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1) Bar charts and a whale curve are some of the common ways of displaying the results
of customer-profitability analysis.
2) Financial accounting information focuses on internal reporting.
3) Average reduction in setup time and processing time at bottleneck operations is an
example of learning-and-growth measures to tackle bottleneck situations.
4) In government contracting, there is a complex interplay of political considerations
and accounting principles.
5) Successful reengineering efforts generally involve changing the roles and
responsibilities of employees.
6) Stefan Ceramics is in the business of selling ceramic vases. It has two departments
molding and finishing. Molding department purchases tungsten carbide and produces
ceramic vases out of it. Ceramic Vases are then transferred to finishing department,
which designs it as per the requirement of the customers.
During the month of July, molding department purchased 500 kgs of tungsten carbide at
$60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200
vases during the month. It has 800 vases in the process at the end of the month. It
incurred direct labor charges of $1,000 and other manufacturing costs of $500, which
included electricity costs of $200. Stefan had no inventory of tungsten carbide at the
end of the month. It also had no beginning inventory of vases. The ending inventory
was 50% complete in respect of conversion costs.
The journal entry to record tungsten carbide purchased and used in production during
July is ________.
A) Work in ProcessMolding $2,400
Accounts Payable Control $2,400
B) Work in ProcessMolding $3,000
Accounts Payable Control $3,000
C) Accounts Payable Control $2,400
Work in ProcessMolding $2,400
D) Accounts Payable Control $3,000
Work in ProcessMolding $3,000
7) Yield variances ________.
A) reveal the effect of substitution within a single factor of production
B) address the productivity of a single component of one factor of production
C) capture both substitutions between factors of production as well as within factors of
production
D) reveal the effect of substitution within multiple factors of production
8) Midend's Camera Shop has prepared the following flexible budget for September and
is in the process of interpreting the variances. F denotes a favorable variance and U
denotes an unfavorable variance.
The actual amount spent for Material A was ________.
A) $28,300
B) $25,300
C) $24,700
D) $21,700
9) Which corporate costs should be allocated to divisions?
A) costs incurred to process orders
B) cost related to homogeneous cost pools only
C) product-handling costs
D) both fixed and variable costs
10) Batman Abstract Company has three divisions that operate autonomously. Their
results for 2015 are as follows:
The company's desired rate of return is 20%.
Required:
a.Compute each division's ROI.
b.Compute each division's residual income.
c.Rank each division by both ROI and residual income.
d.Which division had the best performance in 2015? Why?
11) Baker Corporation has provided the following production and average cost data for
two levels of monthly production volume. The company produces a single product.
The best estimate of the total variable manufacturing cost per unit is:
A) $89.50
B) $18.40
C) $71.10
D) $30.90
12) In the service sector ________.
A) direct labor costs are always easy to trace to jobs
B) a budgeted direct-labor cost rate may be used to apply direct labor to jobs
C) normal costing may not be used
D) overhead is generally applied using an actual cost-allocation rate
13) If the byproduct inventory is recorded at NRV less profit margin of 20%, the
balance sheet will report ________ of byproduct inventory.
A) $375
B) $0
C) $1,500
D) $300
14) What would be the average fixed cost per unit at an activity level of 5,600 units?
Assume that this level of activity is within the relevant range.
A) $32.27
B) $15.68
C) $65.74
D) $15.40
15) The ending balance in the Work-in-Process Control account represents the costs of
all jobs that ________.
A) have not been completed
B) have been completed but not sold
C) have been completed and sold to customers
D) are reported on the income statement
16) The top management at Amore Corp, a manufacturer of computer games, is
attempting to recover from a flood that destroyed some of their accounting records. The
main computer system was also severely damaged. The following information was
salvaged:
Alpha Division Beta Division Gamma Division
Sales $5,500,000 (a) $2,500,000
Net operating income $3,500,000 $1,100,000 $1,200,000
Operating assets (b) (c) $1,600,000
Return on investment 0.25 0.15 (d)
Return on sales (e) 0.1 0.5
Investment turnover (f) (g) 1.5
What is the Alpha Division's return on sales (e)?
A) 60%
B) 65%
C) 63.64%
D) 53.63%
17) In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to
estimate the ________ allocated to a job.
A) direct materials
B) direct labor
C) manufacturing overhead costs
D) total costs
18) Orange Corporation has budgeted sales of 16,000 units, targeted ending finished
goods inventory of 4,000 units, and beginning finished goods inventory of 2,000 units.
How many units should be produced next year?
A) 22,000 units
B) 20,000 units
C) 18,000 units
D) 16,000 units
19) Craylon Corp sells two products X and Y. X sells for $200 and Y sells for $150.
Both X and Y sell for $300 as a bundle. What is the revenue allocated to product Y, if
product X is termed as the primary product in the bundle?
A) $100
B) $128.50
C) $110
D) $112.85
20) A grouping of all the different types of equipment used to make a given product is
referred to as ________.
A) total quality management
B) materials requirements planning
C) manufacturing cells
D) economic order quantity
21) Which of the following statements is true of contribution-margin format of the
income statement?
A) It is used for absorption costing.
B) It highlights the lump sum of fixed manufacturing costs.
C) It distinguishes manufacturing costs from nonmanufacturing costs.
D) It calculates gross margin.
22) Minnesota Ore Company mines iron ore for production into various metal products.
During recent years, the company has had large fluctuations in its inventories of metal
ingots. Much of the volatility of the inventory levels is due to the variability of demand
by the company's largest customers, automobile manufacturers. For large orders, the
company has the technology to quickly shift production from one product to another.
Required:
Explain how the company can improve its inventory control system and give the
advantages of whatever you recommend.
23) Tornado Electronics manufactures stereos. All processing is initiated when an order
is received. For April there were no beginning inventories. Conversion Costs and Direct
Materials are the only manufacturing cost accounts. Direct Materials are purchased
under a just-in-time system. Backflush costing is used with a finished goods trigger
point. Additional information is as follows:
Required:
Record all journal entries for the monthly activities related to the above transactions if
backflush costing is used.
24) What are the factors that are causing many companies to refine their costing
systems to obtain more accurate measures of the costs of their products?
25) What is a standard costing system?
26) Define engineered and discretionary costs and give two examples of each.
27) Christy Enterprises reports the year-end information from 2015 as follows:
Christy is developing the 2016 budget. In 2016 the company would like to increase
selling prices by 10%, and as a result expects a decrease in sales volume of 5%. Cost of
goods sold as a percentage of sales is expected to increase to 62%. Other than
depreciation, all operating costs are variable.
Required:
Prepare a budgeted income statement for 2016.
28) When designing the steps in accounting-based performance measures, should the
decisions in these steps be sequential?
