A variable cost remains constant on a per-unit basis as production increases.
Unfavorable variances are represented by debit balances in the overhead account.
When using the risk-adjusted discount rate method, a manager increases the rate used
for discounting future cash inflows.
When raw materials are placed into production, the materials inventory account is
debited.
Budgetary slack is frequently found in imposed budgets.
If sales exceed production, absorption costing net income exceeds variable costing net
income.
A production plant could be a cost object.
Storage of unneeded inventory is a non-value added item.
Using MACRS depreciation for tax purposes and straight-line depreciation for book
purposes will affect after-tax cash flows during the life of a project.
Testing and adjusting manufacturing equipment is a prevention cost.
Practical capacity is the capacity that can be achieved during normal working hours.
Open-book management is most effective in decentralized organizations.
In a just-in-time (JIT) environment, quality is determined continually during the
manufacturing process.
Fixed costs per unit vary inversely with levels of production.
The benefits of discretionary costs are usually measurable in monetary terms.
The economic production run quantity directly affects the
A. order point for raw material inventories.
B. safety stock for finished goods inventory.
C. level of finished goods inventory.
D. lead time for producing finished goods inventory.
A key element of Japan’s success in world markets is
A. the elimination of waste in all operations.
B. automation of the billing function.
C. inefficient labor forces in competing countries.
D. the verification procedures incorporated into computer programs.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product E?
A. $4,433
B. $1,182
C. $1,108
D. $2,276
In the South Division of Occident Company, segment income for the most recent year
exceeded residual income by $15,000. Also, return on investment exceeded the target
rate of return by 10%. What was the level of investment in the South Division for the
most recent year?
A. $ 15,000
B. $100,000
C. $150,000
D. An answer can’t be determined from this information.
Continental Publishing Company
The Magazine Division of Continental Publishing Company had the following financial
data for the year:
Refer to Continental Publishing Company. What was the Magazine Division’s segment
income?
A. $150,000
B. $100,000
C. $250,000
D. $ 50,000
Consider the following three product costing alternatives: process costing, job order
costing, and standard costing. Which of these can be used in conjunction with variable
costing?
A. job order costing
B. standard costing
C. process costing
D. all of them
Vincent Manufacturing employs a weighted average process costing system for its
products. One product passes through three departments (Molding, Assembly, and
Finishing) during production. The following activity took place in the Finishing
Department during April:.
The costs per equivalent unit of production for each cost failure area as follows:
Raw material is added at the beginning of the Finishing process without changing the
number of units being processed. Work in process inventory was 40 percent complete as
to conversion on April 30. All spoilage was discovered at final inspection. Of the total
units spoiled, 1,680 were within normal limits. Spoilage is considered discrete.
Required:
a. Calculate the equivalent units of production
b. Determine the cost of units transferred out of Finishing
c. Determine the cost of ending Work in Process Inventory
d. The portion of the total transferred in cost associated with beginning Work in Process
Inventory amounted to $18,900. What is the current period cost that was transferred in
from Assembly to Finishing?
e. Determine the cost associated with abnormal spoilage for the month.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product G?
A. $3,495
B. $2,447
C. $1,748
D. $1,311
When the organizational output is difficult to define, management may rely on ____
for cost control.
A. qualitative measures
B. program budgeting
C. surrogate measures of output
D. all of the above
Daybreak Corporation
Daybreak Corporation manufactures and sells two products: A and B. The operating
results of the company are as follows:
In addition, the company incurred total fixed costs in the amount of $10,000.
Refer to Daybreak Corporation. How many total units would the company have needed
to sell to break even?
A. 333
B. 1,111
C. 2,333
D. 3,332
The term incremental cost refers to
A. the profit foregone by selecting one choice instead of another.
B. the additional cost of producing or selling another product or service.
C. a cost that continues to be incurred in the absence of activity.
D. a cost common to all choices in question and not clearly or feasibly allocable to any
of them.
What is the relationship between warehouse space and the length of production runs?
Does a project that generates a positive internal rate of return also have a positive net
present value? Explain.
Grant Company.
Grant Company uses a job-order costing system and develops its predetermined
overhead rate based on machine hours. The company has two jobs in process at the end
of the cycle, Jobs #177 and #179.
Refer to Grant Company. Labor cost was split 25 percent and 70 percent, respectively,
between Jobs #177 and #179 for direct labor. The remainder was indirect labor cost.
What are the total costs of Jobs #177 and #179?
The evaluation of future long-range projects to allocate resources effectively and
efficiently is referred to as ______________________________________.
The relative product quantities composing a company’s total sales is referred to as a
company’s _________________________.
Discuss the basic forms used in a job-order costing system.
The sum of value-added processing time plus non-value added time equals
__________________________.
When multiple materials are used, the effect of substituting a non-standard mix of
materials during the production process is referred to as a ____________________
variance.