The main reason for generating new information provided by activity-based costing is
a. To help managers make better decisions.
b. To provide employees in the accounting department with work to do.
c. To calculate variances.
d. None of these answer choices are correct..
Mantle Co. manufactures baseball bats. The company’s total overhead consists of
assembly costs and inspection costs. The following data is available:
Total overhead assigned to aluminum bats assuming a single overhead rate and using
activity based costing, respectively, are:
a. $63,000 and $75,000
b. $57,000 and $45,000
c. $63,000 and $57,000
d. $57,000 and $75,000
Johnson Equipment expects the following sales in January, February, and March:
The controller has determined that the company collects credit sales as follows: 60% in
the month of sale, 35% in the first month after sale, and 5% in the second month after
sale. How much cash will be collected from customers in March?
a. $291,500
b. $376,500
c. $410,000
d. None of these answer choices are correct.
Capital budgeting decisions involve all of the following except
a. Outflows of cash at one or more times
b. Inflows of cash at one or more times
c. Consideration of depreciation expense
d. A review and approval process
Bethlehem Corporation had $1,000,000 in sales which resulted in operating income of
$62,000. On January 1, Bethlehem reported $920,000 in assets. Because of a downturn
in the economy, Bethlehem sold several assets during the year. Its December 31 balance
sheet reported only $580,000 in assets.
Required:
a. Calculate Bethlehem ‘s margin.
b. Calculate Bethlehem ‘s asset turnover.
c. Calculate Bethlehem ‘s return on investment.
When a department has work in process at the end of the period, the incomplete units
must be converted to
a. Actual units
b. Equivalent units
c. Transferred-in units
d. None of these answer choices are correct
Which of the following is a factor that could influence worker productivity?
a. The level of skill and training workers possess will affect their productivity.
b. Workers’ level of fatigue will affect the direct labor efficiency variance.
c. The quality of direct material used.
d. All of these answer choices are correct.
Holly Industries manufactures artificial holiday wreaths. Its most popular wreath
requires 3 yards of artificial pine boughs and 15 sprigs of holly berries. In August, the
company purchased 4,000 yards of artificial pine bough, and 20,000 sprigs of holly
berries. Holly paid $2.65 per yard for the artificial pine bough, and purchased 4 boxes
of 5,000 sprigs of holly berries for $7,000 per box. The standard price for artificial pine
bough is $2.60 per yard, and the standard price per sprig of holly berry is $1.45. During
August, Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough
and 19,000 sprigs of holly berries. What is Holly’s direct materials quantity variance for
sprigs of holly berries for August?
a. $1,000 unfavorable
b. $1,000 favorable
c. $362.50 favorable
d. $362.50 unfavorable
GAAP-based income statements categorize expenses based on
a.product, contribution, selling or administrative
b.product, selling or administrative
c.contribution, product, administrative
d.variable costs and fixed costs
Harmony Forge manufactures saddles for show horses. The company has received a
special order for 290 saddles for an international competition. Each of these saddles
would include the specialized logo of the competition. Last year Harmony produced
710 saddles, and the company has the capacity to produce 1,000 saddles per year.
Harmony ‘s saddles normally sell for $650 each, but the special offer is for $179,800
($620 per saddle). The controller has provided information to management that
estimates the variable cost per saddle is $435; fixed manufacturing overhead is
$60/saddle. Of the fixed costs assigned to this special order, $15,950 is for the
specialized logos, the remainder is attributable to costs that will be incurred regardless
of whether the special order is produced. What is the operating income generated by the
special order?
a. $53,650
b. $37,700
c. $36,250
d. $20,300
Clover Manufacturing Company makes two products. The company’s budget includes
$200,000 of overhead. Using the traditional allocation method, the company has
allocated overhead based on estimated total direct labor cost of $125,000. Clover
recently implemented an activity-based costing system and had determined that
overhead can be broken into three overhead pools: cutting, machine setups, and good
shipped. The following is a summary of company information:
Required:
a. Calculate the company’s overhead rate as a percentage of direct labor cost.
b. Calculate the company’s overhead rates using the activity-based costing pools.
Common costs, those not directly caused by the cost object are
a. Not relevant
b. Non-differential
c. Both not relevant and non-differential
d. Neither not relevant nor non-differential
The plan that helps manage cash flow is the
a. Statement of cash flows.
b. Budgeted Income Statement.
c. Cash Budget.
d. Schedule of cash activities.
Rowen Company pays 80% of its expenses in the month incurred. Rowen ‘s controller
has developed the following budgeted amounts budgeted for selling and administrative
expenses for July:
What amount will Rowen report on its July pro-forma income statement for selling and
administrative expenses?
a. $47,920
b. $59,900
c. $43,900
d. $35,120
In calculating ROI, the return on investment is based on
a. The book value of operating assets.
b. The fair market value of operating assets.
c. The historical cost of operating assets.
d. None of these answer choices are correct.