1) kleppe corporation has provided the following data from its activity-based costing
accounting system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
how much indirect factory wages and factory equipment depreciation cost would not be
assigned to products using the activity-based costing system?
a.$0
b.$68,000
c.$280,000
d.$200,000
2) the materials purchase budget:
a.is the beginning point in the budget process
b.must provide for desired ending inventory as well as for production
c.is accompanied by a schedule of cash collections
d.is completed after the cash budget
3) (ignore income taxes in this problem.) the wisbley company is contemplating the
purchase of a helicopter for its executives to use in their business trips. this helicopter
could be either purchased or leased from the manufacturer. the useful life of the
helicopter is four years. data concerning these two alternatives follow:
if the helicopter is leased, it would be returned to the manufacturer in four years.
wisbley’s required rate of return is 22%.
the present value of all the cash outflows for rental payments, if the helicopter is leased,
would be:
a.$(647,250)
b.$(623,500)
c.$(716,000)
d.$(510,500)
4) the following standards for variable overhead have been established for a company
that makes only one product:
the following data pertain to operations for the last month:
what is the variable overhead efficiency variance for the month?
a.$2,553 u
b.$6,747 u
c.$6,747 f
d.$6,864 u
5) bacho corporation reports that at an activity level of 5,400 units, its total variable cost
is $416,934 and its total fixed cost is $142,560.
what would be the average fixed cost per unit at an activity level of 5,500 units? assume
that this level of activity is within the relevant range.
a.$26.40
b.$103.61
c.$25.92
d.$51.98
6) excerpts from blackner corporation’s comparative balance sheet appear below:
which of the following classifications of changes in balance sheet accounts as sources
and uses is correct?
a.the change in accounts receivable is a source; the change in inventory is a source
b.the change in accounts receivable is a use; the change in inventory is a use
c.the change in accounts receivable is a use; the change in inventory is a source
d.the change in accounts receivable is a source; the change in inventory is a use
7) when the actual wage rate paid to direct labor workers is less than the standard wage
rate, the journal entry would include:
a.credit to wages payable; credit to labor rate variance
b.credit to work-in-process; credit to labor rate variance
c.credit to wages payable; debit to labor rate variance
d.credit to work-in-process; debit to labor rate variance
8) to obtain the break-even point in terms of dollar sales, total fixed expenses are
divided by which of the following?
a.variable expense per unit
b.variable expense per unit/selling price per unit
c.fixed expense per unit
d.(selling price per unit – variable expense per unit)/selling price per unit
9) alberding corporation would like to determine the relative profitability of the
company’s products for purposes of making volume trade-off decisions. for illustration,
the company has provided the following data for product s06k:
what is the profitability index for product s06k?
a.$6.00 per gram
b.$2.40 per gram
c.0.40
d.$367,200
10) which of the following would be classified as an internal failure cost on a quality
cost report?
a.cost of field servicing and handling complaints
b.debugging software errors
c.maintenance of test equipment
d.test and inspection of incoming materials
11) kalinowski kennel uses tenant-days as its measure of activity; an animal housed in
the kennel for one day is counted as one tenant-day. during february, the kennel
budgeted for 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days.
the kennel has provided the following data concerning the formulas used in its
budgeting and its actual results for february:
the wages and salaries in the planning budget for february would be closest to:
a.$15,570
b.$16,197
c.$16,338
d.$15,688
12) melillo corporation has provided data concerning the company’s manufacturing
overhead account for the month of october. prior to the closing of the overapplied or
underapplied balance to cost of goods sold, the total of the debits to the manufacturing
overhead account was $67,000 and the total of the credits to the account was $57,000.
which of the following statements is true?
a.manufacturing overhead for the month was overapplied by $10,000
b.actual manufacturing overhead for the month was $67,000
c.manufacturing overhead applied to work in process for the month was $67,000
d.manufacturing overhead transferred from finished goods to cost of goods sold during
the month was $57,000
13) the following are the wyeth company’s unit costs of making and selling an item at a
volume of 10,000 units per month (which represents the company’s capacity):
present sales amount to 9,000 units per month. an order has been received from a
customer in a foreign market for 1,000 units. the order would not affect current sales.
fixed costs, both manufacturing and selling and administrative, are constant within the
relevant range between 8,000 and 10,000 units per month. the variable selling and
administrative costs would have to be incurred for this special order as well as all other
sales. assume direct labor is a variable cost.
assume the company has 50 units left over from last year which have small defects and
which will have to be sold at a reduced price as scrap. this would have no effect on the
company’s other sales. what cost is relevant as a guide for setting a minimum price on
these defective units?
a.$6.50
b.$5.00
c.$1.50
d.$3.50
14) cotty clinic uses client-visits as its measure of activity. during march, the clinic
budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for march:
the spending variance for medical supplies in march would be closest to:
a.$1,050 u
b.$1,050 f
c.$1,263 f
d.$1,263 u
15) kimbeth manufacturing makes dust density sensors (dds), a safety device for the
mining industry. the company uses a process costing system and has only a single
processing department. the following information pertains to operations for the month
of may:
the beginning work in process inventory was 60% complete with respect to materials
and 20% complete with respect to conversion costs. the ending work in process
inventory was 90% complete with respect to materials and 40% complete with respect
to conversion costs. the costs were as follows:
using the weighted-average method, the cost per equivalent unit of conversion cost for
may is closest to:
a.$5.65
b.$5.83
c.$6.00
d.$6.41