Number of work orders
An activity base is used to charge service department expenses. Match the following
activity bases with the appropriate department (a-h).
a. Purchasing
b. Payroll accounting
c. Human resources
d. Maintenance
e. Information systems
f. Marketing
g. President’s Office
h. Transportation
Which of the following products would be manufactured using a job order costing
system?
a. a cell phone
b. a highlighter pen
c. a graduation invitation
d. a recliner
If variable manufacturing costs are $15 per unit and total fixed manufacturing costs are
$200,000, what is the manufacturing cost per unit if:
(a) 20,000 units are manufactured and the company uses the variable costing concept?
(b) 25,000 units are manufactured and the company uses the variable costing concept?
(c) 20,000 units are manufactured and the company uses the absorption costing
concept?
(d) 25,000 units are manufactured and the company used the absorption costing
concept?
The budgeted finished goods inventory and cost of goods sold for a manufacturing
company for the year are as follows: January 1 finished goods, $765,000; December 31
finished goods, $540,000; and cost of goods sold for the year, $2,560,000. The
budgeted costs of goods manufactured for the year is
a. $1,255,000
b. $2,335,000
c. $2,785,000
d. $3,100,000
The budgeted direct materials purchases is normally computed as the sum of (1) the
materials for production and (2) the desired ending inventory.
a. True
b. False
Which of the following is not included in the computation of the quick ratio?
a. inventory
b. marketable securities
c. accounts receivable
d. cash
Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. Work in process at the beginning of the period for Department 1
was $75,000, and work in process at the end of the period totaled $60,000. The records
indicate that direct materials, direct labor, and applied factory overhead for Department
2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the
beginning of the period for Department 2 totaled $75,000, and work in process at the
end of the period totaled $60,000. The journal entry to record the flow of costs into
Department 3 during the period is
a. Work in Process’”Department 3 Work in Process’”Department 2 585,000
585,000
b. Work in Process’”Department 3 Work in Process’”Department 2 570,000
570,000
c. Work in Process’”Department 3 Work in Process’”Department 2 555,000
555,000
d. Work in Process’”Department 3 Work in Process’”Department 2 165,000
165,000
The standard costs and actual costs for factory overhead for the manufacture of 2,500
units of actual production are as follows:
The amount of the total factory overhead cost variance is
a. $2,000 favorable
b. $5,000 unfavorable
c. $2,500 unfavorable
d. $5,000 favorable
When a segment of a company is showing a net loss, it is always best to discontinue the
segment in order not to continue with losses.
a. True
b. False
Financial accounting information is used more often for long-term operating decisions
and nonfinancial information is used more often for day-to-day decisions.
a. True
b. False
A company reports the following:
Determine the (a) rate earned on stockholders’ equity, and (b) rate earned on common
stockholders’ equity. Round
to one decimal place.
Examples of transforming a traditional manufacturing environment to a lean
environment is to do all of the following except
a. form partnerships with reliable suppliers.
b. reorganize operational processes to organized product lines.
c. train employees to perform various operations.
d. increase raw materials to produce more, thereby increasing finished goods inventory.
If the accounts receivable turnover for the current year has decreased when compared
with the ratio for the preceding year, there has been an acceleration in the collection of
receivables.
a. True
b. False
Factory overhead includes
a. factory rent and direct labor
b. direct materials and direct labor
c. indirect materials and direct materials
d. indirect labor and indirect materials
Which of the following would most likely use a job order costing system?
a. a paper mill
b. a swimming pool installer
c. a company that manufactures chlorine for swimming pools
d. an oil refinery
The major advantage of residual income as a performance measure is that it gives
consideration to not only a minimum rate of return on investment but also the total
magnitude of income from operations earned by each division.
a. True
b. False
Direct labor costs are included in the conversion costs of a product.
a. True
b. False
Which of the following is a measure of a cost center manager’s performance?
a. budget performance report
b. rate of return and residual income measures
c. divisional income statements
d. balance sheet
Which of the following is part of factory overhead cost?
a. sales commissions
b. depreciation of factory equipment and machines
c. depreciation of sales person’s vehicle
d. direct materials used