A backflush accounting system uses work in process inventories as control points

between each process step.

a. True

b. False

The difference between the standard cost of a product and its actual cost is called a

variance.

a. True

b. False

Income statement information for Sadie Company is below:

Using vertical analysis of the income statement for Sadie Company, determine the gross

profit margin.

a. 100%

b. 66%

c. 34%

b. False

The Thomlin Company forecasts that total overhead for the current year will be

$15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is

$16,000,000 and the actual machine hours are 330,000 hours. The predetermined

overhead rate based on machine hours is

a. $48 per machine hour

b. $62 per machine hour

each), the effect of the quantity factor on the change in contribution margin is:

a. $5,000 decrease

b. $5,000 increase

c. $5,750 increase

d. $5,750 decrease

In preparing flexible budgets, the first step is to identify the fixed and variable

components of the various costs and expenses being budgeted.

a. True

However, management is considering moving to a multiple department rate system for

allocating overhead. The following table presents information about estimated

overhead and direct labor hours.

Determine the overhead rate in the Painting Department for each unit of Product B if

Blue Ridge Marketing Inc. uses a multiple department rate system.

a. $49.60 per unit

b. $99.20 per unit

c. $28.80 per unit

d. $64.00 per unit

a. True

b. False

The following information pertains to Dallas Company. Assume that all balance sheet

amounts represent both average and ending balance figures and that all sales were on

credit.

Assets

Liabilities and Stockholders’ Equity

Income Statement

Sales $90,000

Operating expenses 15,000

Net income $30,000

Number of shares of common stock

a. 7.3%

b. 13.6%

c. 20.5%

d. 40.9%

Next year’s sales forecast shows that 20,000 units of Product A and 22,000 units of

Product B are going to be sold for prices of $10 and $12 per unit, respectively. The

desired ending inventory of Product A is 20% higher than its beginning inventory of

2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending

Department E had 4,000 units in Work in Process that was 40% completed at the

beginning of the period at a cost of $12,500. 14,000 units of direct materials were added

during the period at a cost of $28,700. 15,000 units were completed during the period,

and 3,000 units were 75% completed at the end of the period. All materials are added at

the beginning of the process. Direct labor was $32,450 and factory overhead was

$18,710.

The number of equivalent units of production for the period for materials if the average

cost method is used to cost inventories was

a. 15,650

b. 18,000

c. 17,250

d. 17,700

d. number of packages picked up

a. miscellaneous administrative expenses

b. direct operating expenses

c. indirect expenses

d. fixed expenses

The debits to Work in Process’”Assembly Department for April, together with data

concerning production, are as follows:

All direct materials are placed in process at the beginning of the process and the

average cost method is used to cost inventories.

The materials cost per equivalent unit (to the nearest cent) for April is

a. $2.60

Transformations Hair Salon uses an activity-based costing system in its beauty salon to

determine the cost of services. The salon has determined the costs of services by

activity as follows:

(a) Using the information provided, determine the cost of services for each of the

following services provided by the salon:

(b) If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and

5,500 highlights, determine the budget for cost of services.