The effect of capital expenditures on the master budget is reflected through cash
payments made for acquisition of capital assets.
The financial budget is prepared before the operating budget.
Motivational elements may be quantitative or non-quantitative in nature.
Expected standards are a valuable tool for motivation and control.
A traditional costing system has fewer cost pools that does an activity-based costing
(ABC) system.
Which of the following is not a characteristic of relevant costing information? It is
A. associated with the decision under consideration.
B. significant to the decision maker.
C. readily determined from financial records.
D. related to a future endeavor.
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to Product Z (round to the nearest dollar)?
A. $5,500
B. $4,000
C. $2,390
D. $5,610
Graham Company has 15,000 units in inventory that had a production cost of $3 per
unit. These units cannot be sold through normal channels due to a significant
technology change. These units could be reworked at a total cost of $23,000 and sold
for $28,000. Another alternative is to sell the units to a junk dealer for $8,500. The
relevant cost for Graham to consider in making its decision is
A. $45,000 of original product costs.
B. $23,000 for reworking the units.
C. $68,000 for reworking the units.
D. $28,000 for selling the units to the junk dealer.
Whitney Corporation
Whitney Corporation, a reseller of women’s fashions, has budgeted its activity for
March. The budget information is presented below:
Refer to Whitney Corporation. The budgeted cash receipts for March are:
A. $412,500
B. $137,500
C. $585,000
D. $550,000
In a job-order costing system, the subsidiary ledger for Finished Goods Inventory is
comprised of
A. all job-order cost sheets.
B. job-order cost sheets for all uncompleted jobs.
C. job-order cost sheets for all completed jobs not yet sold.
D. job-order cost sheets for all ordered, uncompleted, and completed jobs.
Break-even analysis assumes over the relevant range that
A. total variable costs are linear.
B. fixed costs per unit are constant.
C. total variable costs are nonlinear.
D. total revenue is nonlinear.
The journal entry to apply overhead to production includes a credit to Manufacturing
Overhead control and a debit to
A. Finished Goods Inventory.
B. Work in Process Inventory.
C. Cost of Goods Sold.
D. Raw Material Inventory.
Cost containment practices by a firm would not be effective for cost increases caused
by
A. inflation.
B. a reduction in the quantity of an input purchased.
C. normal seasonality.
D. a reduction in the number of suppliers.
In relationship to changes in activity, variable overhead changes
A. no no
B. no yes
C. yes yes
D. yes no
Real Products Company
Real Products Company produces and sells a single product. Information on its costs
follow:
Refer to Real Products Company. In the upcoming year, Real Products Company
estimates that it will produce and sell 4,000 units. The variable costs per unit and the
total fixed costs are expected to be the same as in the current year. However, it
anticipates a sales price of $16 per unit. What is Real Products Company’s projected
margin of safety for the coming year?
A. $7,000
B. $20,800
C. $18,400
D. $13,000
A budget that is prepared by adding a new budget month as each month expires is
referred to as a(n) ______________________________.
An activity that a customer is willing to pay for and increases the worth of a product is
referred to as a _________________________ activity.
A process that focuses only on factors that change from one course of action to another
is referred to as ___________________________________.
In a manufacturing organization, the budget that is prepared after the sales budget is the
______________________________.
Why is variable costing not used extensively in external reporting?
Costs of monitoring and compensating for mistakes not eliminated through prevention
activities are referred to as ______________________________.
Aldrich Company
Aldrich Company has the following information available for the current year:
Refer to Aldrich Company. Compute the material purchase price and quantity
variances.
The interrelationships between an organization and its suppliers and customers are
collectively referred to as a(n) _________________________.
Anything for which management wants to accumulate or collect costs is known as a
_________________________.
Standards that allow for waste and inefficiency are referred to as
______________________________.