Goal conflict can be avoided if budget goals are carefully designed for consistency
across all areas of the organization.
a. True
b. False
Contractors who sell to government agencies would be most likely to use which of the
following cost concepts in pricing their products?
a. variable cost concept
b. product cost concept
c. total cost concept
d. fixed cost concept
Carolwood Company manufactures widgets and uses process costing. The status of the
beginning and ending inventory is:
Direct materials are added to the manufacturing process in stages. None are added when
production begins. Approximately 1/2 of the materials are added when the product is
25% complete. The other half is added when the product is 50% complete.
What percentage complete are beginning inventory and ending inventory with respect
to direct materials (DM) and conversion costs (CC)?
a. beg. inventory: DM’”50%, CC’”30%
end. inventory: DM’”100%. CC’”55%
b. beg. inventory: DM’”50%. CC’”30%
end. inventory: DM’”55%. CC’”55%
c. beg. inventory: DM’”30%. CC’”30%
end. inventory: DM’”55%. CC’”55%
d. beg. inventory: DM’”50%. CC’”70%
end. inventory: DM’”100%. CC’”45%
Job order cost accounting systems may be used for planning and controlling a service
business.
a. True
b. False
Department G had 3,600 units, 40% completed at the beginning of the period, 12,000
units were completed during the period, 2,000 units were 20% completed at the end of
the period, and the following manufacturing costs were debited to the departmental
work in process account during the period:
Assuming that all direct materials are placed in process at the beginning of production
and that the first-in, first-out method of inventory costing is used, what is the equivalent
units for materials and conversion costs, respectively?
a. 14,000 and 12,160
b. 10,400 and 10,960
c. 14,000 and 13,600
d. 10,400 and 10,240
A difference in quantity of materials used on two comparable jobs may be caused by
a. inadequately trained employees
b. poor quality materials
c. employee carelessness
d. all of these
Project A requires an original investment of $65,000. The project will yield cash flows
of $15,000 per year for 7 years. Project B has a calculated net present value of $5,500
over a 5-year life. Project A could be sold at the end of 5 years for a price of $30,000.
(a) Using the table below, determine the net present value of Project A over a 5- year
life with salvage value assuming a minimum rate of return of 12%. (b) Which project
provides the greatest net present value?
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Schedule of Activity Costs
From the above schedule of activity costs, determine the internal failure costs.
a. $37,000
b. $25,000
c. $8,000
d. $33,000
The amount of income that would result from an alternative use of cash is called:
a. differential income
b. sunk cost
c. differential revenue
d. opportunity cost
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
month’s sales.
What is the budgeted unit of production for March?
a. 256,000
b. 206,000
c. 214,000
d. 298,000
If direct materials cost per unit increases, the break-even point will increase.
a. True
b. False
If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even
point in sales dollars?
a. $1,250,000
b. $450,000
c. $1,875,000
d. $300,000
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
inventory of B is 3,000 units.
Budgeted production of Product B for the year would be
a. 24,500 units
b. 22,500 units
c. 26,500 units
d. 23,200 units
The following data is given for the Stringer Company:
Overhead is applied on standard labor hours.
The direct materials price variance is
a. $22,800 unfavorable
b. $22,800 favorable
c. $52,000 unfavorable
d. $52,000 favorable
When the goods are sold, their costs are transferred from Work in Process to Finished
Goods.
a. True
b. False
Job order costing and process costing are
a. pricing systems
b. cost accounting systems
c. cost flow systems
d. inventory tracking systems
The materials requisition serves as the source document for debiting the accounts in the
materials ledger.
a. True
b. False
Miramar Industries manufactures two products: A and B. The manufacturing operation
involves three overhead activities’”production setup, material handling, and general
factory activities. Miramar uses activityÂbased costing to allocate overhead to
products. An activity analysis of the overhead revealed the following estimated costs
and activity bases for these activities:
Each product’s total activity in each of the three areas are as follows:
What is the activity rate for production setup?
a. $2,500 per setup
b. $833 per setup
c. $625 per setup
d. $400 per setup