Testing and adjusting manufacturing equipment is an appraisal cost.
Productivity is measured by the quantity of good output generated from a specific
amount of input during a time period.
A company that manufactures small quantities of identifiable products will use a
process costing system.
Under the realized value approach, no value is recognized for by-products or scrap until
they are actually sold.
If a normal loss is anticipated on all jobs, the overhead application rate should include
an amount for the cost of defective units less disposal value.
Equivalent units are computed to assign costs to partially completed units.
Kaizen costing is most often applied to new products.
In CVP analysis, sales and production are assumed to be equal.
An administrative department provides services that benefit the entire organization.
The point at which individual products are first identifiable in a joint process is referred
to as the split-off point.
Process benchmarking creates the risk for a company to become stagnant.
Traditional costing systems tend to misallocate overhead to high-volume standard
products
Total fixed costs remain unchanged with levels of production.
Continuous production losses are assumed to occur uniformly throughout the process.
The formula for usage variance is (AQ – SQ) * AP.
Which of the following pay plans encourages the improvement of the overall
company’s well-being?
A. monthly salary
B. cafeteria plan
C. profit sharing
D. pensions
The budgeted amount of selling and administrative expense for a period can be found
in the
A. sales budget.
B. cash budget.
C. pro forma income statement.
D. pro forma balance sheet.
Moore Company.
Moore Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #6, #9, and #13.
Direct material was requisitioned as follows for each job respectively: 30 percent, 25
percent, and 25 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000.
Other actual overhead costs totaled $36,000.
Refer to Moore Company. What is the total amount of actual overhead?
A. $36,000
B. $69,000
C. $93,000
D. $99,960
For cost control purposes, actual costs should be compared to
A. the original budget.
B. actual costs for the prior period.
C. a flexible budget.
D. a static budget.
The Pareto principle is important to consider when an organization is
A. assessing whether to employ activity-based costing versus attribute-based costing.
B. evaluating the number of activities that are value-added versus those that are
non-value-added.
C. deciding whether to offer a product in one color versus in ten colors.
D. determining whether simultaneous engineering activities will be impacted by the
“Rule of One.”
Which of the following topics is of more concern to management accounting than to
cost accounting?
A. generally accepted accounting principles
B. inventory valuation
C. cost of goods sold valuation
D. impact of economic conditions on company operations
Wyatt Corporation
Wyatt Corporation has the following standard costs associated with the manufacture
and sale of one of its products:
Refer to Wyatt Corporation. The volume variance under absorption costing is
A. $8,000 F.
B. $4,000 F.
C. $4,000 U.
D. $8,000 U.
Which of the following is not a valid method for determining product cost?
A. arbitrary assignment
B. direct measurement
C. systematic allocation
D. cost-benefit measurement
Asset turnover equals
A. income divided by average assets.
B. sales divided by assets.
C. sales divided by average assets.
D. assets divided by sales.
Putnam Company
Below is an income statement for Putnam Company:
Refer to Putnam Company. What was Putnam’s margin of safety?
A. $150,000
B. $175,000
C. $200,000
D. $300,000
Which of the following statements regarding standard cost systems is true?
A. Favorable variances are not necessarily good variances.
B. Managers will investigate all variances from standard.
C. The production supervisor is generally responsible for material price variances.
D. Standard costs cannot be used for planning purposes since costs normally change in
the future.
Return on investment (ROI) is a term most often used to express income earned on
assets invested in a business unit. A company’s return on investment would increase if
sales
A. increased by the same dollar amount as expenses and total assets increased.
B. remained the same and expenses were reduced by the same dollar amount that total
assets increased.
C. decreased by the same dollar amount that expenses increased.
D. and expenses increased by the same percentage that total assets increased.
Profit earned in excess of an amount charged for funds committed to a profit center is
referred to as ______________________________.
The excess of revenues over direct variable expenses and avoidable fixed expenses is
referred to as ______________________________.
Discounting net cash inflows by using an organization’s desired rate of return and
comparing the result with the net cash outflows for a project yields
__________________________.
Costs that are associated with the production of a group of similar products at the same
time are referred to as ______________________________.
Costs that support a product type or process are referred to as
________________________.
Western Division
The Western Division of Lansing Chemical Co. produced the following operating
results for the previous year:
The Western Division is considering a $1,000,000 investment in a new project. The
Western Division estimates that its return on investment (for all of its operations) would
be at 22% with the new investment.
Refer to Western Division. If the manager of the Western Division is evaluated on
return on investment alone, will the manager invest in the new project? Explain.
What are the differences between committed fixed costs and discretionary fixed costs?
Mobile Corporation
Mobile Corporation is a manufacturer of electronic blood pressure monitors for
home use. The following is a summary of quality costs for the first year of operations.
Refer to Mobile Corporation. Compute the profit lost by selling defective units not
reworked.