Capital budgeting uses financial criteria exclusively when evaluating projects.
In accounting for JIT operations, the Raw Material Inventory account
A. is used to record price variances for raw materials purchased.
B. can be expected to have a larger balance than with traditional manufacturing
methods.
C. is combined with the Work In Process Inventory account.
D. is combined with the Finished Goods Inventory account.
____ refers to avoiding competition in making a product distinct from that of
competitors by adding value or features for which consumers are willing to pay more.
A. Kaizen
B. Differentiation
C. Confrontation
D. Cost leadership
After the level of volume exceeds the break-even point
A. the contribution margin ratio increases.
B. the total contribution margin exceeds the total fixed costs.
C. total fixed costs per unit will remain constant.
D. the total contribution margin will turn from negative to positive.
Fixed overhead costs are
A. best controlled on a unit-by-unit basis of products produced.
B. mostly incurred to provide the capacity to produce and are best controlled on a total
basis at the time they are originally negotiated.
C. constant on a per-unit basis at all different activity levels within the relevant range.
D. best controlled as to spending during the production process.
The Education Innovations Corporation produces puzzles in its Colorado
manufacturing plant. The company is currently evaluating ways to improve
productivity. The accountant of the firm’s parent organization suggested that
management implement a new compensation plan based on throughput performance
measure as an incentive to increase productivity. To demonstrate how such a measure
might work, the accountant gathered the following production data for a recent month:
a. How many defective units were produced?
b. Compute manufacturing cycle efficiency.
c. Compute process productivity.
d. Compute process quality yield.
e. Compute hourly throughput.
Perry Company employs a job-order costing system. Only three jobs-Job #205, Job
#206, and Job #207-were worked on during January and February. Job #205 was
completed February 10; the other two jobs were still in production on February 28, the
end of the company’s operating year. Job cost sheets on the three jobs follow:
The following additional information is available:
Required:
Information concerning Lynch Corporation’s Product A follows:
Assuming that Lynch increased sales of Product A by 25 percent, what should the profit
from Product A be?
A. $ 50,000
B. $ 62,500
C. $ 75,000
D. $170,000
Colorful Creations Corporation
The Colorful Creations Corporation makes wreaths in two departments: Forming and
Decorating. Forming began the month with 500 wreaths in process that were 100
percent complete as to material and 40 percent complete as to conversion. During the
month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were
still in process that were 100 percent complete as to material and 50 percent complete
as to conversion. Assume Forming uses the weighted average method of process
costing. Costs in the Forming Department are as follows:
The Decorating Department had 600 wreaths in process at the beginning of the month
that were 80 percent complete as to material and 90 percent complete as to conversion.
The department had 300 units in ending Work in Process that were 50 percent complete
as to material and 75 percent complete as to conversion. Decorating uses the FIFO
method of process costing, and costs associated with Decorating are:
Refer to Colorful Creations Corporation. Assume that 8,000 units were transferred to
Decorating at a total cost of $16,000. What is the material cost per equivalent unit in
Decorating?
A. $8.50
B. $8.65
C. $8.80
D. $9.04
Terrell Corporation
Terrell Corporation produces various products used in the construction industry. The
Plumbing Division produces and sells 100,000 copper fittings each month. Relevant
information for last month follows:
Top-level managers are trying to determine how a transfer price can be set on a transfer
of 10,000 of the copper fittings from the Plumbing Division to the Bathroom Products
Division.
Refer to Terrell Corporation. A transfer price based on full production cost would be set
at ____ per unit.
A. $0.75
B. $1.45
C. $1.60
D. $2.10
Which of the following costs would not be accounted for in a company’s recordkeeping
system?
A. an unexpired cost
B. an expired cost
C. a product cost
D. an opportunity cost
Debt in the capital structure could be treated as if it were common equity in computing
the weighted average cost of capital if the debt were
A. callable.
B. participating.
C. cumulative.
D. convertible.
Not-for-profit organizations are required by the ____ to allocate joint costs.
A. AICPA
B. FASB
C. CASB
D. GASB
Which of the following statements is false concerning electronic data interchange?
A. Electronic data interchange (EDI) is essential in a pull system.
B. One of the benefits realized by EDI organizations is a faster processing of
transactions.
C. Electronic data interchange is essential in a push system.
D. Electronic data interchange refers to computer-to-computer exchange of information.
Whitmore Corporation
Whitmore Corporation predicts it will produce and sell 40,000 units of its sole product
in the current year. At that level of volume, it projects a sales price of $30 per unit, a
contribution margin ratio of 40 percent, and fixed costs of $5 per unit.
Refer to Whitmore Corporation. What would the company’s projected profit be if it
produced and sold 30,000 units?
Tastee Ice Cream Company produces ice cream in two departments-Mixing and
Finishing. In Mixing, all ingredients except fruit are added at the start of production. In
Finishing, fruit is added and then the mixture is placed into containers. Adding the fruit
to the basic ice cream mixture increases the volume transferred in by the number of
gallons of fruit added. Any spoilage that occurs is in the Finishing Department.
Spoilage is detected just before the ice cream is placed into containers or at the 98
percent completion point. All spoilage is abnormal.
Finishing Department
BWIP Costs:
Current Costs:
Prepare a cost of production report for October 20XY. The company uses weighted
average.
Costs:
Cost Assignment:
When production is completed on a job, finished goods are transferred to the
_____________________________________________ account.
A responsibility center whose manager is responsible for generating revenues and
controlling expenses is referred to as a ______________________________.
The ______________________________ report details all manufacturing quantities
and costs, shows computation of EUP, and indicates cost assignments to goods
manufactured.
Denton Company
Denton Company manufactures three products (A, B, and C) from three raw materials
(X, Y, and Z). The following table indicates the number of pounds of each material that
is required to manufacture each type of product:
The company has a policy of maintaining an inventory of finished goods on all three
products equal to 25 percent of the next month’s budgeted sales. Listed below is the
sales budget for the first quarter of the current year:
A situation in which managers pursue goals and objectives that are in the best interests
of a particular segment rather than in the best interests of the organization as a whole is
referred to as ____________________.