A company’s selling price is $12 per unit, variable cost is $3 per unit, and fixed costs
are $25,000. What is the break-even point in sales dollars?
A.$53,333
B.$44,444
C.$33,333
D.$1,333
Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair) and
two operating departments (Fabrication and Assembly). Management has decided to
allocate repair costs on the basis of the area (square feet) in each department and to
allocate General Factory on the basis of labor hours worked by the employees in each
of their respective departments.
The following data appear in the company records for the current period:
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company. Using the step method, what is the total amount of
costs allocated to (a) the Fabrication Department and (b) the Assembly Department?
Valley Company incurred a total cost of $17,000 to produce 500 units of output. A total
of 800 hours was incurred for this effort. If the variable cost was $20 per direct labor
hour, then the fixed cost was
A.$16,000
B.$17,000
C.$ 7,000
D.$ 1,000
Which of the following is an advantage(s) of using market prices in a competitive
market?
A.Both buying and selling divisions can buy and sell as many units as they want at
market price.
B.Managers of both buying and selling divisions are indifferent between trading with
each other or with outsiders.
C.From the company’s perspective, this arrangement is fine as long as the selling
division is operating at capacity.
D.All of the answers are correct.
Manufacturing companies are required to allocate joint-process costs in the valuation of
inventories and cost of goods sold for
A.financial reporting, only.
B.tax reporting, only.
C.managerial reporting, only.
D.both financial and tax reporting.
Accounting for factory overhead costs involves averaging in
Job Order CostingProcess Costing
A.Yes No
B.Yes Yes
C.No Yes
D.No No
Which of the following works in planning, decision making, designing information
systems, designing incentive systems, and helping managers make operating decisions?
A.Controller
B.Treasurer
C.Board of directors
D.Chief executive officer
What is the firststep in allocating service department costs to production departments?
A.Assign overhead costs that are directly attributable to a service or production
department.
B.Allocate other overhead costs based on appropriate cost drivers.
C.Allocate service department costs to production departments.
D.None of the answers is correct.
The step method allocates costs of service departments to
A.other service departments.
B.producing departments.
C.joint products.
D.other service departments and producing departments.
A financial model is only as good as
A.the rate of growth in the economy.
B.the company’s operating leverage.
C.the assumptions it uses and the data it uses.
D.None of the answers are correct.
Catfish Company produces two products, C and F, with the following characteristics:
Total fixed costs for the company are $21,000.
REQUIRED:
a. What is the anticipated level of profits for the expected sales volume?
b. Assuming the product mix would be the same at the break-even point, compute the
break-even point in terms of each of the products.
c. If only product C were sold, how many units would be needed to break even?
d. If only product F were sold, how many units would be needed to break even?
e. If the product mix changed so that equal units of C and F were sold, what would be
the new break-even point in total units?
f. Discuss the accuracy of the above calculations with regards to planning. What types
of occurrences could affect the accuracy of the calculations? What assumptions must be
made to use the calculations in planning and decision making?
The quality based view
A.holds that high quality pays for itself.
B.emphasizes constantly improving systems and processes.
C.focuses on long-run profits
D.All of the answers are correct.
Framing Division
The Framing Division had the following data:
Refer to the Framing Division. What is the investment turnover ratio for Year 2008?
A.1.0
B.1.5
C.1.6
D.2.0
Ambros Company
In the Ambros Company, Division A has a product that can be sold either to outside
customers or to Division B. Information about these divisions is given below:
Refer to Ambros Company. The company uses the opportunity cost approach to transfer
pricing. What is the minimum transfer price in Case 1?
A.$90.
B.$86.
C.$83.
D.$73.
Which of the following best indicates how much shareholder wealth is being created by
company managers?
A.Return on investment divided by total assets.
B.Return on investment divided by total liabilities.
C.Return on investment divided by retained earnings.
D.Economic value added (EVA).
Little League Baseball Manufacturer
The Little League Baseball Manufacturer purchases materials for the production of
customized little league baseball bats, hires workers to convert the materials to
customized finished baseball bats, and then offers the customized baseball bats for sale
to little league teams and the general public.
Refer to Little League Baseball Manufacturer.
Manufacturing costs such as the cost of production supervisors overseeing the
production of several different products fall into which of the following categories?
A.direct material costs.
B.direct labor costs.
C.manufacturing overhead costs.
D.opportunity costs.
Tool(s) that managers can use to decide when to investigate variances include which of
the following?
A.Use of both tolerance limits and decision models.
B.Use of tolerance limits only.
C.Decision models only.
D.None of the above.
Fred’s Fine Roasted Coffee
Fred’s Fine Roasted Coffee reports the following data for April 2010 where 500,000
pounds of roasted gourmet coffee beans were actually produced (note: standard costs do
not allow for any wastage),
Refer to Fred’s Fine Roasted Coffee. Calculate the direct labor efficiency variance.
A.$48,000 F
B.$20,000 F
C.$68,000 F
D.$28,000 F
Which of the following statements is true regarding the master budget?
A.The master budget is a blueprint of the planned operations of a firm for a period.
B.The master budget begins with the production budget.
C.The master budget does not require a sales forecast.
D.all of the above.
Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds
of roasted gourmet coffee beans were actually produced (note: standard costs do not
allow for any wastage), Actual:
Standard:
Refer to Java Gourmet Coffee. Calculate the variable manufacturing overhead variance.
A.$1,000 U
B.$2,000 U
C.$1,000 F
D.$2,000 F
How is the budget used for performance evaluation?
Fisher Products Company
The Fisher Products Company uses a job costing system. The company estimated its
annual overhead to be $100,000, and the number of direct labor hours for the year to be
20,000 hours. In the first month, the following jobs were completed:
Refer to the Fisher Products Company. What is the company’s predetermined overhead
rate using direct labor hours as the base?
Describe activity-based management. Compare activity-based management to
activity-based costing. How does activity-based costing improve overhead allocation in
a manufacturing environment?
Compare the four types of responsibility centers.
Use this information to answer the following question(s):
Refer to the above information; determine the amount of materials purchased during the
period.
Learning curve. Falcon Co. makes technical products for magicians. To make Product
J24, the company recently recorded the following costs, which decline subject to an 85
percent cumulative learning curve.
Required:
Complete the chart by filling in the cost amounts for volumes of 4, 8, and 16 units and
show your calculations.
Chester Marx, the new Vice-President of Finance at Tempco, Inc., has just finished
reviewing the company’s financial statements. The company appears to be losing profits
steadily. In fact, profits have dropped by 30 percent over the last two years. Upon
further investigation, Marx learned that the decrease was attributable to the decline in
sales resulting from higher prices than competitors. Since the company has recently
changed its production method, Marx thinks the company should adopt a more relevant
product costing system. The controller, Ted Vince, believes the higher sales price is
necessary to cover costs. Vince, who has been controller for 20 years, feels that the
company has come out of downturns before and will again. He is unaware of
activity-based costing techniques and argues the current costing system has been
serving the company well for a long time. What are the ethical considerations in this
situation?