1) The records of Andrews Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 1 / 3 completed at a cost of
$2,400 for materials, $825 for labor, and $3,000 for overhead.
Production costs for the month – materials – $20,695; labor – $13,050; overhead –
$41,500
Units completed and transferred to finished goods – 35,000
Work in process, end of month – 3,000 units; 3 / 4 completed
Compute the equivalent units of production.
A.32,750
B.37,250
C.38,000
D.36,500
2) Consider the following information for the Cornwall Company:
How many units must Cornwall sell to break even?
A.7,000
B.16,800
C.12,000
D.8,400
3) The cost of production summary for Maha Industries follows:
What is the journal entry to record factory overhead applied to production?
A.Work in process 3,000
Factory overhead 3,000
B.Factory overhead 3,000
Various accounts 3,000
C.Work-in-process 375
Factory overhead 375
D.Factory overhead 375
4) Costs that remain constant over a range of production and then abruptly change
include:
A.unexpected costs
B.step-variable costs
C.semifixed costs
D.curvilinear costs
5) According to the Institute of Management Accountants (IMA) Statement of Ethical
Professional Practice, under the Integrity Standard, each member has the responsibility
to:
A.Communicate information fairly and objectively
B.Keep information confidential
C.Mitigate actual conflicts of interest
D.Maintain an appropriate level of professional competence
6) David Andrews works at the Neal Company where he makes $12 per hour with
time-and-a-half for overtime. For the week ended January 8, David worked 45 hours as
follows:
Assuming the overtime was due to priority scheduling for Job 532, how much will be
charged to Job 532?
A.$147
B.$132
C.$198
D.$162
7) A factory worker earns $500 per week and will receive a $2,000 bonus at year-end, a
2-week paid vacation, and 5 paid holidays. The combined amount of the accruals for
bonus, vacation, and holiday pay in the weekly payroll would be:
A.$20.00
B.$70.00
C.$40.00
D.None of the above
8) Which of the following statements best describes a by-product?
A.A product with a value that can easily and accurately be determined
B.A product that has a greater value than the main product
C.A product created along with the main product whose sales value does not cover the
cost of its production
D.A product that usually produces a small amount of revenue when compared to the
main product revenue
9) Another term for cost incurred to sell and deliver products is:
A.Differential costs
B.Administrative costs
C.General costs
D.Distribution costs
10) The data below relate to the month of April for Monroe, Inc., which uses a standard
cost system and a two-variance analysis of factory overhead:
What was Monroe’s production-volume variance for April?
A.$187.50 favorable
B.$187.50 unfavorable
C.$437.50 favorable
D.$437.50 unfavorable
11) Goods completed and on hand refers to:
A.goods in the finished goods warehouse
B.goods awaiting sale
C.finished goods purchased directly from suppliers
D.finished goods in a department that have not yet been transferred to the next
department
12) The Company is planning to sell Product Z for $10 a unit. Variable costs are $6 a
unit and fixed costs are $100,000. What must total sales be to break even?
A.$266,667
B.$250,000
C.$200,000
D.$166,667
13) If the amount of loss in a manufacturing process is abnormal, it should be classified
as a:
A.Period cost
B.Deferred charge
C.Joint cost
D.Product cost
14) Joey Bruce is a cost accountant at ABC Industries. Joey told Tanner Scott, his
financial advisor, that he was working on a project to determine the feasibility of a
merger of ABC Industries with Left Guard Company, a major competitor. Which of the
Institute of Management Accountants (IMA) ethical standards may have been violated?
A.Competence
B.Confidentiality
C.Integrity
D.Credibility
15) Cooper Carriers has budgeted production of 180,000 units this fiscal year. There
were 12,000 units on hand in finished goods inventory on January 1 and the companys
desired inventory at the end of the year is 15,000 units. Coopers sales budget in units is:
A.165,000
B.192,000
C.183,000
D.177,000
16) The file for each factory employee that shows the time the employee spent on each
job, as well as time spent as indirect labor is the:
A.labor time record
B.payroll record
C.employees earnings record
D.labor cost summary
17) Rowe Co.’s Job 401 for the manufacture of 2,200 wagons was completed during
August at the unit costs presented below. Final inspection of Job 401 disclosed 200
spoiled wagons that were sold to a jobber for $6,000.
Assume that spoilage loss is attributable to the exacting specifications of Job 401 and is
charged to this specific job. What would be the unit cost of the good wagons produced
on Job 401?
A.$56.00
B.$58.60
C.$53.00
D.$48.18
18) The inventory method which results in the prices paid for earliest purchases
assigned to cost of goods sold is:
A.First-in, first-out
B.Last-in, first-out
C.Last-in, last-out
D.Moving average
19) All of the operating expenses in a professional firm are:
A.Overhead costs
B.Period costs
C.Labor costs
D.Product costs
20) The cost of production summary for Maha Industries follows:
What is the journal entry to record the distribution of labor to production?
A.Finished goods 4,000
Payroll 4,000
B.Work in process 4,000
Overhead 4,000
C.Work in process 4,000
Payroll 4,000
D.Payroll 4,000
21) The normal capacity of Yule Company is 5,000 units per month. At this volume,
budgeted fixed and variable factory overhead are $25,000 and $20,000, respectively. In
December, actual production was 4,800 units and actual overhead incurred was
$46,300.
What is the factory overhead application rate at the actual level of production (rounded
to the nearest penny)?
A.$9.00
B.$9.21
C.$8.80
D.$9.26
22) Taylor Logan is an accountant with the Tanner Corporation. Taylors duties include
preparing reports that focus on both historical and estimated data needed to conduct
ongoing operations and do long-range planning. Taylor is a(n)
A.certified financial planner
B.management accountant
C.financial accountant
D.auditor
23) RHO Company began its operations on January 1 and produces a single product
that sells for $10.25 per unit. Standard capacity is 80,000 units per year. The 80,000
units were produced and 70,000 units were sold during the year.
Manufacturing costs and selling and administrative expenses follow:
What is the standard cost of manufacturing a unit of product?
A.$6.00
B.$6.50
C.$5.00
D.$5.50
24) Pierce, Inc. uses sulfuric acid in a manufacturing process. Information as to
balances on hand, purchases, and requisitions of acid is given in the following table.
If a perpetual inventory record of Raw Material A is maintained on a LIFO basis, the
20,000 units in inventory at July 18 will consist of:
A.5,000 units @ $.72 and 15,000 units @ $.65
B.10,000 units @ $.50 and 10,000 units @ $.65
C.2,000 units @ $.72, 8,000 units @ $.65 and 10,000 units @ $.50
D.10,000 units @ $.50, 6,000 units @ $.65 and 4,000 units @ $.72
25) The following data are from Burton Corporation, a manufacturer, for the month of
September:
Compute the prime costs.
A.$344,000
B.$135,000
C.$335,000
D.$256,000
26) Control is the process of monitoring the companys operations to determine whether
the companys objectives are being achieved. Effective control is achieved through all of
the following except:
A.periodically measuring and comparing company results
B.assigning responsibility for costs to employees responsible for those costs
C.constantly monitoring employees to ensure they do exactly as they are told
D.taking necessary corrective action when variances warrant doing so
27) Victoria is a budget analyst at Young Industries. She used the least squares
regression method to separate the plants monthly utilities cost into its fixed and variable
components. The results were as follows:
Y = 3,250 + .054 X
X = the number of units produced
R2 = .892
How should Victoria interpret the R2 of .892?
A.The equation is a better predictor of fixed costs than of variable costs 89.2% of the
time
B.The equation will accurately predict utility costs 89.2% of the time
C.Fixed costs make up 89.2% of the total semi-variable cost in any given month
D.The number of units produced explains 89.2% of the variation in the plant utilities
cost
28) Hernandez Corporation uses a standard cost system and has established the
following standards for one unit of product:
During October, the company purchased 240,000 pounds of material at a total cost of
$588,000. The total factory wages for October were $49,400. During October, 21,000
units of product were manufactured using 211,000 pounds of material and 5,200 direct
labor hours. Material quantity and price variances are recorded when materials are used.
Show whether each of the above variances was either favorable or unfavorable.
29) The following payroll summary is prepared for the Sothern Manufacturing
Company for the week ending March 29:
Payroll taxes and insurance are to be computed as follows:
Prepare the general journal entries to:
a. Record the payroll.
b. Pay the payroll.
c. Distribute the payroll to the appropriate accounts.
d. Record the employer’s share of payroll tax expense. (All of the employees work in
the factory.)