1) factory overhead costs for a given period were 2 times as much as the direct material
costs. prime costs totaled $8,000. conversion costs totaled $11,350. what are the direct
labor costs for the period?
a.$4,650
b.$3,560
c.$4,200
d.$3,860
2) by-product costing that uses the asset recognition method(s) creates:
a.expense recognition in the current period
b.a distortion of net income
c.an adjustment on the income statement
d.an inventory value in the period in which the by-products are produced
e.a result that is not compatible with gaap
3) information pertaining to yekstop corp.’s sales revenue is presented below.
management estimates that 4% of credit sales are eventually uncollectible. of the
collectible credit sales, 65% are likely to be collected in the month of sale and the
remainder in the month following the sale. the company desires to begin each month
with an inventory equal to 75% of the sales projected for the month. all purchases of
inventory are on open account; 30% will be paid in the month of purchase, and the
remainder paid in the month following the month of purchase. the purchase costs are
approximately 60% of the selling prices.
budgeted cash payments in december for november inventory purchases by yekstop
corp. are:
a.$76,625
b.$94,905
c.$115,200
d.$161,280
e.$221,445
4) a key disincentive effect of departmental cost allocation can occur when:
a.allocated costs are less than external purchase costs
b.managers do not understand the incentives in the allocation base
c.the allocation base is actual usage
d.the allocation base is budgeted usage
e.the allocation base is greater than usage
5) furniture co. incurred the following costs during 2013:
what was the amount of direct materials and direct labor used for the year?
a.option a
b.option b
c.option c
d.option d
6) a plan that shows the cash balance on hand at the beginning of a budget period,
expected cash flow from operations, cash flows from investing activities, cash flows
from financing activities, and an ending cash balance is called a(n):
a.capital budget
b.financial budget
c.financial flows budget
d.cash budget
e.cash receipts budget
7) abc company listed the following data for the current year:
the journal entry to dispose of overapplied or underapplied overhead, if overhead is
applied based on direct labor hours, would include a credit to:
a.work-in-process inventory
b.cost of goods sold
c.finished goods inventory
d.factory overhead control
e.materials inventory
8) the percentage of completion of the beginning work-in-process inventory should be
considered in the computation of the equivalent units for which of the following
methods of process costing?
a.option a
b.option b
c.option c
d.option d
e.none of the above
9) which of the following methods accurately represents the process below?
a customer orders twenty cases of nails, and the firm then produces the nails.
a.pull method
b.push method
c.order method
d.overhead assignment method
10) a truck, costing $25,000 and uninsured, was wrecked the very first day it was used.
it can either be disposed of for $5,000 cash and be replaced with a similar truck costing
$27,000, or rebuilt for $20,000 and be brand new as far as operating characteristics and
looks are concerned. the net relevant cost of the replacing option is:
a.$5,000
b.$20,000
c.$22,000
d.$25,000
e.$27,000
11) many products in the marketplace today are built from components designed and
manufactured by sub-contractors. while the extent of this practice is not well known to
consumers, manufacture and sale of multi-component units that use parts from many
different companies continues to grow.
required:
if the assembling company is using value-chain analysis in its strategic planning,
comment on the following:
(a) the cost justification for subcontracting.
(b) the willingness of consumers to buy products they know contain subcontracted
parts.
(c) the problems of quality control facing the assembling company.
12) abnormal spoilage:
a.is considered part of good production
b.arises under efficient operating conditions
c.is controllable in the short run
d.is unacceptable spoilage that should not occur under efficient operating conditions
e.is part of inventory product cost
13) orange, inc. has identified the following cost drivers for its expected overhead costs
for the year:
total direct labor hours budgeted = 2,000 hours.
the following data applies to product x, one of the products completed during the year
if a volume-based costing system based on direct labor hours to assign overhead is
used, the total overhead cost for product x will be:
a.$1,500
b.$1,560
c.$2,000
d.$2,400
e.$2,560
14) in preparing a budget for the first three months of the year starting in october, dubya
company is planning the number of units of merchandise to order each month. the
company’s policy is to have 40% of the next month’s sales on hand at the end of the
current month. projected sales for october, november, and december are 40,000 units,
50,000 units, and 100,000 units, respectively.
required: how many units must be ordered in november?
15) information pertaining to yeks company’s budgeted sales revenue for the first
quarter of the year is presented below.
management estimated that four percent of credit sales would be uncollectible. of the
collectible credit sales, 60% would be collected in the month of sale and the remainder
in the month following the sale.
required: calculate total budgeted cash collections in february.
16) kumar co. is attempting to predict its maintenance costs more accurately.
maintenance costs are a mixed cost. maintenance costs and machine hours for the first
four months of the year are as follows:
required: using the high-low method, calculate unit variable cost and monthly fixed
costs.
17) lighting inc.’s sales budget showed the following projections for the coming year:
inventory on december 31 of the current year is expected to be 20,000 units. the
quantity of finished goods inventory at the end of each quarter was to equal seven
percent of the next quarter’s budgeted units to be sold.
required: calculate the units to be produced during the third quarter.
18) gordon manufacturing produces high-end furniture products for the luxury hotel
industry. gordon has succeeded through excellence in design, careful attention to quality
in manufacturing and in customer service, and through continuous product innovation.
the manufacturing process at gordon begins with a close consultation with each
customer so that the finished product exactly meets the customer’s specifications. this
commonly means unique designs, special fabrics, and high levels of manufacturing
quality. in addition, gordon believes that a key competitive edge it has over other
competitors is that it has an outstanding design staff that is able to work with customers
to come up with product designs that go beyond the customer’s expectations.
required:
present a balanced scorecard for gordon manufacturing with four perspectives and at
least three quantitative critical success factors in each perspective.
19) quinta inc. manufactures machine parts for aircraft engines. the ceo is considering
an offer from a subcontractor who would provide 2,800 units of product qr128 for a
price of $190,000. if quinta does not purchase these parts from the subcontractor it must
produce them in-house with the following costs:
in addition to the above costs, if quinta produces part qr128, there would also be a
retooling and design cost of $13,000. should quinta inc. accept the offer from the
subcontractor?
20) one of the behavioral considerations in implementing a budgeting system has to do
with the issue of budgetary slack. what are the positive and negative aspects of building
slack into budgets from top management’s point of view, and the employee’s point of
view (i.e., the individual responsible for building slack into the budget)?