Wimberley Company
Wimberley Company has the following information available for December when 3,500
units were produced (round answers to the nearest dollar).
Refer to Wimberley Company. What is the labor rate variance?
a. $875 F
b. $865 F
c. $865 U
d. $875 U
From a cost management view, research and development cost represents
a. a life-cycle investment
b. a period expense.
c. an unearned revenue.
d. a risk reserve.
Which of the following is notan “operating” budget?
a. sales budget
b. production budget
c. purchases budget
d. capital budget
Priceless Memories Company
Priceless Memories Company manufactures toy trains. Information on Priceless
Memories Company’s labor costs follow:
The following information applies to the upcoming month of July for Priceless
Memories Company:
Refer to Priceless Memories Company. What is Priceless Memories’ budgeted factory
labor cost for July?
a. $13,000
b. $24,000
c. $34,000
d. $15,000
The measure of activity that allows for routine variations in manufacturing activity is:
a. theoretical capacity
b. practical capacity
c. normal capacity
d. expected capacity
Corporate taxes and tariffs are particular transfer-pricing concerns of
a. investment centers.
b. multinational corporations.
c. division managers.
d. domestic corporations involved in importing foreign goods.
Mobile Company
Mobile Company is a manufacturer of electronic components. The following
manufacturing information is available for the month of May:
Refer to Mobile Company. What is the process quality yield?
a. 50%
b. 75%
c. 80%
d. 125%
Stillwater Corporation
The following information is available for Stillwater Corporation for the current year:
All materials are added at the start of production.
Refer to Stillwater Corporation. Using FIFO, what is the cost per equivalent unit for
material?
a. $1.42
b. $1.66
c. $1.71
d. $1.60
Riley Company
Riley Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.
Refer to Riley Company. Using approximated net realizable value at split-off, what
amount of joint processing cost is allocated to Product A (round to the nearest dollar)?
a. $2,718
b. $2,934
c. $3,014
d. $4,500
Baker Company
Baker Company produces three products: A, B, and C from the same process. Joint
costs for this production run are $2,100.
If the products are processed further, Baker Company will incur the following disposal
costs upon sale: A, $3.00; B, $2.00; and C, $1.00.
Refer to Baker Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product A (round to the nearest dollar)?
a. $700
b. $679
c. $927
d. $494
Engaging in which of the following will result in radical changes being made to an
organization’s processes?
a. Continuous improvement
b. Benchmarking
c. Reengineering
d. Mass customization
Jackson Company.
Jackson Company manufactures wood file cabinets. The following information is
available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company. Compute total manufacturing costs for June, if there were
1,500 direct labor hours and $21,000 of raw material was purchased.
a. $58,500
b. $46,500
c. $43,500
d. $43,100
Charlotte Company
Charlotte Company is a manufacturer of electronic components. The following
manufacturing information is available for the month of February:
Refer to Charlotte Company. What is the process quality yield?
a. 60%
b. 70%
c. 83%
d. 143%
Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent. The company employs
both skilled and unskilled workers. To produce one 55-gallon drum of solvent requires
Materials A and B as well as skilled labor and unskilled labor. The standard and actual
material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon
drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company. What is the total material mix variance?
a. $3,596 F
b. $3,596 U
c. $4,864 F
d. $4,864 U
For the month of March, Robertson Corporation. predicts total cash collections to be
$1.5 million. Also for March, Robertson Corporation. estimates that its beginning cash
balance will be $60,000 and that it will borrow cash in the amount of $80,000. If
Robertson Corporation. estimates an ending cash balance of $40,000 for March, what
must its projected cash disbursements be?
a. $1,520,000
b. $1,580,000
c. $1,600,000
d. $1,640,000
If sales and expenses both rise by $100,000
a. residual income will increase.
b. return on investment will increase.
c. return on investment will be unchanged.
d. asset turnover will decrease
Traditionally, overhead has been assigned based on direct labor hours or machine hours.
What effect does this have on the cost of a high-volume item?
a. over-costs the product
b. under-costs the product
c. has no effect the product cost
d. cost per unit is unaffected by product volume
Reverse engineering is used in
a. statistical process control.
b. process benchmarking.
c. results benchmarking.
d. price fixing.
Top management can preserve the autonomy of division managers and encourage an
optimal level of internal transactions by
a. selecting performance evaluation measures that are consistent with the achievement
of overall corporate goals.
b. selecting division managers who are most concerned about their individual
performance.
c. prescribing transfer prices between segments.
d. setting up all organizational units as revenue centers.
Which of the following are relevant in a make or buy decision?
a. yes yes
yes
b. yes no
yes
c. yes no
no
d. no no
yes
A mandate to reduce costs, increase product quality, and/or improve production
processes through continuous improvement is known as
a. kaizen costing.
b. activity-based costing.
c. the theory of constraints.
d. mass customization.
Ultimate Vision Corporation
Ultimate Vision Corporation has two product lines: LCD televisions and projection
televisions. The company has budgeted the following production and overhead costs for
the upcoming year:
Refer to Ultimate Vision Corporation. If the company uses total direct labor hours to
allocate factory overhead, the materials handing cost allocated to LCD TVs would be:
a. $23,077
b. $28,125
c. $30,000
d. $45,000
Which of the following is a commonly used joint cost allocation method?
a. high-low method
b. regression analysis
c. approximated sales value at split-off method
d. weighted average quantity technique
A logical structure of activities designed to analyze and evaluate management of
expenditures is a cost
a. consciousness system.
b. understanding system.
c. avoidance system.
d. control system.
Stillwater Corporation
The following information is available for Stillwater Corporation for the current year:
All materials are added at the start of production.
Refer to Stillwater Corporation. Using FIFO, what is the cost per equivalent unit for
conversion costs?
a. $4.46
b. $4.15
c. $4.30
d. $3.84
Merrill Productions is considering the purchase of a new movie camera, which will be
used for major motion pictures. The new camera will cost $30,000, have an eight-year
life, and create cost savings of $5,000 per year. The new camera will require $700 of
maintenance each year. Merrill Productions uses a discount rate of 9 percent.
Present value tables or a financial calculator are required.
Duffy Company makes fabric-covered hatboxes. The company began July with 500
boxes in process that were 100 percent complete as to cardboard, 80 percent complete
as to cloth, and 60 percent complete as to conversion costs. During the month, 3,300
boxes were started. On April 30, 350 boxes were in process (100 percent complete as to
cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion
costs). Using the FIFO method, what are equivalent units for cloth?
a. 3,295
b. 3,395
c. 3,450
d. 3,595
Sullivan Company
Sullivan Company is preparing its Manufacturing Overhead budget for the second
quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced;
budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount
being factory depreciation.
Refer to Sullivan Company. If the budgeted production for May is 5,000 units, then the
total budgeted factory overhead per unit:
a. $15
b. $18
c. $20
d. $22
Saturn Corporation
Material A is added at the start of production, while Material B is added uniformly
throughout the process.
Refer to Saturn Corporation Assuming a weighted average method of process costing,
compute the average cost per unit for Material A.
a. $20.10
b. $20.00
c. $31.25
d. $31.00
The addition or removal of product or service characteristics to satisfy additional needs,
especially price, reflect the ____ of a product or service.
a. value
b. grade
c. quality
d. durability
Painter Corporation
Painter Corporation has the following information for the current month:
Refer to Painter Corporation. Assume that the costs per EUP for material and
conversion are $1.00 and $1.50, respectively. Using FIFO, what is the total cost
assigned to the transferred-out units (rounded to the nearest dollar)?
a. $245,750
b. $244,438
c. $237,000
d. $224,938
Office Systems Corporation
Office Systems Corporation manufactures and sells various high-tech office automation
products. Two divisions of Office Systems Corporation are the Computer Chip Division
and the Computer Division. The Computer Chip Division manufactures one product, a
“super chip,” that can be used by both the Computer Division and other external
customers. The following information is available on this month’s operations in the
Computer Chip Division:
Presently, the Computer Division purchases no chips from the Computer Chips
Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each
month.
Refer to Office Systems Corporation. Assume, for this question only, that the Computer
Chip Division is selling all that it can produce to external buyers for $50 per unit. How
would overall corporate profits be affected if it sells 4,000 units to the Computer
Division at $45? (Assume that the Computer Division can purchase the super chip from
an outside supplier for $45.)
a. no effect
b. $20,000 increase
c. $20,000 decrease
d. $90,000 increase
For a company that manufactures candy, how would the costs of product inspection be
classified?
a. Yes No
b. No Yes
c. Yes Yes
d. No No
Wimberley Company
Wimberley Company has the following information available for December when 3,500
units were produced (round answers to the nearest dollar).
Refer to Wimberley Company. What is the material price variance (based on quantity
purchased)?
a. $3,075 U
b. $2,938 U
c. $2,938 F
d. $3,075 F
The document that results from the budgeting process is referred to as the
______________________________.
The payback period typically ignores the time value of money.
A fixed cost remains constant on a per-unit basis as production changes.
The slope of a regression line is determined by dividing the change in total cost by the
change in activity level.
An enterprise resource planning system is composed of numerous software modules.
A decision in which projects are ranked according to their impact on the achievement of
company objectives is referred to as a(n) ___________________________________.
Variable costing is more useful than absorption costing in determining a company’s
break-even point.
Overapplied factory overhead that is material in amount is closed to cost of goods sold
at year end.
When manufacturing overhead is applied to a job in process, the
account is credited.
A continuous loss is assumed to occur at a specific point in the production process.
A traditional costing system has fewer cost pools that does an activity-based costing
(ABC) system.
An organization’s strategy is the guiding force for its mission.
It is not necessary to be familiar with an organization’s mission when designing a cost
management system.
In an actual job-order costing system, factory overhead is assigned to a job
continuously during the production process.
A total quality system should place an emphasis on prevention and continuous
improvement.