Which of the following terms is not used in referring to common costs?
a. Allocated cost
b. Unavoidable cost
c. Traceable cost
d. All of these answer choices are used in referring to common costs.
Which of the following is a reason why top managers would decide to increase the level
of decentralized decision-making authority in their company?
a. Managers at the operational level can respond to issues more quickly than top
management.
b. Top managers want to give attention to grooming the next generation of top
managers.
c. Managing an organization is a time-consuming function.
d. All of these answer choices are correct.
Glade Industries manufactures and bottles energy drinks. Last year the company made
and bottled 2,500,000 units. Glade has the capacity to manufacture and bottle 3,000,000
units per year. Glade has received a special offer from a grocery chain for 500,000
bottles with a special label to be sold as the house brand energy drink. Glade ‘s normal
selling price is $.80 per bottle. The special offer is for $360,000 total ($.72/bottle).
Management estimates that the variable cost per bottle is $.34; fixed manufacturing
overhead is $.22/bottle. Of the fixed costs assigned to this special order, $2,500 is for
the special labels, the remainder is attributable to costs that will be incurred regardless
of whether the special order is produced. What is the operating income generated by the
special order?
a. $190,000
b. $187,500
c. $80,000
d. $77,500
Which of the following is the reason that preferred dividends are deducted from net
income in calculating earnings per share?
a. Because preferred dividends are not paid from net income.
b. Because preferred dividends are not a part of stockholders’ equity.
c. Because preferred dividends are paid to preferred stockholders, not common
stockholders.
d. Because preferred dividends are not paid until all common stockholders have
received their dividends, so preferred dividends are not relevant in the formula and so
must be taken out of the equation.
The direct labor flexible budget variance is due to
a. What the company pays for labor and how efficiently employees work.
b. What the company pays for labor and how management allocates the labor rate.
c. How efficiently employees work and how management allocates the workers to
products.
d. None of these answer choices are correct.
Unit 6-3,
When using variable costing, which of the following costs are treated as period costs?
a. Selling
b. Administrative
c. Fixed manufacturing overhead
d. All of these answer choices are correct
On December 31, Berry Company recorded the following information in the Mixing
Department’s Work in Process account:
Assume that the unfinished units in ending inventory are 60% complete for both
materials and conversion. What is the cost per equivalent unit?
a. $5.18
b. $5.23
c. $5.44
d. $5.55
Capital assets are
a. Used to promote the company.
b. Used to build products or deliver services.
c. Always depreciable.
d. All of these answer choices are correct.
In an activity-based costing system, which of the following is not a category in which
activities are classified?
a. Unit-level
b. Batch-level
c. Product-level
d. Delivery-level
You have been assigned to a team responsible for evaluating the company results based
on the statement of cash flows. One of your responsibilities is to determine how much
cash should be kept on hand. On the statement of cash flows your team has identified
the following issues:
ï€ï€ Operating activities did not generate a positive cash flow
ï€ï€ Cash was generated primarily from the sale of plant assets
ï€ï€ Additional shares of stock were sold during the year
ï€ï€ No loans were taken out during the year, and a substantial portion of debt was
retired
Required:
Answer the following questions relating to interpreting the statement of cash flows.
a. Why is it important for a company to generate cash from operating activities on a
consistent basis?
b. What might a trend toward providing cash through investing activities suggest about
a business?
c. What factors might influence how much cash should be kept on hand?
The time needed to produce one unit of product is referred to as
a. The direct labor efficiency standard.
b. The direct labor time standard.
c. The direct labor quantity standard.
d. None of these answer choices are correct.
Which of the following is a use of cash?
a. Interest received on investment
b. Issuing long-term bonds
c. Dividends paid to stockholders
d. Loss on sale of investment
A limitation of the high-low method is that
a.It is costly to use because it uses a statistical technique to estimate the cost
components.
b.It is complex to calculate.
c.It can only be used if the levels of activity cover a wide range.
d.Because it is based on only two extreme points, the high and low activity levels, the
cost equation may not be truly representative of the cost relationship.
Assume a sales price per unit of $20, variable cost per unit $16, and total fixed costs of
$168,000. What is the breakeven point?
a. 420,000 units
b. $420,000
c. 840,000 units
d. $840,000
Ans: d
When an outsourcing decision refers to the components of a manufacturing product, it
is commonly called
a. Unit outsourcing.
b. Make-or-buy decision.
c. Transfer of ownership decision.
d. None of these answer choices are correct.
Chocolate Delight sells chocolate dipped fruit to local restaurants. Chocolate Delight
delivered 30,000 chocolate dipped strawberries to customers in May and 24,000 in
June. Delivery costs for the two months were $1,500 and $1,200, respectively. Using
these two months’ data, the delivery cost function is best estimated as
a.($2 x number of strawberries) + $800
b.($0.02 x number of strawberries) + $900
c.($0.05 x number of strawberries) + $0
d.($0.05 x number of strawberries) + $600
The key to reducing costs through activity management is
a. Eliminating high-cost executive positions.
b. Eliminating activities such as inspections.
c. Eliminating the resources associated with the reduced activities.
d. All of these answer choices are keys to reducing costs through activity management.
If a company gets the sales forecast wrong, which of the following budgets will also be
incorrect?
a. Direct labor budget
b. Production budget
c. Budgeted income statement
d. All of these answer choices are correct.
The inventory turnover is calculated as
Construct a statement of cash flows.
On the breakeven graph, any level of sales to the left of the breakeven point represents a
profit.
A company may use GAAP-based product costing or activity-based costing. List two
differences between these two methods.
Adler Industries uses a standard cost system in which direct material is carried at
standard cost. Adler has established the following standards for one unit of product:
standard quantity of 8 pounds, standard price $1.80 per pound. During January, Adler
purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500
pounds in production of 18,700 units.
Required:
Calculate the direct materials price variance and indicate whether the variance is
favorable or unfavorable.
Calculate the direct materials price and quantity variances.
Snow Manufacturing Company engaged in the following activities during the year:
ï€ï€ Purchased land at a cost of $300,000
ï€ï€ Sold equipment that cost $25,000 for $10,000
ï€ï€ Sold 100 shares of stock for $18 each
ï€ï€ Received a dividend totaling $12,000 from a company in which Snow owned stock
Required:
Prepare the cash flows provided by investing activities section of Snow’s statement of
cash flows.
Ledbetter’s Adventures manufactures outdoor camp ovens. In planning for the coming
year, the budget committee is considering three different sales targets: 2,000 ovens,
2,400 ovens, and 2,600 ovens. Ovens sell for $280 each. The standard cost information
for an oven is as follows:
Required:
Prepare a flexible budget for the three sales levels under consideration.
Which of the following is the correct journal entry to record the application of
manufacturing overhead?