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. What is the cost per equivalent unit for conversion
costs using weighted average?
A. $4.62
B. $4.21
C. $4.48
D. $4.34
In a perpetual inventory system, a transaction that requires two journal entries (or one
compound entry) is needed when
A. raw materials are purchased on account.
B. goods are sold for either cash or on account.
C. goods are finished and transferred out of Work in Process Inventory.
D. overhead is applied to Work in Process Inventory.
Colorful Creations Corporation
The Colorful Creations Corporation makes wreaths in two departments: Forming and
Decorating. Forming began the month with 500 wreaths in process that were 100
percent complete as to material and 40 percent complete as to conversion. During the
month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were
still in process that were 100 percent complete as to material and 50 percent complete
as to conversion. Assume Forming uses the weighted average method of process
costing. Costs in the Forming Department are as follows:
The Decorating Department had 600 wreaths in process at the beginning of the month
that were 80 percent complete as to material and 90 percent complete as to conversion.
The department had 300 units in ending Work in Process that were 50 percent complete
as to material and 75 percent complete as to conversion. Decorating uses the FIFO
method of process costing, and costs associated with Decorating are:
Refer to Colorful Creations Corporation. Assume 8,000 units were transferred to
Decorating. Compute the number of equivalent units in Decorating for material.
A. 7,970
B. 8,000
C. 8,330
D. 8,450
A budget aids in
A. communication.
B. motivation.
C. coordination.
D. all of the above.
The Institute of Management Accountants issues
A. Statements on Accounting Research for Managers.
B. Statements on Management Accounting.
C. Statements on Managerial and Cost Accounting.
D. Cost Accounting Standards.
Davis Company manufactures desks. The beginning balance of Raw Material
Inventory was $4,500; raw material purchases of $29,600 were made during the month.
At month end, $7,700 of raw material was on hand. Raw material used during the
month was
A. $26,400.
B. $34,100.
C. $37,300.
D. $29,600.
Which measure is limited by the fact that it uses accounting income?
A. ROI
B. RI
C. EVA
D. All of the above
In a typical (conservative assumptions) after-tax discounted cash flow analysis,
depreciation expense is assumed to accrue at
A. the beginning of the period.
B. the middle of the period.
C. the end of the period.
D. irregular intervals over the life of the investment.
In allocating fixed costs to products in activity-based costing,
A. direct labor hours should always be used as the allocation base.
B. a company should use the same allocation base that it uses for variable costs.
C. a cost driver that is not volume-related should be used.
D. machine hours should always be used.
Ellis Corporation
The following information was extracted from the first year absorption-based
accounting records of Ellis Corporation
Refer to Ellis Corporation. If Ellis Corporation had used variable costing in its first year
of operations, how much income (loss) before income taxes would it have reported?
A. ($6,000)
B. $54,000
C. $26,000
D. $ 2,000
Parker Company
Below is an income statement for Parker Company:
Refer to Parker Company. Assuming that the fixed costs are expected to remain at
$200,000 for the coming year and the sales price per unit and variable costs per unit are
also expected to remain constant, how much profit before taxes will be produced if the
company anticipates sales for the coming year rising to 130 percent of the current year’s
level?
A. $97,500
B. $195,000
C. $157,500
D. A prediction cannot be made from the information given.
Crosby Corporation
Crosby Corporation has two service departments: Data Processing and
Administration/Personnel. The company also has three divisions: X, Y, and Z. Data
Processing costs are allocated based on hours of use and Administration/Personnel costs
are allocated based on number of employees.
Assume that Data Processing provides more service than Administration/Personnel.
Refer to Crosby Corporation. Assume that Data Processing costs have been allocated
and the balance in Administration is $600,000. Using the step method, what amount is
allocated to X?
A. $257,143
B. $112,500
C. $200,000
D. $187,500
In which of the following stages of the product life cycle would operating losses not be
expected?
A. growth
B. development
C. introduction
D. decline
The weighted average cost of capital represents the
A. cost of bonds, preferred stock, and common stock divided by the three sources.
B. equivalent units of capital used by the organization.
C. overall cost of capital from all organization financing sources.
D. overall cost of dividends plus interest paid by the organization.
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 FIFO method of process costing, compute
EUP units for Materials A and B.
A. 2,700 and 2,280, respectively
B. 2,700 and 2,450, respectively
C. 2,000 and 2,240, respectively
D. 2,450 and 2,880, respectively
Kanban is the Japanese word for
A. production.
B. just-in-time.
C. card.
D. target costing.
The ____ provides management with a historical summation of total costs for a given
product.
A. job-order cost sheet
B. employee time sheet
C. material requisition form
D. bill of lading
The algebraic method
A. considers all interrelationships of the departments and reflects these relationships in
equations.
B. does not consider interrelationships of the departments nor reflect these relationships
in equations.
C. is also referred to as the “benefits-provided” ranking method.
D. is not a service department cost allocation method.
Which of the following are tax deductible under U.S. tax law?
A. interest payments to bondholders
B. preferred stock dividends
C. common stock dividends
D. all of the above