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 weighted average, what are equivalent units for
material?
A. 82,000
B. 89,500
C. 84,500
D. 70,000
Assume that a project consists of an initial cash outlay of $100,000 followed by equal
annual cash inflows of $40,000 for 4 years. In the formula X = $100,000/$40,000, X
represents the
A. payback period for the project.
B. profitability index of the project.
C. internal rate of return for the project.
D. project’s discount rate.
A job-order costing system is likely to provide better
A. yes no no
B. no yes yes
C. no no no
D. yes yes yes
In the introduction stage of a product’s life-cycle, which of the following type of costs
typically may create losses rather than profits?
A. advertising
B. assembly
C. design
D. overhead
When a company discontinues a segment, total corporate costs may decrease in all of
the following categories except
A. variable production costs.
B. allocated common costs.
C. direct fixed costs.
D. variable period costs.
Chapman Company
Chapman Company uses a job-order costing system. At the beginning of March, the
company had two jobs in process with the following costs:
Chapman pays its workers $8.50 per hour and applies overhead on a direct labor hour
basis.
Refer to Chapman Company. During March, Chapman’ employees worked on Job #649.
At the end of the month, $714 of overhead had been applied to this job. Total Work in
Process at the end of the month was $6,800 and all other jobs had a total cost of $3,981.
What amount of direct material is included in Job #649?
A. $ 677.00
B. $1,391.00
C. $2,142.00
D. $4,658.00
One of the obstacles to implementing open-book management is reluctance of an
organization to release sensitive financial data.
Downsizing may result in a(n)
A. reduction in workforce.
B. restructuring of processes.
C. elimination of noncore businesses.
D. all of the above.
Prepare the necessary journal entries from the following information for Parrish
Company, which uses a perpetual inventory system.
a. Purchased raw material on account, $61,200.
b. Requisitioned raw material for production as follows: direct material-75 percent of
purchases; indirect material-20 percent of purchases.
c. Direct labor wages of $35,500 are accrued as are indirect labor wages of $14,100.
d. Overhead incurred and paid for is $68,100.
e. Overhead is applied to production based on 125 percent of direct labor cost.
f. Goods costing $99,500 were completed during the period.
g. Goods costing $53,400 were sold on account for $81,200.
Employee stock ownership in the employees’ firm
A. will encourage short term earnings growth patterns.
B. will encourage employees to take a longer term perspective regarding their
performance in the company.
C. is not suitable for hourly or salaried employees.
D. is common for management in American firms.
Jackson Company transferred 6,000 units to Finished Goods Inventory during August.
On August 1, the company had 400 units on hand (35 percent complete as to both
material and conversion costs). On August 31, the company had 750 units (20 percent
complete as to material and 30 percent complete as to conversion costs). The number of
units started and completed during August was:
A. 5,600
B. 5,860
C. 6,000
D. 6,750
Most managers evaluate decision alternatives based on how
A. much the decision will increase or decrease organizational profits.
B. the outcomes may affect selected performance measurement and reward criteria.
C. much the outcome will reduce the organization’s cost of capital.
D. easily the decision impacts can be quantified in the organization’s cost management
system.
The margin of safety is a key concept of CVP analysis. The margin of safety is the
A. contribution margin rate.
B. difference between budgeted contribution margin and actual contribution margin.
C. difference between budgeted contribution margin and break-even contribution
margin.
D. difference between budgeted sales and break-even sales.
Riley Company
Riley Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.
If A and C are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Riley Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product A (round to the nearest dollar)?
A. $2,938
B. $3,682
C. $4,500
D. $6,062