Decentralization is a transfer of authority from the top to the lower level of an
organization.
On a CVP graph, the total variable cost line intersects the y-axis at zero.
A debit to the Factory Overhead account represents applied overhead costs.
In an actual cost system, factory overhead is assigned to an overhead control account
and then allocated to products and services.
If underapplied factory overhead is material, it is prorated among Work in Process
Inventory, Finished Goods Inventory, and Cost of Goods Sold.
Incremental analysis focuses on factors that change from one decision to another.
A hybrid costing system would be appropriate for a company that manufactures several
varieties of jam.
A measuring device that identifies what is actually happening in the process being
controlled is a detector.
In a totally automated organization, using theoretical capacity will generally provide
the highest fixed overhead application rate.
Firms that are downsizing should engage in other innovative practices to improve
efficiency.
Shannon Companies
Refer to Shannon Companies. For Company A, what are the budgeted cash collections?
A. $700
B. $500
C. $300
D. $400
Office Innovations Corporation manufactures hand-made pine file boxes for a variety of
clients. As production manager, you have developed the following value chart:
a. Determine the value-added activities and their total time.
b. Determine the non-value-added activities and their total time.
c. Calculate the manufacturing cycle efficiency.
Brazosport Pipe Corporation
The capital budgeting committee of the Brazosport Pipe Corporation is evaluating the
possibility of replacing its old pipe-bending machine with a more advanced model.
Information on the existing machine and the new model follows:
Refer to Brazosport Pipe Corporation. The $80,000 market value of the existing
machine is
A. a sunk cost.
B. an opportunity cost of selling the old machine.
C. irrelevant to the equipment replacement decision.
D. a historical cost.
Which of the following is the first element of knowledge needed by a company
wanting to pursue total quality management?
A. what the company’s customers want
B. who the company’s customers are
C. how the company’s processes are designed
D. what the components of the company’s product are
McCoy Corporation
McCoy Corporation sells a product for $21 per unit, and the standard cost card for the
product shows the following costs:
Refer to McCoy Corporation. McCoy received a special order for 1,200 units of the
product. The only additional cost to McCoy would be foreign import taxes of $2 per
unit. If McCoy is able to sell all of the current production domestically, what would be
the minimum sales price that McCoy would consider for this special order?
A. $10.00
B. $15.00
C. $21.00
D. $23.00
In an income statement prepared as an internal report using the variable costing
method, fixed manufacturing overhead would
A. not be used.
B. be used in the computation of operating income but not in the computation of the
contribution margin.
C. be used in the computation of the contribution margin.
D. be treated the same as variable manufacturing overhead.
Residual income is an example of a ____ performance measurement.
A. long-term
B. short-term
C. qualitative
D. profit center
Benchmarking against noncompetitors is extremely important in
A. process benchmarking.
B. results benchmarking.
C. reverse engineering.
D. all of the above.
Cibolo Company
Cibolo Company has the following information available for March when 4,200 units
were produced (round answers to the nearest dollar).
Refer to Cibolo Company. What is the material quantity variance?
A. $ 510 F
B. $ 525 U
C. $ 525 F
D. $3,675 U
Which of the following activities within an organization would be least likely to be
outsourced?
A. accounting
B. data processing
C. transportation
D. product design
Which of the following is not a step in benchmarking procedures?
A. analyze the “positive gap”
B. engage in continuous improvement
C. analyze the “negative gap”
D. identify “best-in-class” companies
Usually, with respect to a variable cost, optimal control is exerted when the cost
A. can be controlled prior to incurrence.
B. is compared to its budget amount.
C. increases steadily over time.
D. is closely monitored.
Variance analysis for overhead normally focuses on
A. efficiency variances for machinery and indirect production costs.
B. volume variances for fixed overhead costs.
C. the controllable variance as a lump-sum amount.
D. the difference between budgeted and applied variable overhead.
Which of the following statements about job-order cost sheets is true?
A. All job-order cost sheets serve as the general ledger control account for Work in
Process Inventory.
B. Job-order cost sheets can serve as subsidiary ledger information for both Work in
Process Inventory and Finished Goods Inventory.
C. If material requisition forms are used, job-order cost sheets do not need to be
maintained.
D. Job-order cost sheets show costs for direct material and direct labor, but not for
manufacturing overhead since it is an applied amount.
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. Assume that the cost per EUP for material and
conversion are $1.75 and $4.55, respectively. What is the cost assigned to ending Work
in Process?
A. $100,800
B. $87,430
C. $103,180
D. $71,680
If underapplied or overapplied factory overhead is immaterial, it is charged to
______________________________.
Packaged software programs that allow companies to automate and integrate the
majority of their business processes, share data, and produce information in a real-time
environment are referred to as
_______________________________________________________.
enterprise resource planning systems or
Discuss the concept of total quality management.
Using the information below, prepare a Schedule of Cost of Goods Manufactured (in
good form) for the Gleason Company for June 20y0:
Additional information: purchases of raw material were $46,700; 19,700 direct labor
hours were worked at $11.30 per hour; overhead costs were $33,300.
What is the purpose of the EOQ model?
A segment of a production or service process for which management wants a separate
report is referred to as a(n) ______________________________.
What are the five steps in implementing a system of cost control?
A company that manufactures small quantities of identifiable products will normally
use a ____________________ costing system.