If 30,000 units of materials enter production during the first year of operations, 25,000
of the units are finished, and 5,000 are 50% completed, the number of equivalent units
of production would be 28,500.
a. True
b. False
Answer:
Two divisions of Oregano Company (Divisions TX and OY) have the same profit
margins. Division TX’s investment turnover is larger than that of Division OY (1.2 to
1.0). Income from operations for Division TX is $55,000, and income from operations
for Division OY is $43,000. Division TX has a higher return on investment than
Division OY by
a. using income from operations as a performance measure
b. comparing the profit margins
c. applying a negotiated price measure
d. using its assets more efficiently in generating sales
Answer:
Gladstorm Enterprises sells a product for $60 per unit. The variable cost is $20 per unit,
while fixed costs are $85,000. Determine the (a) break-even point in sales units, and (b)
break-even point in sales units if the selling price increased to $80 per unit. Round your
answer to the nearest whole number.
Answer:
Variable manufacturing costs plus variable selling and administrative costs are included
in cost per unit
Match the definitions that follow with the term (a’“e) it defines.
a. Engineering change order
b. Total cost concept
c. Variable cost concept
d. Normal selling price
e. Setup
Answer:
The major shortcoming of income from operations as an investment center performance
measure is that it ignores the amount of revenues earned by the center.
a. True
b. False
Answer:
Which of the following activity bases would be the most appropriate for food costs of a
hospital?
a. number of nurses scheduled to work
b. how many MRI’s are taken
c. number of patients who stay in the hospital
d. quantity of prescriptions filled
Answer:
The cost of production report reports the cost charged to production and the costs
allocated to finished goods and work in process.
a. True
b. False
Answer:
If the standard to produce a given amount of product is 500 direct labor hours at $15
and the actual was 600 hours at $17, the rate variance was $1,200 favorable.
a. True
b. False
Answer:
For the coming year, River Company estimates fixed costs at $109,000, the unit
variable cost at $21, and the unit selling price at $85. Determine (a) the break-even
point in units of sales, (b) the unit sales required to realize operating income of
$150,000 and (c) the probable operating income if sales total $500,000.
Round units to the nearest whole number and percentage to one decimal place.
Answer:
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company
uses a single plantwide factory overhead rate for allocating overhead to products.
However, management is considering moving to a multiple department rate system for
allocating overhead. The following table presents information about estimated
overhead and direct labor hours.
Determine the overhead rate in the Finishing Department for each unit of Product A if
Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $99.20 per unit
b. $49.60 per unit
c. $64.00 per unit
d. $28.80 per unit
Answer:
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company
uses a single plantwide factory overhead rate for allocating overhead to products.
However, management is considering moving to a multiple department rate system for
allocating overhead. The following table presents information about estimated
overhead and direct labor hours.
Determine the overhead from both production departments allocated to each unit of
Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.
a. $396.80 per unit
b. $425.60 per unit
c. $320.00 per unit
d. $214.40 per unit
Answer:
Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit
variable costs are $20. What are the old and new break-even sales (units) if the unit
selling price increases by $4?
a. 7,500 units and 6,667 units
b. 20,000 units and 30,000 units
c. 20,000 units and 15,000 units
d. 12,000 units and 15,000 units
Answer:
*Actual hours are equal to standard hours for units produced.
The total factory overhead cost variance is
a. $4,866.75 unfavorable
b. $4,866.75 favorable
c. $8,981.75 favorable
d. $8,981.75 unfavorable
Answer:
The International Boot Company has income from operations of $80,000, invested
assets of $500,000, and sales of $1,525,000.
What is the profit margin?
a. 33.3%
b. 5.2%
c. 16.0%
d. 19.1%
Answer:
The process by which management allocates available investment funds among
competing capital investment proposals is termed present value analysis.
a. True
b. False
Answer:
Put the following in the order of the flow of manufacturing costs for a company.
a. Closing under/over applied factory overhead to Cost of Goods Sold
b. Materials purchased
c. Factory labor used and factory overhead incurred in production
d. Completed jobs moved to finished goods
e. Factory overhead applied to jobs according to the predetermined overhead rate
f. Materials requisitioned to jobs
g. Selling of finished product
h. Preparation of financial statements to determine gross profit
Answer:
The costs of initially producing an intermediate product should be considered in
deciding whether to further process a product, even though the costs will not change,
regardless of the decision.
a. True
b. False
Answer: