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1) manders manufacturing corporation uses the following model to determine its
product mix for metal (m) and scrap metal (s):
the point where m = 2 and s = 3 would:
a.minimize total cost
b.minimize total variable cost
c.lie in a corner
d.be a feasible point
e.be the optimal solution point
2) during the strengths and weaknesses portion of a firm's swot analysis, which of the
following would not be discovered?
a.the firm's method of product distribution was not very efficient
b.through continued research and development, the firm's products were state-of-the-art
c.due to a lack of barriers to entry into the industry, several new competitors were
beginning to enter the market
d.the production process needed to be reengineered to reduce unnecessary scrap
e.the firm's employees are trained in new manufacturing methods each month
3) talamoto co. manufactures a single product that goes through two processes mixing
and cooking. the following data pertains to the mixing department for september.
material p is added at the beginning of work in the mixing department. material q is also
added in the mixing department, but not until units of product are forty percent
completed with regard to conversion. conversion costs are incurred uniformly during
the process.
cost per equivalent unit for material q under the weighted-average method is calculated
to be:
a.$5.10
b.$2.60
c.$2.50
d.$2.30
e.$5.40
4) when there is limited capacity, the minimum acceptable price for a special sales order
will equal the _______________ from the product that is sacrificed plus the variable
costs of the ordered product.
a.selling price
b.full cost
c.variable cost
d.contribution margin
5) place the six cost estimation steps into the correct order:
1> determine the cost drivers
2> graph the data
3> select and employ the appropriate estimation method
4> define the cost object for which the related costs are to be estimated
5> evaluate the accuracy of the cost estimate
6> collect consistent and accurate data on the cost object and the cost drivers
a.6,4,1,3,5,2
b.4,1,6,2,3,5
c.2,1,4,3,6,5
d.1,3,4,6,5,2
6) conversion costs in a process cost system include:
a.direct materials and direct labor
b.direct labor and manufacturing overhead
c.direct materials and manufacturing overhead
d.manufacturing overhead and selling, general & administrative expenses
7) relevant costs for a make-or-buy decision for a component part include all of the
following except:
a.fixed salaries that will not be incurred if the part is outsourced
b.payroll tax (unemployment insurance cost), because of outsourcing
c.material-handling costs that can be eliminated if the part is outsourced
d.special machinery for the part that has no resale value
e.current direct material costs for the part
8) ardel co. budgeted to sell 200,000 units of zbox in september. production of one unit
of zbox required two pounds of aluminum and five pounds of steel powder. the
beginning inventory and the desired ending inventory in units are:
how many pounds of aluminum powder does ardel co. need to purchase during
september if ardel plans to manufacture 150,000 units of zbox in september?
a.143,000 pounds
b.157,000 pounds
c.286,000 pounds
d.293,000 pounds
e.300,000 pounds
9) cvp analysis with multiple products assumes that sales will continue at the same mix
of products, expressed in either sales units or sales dollars. this assumption is essential,
because a change in the product mix will probably change:
a.the average sales price per unit
b.the average variable cost per unit
c.the weighted-average contribution margin (per unit or ratio)
d.the total fixed cost
e.the average contribution margin (per unit or ratio)
10) a company's approach to a make-or-buy decision:
a.depends on whether the company is operating at or below the breakeven point
b.depends on whether the company is operating at or below normal volume
c.involves an analysis of avoidable costs
d.should utilize absorption (i.e., full) costing
11) joe green enterprises has met all production requirements for the current month and
has an opportunity to produce additional units of product with its excess capacity. unit
selling prices and costs for three models of one of its product lines are as follows:
variable overhead is charged to products on the basis of direct labor dollars, and fixed
overhead is charged to products on the basis of machine hours.
required:
1> if joe green enterprises has excess machine capacity and can add more labor as
needed (that is, neither machine capacity nor labor is a constraint), the excess
production capacity should be devoted to producing which product or products? (show
calculations.)
2> if joe green enterprises has excess machine capacity but a limited amount of labor
time, the production capacity should be devoted to producing which product or
products?
12) the following information applies to the mcadoo company for the year.
required:
prepare a statement of cost of goods manufactured and an income statement for the
year.
13) a recent article in themckinseyquarterly, present a useful list of some of the ways
that strategic decisions can go wrong because of human shortcomings: 1 .
overconfidence; 2 . loss aversion; 3 . champion bias; 4 . misaligned risk aversion; and
5 . misaligned time horizon
required: provide a one sentence explanation for each of the five human shortcomings
in decision making.
14) johnson associates is a catering firm in tucson, arizona, with revenue of $4 million.
the business began ten years ago as a one-owner bakery, but has dramatically changed
in size and function during the past five years. the four partners foresee the business
doubling in sales revenue within two years, and expect the firm to expand into other
services including flowers, furnishings, decorations, and music. johnson associates
employs six full-time and ten part-time employees. the four partners also work
full-time, each partner managing a separate business function. the firm currently uses a
volume-based costing system installed seven years ago and modified three years later.
required:
(1) with just the above information, comment on johnson associates changing and
future costing system needs.
(2) is johnson associates a probable candidate for an activity-based costing system
(abc)? why or why not?
15) carter inc. produces two products, a and b. pertinent data follow:
there is insufficient labor capacity in the plant to meet the combined demand for both
products. both products are produced through the same production departments. the
fixed factory overhead rate is $10 per direct labor hour.
required:
1> calculate the unit contribution margin for each product.
2> determine which product should be produced in priority, given the labor constraint,
and explain why.
16) the controller for alabama cooking oil co. established the following overhead cost
pools and cost drivers:
an order of 800 barrels of cooking oil used:
required:
(1) what is the overhead rate per machine hour if the number of machine hours is used
as a single cost driver under traditional costing system? (round your intermediate
calculation to the nearest cent and final answer to the nearest whole dollar.)
(2) using volume-based costing, how much overhead is assigned to the order based on
machine hours as a single cost driver?
(3) using abc costing, how much total overhead is assigned to the order?
17) assad company uses the process costing method with the following data for the
month of july.
required:
(1) compute cost per equivalent unit under the weighted-average method.
(2) compute cost per equivalent unit under fifo method.
