The formula for usage variance is (AQ – SQ) * SP.
The first stage in the budgeting process is the preparation of a sales budget.
A hybrid costing system would be appropriate for a company that manufactures
automobiles.
Absorption costing is commonly used for internal reporting.
The learning and growth perspective of the balanced scorecard addresses the things
that an organization needs to do well to meet customer needs and expectations.
The usage variance reflects the difference between the quantity of inputs used and the
standard quantity allowed for the output of a period.
Ideal standards are an effective means of controlling variances and motivating
workers.
The financial budget is prepared after the operating budget.
A budget manual should include pro-forma financial statements for the upcoming
period.
After the break-even point is reached, each dollar of contribution margin is a dollar of
after-tax profit.
A flexible budget compares actual costs to budgeted costs at several activity levels.
The formula for price/rate variance is (AP – SP) x AQ.
The difference between the reported income under absorption and variable costing is
attributable to the difference in the
A. income statement formats.
B. treatment of fixed manufacturing overhead.
C. treatment of variable manufacturing overhead.
D. treatment of variable selling, general, and administrative expenses.
An all-inclusive definition of quality views it as the ability of products/services to
A. only meet internal design specifications.
B. meet the customer’s stated or implied needs.
C. be produced using all value-added production activities.
D. be produced with no rework costs.
Wyman Corporation
Wyman Corporation. has the following information for May:
All material is added at the start of the process and all finished products are transferred
out.
Refer to Wyman Corporation. How many units were transferred out in May?
A. 17,600
B. 19,500
C. 25,100
D. 27,000
Richards Company
The following information has been taken from the cost records of Richards Company
for the past year:
Refer to Richards Company. Direct labor cost charged to production during the year
was
A. $135.
B. $216.
C. $225.
D. $360.
Miller Corporation faces a marginal tax rate of 30 percent. One project that is currently
under evaluation has a cash flow in the fifth year of its life that has a present value of
$12,000 (after-tax). Miller Corporation assumes that all cash flows occur at the end of
the year and the company uses 13 percent as its discount rate. What is the pre-tax
amount of the cash flow in year 5? (Round to the nearest dollar.) Present value tables or
a financial calculator are required.
A. $15,475
B. $22,108
C. $31,582
D. $73,692
Buxton Company
One of the products manufactured by Buxton Company is a plastic tray. The
information below relates to the Tray Production Department:
Refer to Buxton Company. What is the process productivity in the Tray Production
Department?
A. 588
B. 625
C. 667
D. 833
Stayton Enterprises
Refer to Stayton Enterprises. For April, Cost of Goods Manufactured was
A. $141,000
B. $133,000.
C. $125,000.
D. $121,000.
Managers may be more willing to accept a budget if
A. it is continuous.
B. it is imposed.
C. it is very hard to attain.
D. they can participate in its development.
The Television Division of Electronics Corporation has the following segment
information:
What was Television Division’s return on investment?
A. 12%
B. 10%
C. 24%
D. 20%
Charlotte Company
Charlotte Company is a manufacturer of electronic components. The following
manufacturing information is available for the month of February:
Refer to Charlotte Company. What is the process quality yield?
A. 60%
B. 70%
C. 83%
D. 143%
Reed Company
Reed Company produces 50,000 units of Product Q and 6,000 units of Product Z during
a period. In that period, four set-ups were required for color changes. All units of
Product Q are black, which is the color in the process at the beginning of the period. A
set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red
units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was
then made to return the process to its standard black coloration and the units of Product
Q were run. Each set-up costs $500.
Refer to Reed Company. If set-up cost is assigned on a volume basis for the department,
what is the approximate per-unit set-up cost for the red units of Product Z?
A. $.036.
B. $.111.
C. $.250.
D. None of the responses are correct.
The cost of abnormal continuous losses is
A. considered a product cost.
B. absorbed by all units in ending inventory and transferred out on an equivalent unit
basis.
C. written off as a loss on an equivalent unit basis.
D. absorbed by all units past the inspection point.
In a CVP graph, the area between the total cost line and the total fixed cost line yields
the
A. fixed costs per unit.
B. total variable costs.
C. profit.
D. contribution margin.
Truman Corporation
The following information has been extracted from the financial records of Truman
Corporation for its first year of operations:
Refer to Truman Corporation. Based on absorption costing, the Cost of Goods
Manufactured for Truman Corporation’s first year would be
A. $200,000.
B. $270,000.
C. $300,000.
D. $210,000.
Andersen Corporation
Andersen Corporation has the following information for the current month:
All materials are added at the start of the production process. Andersen Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Andersen Corporation. What are equivalent units of production for material,
assuming FIFO?
A. 91,000
B. 92,000
C. 95,000
D. 110,000
A company may set predetermined overhead rates based on normal, expected annual,
or theoretical capacity. At the end of a period, the fixed overhead spending variance
would
A. be the same regardless of the capacity level selected.
B. be the largest if theoretical capacity had been selected.
C. be the smallest if theoretical capacity had been selected.
D. not occur if actual capacity were the same as the capacity level selected.
Southern Digital, Inc.
The Southern Digital, Inc. produces a high-quality computer chip. Unit production costs
(based on capacity production of 100,000 units per year) follow:
Refer to Southern Digital, Inc. Assume, for this question only, that the Memory
Division is presently operating at a level of 80,000 chips per year. Accepting a ‘special
order” on 2,000 chips at $88 will
A. increase total corporate profits by $4,000.
B. increase total corporate profits by $20,000.
C. decrease total corporate profits by $14,000.
D. decrease total corporate profits by $24,000.
Strategic planning is
A. planning activities for promoting products for the future.
B. planning for appropriate assignments of resources.
C. setting standards for the use of important but hard-to-find materials.
D. stating and establishing long-term plans.
The two components of total material/labor variance are
______________________________ and ___________________________________
Costs of normal shrinkage and normal continuous losses in a process costing
environment are handled by the method of ____________________.
Discuss underapplied and overapplied overhead and its disposition at the end of the
period.
In June 20y0, the Johnson Company has Cost of Goods Manufactured of $296,000;
beginning Finished Goods Inventory of $29,730; and ending Finished Goods Inventory
of $19,990. Prepare an income statement in good form. (Ignore taxes.) The following
additional information is available:
A cost that varies in total in direct proportion to changes in activity is known as a
____________________ cost
What are four generic strategies that may be used in cost management to deal with
uncertainty?
