Dodge Company had the following information:
Budgeted factory overhead costs $90,000
Actual factory overhead costs $82,000
Budgeted machine hours 40,000
Actual machine hours 35,500
Assume machine hours are the cost driver of factory overhead costs. The budgeted
factory overhead rate is ________.
A) $2.025 per machine hour
B) $2.05 per machine hour
C) $2.25 per machine hour
D) $2.875 per machine hour
All service organizations are similar in that ________.
A) they are labor intensive
B) output is easy to measure
C) major inputs and outputs can be stored
D) they are capital intensive
Janitors clean the factory with scrubbing machines and polishing machines. Scrubbing
machines scrub the factory floor and polishing machines polish the floor. The cost
associated with cleaning the factory is treated as a product cost. What is a good cost
driver for the Depreciation Expense associated with the scrubbing and polishing
machines?
A) number of janitors operating machines
B) number of labor hours put in by janitors
C) number of kilowatt hours used
D) number of machine hours used
Nestle Company paid $130,000 for a machine used to mill oats. The annual
contribution margin from oat sales is $60,000. The machine could be sold for $80,000.
The opportunity cost of producing the oats is ________.
A) $20,000
B) $60,000
C) $80,000
D) $130,000
Jorgensen Company has determined the following variances at the end of the current
year:
Variances
Production Volume Variance $200,000 Favorable
Flexible Budget Variance for Direct Materials $10,000 Unfavorable
Flexible Budget Variance of Direct Labor $2,000 Unfavorable
Flexible Budget Variance for Fixed Overhead $3,000 Favorable
Flexible Budget Variance for Variable Overhead $2,000 Unfavorable
Before consideration of the above variances, the company has operating income of
$1,000,000. What is the operating income after considering the above variances?
A) $986,000
B) $989,000
C) $1,189,000
D) $1,200,000
Costs of defective components or products that are scrapped or reworked are examples
of ________ costs.
A) prevention
B) appraisal
C) internal failure
D) external failure
In an efficient capital market, searching for ________.
A) overpriced securities is fruitless
B) underpriced securities is fruitless
C) securities with high dividend yields is fruitless
D) low risk securities is fruitless
Moody Company has the following information available for the most current year:
Paid-in capital, January 1, 2014 $475,000
Retained earnings, January 1, 2014 $100,000
Total revenues in 2014 $870,000
Total expenses in 2014 $550,000
Dividend declared in 2014 $70,000
Dividend paid in 2014 $0
Investments by owners in 2014 $10,000
What was the total amount of stockholders’ equity for Moody Company at December
31, 2014?
A) $250,000
B) $350,000
C) $485,000
D) $835,000
The following information was compiled by Gorgeous Incorporated:
Expected volume of production 50,000 units
Actual volume of production 47,500 units
Budgeted fixed overhead costs(for 50,000 budgeted units) $400,000
Actual fixed overhead costs $415,000
Actual variable overhead costs $790,000
Budgeted variable overhead costs(for 50,000 budgeted units) $855,000
Assume the cost-allocation base for overhead costs is units of production. What is the
production volume variance?
A) $15,000 Favorable
B) $15,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable
Brankovich Company manufactures generic notebooks. Material is introduced at the
beginning of the process in the Printing Department. Conversion costs are applied
uniformly throughout the process. The weighted-average method of process costing is
used. Data for the Printing Department for the month of June follow:
Work-In-Process Inventory, June 1:
Units 15,000
Direct materials (100% complete) $35,000
Conversion costs (30% complete) $14,000
Units started in June 65,000
Units completed in June 62,000
Work-In-Process Inventory, June 30 18,000
Direct materials added in June $285,000
Conversion costs added in June $210,000
With regard to the Work-In-Process Inventory on June 30, materials are 100 percent
complete and conversion costs are 60 percent complete. The unit cost for materials is
________.
A) $3.54
B) $3.59
C) $4.00
D) $4.91
Paquin Company has the following information available for the most current year:
Paid-in capital, January 1, 2014 $475,000
Retained earnings, January 1, 2014 $50,000
Total revenues in 2014 $890,000
Total expenses in 2014 $550,000
Dividend declared in 2014 $70,000
What was the balance in Retained Earnings at December 31, 2014?
A) $270,000
B) $320,000
C) $390,000
D) $405,000
The net amount a company expects to collects on Accounts Receivable is equal to
________.
A) gross Accounts Receivable
B) Allowance for Doubtful Accounts
C) gross Accounts Receivable minus Allowance for Doubtful Accounts
D) gross Accounts Receivable plus Allowance for Doubtful Accounts
A linear cost function is estimated over the relevant range of 0 to 1,000 orders. The
equation estimated is: Y = $25,000 + $89X where Y equals the total order-processing
cost and X equals the number of orders. If the number of orders increases to 1,800,
what is the predicted total order-processing cost?
A) $25,000
B) $160,200
C) $185,200
D) cannot be determined
The ________ chart is the statistical plot of measures of various product quality
dimensions or attributes.
A) cycle-time
B) productivity-control
C) quality-control
D) throughput-time
What do liabilities and stockholders’ equity have in common?
A) They are both held by nonowners of the company.
B) They are both held by owners of the company.
C) They are both creditors.
D) They are both claims on a company’s assets
Goodwill remains on a company’s books until ________.
A) accountants amortize it
B) accountants depreciate it
C) management sells it
D) management determines its value is impaired
The budgeted factory overhead rate is computed as ________.
A) actual factory overhead costs divided by actual production in units
B) actual factory overhead costs divided by actual cost driver activity
C) budgeted factory overhead costs divided by actual cost driver activity
D) budgeted factory overhead costs divided by budgeted cost-allocation base level
The following information is available for the Wetzel Company:
Net income for the year ended December 31, 2014 $127.4
Credit sales for the year ended December 31, 2014 $1,606.0
Retained earnings, December 31, 2014 150.0
Retained earnings, December 31, 2013 180.0
Total assets, December 31, 2014 470.0
Total assets, December 31, 2013 442.0
Total liabilities, December 31, 2014 240.0
Total liabilities, December 31, 2013 182.0
Accounts Receivable, December 31, 2014 180.0
Accounts Receivable, December 31, 2013 144.0
What is the average collection period in days for the year ended December 31, 2014?
A) 5.0
B) 36.8
C) 40.9
D) 77.3
By-products differ from joint products because by-products have ________.
A) no joint costs before the split-off point
B) joint costs before the split-off point
C) significant sales value when compared to other products at the split-off point
D) insignificant sales value when compared to other products at the split-off point
To construct the Total Cost line on a cost-volume-profit graph, plot ________ and then
plot ________.
A) mixed costs; step costs
B) step costs; mixed costs
C) fixed costs; variable costs
D) fixed costs; fixed costs plus variable costs
Unsecured debt holders are creditors who have ________.
A) a specific claim against particular assets
B) a specific claim against fixed assets only
C) a general claim against fixed assets only
D) a general claim against total assets
Examples of business process reengineering do NOT include ________.
A) computer-aided design
B) computer-aided manufacturing
C) robots
D) labor-intensive machines
What is the first step in applying the net-present-value method to investment projects?
A) Identify the amount and timing of relevant future cash inflows.
B) Identify the amount and timing of relevant future cash inflows and outflows.
C) Find the present value of each expected cash flow.
D) Sum the individual present values of the cash flows.
The process of identifying appropriate cost drivers and their effects on the costs of
making a product or providing a service is called ________.
A) account analysis
B) activity analysis
C) cost analysis
D) product analysis
Bombard Company manufactures plastic cups in one department. The following
information is available:
Work-In-Process Inventory, beginning 0
Units started 60,000
Units completed and transferred 48,000
Work-In-Process Inventory, end 12,000
Direct materials added $240,000
Direct labor $164,780
Factory overhead $82,000
The units in the ending Work-In-Process Inventory are 100 percent complete with
respect to direct materials and 50 percent complete with respect to conversion costs.
The cost of the ending Work-In-Process Inventory is ________.
A) $61,200
B) $72,200
C) $75,420
D) $102,000
The ________ budget focuses on the budgeted income statement and the supporting
schedules.
A) financial
B) operating
C) operating expense
D) purchases and cost of goods sold
In process costing, the journal entry to record factory overhead applied to units in a
department would include a ________.
A) Debit to Factory Overhead
B) Debit to Work-in-Process Inventory—Department Name
C) Credit to Cost of Goods Sold
D) Credit to Finished Goods Inventory
________ is the item that restricts or constrains the production or sale of a product.
A) A limiting factor
B) A scarce resource
C) Floor space
D) All of the above
Tomlin Company spends $12,000 for a forklift with an estimated useful life of four
years. The company expects annual savings of $4,000 per year for four years, and a
salvage value of $5,000 at the end of 4 years. What is the payback period?
A) 2 years
B) 2.8 years
C) 3 years
D) 4 years
A disadvantage of the visual-fit method to approximate a cost function is ________.
A) it does not use all the available data
B) it is costly to apply
C) it does not capture the general tendency of the data
D) the placement of the line is subjective