Set up time is disregarded as an improvement priority under the manufacturing concept.
a. traditional
b. lean
c. total quality management
d. product cost
Answer:
Ruby Company produces a chair that requires 5 yards of material per unit. The standard
price of one yard of material is $7.50. During the month, 8,500 chairs were
manufactured, using 43,600 yards at a cost of $7.55 per yard.
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
Answer:
Which of the following would be least likely to be considered a managerial accounting
report?
a. a report to analyze potential efficiencies and savings for the purchase of new
production equipment
b. a schedule of total manufacturing costs incurred
c. a statement of cost of goods manufactured
d. a statement of stockholders’ equity
Answer:
What cost concept used in applying the cost-plus approach to product pricing includes
only total manufacturing costs in the cost amount to which the markup is added?
a. variable cost concept
b. total cost concept
c. product cost concept
d. opportunity cost concept
Answer:
If a business sells two products, it is not possible to estimate the break-even point.
a. True
b. False
Answer:
While setting standards, managers should never allow for spoilage or machine
breakdowns in their calculations.
a. True
b. False
Answer:
The method of analyzing capital investment proposals that divides the estimated
average annual income by the average investment is
a. cash payback method
b. net present value method
c. internal rate of return method
d. average rate of return method
Answer:
The formula to compute the direct materials price variance is to calculate the difference
between
a. Actual costs ‘“ (Actual quantity × Standard price)
b. Actual cost + Standard costs
c. Actual cost ‘“ Standard costs
d. (Actual quantity × Standard price) ‘“ Standard costs
Answer:
Assume that divisional income from operations amounts to $215,000 and top
management has established 15% as the minimum rate of return on divisional assets
totaling $1,000,000. The residual income for the division is
a. $65,000
b. $215,000
c. $635,000
d. $150,000
Answer:
An unfavorable fixed factory overhead volume variance may be due to a failure of
supervisors to maintain an even flow of work.
a. True
b. False
Answer:
The budgeted cell conversion cost rate is very similar to the predetermined factory rate
because both include only factory overhead costs.
a. True
b. False
Answer:
The management of Arkansas Corporation is considering the purchase of a new
machine costing $490,000. The company’s desired rate of return is 10%. The present
value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826,
0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the
following data in determining the acceptability of this investment:
The net present value for this investment is
a. $36,400
b. $55,200
c. $(16,170)
d. $(126,800)
Answer:
National Survey Company uses a job order cost system.
(a) Indicate the source of the data for debiting Work in Process for each of the
following:
(1) Direct materials requisitioned
(2) Direct labor used
(b) Indicate the source of the data for crediting Work in Process for jobs completed.
(c) Present a list of the three controlling accounts used in the general ledger to record
the inventories and, in each case, indicate the related subsidiary ledger.
Answer:
For a period during which the quantity of product manufactured exceeded the quantity
sold, income from operations reported under absorption costing will be smaller than
income from operations reported under variable costing.
a. True
b. False
Answer:
Make-to-order companies typically produce in small batch sizes.
a. True
b. False
Answer:
The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable
factory overhead and $1.30 for fixed factory overhead) based on 100% of normal
capacity of 80,000 machine hours. The standard cost and the actual cost of factory
overhead for the production of 15,000 units during August were as follows:
What is the amount of the variable factory overhead controllable variance?
a. $12,000 unfavorable
b. $12,000 favorable
c. $14,000 unfavorable
d. $26,000 unfavorable
Answer: