1) Bellisimo Industries material handling costs and tons of material over a six-month
period follow:
Using the high-low method, what is the estimated material handling cost per ton of
material?
A.$.90
B.$1.25
C.$1.00
D.$.80
2) The Joan Company uses the process cost system and average cost method. The
following production data are for the month of July, 20–.
(a) Prepare a cost of production summary for the month.
(b) Prepare the journal entries to record production for the month
3) Campus Carriers Co. manufactures and sells backpacks to college students. Campus
Carriers operates a factory in Small Town and two stores in College Town and
University City. Classify the following costs incurred by Campus Carriers as Direct
Materials, Direct Labor, Factory Overhead or Selling and Administrative Expense.
a. Rent paid to lease the store in College Town.
b. Canvas fabric.
c. Wages paid to students distributing advertising fliers in University City.
d. Sewing machine operators wages.
e. Building depreciation on the factory building.
f. Thread.
g. The cost of transporting the backpacks from the factory in Small Town to the
University City store.
h. Depreciation of the racks and shelves at the College Town Store.
i. Factory managers salary.
j. Security guard at the factory.
k. Store managers salary.
l. Electricity to power sewing machines.
m. Electricity to light the College Town store.
4) Factory overhead includes:
A.Indirect labor but not indirect materials
B.Indirect materials but not indirect labor
C.All manufacturing costs, except indirect materials and indirect labor
D.All manufacturing costs, except direct materials and direct labor
5) A budget that adds a new month at the end of the budget when a month is completed,
resulting in a budget that is always one year in advance is a:
A.Flexible budget
B.Static budget
C.Continuous budget
D.Capital budget
6) Regina Manufacturing uses the FIFO method of process costing. The production
report for the Curing Department, where the materials are added at the beginning of the
period, for September was as follows:
The number of units started and completed during the period was:
A.12,000
B.9,000
C.15,000
D.6,000
7) A Company is planning to sell Product Z for $10 a unit. Variable costs are $6 a unit
and fixed costs are $100,000. If the company is currently selling 30,000 units, what is
the margin of safety in units?
A.5,000
B.10,000
C.25,000
D.20,000
8) Items that should be considered in developing a revenue budget for a professional
firm include all of the following except:
A.Expected new business
B.Expected mix of professional labor hours
C.Expected mix of work
D.All of these should be considered in preparing a revenue budget for a professional
firm
9) Which of the following is the best example of a non-financial performance measure
for the internal business process perspective of a fast food restaurants balanced
scorecard?
A.Number of repeat customers
B.Drive-through times
C.Monthly revenue growth
D.Employee retention percentage
10) The budget that is used as a basis for preparing all other budgets is the:
A.cash budget
B.production budget
C.budget balance sheet
D.sales budget
11) Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently
operating at 80% capacity. The windows usually sell for $20.00 each. Costs for each
window follow:
The Army has offered to buy 10,000 windows for $12.00 each for barracks. Bradley
should:
A.Reject the offer because it currently does not have enough capacity to accept the
order
B.Reject the order because the company will lose $20,000 on the order
C.Accept the offer because the company will realize $20,000 in additional contribution
margin
D.Accept the offer because the company will realize $40,000 in additional contribution
margin
12) When recording payroll:
A.the debit to Work In Process must equal the total direct labor charged to jobs in the
subsidiary job cost ledger
B.the debit to Factory Overhead must equal the total indirect labor cost charged to jobs
in the subsidiary job cost ledger
C.the payroll record summarizes the direct labor and indirect charges to the department
for the period
D.the labor cost summary is prepared from the employees earnings records
13) Consider the flexible budget information relating to direct labor costs for Logan
Ltd.:
Logans actual production was 51,000 units and the related cost was $205,500. What is
the variance related to direct labor?
A.$1,500 unfavorable
B.$5,500 unfavorable
C.$2,500 favorable
D.$1,500 favorable
14) According to the Institute of Management Accountants (IMA) Statement of Ethical
Professional Practice, performing professional duties in accordance with relevant laws,
regulations and technical standards is a component of which standard?
A.Competence
B.Confidentiality
C.Integrity
D.Credibility
15) Which of the following correctly demonstrates the comparison of the four-variance
method of factory overhead analysis to the two-variance method of factory overhead
analysis?
A.The sum of the fixed and variable spending variances in the four-variance method is
equal to the flexible-budget variance in the two-variance method
B.The sum of the fixed and variable spending and variable efficiency variances in the
four-variance method is equal to the flexible-budget variance in the two-variance
method
C.The sum of the fixed and variable spending, variable efficiency and
production-volume variances in the four-variance method is equal to the flexible-budget
variance in the two-variance method
D.The fixed spending variance in the four-variance method is equal to the
flexible-budget variance in the two-variance method
16) On a cost of quality report, the cost of activities that are incurred to preclude the
production of a product or the execution of a service that does not conform to its design
specifications is classified as a(n):
A.prevention cost
B.appraisal cost
C.internal failure cost
D.external failure cost
17) In a three-variance method of factory overhead analysis, the variance that measures
the difference between the factory overhead applied and the actual hours worked
multiplied by the standard rate is the:
A.Production-volume variance
B.Quantity variance
C.Spending variance
D.Efficiency variance
18) Kristoff Ltd. has accumulated the following data for the year regarding its factory
overhead costs:
a. Using the least squares regression method and Microsoft Excel, determine the
variable and fixed cost elements (SLOPE and INTERCEPT) and the RSQ.
b. What does the RSQ mean in this case.
c. Use the results to prepare a flexible budget at volumes of 2,800; 3,000 and 3,200
units. Round to the nearest dollar.
19) The Institute of Management Accountants (IMA) Statement of Professional Practice
includes four standards of ethical behavior.
a. List the four standards of ethical behavior.
b. For each of the items listed below, identify the IMA standard under which each of the
following responsibilities is included.
1> Refrain from using confidential information for unethical or illegal advantage.
2> Communicate information fairly and objectively.
3> Abstain from engaging or supporting any activity that might discredit the profession.
4> Perform professional duties in accordance with relevant laws, regulations, and
technical standards.
5> Maintain an appropriate level of professional expertise by continually developing
knowledge and skills.
6> Mitigate actual conflicts of interest. Regularly communicate with business associates
to avoid any apparent conflict of interest. Advise all parties of potential conflicts.
7> Disclose all relevant information that could reasonably be expected to influence an
intended users understanding of the reports, analyses or recommendations.
20) In a JIT system, reducing throughput time is possible because:
A.there are fewer materials used in the process
B.there are more workers involved in the process
C.there are more supervisors, so a better job is done of directing plant activities
D.there are fewer operations such as moving and storing inventories that do not add
value to the product
21) Joshua Company prepares monthly performance reports for each department. The
budgeted amounts of wages for the Finishing Department for the month of August and
for the eight-month period ended August 31 were $12,000 and $100,000, respectively.
Actual wages paid through July were $91,500, and wages for the month of August were
$11,800. The month and year-to-date variances, respectively, for wages on the August
performance report would be:
A.$200 F; $8,500 F
B.$200 F; $3,300 U
C.$200 U; $3,300 U
D.$200 U; $8,500 F
22) Which of the following is not an acceptable method for accounting for by-products
in a joint manufacturing process?
A.Costs before the split-off point are allocated to by-products
B.The estimated sales value of the by-product reduces the cost of the main product
C.The value of by-products is included in an account called By-products Inventory
D.In some instances, the revenue from selling by-products may be treated as other
income on the income statement
23) Selected data concerning the past fiscal year’s operations (000’s omitted) of
Hercules Mills are presented below:
The cost of goods sold during the year was:
A.$135
B.$146
C.$153
D.$155
24) The practice of assigning costs evenly to jobs using a single overhead rate when
different jobs actually consume resources in different proportions is sometimes called:
A.Smooth costing
B.Process costing
C.Activities-based costing
D.Peanut-butter costing
25) PHI Company began its operations on January 1 and produces a single product that
sells for $35.00 per unit. 5,000 units were produced and 4,000 units were sold during
the year.
Standard costs per unit follow:
What is entry to record the finished goods?
A.Finished goods 115,000
Work in process 115,000
B.Finished goods 92,000
Work in process 92,000
C.Work in process 115,000
Finished goods 115,000
D.Cost of goods sold 92,000
26) Consider the income statement for Pickbury Farm:
What is the margin of safety ratio (to the nearest percentage point)?
A.47%
B.70%
C.30%
D.88%
27) Chase Companys production budget is as follows:
Each unit takes 15 minutes to produce and the standard labor rate is $18 per labor hour.
What is Chases direct labor budget?
A.$1,440,000
B.$1,350,000
C.$5,400,000
D.$5,760,000
28) For a manufacturer, manufacturing costs incurred to date for goods in various stages
of production, but not yet completed is:
A.Merchandise Inventory
B.Finished Goods
C.Work in Process
D.Materials