1) abnormal spoilage is considered what kind of cost?
a.period cost
b.product cost
c.opportunity cost
d.sunk cost
2) the balanced scorecard can be made more effective by developing it at a detail level
so that employees:
a.can see how it is put together
b.appreciate all the effort that goes into its preparation
c.respect management for including them in its formulation
d.can see how their actions contribute to the success of the firm
e.do not feel left out
3) marin products produces three products dbb-1, dbb-2, and dbb-3 from a joint
process. each product may be sold at the split-off point or processed further. additional
processing requires no special facilities, and production costs of further processing are
entirely variable and traceable to the products involved. key information about marin’s
production, sales, and costs follows.
the amount of joint costs allocated to product dbb-1 using the sales value at split-off
method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%,
and round all dollar amounts to the nearest whole dollar):
a.$939,240
b.$216,870
c.$447,120
d.$757,800
e.$2,213,640
4) relevant or differential cost analysis:
a.takes all variable and fixed costs into account to analyze decision alternatives
b.considers only variable costs as they change with each decision alternative
c.considers only nonfinancial and strategic factors associated with each decision
alternative
d.considers all variable and fixed costs as they change with each decision alternative
e.allows the decision maker to group all types of costs together to facility decision
making
5) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, total overhead per unit of great p model is (rounded to the
nearest cent):
a.$42.61
b.$45.99
c.$61.32
d.$66.73
e.$168.00
6) the following data pertains to lam co.’s manufacturing operations:
additional information for the month of april:
overhead is applied at $12 per direct labor hour.
for the month of april, prime cost incurred was:
a.$75,000
b.$66,000
c.$65,000
d.$62,000
7) marin products produces three products dbb-1, dbb-2, and dbb-3 from a joint
process. each product may be sold at the split-off point or processed further. additional
processing requires no special facilities, and production costs of further processing are
entirely variable and traceable to the products involved. key information about marin’s
production, sales, and costs follows.
the amount of joint costs allocated to product dbb-1 using the physical measure method
is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and
round all dollar amounts to the nearest whole dollar):
a.$54,250
b.$757,800
c.$1,705,320
d.$49,200
e.$1,136,880
8) the sand cruiser is a takeout food store at a popular beachside resort. teresa texton,
owner of the sand cruiser, was deciding how much refrigerator space to devote to four
different beverages. appropriate data on the four beverages follow:
the contribution margin per case for lemonade is:
a.$5.50
b.$6.40
c.$5.40
d.$4.80
e.$9.90
9) which one of the following is correct for determining relevant costs for
decision-making?
a.differential
b.integrative
c.long-term focus
d.subjective
e.absorption
10) procurement costs such as costs of placing orders for materials and paying suppliers
are usually classified as:
a.output-unit-level costs
b.batch-level costs
c.product-level costs
d.facility-level costs
e.vendor costs
11) lm company listed the following data for 2013:
required:
(1) assuming klm applied overhead based on direct labor hours, calculate the company’s
predetermined overhead rate for 2013 .
(2) assuming klm applied overhead based on machine hours, calculate the company’s
predetermined overhead rate for 2013 .
(3) if overhead is applied based on direct labor hours, calculate the
overapplied/underapplied overhead.
(4) if overhead is applied based on machine hours, calculate the
overapplied/underapplied overhead.
12) motor corp. manufactures machine parts for boat engines. the ceo, james hamilton,
was considering an offer from a subcontractor who would provide 3,000 units of
product ab100 for hamilton for a price of $230,000. if motor corp. does not purchase
these parts from the subcontractor it must produce them in-house with the following
per-unit costs:
in addition to the above costs, if hamilton produces part ab100, he would also have a
retooling and design cost of $10,000. should motor corp. accept the offer from the
subcontractor?
13) many industries, for example mining and other extractive industries, use process
costing to provide information regarding sustainability.
required: give an example of how a company could use process costing to assist in
making decisions regarding sustainability.
14) hightech company recently developed the technology necessary to produce a
low-end, a medium-end, and high-end computer memory chip for heart monitoring
healthcare equipment. budgeted fixed costs for the manufacture of all three products
total $4,250,000. the budgeted sales by product and in total for the coming year are as
follows:
required:
1> prepare a contribution income statement for the year based on actual sales data (but
budgeted cost data, for both variable and fixed costs).
2> compare the breakeven sales dollars for the year based on both budgeted and on
actual sales, assuming that the sales mix remains constant in terms of sales dollars.
(round contribution margin ratios, in all calculations, to three decimal places. round
answer in dollars up, to the nearest whole number.)
3> the company president knows that total actual sales were $8,250,000 for the year,
the same as budgeted. because she had seen the budgeted income statement, she was
expecting a nice profit from producing the memory chips. explain to her what
happened.
15) manufacturers of large equipment such as aircraft and ships and companies
involved in road construction have jobs that may require two or more years for
completion. for example, boeing corporation might have an order for 50 aircraft for a
particular airline, and the order will extend over a three-to five-year period. aircraft are
delivered as completed, but not in a batch of 50 at one time. in the typical fashion, the
overhead application rate must be calculated and applied in such a way that each
aircraft that is delivered has the proper amount of overhead for that aircraft.
required: what unique difficulties do you see in the calculation and application of
overhead in industries such as aircraft manufacturing or shipbuilding? how do you think
these firms should respond to these difficulties in determining overhead rates and
applying overhead costs?