1) Activity-based management refers to using activity-based cost information to make
decisions that may increase profits while satisfying customers’ needs.
2) If manufacturing overhead allocated is less than the actual manufacturing overhead
incurred, then jobs have been overcosted.
3) A standard cost income statement shows cost of goods sold at standard and actual
cost.
4) Indirect costs cannot be traced to the cost objects, so they are allocated.
5) Facilitylevel activities and costs are incurred no matter how many units, batches, or
products are produced in the plant.
6) The common size statement percentages are different from those that appear in
horizontal analysis.
7) Capital budgeting techniques such as payback method and net present value are
based upon Generally Accepted Accounting Principles (GAAP) and accrual accounting.
8) When using the contribution margin ratio, managers project operating income based
upon sales units.
9) A marginal cost is the cost of making one more unit of a product.
10) Merchandising and service companies, as well as governmental agencies, can use
refined cost allocation systems to provide their managers with better cost information.
11) Wong completed 24,000 units and had another 6,000 units 45% complete. The total
equivalent units for the period are 26,700.
12) Hummingbird Manufacturing manufactures small parts and uses an activity-based
costing system.
The following parts were produced in October with the following information:
Total manufacturing costs for part B is
A) $8,350
B) $12,350
C) $14,850
D) $18,850
13) The difference between the sales price and the job cost is
A) gross profit
B) cost of goods sold
C) net income
D) operating income
14) Assume the following amounts:
If sales revenue per unit increases to $22 and 12,000 units are sold, what is the
operating income?
A) $264,000
B) $60,000
C) $108,000
D) $84,000
15) Wriston Company is preparing its cash budget for the upcoming month. The
beginning cash balance for the month is expected to be $12,000. Budgeted cash
disbursements are $70,500, while budgeted cash receipts are $86,100. Wriston
Company wants to have an ending cash balance of $40,000. The excess (deficiency) of
cash available over disbursements for the month would be
A) $27,600
B) $168,600
C) $(27,600)
D) $110,500
16) The following data relates to Logan Electric and its Light Bulb Division.
What is the Light Bulb Division’s Residual Income (RI)?
A) $(375,000)
B) $420,000
C) $218,000
D) $300,000
17) The entry to allocate manufacturing overhead costs to production involves which of
the following?
A) Debit to work in process inventory for the actual cost of overhead
B) Credit to work in process inventory for the standard rate of overhead times the
standard quantity of the allocation base allowed for actual output
C) Credit to work in process inventory for the actual cost of overhead
D) Debit to work in process inventory for the standard rate of overhead times the
standard quantity of the allocation base allowed for actual output
18) In the equation y = $7.20x + $790, “x” represents
A) number of units produced
B) total fixed costs
C) total costs
D) none of the above
19) During a period, 38,200 units were completed and 5,300 units were in ending WIP
inventory. Ending WIP was 70% complete for direct materials and 50% complete for
conversion costs. What are the equivalent units for conversion costs?
A) 21,750
B) 43,500
C) 41,910
D) 40,850
20) he following information relates to Harris Corporation.
Required:
a.What is the acid-test ratio for the current year?
b.What is the inventory turnover for the current year?
c.What is days’ sales in receivables for the current year?
d.What is the book value per share of common stock for the current year?
e.What is the price-earnings ratio for the current year?
f.What is the rate of return on total assets for the current year?
g.What is the times-interest-earned ratio for the current year?
h.What is the current ratio for the current year?
21) Prime costs consist of
A) direct materials and direct labor
B) direct labor and manufacturing overhead
C) direct materials and manufacturing overhead
D) direct materials, direct labor and manufacturing overhead
22) The following information relates to Woolf Unlimited for the past two years.
What is the inventory turnover for the current year?
A) 2.30 times
B) 0.78 times
C) 13.00 times
D) 2.20 times
23) Wadsworth Industries manufactures small appliances and uses an activity-based
costing system. Information from its system for the year for all products follows:
Wadsworth makes 775 of its stand mixers a year, which requires a total of 25 machine
hours, 10 inspection hours, and 12 orders. The stand mixer requires $15.00 in direct
materials per unit and $11.50 in direct labor per unit. The stand mixer sells for $120 per
unit. What is the product margin in total for the stand mixer?
A) $91,979.50
B) $26.50
C) $20,537.50
D) $71,468.50
24) Which of the following would be considered an investing activity on the statement
of cash flows?
A) An issuance of stock
B) A sale of equipment
C) Payment of dividends
D) Purchase of inventory
25) Traditional performance management systems can be adapted to include measures
of environmental costs, savings, and liabilities. The amount of electricity used by an oil
refinery is an example of a key performance indicator (KPI) classified under which
perspective of the balanced scorecard?
A) Financial perspective
B) Customer perspective
C) Internal business perspective
D) Community perspective
26) Which of the following types of analysis include trend percentage analysis?
A) Vertical
B) Horizontal
C) Benchmarking
D) Profitability
27) Network Enterprises incurred actual fixed manufacturing overhead costs of $22,800
for the month of September. If the fixed manufacturing overhead budget variance was a
favorable $6,700 what were the budgeted fixed overhead costs?
A) $6,700
B) $29,500
C) $16,100
D) $22,800
28) A company produces toy airplanes at a variable cost of $23 per toy. If 7,000 toys are
produced at a total variable cost of $161,000, the total variable cost at 4,500 toys will be
A) $161,000
B) $23
C) $103,500
D) $264,500
29) Green Corporation has total sales revenues of $400,000. If its total fixed costs are
$70,000 and its total variable costs are $150,000, the contribution margin is
A) $330,000
B) $250,000
C) $550,000
D) $220,000
30) The Maple Company has total fixed costs of $400,000. It also has $200,000 in total
variable costs. These costs exist at a production level of 100,000 units. The fixed cost
per unit is
A) $2.00
B) $6.00
C) $1.50
D) $4.00
31) At Hodgson Corporation, direct materials are added at the beginning of the process
and conversions costs are uniformly applied. Other details include:
What are the total equivalent units for direct materials?
A) 138,700
B) 129,500
C) 134,900
D) 142,500
32) Garfield Corporation is considering building a new plant in Canada. It predicts sales
at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated
expenses.
A Canadian firm was contracted to sell the product and will receive a commission of
10% of the sales price. No U.S. home office expenses will be allocated to the new
facility.
The contribution margin ratio for Garfield Corporation is
A) 28.00%
B) 38.00%
C) 172.00%
D) 72.00%
33) The ________ variance “measures whether the quantity of direct labor used to make
the actual number of outputs is within the standard allowed for that number of outputs”.
A) production volume
B) overhead flexible budget
C) rate
D) efficiency
34) Sustainability is concerned not only with the impact on the environment, but also
with the impact on people and profit. The “triple bottom line” measures an entity’s
impact on profit, people, and planet. A Fortune 500 company that encourages its
employees to use reusable mugs as opposed to styrofoam cups is impacting which
element of the triple bottom line?
A) Profit
B) People
C) Planet
D) None of the above
35) The unit contribution margin is computed by
A) subtracting the variable cost per unit from the sales price per unit
B) dividing the sales revenue by variable cost per unit
C) dividing the variable cost per unit by the sales revenue
D) subtracting the sales price per unit from the variable cost per unit
36) There are several reasons an organization might pursue sustainable initiatives. “An
automobile manufacturer has committed to being the market leader in fuel economy
with every new vehicle developed.” This situation is an example of which type of
reason to implement sustainable initiatives?
A) Cost reduction
B) Regulatory compliance
C) Stakeholder influence
D) Competitive strategy