Dooley Company has the following information available for variable overhead costs.
Direct labor hours are the cost driver for variable overhead costs.
Actual variable overhead costs $4,700
Standard variable overhead costs $1.20 per hour
Actual direct labor hours 3,750 hours
Standard direct labor hours per unit 5 hours
Units produced 700
What is the variable overhead efficiency variance?
A) $300 Favorable
B) $300 Unfavorable
C) $500 Favorable
D) $500 Unfavorable
The IMA’s ethical standard for confidentiality includes all of the following EXCEPT
________.
A) keep information confidential except when disclosure is authorized or legally
required
B) inform all relevant parties regarding appropriate use of confidential information.
Monitor subordinates’ activities to ensure compliance
C) refrain from using confidential information for unethical or illegal advantage
D) refrain from engaging in any conduct that would prejudice carrying out duties
ethically
Gomez Company makes three types of products. The company has two types of
customers. The cost to serve all customers is $12,000 and is allocated to customer types
based on the number of manager visits to customer locations. The following data are
available:
Product 1 Product 2 Product 3
Sales $5,000 $6,000 $30,000
Cost of goods sold 4,000 4,800 15,000
Gross margin $1,000 $1,200 $15,000
Customer Type 1 Customer Type 2
Product 1 Sales $500 $4,500
Product 2 Sales $1,000 $5,000
Product 3 Sales $16,000 $14,000
Manager visits 4 16
What is the gross profit margin for all three products for Customer Type 1?
A) $8,000
B) $8,200
C) $8,250
D) $8,300
Which of the following departments is NOT a service department?
A) laundry department in a hospital
B) maintenance department in a hospital
C) housekeeping department in a hospital
D) surgery floor in a hospital
The following information pertains to the Vertigo Company:
Total assets $150,000
Total current liabilities $110,000
Total expenses $70,000
Total liabilities $115,000
Total revenues $80,000
Return on sales equals ________.
A) 12.5%
B) 50.0%
C) 75.0%
D) 133.0%
Joe Anthony Company recently issued 20,000 shares of $1.00 par value common stock
for $40,000. This transaction will increase the ________.
A) Common stock account by $20,000
B) Common stock account by $40,000
C) Paid in capital in excess of par account by $40,000
D) Retained earnings account by $40,000
Budgeted cost rates are used for allocating variable costs of service departments to user
departments because ________.
A) it provides service departments a greater incentive to be efficient
B) it protects user departments from inefficiencies in service departments
C) it protects managers in service departments from inflation
D) A and B
________ is the logical integration of techniques to gather and use data for planning
and control decisions and to evaluate performance.
A) An internal control system
B) A quality control system
C) A financial reporting system
D) A management control system
Which of the following cost is relevant to the decision whether to process joint products
beyond the split-off point?
A) joint costs
B) allocated joint costs
C) separable costs
D) additional revenue from further processing beyond split-off point
When does a company earn the majority of revenue for a product that goes through the
product life cycle?
A) phase-out of product and introduction to market stages
B) introduction to market and mature market stages
C) product development and mature market stages
D) mature market and phase-out of product stages
Ropal Company manufactures tape dispensers. The Assembly Department reported the
follow data for the past month:
Units started and completed 70,000
Units started and not complete 10,000
Units in beginning inventory 0
Direct materials costs $480,000
Conversion costs $240,000
The partially complete units at the end of the month were 100 percent complete with
respect to materials and 50 percent complete with respect to conversion costs. The total
cost of ending work-in-process inventory is ________.
A) $60,000
B) $76,000
C) $90,000
D) $91,600
Sanchez Company planned to produce 12,000 units. This level of activity required 20
setups at a cost of $22,000 plus $500 per setup. Actual production was 10,000 units,
requiring 15 setups. Actual setup cost was $26,000. At 10,000 units, what is the flexible
budget amount for total setup costs?
A) $7,500
B) $22,000
C) $26,000
D) $29,500
What is the sequence of steps in preparing the master budget?
A) Output from the financial budget is used to prepare the operating budget.
B) Output from the operating budget is used to prepare the financial budget.
C) Output from the financial budget is used to prepare the budgeted income statement.
D) Output from the financial budget is used to prepare the operating expense budget.
Warranty costs are a form of ________ costs.
A) prevention
B) appraisal
C) internal failure
D) external failure
Assume the following information for Richard Company:
Selling price per unit $100
Variable cost per unit $80
Total fixed costs $80,000
After-tax net income $40,800
Tax rate 40%
How many units must be sold to achieve the after-tax net income?
A) 6,040
B) 7,400
C) 7,770
D) 7,800
For the year ending December 31, 2014, Martha Company reports net income of
$23,000 and depreciation expense of $7,000. The income tax expense for the year
ending December 31, 2014 is $20,000. The following data is available:
December 31, 2013 December 31, 2014
Cash $25,000 $16,000
Accounts Receivable $25,000 $45,000
Inventories $60,000 $100,000
Fixed Assets $330,000 $581,000
Accumulated Depreciation $110,000 $101,000
Accounts Payable $6,000 $74,000
Wages Payable $4,000 $25,000
What is the net cash provided (used) by operating activities for the year ended
December 31, 2014? Assume the indirect method is used.
A) $(20,000)
B) $23,000
C) $59,000
D) $69,000
The following information was taken from the accounting records of Henry
Manufacturing Company:
Direct materials purchased $75,000
Direct materials used $56,000
Direct manufacturing labor costs $20,000
Indirect manufacturing labor costs $10,000
Sales Salaries Expense $35,000
Miscellaneous Factory Expenses $5,000
Administrative Expenses $40,000
Finished Goods Inventory, beginning $10,000
Finished Goods Inventory, end $12,000
Work-In-Process Inventory, beginning 0
Work-In-Process Inventory, end 0
What is Cost of Goods Manufactured?
A) $86,000
B) $89,000
C) $91,000
D) $96,000
According to the Institute of Management Accountants, management accountants
should follow several ethical principles that include ________.
A) honesty, fairness, respect and compassion
B) honesty, fairness, responsibility and objectivity
C) honesty, competence, confidentiality and integrity
D) competence, confidentiality, integrity and honesty
Jackson Company manufactures three products from a joint process. Joint costs for the
year amounted to $300,000. The following data was available:
Product Units Produced Sales Value at Split-off
X 5,000 $70,000
Y 3,000 $30,000
Z 2,000 $100,000
Assume the physical-units method of allocating joint costs is used. What amount of
joint costs is allocated to Product Y?
A) $30,000
B) $37,500
C) $90,000
D) $300,000
The following information was compiled by Fabulous 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
fixed overhead flexible budget variance?
A) $15,000 Favorable
B) $15,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable
Choosing direct labor cost rather than direct labor hours as a cost driver for overhead
costs implies that ________.
A) direct labor cost data is more accurate
B) direct labor cost data is easier to obtain
C) higher paid employees use proportionately less overhead support than lower paid
employees
D) higher paid employees use proportionately more overhead support than lower paid
employees
Which statement regarding fixed costs is TRUE?
A) Discretionary fixed costs preserve management’s flexibility.
B) Committed fixed costs preserve management’s flexibility.
C) Both discretionary and committed fixed costs preserve management’s flexibility.
D) Discretionary fixed costs limit management’s flexibility.
Paper Company has a tax rate of 40% and a required rate of return of 10%.
Depreciation expense relating to operating equipment is $80,000 per year. The asset has
a five year life. The present value of one for five years at 10% is 0.6209. The present
value of an ordinary annuity of one for five years at 10% is 3.7908. What is the present
value of the after-tax cash flows from the annual depreciation expense over the life of
the equipment?
A) $0
B) $19,869
C) $80,000
D) $121,306
If demand is the limiting factor, and there are no other scarce resources, managers
should emphasize the product with ________.
A) the highest selling price per unit
B) the lowest variable costs per unit
C) the highest contribution margin per unit
D) the highest contribution margin per hour
Wisconsin Company reported selected accounts as follows:
December 31, 2014 December 31, 2015
Accounts payable $20,000 $30,000
Bonds payable $40,000 $28,000
Common stock $20,000 $24,000
Dividends of $8,800 were declared and paid by December 31, 2015. What was the net
cash flow from financing activities for the year ended December 31, 2015?
A) $6,800 cash outflow
B) $16,800 cash outflow
C) $6,800 cash inflow
D) $16,800 cash inflow
Flexible budget variances are the difference between the actual results and ________.
A) the static budget for the planned level of output
B) the flexible budget for the planned level of output
C) the flexible budget for the actual level of output
D) the master budget for the planned level of output
The ” break-even” cash inflow for an investment project is the point at which
________.
A) the present value of the variable cost of future cash flows equals the present value of
the fixed cost of future cash flows
B) the present value of the variable cost of future cash flows equals the present value of
the variable cost of past cash flows
C) the net present value of the investment project is zero
D) the total cash revenues equal total cash expenses
What are accounting systems?
A) The process used to streamline production processes
B) The process used to generate performance measures
C) Formal mechanisms for gathering, organizing and communicating information about
an organization’s activities
D) none of the above
Madison Company produces a part that is used in the manufacture of one of its
products. The costs associated with the production of 5,000 units of this part are as
follows:
Direct materials $108,000
Direct labor 156,000
Variable factory overhead 72,000
Fixed factory overhead 168,000
Total costs $504,000
Of the fixed factory overhead costs, $72,000 are avoidable. Middleton Company has
offered to sell 5,000 units of the same part to Madison for $87.00 per unit. Assuming
there is no other use for the facilities, Madison Company should ________.
A) make the part to save $24,000
B) make the part to save $27,000
C) buy the part to save $24,000
D) buy the part to save $27,000
California Company has 40,000 shares of its common stock outstanding. Utah
Company owns 15,000 shares of California Company’s stock. Which of the following
methods should Utah Company use to account for its investment in California
Company?
A) market-value
B) equity
C) consolidated
D) available-for-sale
When preparing a budgeted balance sheet, the balance in the cash account is found on
the ________.
A) sales budget
B) cash budget
C) operating expense budget
D) capital budget