1) The purchase-order lead time is the ________.
A) time between placing an order and its delivery
B) time between receiving a customer order and producing the products
C) time between receiving a customer order and delivering the items
D) time required to correct errors in the defective products
2) Goldfarb’s Book and Music Store has two service departments, Warehouse and Data
Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted
warehouse-hours. Data Center Department costs of $150,000 are allocated based on the
number of computer log-on hours. The costs of operating departments Music and Books
are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and
number of computer log-on hours are as follows:
Which of the following linear equations represents the complete reciprocated cost of the
Data Processing Department?
A) DP= $75,000 + (600/4,700) PM
B) DP= $75,000 + (3,500/16,700) PM
C) DP= $75,000 (600/4,700) + $350,000 (3,340/16,700)
D) DP= $350,000 + (600/16,700) DP
3) Zenith Corporation’s net income is $78,400. What is the return on investment if the
amount of the investment is $500,000?
A) 14.88%
B) 12.78%
C) 15.68%
D) 16%
4) Coroid Corporation used the following data to evaluate their current operating
system. The company sells items for $11 each and had used a budgeted selling price of
$12 per unit.
What is the static-budget variance of variable costs?
A) $12,000 favorable
B) $12,000 unfavorable
C) $15,000 favorable
D) $15,000 unfavorable
5) Iaci Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for $133.60 per unit.
The best estimate of the total contribution margin when 4,300 units are sold is:
A) $112,230
B) $162,110
C) $28,380
D) $45,150
6) During an accounting period, job costs are computed on an ongoing basis by the use
of ________.
A) actual allocation rates
B) budgeted indirect-cost rates
C) overallocated indirect-cost rates
D) underallocated indirect-cost rates
7) Using the high-low method of analysis, the variable cost per meal served in the
cafeteria would be estimated to be:
A) $1.50
B) $2.00
C) $2.80
D) $1.00
8) Wayland Manufacturing uses a normal cost system and had the following data
available for 2010:
The ending balance of direct materials inventory is ________.
A) $92,000
B) $174,000
C) $82,000
D) $108,000
9) For each of the following activities identify an appropriate activity-cost driver.
a.machine maintenance
b.machine setup
c.quality control
d.material ordering
e.production scheduling
f.warehouse expense
g.engineering design
10) Veach Corporation incurred fixed manufacturing costs of $6,000 during 2015. Other
information for 2015 includes:
The budgeted denominator level is 1,000 units.
Units produced total 750 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses variable costing and the fixed manufacturing cost rate is based on
the budgeted denominator level. Manufacturing variances are closed to cost of goods
sold.
Fixed manufacturing costs expensed on the income statement (excluding adjustments
for variances) total ________.
A) $3,600
B) $4,800
C) $6,000
D) 0
11) The fixed costs of operating the maintenance facility of General Hospital are
$4,500,000 annually. Variable costs are incurred at the rate of $30 per
maintenance-hour. The facility averages 40,000 maintenance-hours a year. Budgeted
and actual hours per user for 20X3 are as follows:
Assume that budgeted maintenance-hours are used to calculate the allocation rates.
Required:
a.If a single-rate cost-allocation method is used, what amount of maintenance cost will
be budgeted for each department?
b.If a single-rate cost-allocation method is used, what amount of maintenance cost will
be allocated to each department based on actual usage?
c.If a dual-rate cost-allocation method is used, what amount of maintenance cost will be
budgeted for each department?
d.If a dual-rate cost-allocation method is used, what amount of maintenance cost will be
allocated to each department based on actual usage? Based on budgeted usage for fixed
operating costs and actual usage for variable operating costs?
12) Shiffon Electronics manufactures music player. Its costing system uses two cost
categories, direct materials and conversion costs. Each product must pass through the
Assembly Department, the Programming department, and the Testing Department.
Direct materials are added at the beginning of the production process. Conversion costs
are allocated evenly throughout production. Shiffon Electronics uses weighted-average
costing.
The following information is available for the month of March 2015 for the Assembly
department.
The cost details for the month of March are as follows:
What amount of direct materials costs is assigned to the ending Work-in-Process
account for March?
A) $31,363
B) $63,636
C) $75,075
D) $95,000
13) The Fabrication Division of American Car Company has offered to purchase 90,000
batteries from the Electrical Division for $104 per unit. At a normal volume of 250,000
batteries per year, production costs per battery are as follows:
The Electrical Division has been selling 250,000 batteries per year to outside buyers at
$136 each; capacity is 350,000 batteries per year. The Fabrication Division has been
buying batteries from outside sources for $130 each.
Required:
a.Should the Electrical Division manager accept the offer? Explain.
b.From the company’s perspective, will the internal sales be of any benefit? Explain.
14) Kamrock applies manufacturing overhead costs to products at a budgeted
indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has
requested a bid on a special order of the Toy Mouse product. Estimates for this order
include: Direct materials of $50,000; 600 direct manufacturing labor-hours at $20 per
hour; and a 20% markup rate on total manufacturing costs. Manufacturing overhead
cost estimates for this special order total ________.
A) $46,000
B) $34,000
C) $36,000
D) $40,000
15) ________ is a measure of the balanced scorecard’s financial perspective.
A) Service response time
B) Number of new patents
C) Operating income
D) Defect rates
16) Buzz’s Educational Software Outlet sells two or more of the video games as a single
package. Managers are keenly interested in individual product-profitability figures.
Information pertaining to three bundled products and the stand-alone prices is as
follows:
Using the stand-alone method with selling price as the weight for revenue allocation,
what amount will be allocated to the refrigerator?
A) $500.00
B) $333.33
C) $666.67
D) $676.67
17) Vital Industries manufactured 1,200 units of its product Huge in the month of April.
It incurred a total cost of $120,000 during the month. Out of this $120,000, $45,000
comprised of direct materials used in the product and the rest was incurred because of
the conversion cost involved in the process. Ryan had no opening or closing inventory.
What will be the total cost per unit of the product, assuming conversion costs contained
$10,000 of indirect labor?
A) $100
B) $90
C) $70
D) $30
18) Which of the following statements about the direct/indirect cost classification is
true?
A) Indirect costs are always traced.
B) Indirect costs are always allocated.
C) The design of sales target affects the direct/indirect classification.
D) The direct/indirect classification depends on the cost control measures.