1) The maximum outsourcing price a company is willing to pay can be found by
solving for the company’s indifference point.
2) The journal entry to record the use of direct labor in Processing Department #1
would include a debit to WIP-Processing Department #1 .
3) A sales volume variance will occur when the number of units actually sold differs
from the volume originally planned for in the master budget.
4) The last step of the 5-step process costing procedure is to assign total costs to units
completed and to units in ending Work in Process inventory.
5) The payback method primarily focuses on profitability and not time.
6) In process costing, there is only one Work in Process Inventory account for all of the
individual processing departments.
7) The health care insurance cost of a company for its assembly-line workers would not
be considered to be a capital asset.
8) Vertical analysis is the analysis of a financial statement that reveals the relationship
of each statement item to a specified base.
9) The cost of goods sold is a variable cost for merchandise company, but contains a
mixture of variable and fixed production costs for manufacturers.
10) The cash budget is prepared before the budgeted balance sheet is prepared.
11) To maximize profits, produce the product with the lowest contribution margin per
unit of the constraint.
12) Trends in the modern business environment include a shift to a service economy
and the rise of the global marketplace.
13) The Sarbanes-Oxley Act has significantly impacted the responsibility for financial
reporting by publicly traded corporations.
14) Sales margin is a component of the Return on Investment (ROI) calculation.
15) The margin of safety is the excess of expected sales over breakeven sales.
16) If the number of units produced equals the number of units sold for a manufacturer,
both variable costing and absorption costing income statements will yield the same
gross margin.
17) Which of the following items represent monetary information in an environmental
management accounting system?
A) Cost of coffee in break room
B) Cost of sulfur used in erasers
C) Cost of wages for secretaries
D) Cost of wages for quality control inspector
18) Determining how much manufacturing overhead is overallocated or underallocated
A) is done before the period starts
B) is done during the period
C) can be done at any time
D) is done at the end of the period
19) In the equation y = $7.20x + $790, “y” represents
A) total fixed costs
B) total costs
C) variable costs/unit
D) none of the above
20) Brittany Furniture manufactures two products: Futons and Recliners. The following
data are available:
The company can manufacture two futons per machine hour and one recliner per
machine hour. The company’s production capacity is 900 machine hours per month.
To maximize profits, what product and how many units should the company produce in
a month?
A) 900 recliners
B) 1,800 futons and 900 recliners
C) 1,800 futons
D) 700 futons and 360 recliners
21) The selling price of a particular product is $7.00 per unit, fixed costs total $18,000,
and the breakeven sales in dollars is $24,000. What would be the variable expense per
unit?
A) $2.33
B) $5.25
C) $1.75
D) $12.25
22) The Hummel Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s days’ sales in receivables for the current year?
A) 42.00 days
B) 1.20 days
C) 25.00 days
D) 14.60 days
23) Here are selected data for Sunny Sky Corporation:
What is the finished goods ending inventory?
A) $80,300
B) $493,700
C) $79,300
D) $287,000
24) Zanny Moldings has the following estimated costs for the upcoming year:
The company estimates that 1,600 direct labor hours will be worked in the upcoming
year, while 2,000 machine hours will be used during the year. The predetermined
manufacturing overhead rate per direct labor hour is closest to
A) $120
B) $66
C) $38
D) $40
25) Selected financial data for The Portland Porcelain Works Coffee Mug Division is as
follows:
What is The Portland Porcelain Works Coffee Mug Division return on investment?
A) 57.60%
B) 320.00%
C) 18.00%
D) 7.83%
26) The horizontal line intersecting the vertical y-axis at the level of total cost on a CVP
graph represents
A) total costs
B) total variable costs
C) total fixed costs
D) breakeven point
27) Total predicted sales (in units) minus total breakeven sales in units divided by total
predicted sales (in units) yields
A) contribution margin ratio
B) contribution margin per unit
C) percent of sales mix
D) margin of safety percentage
28) The following information relates to Bennett 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?
29) The number of new services offered during the period would be an example of
measuring which perspective?
A) Financial
B) Customer
C) Internal business
D) Learning and growth
30) Razzle Baking Company gathered the following actual results for the current
month:
Budgeted production and standard costs were:
What is the direct materials quantity variance?
A) $2,500 unfavorable
B) $2,250 unfavorable
C) $2,500 favorable
D) $2,250 favorable
31) Inflating your expenses for a company-sponsored conference is a violation of what
ethical standard?
A) Credibility
B) Integrity
C) Competence
D) Confidentiality
32) Outsourcing decisions are sometimes referred to as
A) make-or-buy decisions
B) make decisions
C) buy decisions
D) none of the above
33) All of the following budgets are prepared by merchandising companies except
A) manufacturing overhead
B) capital expenditures
C) budgeted income statement
D) cash
34) When units are moved from one processing department to the next, the cost
associated with those units must also be moved from one WIP account to the next. What
are these costs called?
A) Transported costs
B) Transmitted costs
C) Transferred costs
D) Conveyed costs
35) Joe’s Bottling Company provided the following expense information for July:
What is the total cost for the customer service category of the value chain?
A) $68,000
B) $12,000
C) $20,000
D) $75,000
36) Dozen Bakery makes cupcakes and cookies. Dozen gathered the following
information for the current year regarding its use of flour and butter (flour is a direct
material for cupcakes and butter is a direct material for cookies):
What is the direct materials flexible budget variance for the flour in cupcakes?
A) $200 favorable
B) $800 unfavorable
C) $800 favorable
D) $200 unfavorable
37) If a company decides to outsource and then has freed capacity, the decision on what
to do with that freed capacity would be based upon
A) avoidable fixed costs
B) opportunity costs
C) unavoidable fixed costs
D) none of the above
38) A company reported the following amounts of net income:
Which of the following is the percentage change from Year 2 to Year 3?
A) 40.00%
B) 50.00%
C) 110.00%
D) 150.00%
39) Yummy-Tummy Foods has the following information about its standards and
production activity for November:
Actual manufacturing overhead cost incurred, $85,000
Standard manufacturing overhead:
Variable manufacturing overhead cost @ $5.75 per unit produced
Fixed manufacturing overhead cost @ $8.45 per unit produced
($84,500/10,000 budgeted units)
Actual units produced, 12,000
Assume the allocation base for fixed overhead costs is the number of units to be
produced.
How much are the standard overhead costs allocated to actual production?
A) $170,400
B) $142,000
C) $85,000
D) $57,500
40) Which of the following budgets or financial statements is part of the operating
budget?
A) Sales budget
B) Budgeted balance sheet
C) Capital expenditures budget
D) Cash budget
41) The journal entry needed to record the receipt of a factory utility bill would include
a
A) debit to manufacturing overhead
B) credit to manufacturing overhead
C) debit to accounts payable
D) debit to utilities payable