1) Under the incremental method of allocating common costs ________.
A) the parties are interested in being viewed as primary users
B) each party bears a proportionate share of the total costs in relation to their individual
stand-alone costs
C) the first-incremental user bears a higher proportion of the cost in comparison with
the primary user
D) the primary user bears the maximum of the total cost
2) The best estimate of the total monthly fixed manufacturing cost is:
A) $1,027,200
B) $1,060,300
C) $1,093,400
D) $630,000
3) Mintol Company provided the following information:
Budgeted input72,000gallons
Actual input90,000gallons
Budgeted production30,000units
Actual production28,500units
What is the partial productivity ratio?
A) 0.32 units per pound
B) 0.37 units per pound
C) 0.41 units per pound
D) 0.39 units per pound
4) A well-designed management control system uses information from ________.
A) internal sources only as they are the most reliable sources of information
B) external sources only as they are more dynamic and future oriented
C) both internal and external sources as a wide range of information is required
D) external sources only as they are the most reliable sources of information
5) The minimum transfer price equals ________.
A) opportunity costs less the additional outlay costs
B) opportunity costs times 125% plus the additional outlay costs
C) opportunity costs divided by the additional outlay costs
D) incremental costs plus opportunity costs
6) Which of the following statements best defines manufacturing cells?
A) They are manufacturing areas that use a “push-through”approach whereby finished
goods are manufactured on the basis of demand forecasts.
B) They are manufacturing centers which focuses on production of a single product.
C) They are work areas with different types of equipment grouped together to make
related products.
D) They are production centers in which goods are manufactured only after receiving
customer orders.
7) Which of the following is true if the production volume decreases?
A) fixed cost per unit increases
B) average cost per unit decreases
C) variable cost per unit increases
D) variable cost per unit decreases
8) Komerica Corp is committed to its quality program. It works with all areas of the
company to establish sound quality programs within reasonable budget guidelines. For
2015, it has budgeted $1,000,000 for prevention costs and $800,000 for appraisal costs.
Internal failure has a budget of $100 per failed item, while external failure has a total
budget of $600,000.
Product Testing has proposed to management a change in the 2015 budget for a new
method of testing products. If management decides to implement the new method, $2
per unit of appraisal costs will be saved, up to a level of 150,000 tests. No additional
savings are expected past the 150,000 level. The new method involves $95,000 in
training costs and $65,000 in yearly testing supplies.
Traditionally, 5% of all completed items have to be reworked. External failure costs
average $120 per failed unit. The company’s average external failures are 1% of units
sold. The company carries no ending inventories.
Required:
a.What is the adjusted budget for appraisal costs, assuming the new method is
implemented and 800,000 units are tested during the manufacturing process in 2015?
b.How much do internal failure costs change, assuming 500,000 units are tested under
the new method and it reduces the amount of unacceptable units in the manufacturing
process by 40%?
c.What would be the change in the external failure budget, assuming external failures
are reduced by 60% and the same facts as in part (b)?
9) Total finished units to be produced is based on the ________.
A) direct material purchase budget
B) budgeted sales units
C) direct material usage budget
D) budgeted manufacturing overhead
10) The prime cost for December was:
A) $129,000
B) $115,000
C) $109,000
D) $62,000
11) Product costs for financial statements may refer to ________.
A) inventoriable costs for external reporting purposes
B) exchange cost incurred during transportation
C) only the costs incurred along the supply chain
D) opportunity costs incurred for the decisions forgone
12) Which of the following statements best relates to the balanced scorecard’s learning
and growth perspective?
A) How will we empower our employees?
B) How do we lower costs?
C) What processes will increase value to customers?
D) How can we obtain greater profits?
13) Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system
utilizes two cost categories, direct materials and conversion costs. Each product must
pass through Department A and Department B. Direct materials are added at the
beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2015 are:
Costs for Department A for February 2015 are:
What is the unit cost per equivalent unit of beginning inventory in Department A?
A) $750
B) $1,750
C) $2,800
D) $3,250