1) Managers should consider all of the following when deciding whether to accept a
special order, except
A) available excess capacity
B) the variable costs associated with the special order
C) the effect of the order on regular sales
D) fixed costs that will not be affected by the order
2) Which of the following items could be an example of a cost object?
A) A manufacturing plant
B) An international plant
C) The accounting department
D) All of the above are examples of potential cost objects
3) A company receives an unusually high number of orders in a month. To produce all
of the orders within the scheduled dates of delivery, the company pays employees an
extra $8 per hour for every hour of overtime the employees work. Which variance
would be directly impacted?
A) Materials price variance
B) Materials quantity variance
C) Labor efficiency variance
D) Labor rate variance
4) Environmental management accounting (EMA) utilizes three types of information
for internal decision making.
5) If a regression analysis shows an R factor of .89 exists, it is safe to assume
A) a strong negative relationship between cost and volume
B) a strong positive relationship between cost and volume
C) no relationship between cost and volume
D) a perfect positive relationship between cost and volume
6) Joe, Jeff and Jerry Frank own Frank Brothers Farm, a seed company specializing in
seed corn. At their weekly meeting they tried to calculate the portion of the farm’s
overhead expenses that is fixed and the portion that is variable. Over the past twelve
months, the number of bushels of seed corn that has been sold reached its peak in May,
when the total monthly overhead costs totaled $250,000 for 95,000 bushels of seed corn
sold. The lowest number of bushels sold in the last twelve months occurred in
December, when total overhead costs were $75,000 for 7,500 bushels sold. What was
the variable cost per yard?
A) $0.50
B) $2.00
C) $10.00
D) $2.63
7) The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor
per hour is $15.50. The direct labor hours allowed per finished unit is 0.5 hour. During
the current period, 5,500 units of finished goods were produced using 3,000 direct labor
hours. How much is the direct labor rate variance?
A) $1,500 favorable
B) $2,750 favorable
C) $1,500 unfavorable
D) $2,750 unfavorable
8) If a company uses the indirect method to prepare the statement of cash flows, which
of the following items would be added to net income in determining the net cash flow
from operating activities?
A) An increase in inventory would be added to net income
B) A decrease in accounts receivable would be added to net income
C) A decrease in accounts payable would be added to net income
D) An increase in preferred dividends payable would be added to net income
9) Which of the following costs include all of the costs associated with production of a
product?
A) Inventoriable
B) Direct
C) Mixed
D) Overhead
10) The internal financial statements of Vera Incorporated show that their beaded purses
incurred an operating loss in the most recent year. There were 25,000 purses sold in that
year. Selected financial information about the purse line follows.
If the line of purses were to be discontinued, the company would avoid $16,000 in fixed
costs per year.
If Vera Incorporated were to discontinue the line of purses, the change in annual
operating income would be a(n):
A) increase in total operating income of $74,000
B) decrease in total operating income of $10,000
C) increase in total operating income of $10,000
D) decrease in total operating income of $74,000
11) The ________ from the balanced scorecard focuses on determining the company’s
“climate for action.”
A) internal business perspective
B) learning and growth perspective
C) customer perspective
D) financial perspective
12) Tommy’s Toys produces two types of toys: trains and dolls. Tommy’s uses stainless
steel to manufacture the trains and plastic to manufacture the dolls. Information
regarding the usage of steel and plastic for the past year follows:
What is the price variance for steel used to manufacture the trains?
A) $625 favorable
B) $103 favorable
C) $625 unfavorable
D) $103 unfavorable
13) Forty Winks Corporation manufactures night stands. The production budget shows
that Forty Winks Corporation plans to produce 1,200 night stands in March and 1,050
night stands in April. Each night stand requires .50 direct labor hours in its production.
Forty Winks Corporation has a direct labor rate of $12 per direct labor hour. What is the
total combined direct labor cost that should be budgeted for March and April?
A) 6,300
B) 7,200
C) 27,000
D) 13,500
14) All else being equal, a company with a low operating leverage will have
A) relatively high fixed costs
B) relatively high contribution margin ratio
C) relatively high risk
D) relatively high variable costs
15) If the selling price per unit is $40.00, the variable expense per unit is $30, and total
fixed expenses are $200,000, what are the breakeven sales in dollars?
A) $5,000
B) $50,000
C) $800,000
D) $114,286
16) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to common stock?
A) An increase of 6.89 in sales revenue
B) Increase of $6,000 in common stock
C) An increase of 85.37% from prior to current year
D) Sales return of $9.16
17) Job 222 started on June 1 and finished on July 15 . Total cost on July 1 was
$12,400, and the costs added in July were $188,500. The entry for the sale at a price of
$310,000 would be:
A)
B)
C)
D)
18) A company reported beginning plant assets, net of depreciation, of $655,000 and an
ending amount of $732,550. Depreciation expense of $48,400 and a loss on the sale of
equipment of $5,500 were reported on the income statement. The company acquired
$213,800 of plant assets during the year. How much will be reported as cash received
from the sale of equipment in the investing activities section of the statement of cash
flows?
A) The cash received upon the sale of the equipment was $87,850
B) The cash received upon the sale of the equipment was $82,350
C) The cash received upon the sale of the equipment was $93,350
D) The cash received upon the sale of the equipment was $130,750
19) Which type of cost behavior is indicated by the following graphs?
A) Step
B) Fixed
C) Curvilinear
D) Variable
20) The representation for total variable costs is
A) vx + f
B) vx
C) vx – f
D) y = vx + f
21) Guys and Dolls Corporation uses job costing. The following selected financial data
from the company is for the most recent year.
Compute:
a)Beginning raw materials inventory
b)Beginning work in process inventory
c)Beginning finished goods inventory
d)Actual manufacturing overhead costs incurred during the year
22) Earnst & Earnst Consulting pays Amber Kelly $58,000 per year. The cost of her
annual benefits is $17,000. Kelly works 2,500 hours per year.
A)What is the hourly rate to Earnst & Earnst Consulting of employing Amber Kelly?
B)If Amber works 30 hours for client 252, what is the direct labor cost associated with
that client?
23) The journal entry to record $300 of depreciation expense on factory equipment
involves a
A) debit to accumulated depreciation for $300
B) debit to manufacturing overhead for $300
C) debit to depreciation expense for $300
D) credit to manufacturing overhead for $300
24) The data points with the ________ should be selected for use in calculating the
variable cost per unit and the total fixed costs when using the high-low method.
A) highest cost and the lowest cost
B) highest volume and the lowest volume
C) highest volume and the lowest cost
D) highest cost and the lowest volume
25) The primary source of cash over the life of a business is ________.
A) investing activities
B) financing activities
C) operating activities
D) None of the above