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1) Distribution of questionnaires to customers regarding product quality and improving
the product on certain key areas based on the inferences drawn from the questionnaires
is an example of a nonfinancial measure of quality.
2) An example of a physical cause-and-effect relationship is when additional units of
production increase total direct material costs.
3) The sales-quantity variance is favorable when budgeted unit sales exceed actual unit
sales.
4) The homogeneous cost pools and the choice of cost-allocation bases give managers
greater confidence in the activity and product cost numbers from single indirect-cost
pool systems.
5) While doing cost-volume-profit analysis, a company should separate costs into fixed
and variable components.
6) The quantitative analysis method of cost estimation is based on opinions from
various departments and is quick and of low cost to apply.
7) Six Sigma emphasizes incremental rather than dramatic or disruptive innovation.
8) Joint costs are incurred beyond the splitoff point and are assignable to individual
products.
9) In CVP analysis, the graph of total revenues versus total costs is linear in nature
relation to units sold within a relevant range and time period.
10) To take advantage of changing market opportunities, the annual budget should be
strictly enforced.
11) In variance analysis, if any single performance measure is underemphasized,
managers will tend to make decisions that will cause the particular performance
measure to look good.
12) When production quantity exceeds sales, throughput costing results in reporting
lower operating income than variable costing.
13) Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc.,
produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc., must set
up the machines and molds. Setup costs are batch-level costs because they are
associated with batches rather than individual units of products. A separate Setup
Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are
fixed with respect to the number of setup-hours. The following information pertains to
June 2015:
Calculate the flexible-budget variance for variable overhead setup costs.
A) $600 favorable
B) $1,300 favorable
C) $600 unfavorable
D) $1,300 unfavorable
14) Standard labor rate is $8 per hour. Standard labor allowed per unit is 0.6 hours.
Actual cost per labor hour is $7.5 and actual labour hour per unit is 0.7 hours. What is
the standard labor cost per output unit?
A) $4.5
B) $4.8
C) $5.6
D) $5.25
15) Crimpson Company has invested $2,000,000 in a plant to make commercial juicer
machines. The target operating income desired from the plant is $299,000 annually. The
company plans annual sales of 7,000 juicer machines at a selling price of $400 each.
What is the target rate of return on investment for Crimpson Company?
A) 22.0%
B) 18.0%
C) 14.9%
D) 12.9%
16) Stella Company sells only two products, Product A and Product B.
Stella sells two units of Product A for each unit it sells of Product B. Stella faces a tax
rate of 30%. Stella desires a net after-tax income of $73,500. The breakeven point in
units would be ________.
A) 21,750 units of Product A and 43,500 units of Product B
B) 22,500 units of Product A and 45,000 units of product B
C) 43,500 units of Product A and 21,750 units of Product B
D) 45,000 units of Product A and 22,500 units of Product B
17) When analyzing the change in operating income, the strategy component of
productivity ________.
A) calculations are similar to the sales-volume variance calculations
B) compares the change in output price with the changes in input prices
C) will report a large positive amount when a company has successfully pursued the
cost leadership strategy
D) isolates the change attributed solely to an increase in the quantity of units sold
18) The Charmatz Corporation has a central copying facility. The copying facility has
only two users, the Marketing Department and the Operations Department. The
following data apply to the coming budget year:
Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Marketing Department was 80,000 copies and by the
Operations Department was 360,000 copies.
If a dual-rate cost-allocation method is used, what amount of copying facility costs will
be budgeted for the Operations Department?
A) $57,000
B) $56,400
C) $60,490
D) $59,890
19) Which of the following statements is true about activity-based budgeting?
A) activity-based budgeting estimates total costs more accurately than cost-based
budgeting
B) activity-based budgeting provides more detailed information than cost-based
budgeting
C) activity-based budgeting is cheaper than cost-based budgeting
D) activity-based budgeting is simpler to implement than cost-based budgeting
20) ________ reduces theoretical capacity for unavoidable operating interruptions.
A) Practical capacity
B) Theoretical capacity
C) Master-budget capacity utilization
D) Normal capacity utilization
21) Younger Corporation reports that at an activity level of 8,700 units, its total variable
cost is $653,109 and its total fixed cost is $658,416.
Required:
For the activity level of 8,800 units, compute: (a) the total variable cost; (b) the total
fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed
cost per unit; and (f) the average total cost per unit. Assume that this activity level is
within the relevant range.
22) A shift towards a mix of products with a lower contribution margin per unit will
most likely result in a(n) ________.
A) unfavorable sales-mix variance
B) unfavorable sales-quantity variance
C) favorable sales-mix variance
D) favorable sales-quantity variance
23) ________ focuses on reducing costs during the manufacturing stage.
A) Target costing
B) Kaizen costing
C) Cost-plus pricing
D) Life-cycle costing
24) The sales-quantity variance results from a difference between ________.
A) the actual sales mix and the budgeted sales mix
B) the actual quantity of units sold and the budgeted quantity of unit sales in the static
budget
C) actual contribution margin and the budgeted contribution margin
D) actual market size in units and the budgeted market size in units
25) Which of the following statements is true of lean accounting?
A) It is much complex than traditional product costing.
B) It does not always compute costs for individual products.
C) It omits recording some of the journal entries relating to the stages from the purchase
of direct materials to the sale of finished goods.
D) It compares value stream costs against costs that include costs of all purchased
materials.
26) Many companies have switched from absorption costing to variable costing for
internal reporting ________.
A) to comply with external reporting requirements as required by GAAP
B) to increase bonuses for managers
C) to reduce the undesirable incentive to build up inventories
D) so the denominator level is more accurate
27) Meridian Industries manufactures and sells two models of watches, Prime and
Luxuria. It expects to sell 3,000 units of Prime and 1,000 units of Luxuria in 2016.The
following estimates are given for 2016:
Meridian had an inventory of 200 units of Prime and 75 units of Luxuria at the end of
2015 . It has decided that as a measure to counter stock outages it will maintain ending
inventory of 350 units of Prime and 200 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of
$10. There were 100 units of Crimpson in stock at the end of 2015.The management
does not want to have any stock of Crimpson at the end of 2016 .
What is the amount budgeted for purchase of Crimpson in 2016?
A) $31,500
B) $10,250
C) $30,500
D) $10,000
28) New Age Electronics manufactures surround sound systems and applies
manufacturing costs to production at a budgeted indirect-cost rate of $20 per
direct-labor hour. The following data are obtained from the accounting records for
August 2014:
Required:
a.What actual amount of manufacturing overhead cost was incurred during August
2014?
b.What amount of manufacturing overhead was allocated to all jobs during August
2014?
c.For August 2014, was manufacturing overhead underallocated or overallocated?
Explain.
29) Job-costing is likely to be used by________.
A) oil refining companies
B) advertising agencies
C) postal service companies
D) beverage production companies
30) Which of the following is the correct mathematical expression to calculate a
benchmark total factor productivity?
A) Quantity of output produced in current year Costs of inputs at current year prices
that would have been used in previous year to produce current year output
B) Quantity of output produced in previous year Costs of inputs at current year prices
that would have been used in previous year to produce current year output
C) Quantity of output produced in current year Costs of inputs at previous year prices
that would have been used in previous year to produce current year output
D) Quantity of output produced in previous year Costs of inputs at previous year prices
that would have been used in previous year to produce current year output
31) Which of the following companies is part of the merchandising sector of our
economy?
A) Jaguar
B) Hewlett Packard
C) Arrow Electronics
D) Michael Toback Accounting Firm
32) Actual (rather than allocated) manufacturing overhead costs are first recorded in the
________.
A) Work-in-Process Control account
B) Finished Goods Control account
C) Manufacturing Overhead Control account
D) Cost of Goods Sold account
