A hotel has the following organizational goal: Increase employee satisfaction. Which
one of the following is the best performance measure of the organizational goal?
A) number of new employees trained
B) turnover rate of hotel employees
C) overall rating on employee service on guest satisfaction survey
D) percent of guests writing complaints about employees
During the month of May, Sanchez Clothing transferred 140,000 shirts to Finished
Goods Inventory. There was no beginning work-in-process inventory. The company had
40,000 shirts in process at May 31 and the shirts were 50 percent complete with respect
to conversion costs. All direct materials are added at the beginning of the production
process. The equivalent units for materials for May are ________.
A) 90,000
B) 140,000
C) 160,000
D) 180,000
Chocolate Company is considering the production of a new product. Chocolate
Company has the following data available:
Expected sales(units) over product life 15,000
Variable production costs $42 per unit
Variable selling costs $16 per unit
Annual fixed production costs $15,000
Annual fixed selling costs $5,000
Research and development costs $184,000
What is the total variable cost of the product over the product life cycle?
A) $204,000
B) $716,000
C) $870,000
D) $880,000
Why is absorption costing more widely used than variable costing?
A) Variable costing is not allowed for tax purposes, but absorption costing is allowed.
B) Variable costing is not allowed for external reports, but absorption costing is
allowed.
C) Absorption costing removes the impact of changing inventory levels from the
financial results.
D) A and B
Matthew Company has a sales budget for next month of $400,000. Cost of goods sold is
expected to be 40% of sales. All units are paid for in the month following purchase. The
beginning inventory is $5,000 and an ending inventory of $12,000 is desired. Beginning
accounts payable is $76,000. The cost of goods sold for next month is ________.
A) $140,000
B) $160,000
C) $172,000
D) $220,000
Maury Company’s revenues are $300 for the year. Average invested capital for the year
is $240. Expenses are currently 84% of revenues. If Maury Company can reduce its
expenses to 70% of revenues, return on investment will be ________.
A) 20%
B) 37.5%
C) 70%
D) 93.75%
________ summarizes the results of the basic operating activities of a company.
A) Gross margin
B) Gross profit
C) Net profit
D) Operating income
Wendel Company has actual fixed overhead costs of $14,700. Fixed overhead costs
based on the flexible budget and the actual use of the cost driver are $14,400. Actual
variable overhead costs are $14,500. What is the flexible-budget variance for fixed
overhead costs?
A) $300 Favorable
B) $300 Unfavorable
C) $100 Favorable
D) $100 Unfavorable
Gollerowski Company has determined the following information for the year ended
December 31, 2015:
Direct labor used $16,840
Direct material used $26,300
General and administrative expenses $14,240
Indirect production costs $56,780
Selling expenses $13,599
Work-In-Process Inventory, January 1, 2015 0
Work-In-Process Inventory, December 31, 2015 0
Finished Goods Inventory, January 1, 2015 0
Finished Goods Inventory, December 31, 2015 ?
Cost of Goods Sold $80,000
Requirements:
A) What is the Cost of Goods Manufactured for the year ended December 31, 2015?
B) What is Finished Goods Inventory at December 31, 2015?
Which of the following statements about management accounting is FALSE?
A) Management accounting is the process of identifying, measuring, accumulating,
analyzing, preparing, interpreting and communicating information.
B) Management accounting helps managers fulfill organizational objectives.
C) Management accounting is used by managerial accountants to make strategic and
operational decisions.
D) Management accounting produces information for managers in an organization.
Patrick Company had the following transactions:
1. The owner started the company by investing $10,000 of cash.
2. The company paid $2,000 for six months of rent. The rent was paid in advance.
3. The company acquired $3,300 in inventory and put one-third of the purchase on
account. The company paid $2,200 cash.
4. The company sold inventory costing $1,400 for $2,900 on account.
After all these transactions, what is the balance in the cash account?
A) $1,600
B) $2,900
C) $5,800
D) $8,000
The following information is available for the Gold Company:
Net income for the year ended December 31, 2014 $127.4
Retained earnings, December 31, 2014 150.0
Retained earnings, December 31, 2013 180.0
Total assets, December 31, 2014 470.0
Total assets, December 31, 2013 442.0
Total liabilities, December 31, 2014 240.0
Total liabilities, December 31, 2013 182.0
What is the return on stockholders’ equity for the year ended December 31, 2014?
A) 24.1%
B) 27.1%
C) 52.0%
D) 55.4%
Diulio Company produces a product in a process-costing system involving several
departments. The company uses the weighted-average method of process costing. The
first department’s data for the month of April follow:
Units in beginning work-in-process inventory 15,000
Units started during April 140,000
Units completed during April 120,000
Units in ending work-in-process inventory 35,000
Direct materials added in current month $168,000
Conversion costs added in current month $186,000
Direct materials-beginning work-in-process inventory $25,750
Conversion costs-beginning work-in-process inventory $3,225
Stage of Completion:
Materials Conversion Costs
Beginning work-in-process inventory 50% 40%
Ending work-in-process inventory 50% 30%
Required:
A) Compute equivalent units for materials and conversion costs.
B) Compute the cost per unit for materials and conversion costs. Round to two decimal
places.
C) Compute the cost of the units transferred.
D) Compute the cost of the ending work-in-process inventory.
Julie Company’s revenues for the year are $300 and average invested capital for the
year is $240. Expenses are currently 50% of revenues. Julie Company’s current return
on investment is ________.
A) 50%
B) 62.5%
C) 80%
D) 100%
Bronski Corporation manufactures two products, Simple and Complex. The following
information was gathered:
Simple Complex
Selling price per unit $37.00 $26.00
Variable cost per unit 32.00 22.00
Total fixed costs are $18,000. Assume demand for either product exceeds the factory’s
capacity. It takes one hour of production time to make Simple and two hours to make
Complex. The annual capacity of the plant is 10,000 hours. How many units of Simple
and Complex should Bronski Corporation produce and sell to maximize profits?
A) 0 units of Simple and 5,000 units of Complex
B) 6,000 units of Simple and 3,000 units of Complex
C) 10,000 units of Simple and 0 units of Complex
D) 3,000 units of Simple and 6,000 units of Complex
John Company reported cost of goods sold of $910,000, an increase in inventory of
$100,000, and an increase in accounts payable of $40,000. How much cash was paid to
suppliers?
A) $770,000
B) $810,000
C) $970,000
D) $1,050,000
Who is the primary user of performance reports used to plan and control operations?
A) management accountants
B) CPAs
C) operating managers
D) chartered accountants
With mixed costs, the fixed cost element is viewed as the ________ and the variable
cost element is viewed as the ________.
A) step cost; cost of capacity
B) cost of capacity; incremental cost of using capacity
C) variable cost; cost of capacity
D) step cost; mixed cost
The cost to serve percentage for a customer equals ________.
A) gross margin per unit divided by selling price per unit
B) contribution margin per unit divided by selling price per unit
C) cost of goods sold per unit divided by selling price per unit
D) costs associated with customer divided by sales revenue
When a company uses economic profit as a performance metric, managers have an
incentive to invest only in projects ________.
A) earning less than the return on investment of the segment or division
B) earning more than the return on investment of the segment or division
C) earning more than the cost of capital of the segment or division
D) earning less than the cost of capital of the segment or division
________ costs involve efforts to improve product design for more efficient production
processes.
A) Prevention
B) Appraisal
C) Internal failure
D) External failure
A cost management system provides ________.
A) measures of inventory value and cost of goods sold for financial reporting
B) cost information for strategic management decisions
C) cost information for operational control
D) all of the above
Zach Company produces and sells a product that has variable costs of $7 per unit and
fixed costs of $200,000 per year. If 40,000 units are produced and sold in a year, what is
the total cost per unit?
A) $7
B) $10
C) $12
D) $17
The higher the risk of an investment project, the ________ for the project.
A) lower the minimum desired rate of return
B) higher the minimum desired rate of return
C) lower the expected rate of return
D) higher the expected rate of return
Cowboy Company wishes to sell a machine with a book value of $40,000. The income
tax rate is 30%. The machine is sold for $60,000.
Required:
A) What is the net after-tax cash flow from the sale of the machine? Is it an inflow or
outflow?
B) If the machine is sold for $30,000, what is the net after-tax cash flow from the sale
of the machine?
A brainstorming group in the Research and Development area is charged with
developing new product ideas for the company. What is a good cost driver of the cost of
this activity?
A) number of parts in new products proposed
B) number of new product proposals
C) number of workers
D) number of engineering hours
Gnat Company reported the following information about the production and sale of its
only product during the first month of operations:
Selling price per unit $300
Sales $480,000
Direct materials used $220,000
Direct labor $200,000
Variable factory overhead $60,000
Fixed factory overhead $80,000
Variable selling and administrative expenses $20,000
Fixed selling and administrative expenses $10,000
Ending inventory, Direct Materials 0
Ending inventory, Work-in-process 0
Ending inventory, Finished Goods 400 units
Under variable costing, the operating income or loss is ________.
A) $(6,000)
B) $(14,000)
C) $10,000
D) $41,000
Donna Company makes three types of products. The company has two types of
customers. The cost to serve all customers is $12,000 and is allocated to customer types
based on the number of manager visits to customer locations. The following data are
available:
Product 1 Product 2 Product 3
Sales $5,000 $6,000 $30,000
Cost of goods sold 4,000 4,800 15,000
Gross margin $1,000 $1,200 $15,000
Customer Type 1 Customer Type 2
Product 1 Sales $500 $4,500
Product 2 Sales $1,000 $5,000
Product 3 Sales $16,000 $14,000
Manager visits 4 16
What is the operating income for all three products for Customer Type 1?
A) $2,400
B) $5,850
C) $5,900
D) $9,600
Sealy Company has a joint process, which produces three products called A, B and C.
Each product may be sold at split-off or processed further and then sold. Joint
processing costs for a year are $20,000. Other relevant data are:
Sales Value Separable Processing Sales Value
Product at Split-Off Costs After Split-Off at Completion
A $94,000 $28,000 $115,000
B 60,000 10,000 82,000
C 66,000 14,000 79,000
Required:
A) Which products should be processed further? Why?
B) If the Sealy Company maximizes profits, what is the operating income?
A spreadsheet can be used to prepare ________.
A) the operating budget
B) the financial budget
C) schedules from the master budget
D) all of the above
A favorable materials price variance can affect all of the following variances except
________.
A) labor rate variance
B) labor efficiency variance
C) materials quantity variance
D) flexible budget variance for direct materials
Which one of the following is NOT a nonfinancial performance measure of customer
satisfaction on a commercial airline?
A) number of lost bag reports
B) number of flights cancelled
C) number of employees with advanced degrees
D) number of flights on time