Clooney Company has the following expected pattern of collections on credit sales: 70
percent collected in the month of sale, 15 percent in the month after the month of sale,
and 14 percent in the second month after the month of sale. The remaining 1 percent is
never collected.
At the end of May, Clooney Company has the following accounts receivable balances:
Clooney’s expected sales for June are $150,000. How much cash will Clooney
Company expect to collect in June?
A. $127,400
B. $129,000
C. $148,600
D. $152,520
Pearce Company
Pearce Company uses a standard cost system for its production process. Pearce
Company applies overhead based on direct labor hours. The following information is
available for July:
Refer to Pearce Company Using the four-variance approach, what is the volume
variance?
A. $6,930 U
B. $13,260 U
C. $0
D. $2,640 F
In activity-based costing, final cost allocations assign costs to
A. departments.
B. processes.
C. products.
D. activities.
Bradley Corporation
Bradley Corporation has three production departments A, B, and C. Bradley
Corporation also has two service departments, Administration and Personnel.
Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.
Refer to Bradley Corporation. Assume that Administration costs have been allocated
and the balance in Personnel is $860,000. What amount is allocated to C (round to the
nearest dollar)?
A. $213,964
B. $430,000
C. $286,667
D. $143,333
Which of the following costs would be relevant in short-term decision making?
A. incremental fixed costs
B. all costs of inventory
C. total variable costs that are the same in the considered alternatives
D. the cost of a fixed asset that could be used in all the considered alternatives
One unit requires 2 direct labor hours to produce. Standard variable overhead per unit
is $1.25 and standard fixed overhead per unit is $1.75. If 330 units were produced this
month, what total amount of overhead is applied to the units produced?
A. $990
B. $1,980
C. $660
D. cannot be determined without knowing the actual hours worked
Which of the following statements is true?
A. A good cost management system is a key consideration in determining an
organization’s mission.
B. The organization’s mission is a critical success factor in assessing how to react to
competition.
C. Knowledge of an organization’s critical success factors help to clarify organizational
mission and develop a cost management system.
D. An organization must establish a position of cost leadership to compete in a global
business environment.
Glassman Company
Glassman Company produces two products: A and B. The company has three overhead
functions that are required for both products.
Below is production information for Products A and B:
The company produces 800 units of Product A and 8,000 units of Product B each
period.
The overhead functions have the following hourly costs:
Refer to Glassman Company If total overhead is assigned to A and B on the basis of
overhead activity hours used, the total product cost per unit assigned to Product B will
be
A. $115.50
B. $73.32
C. $34.60
D. None of the responses are correct.
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. What are the equivalent units for material using the FIFO
method?
A. 111,800
B. 120,000
C. 125,500
D. 130,000
A process costing system does which of the following?
A. no no
B. no yes
C. yes yes
D. yes no
Performance measurements and a reward system are part of which cost management
element?
A. motivational
B. informational
C. reporting
D. all of the above
Irrelevant costs generally include
A. yes yes no
B. yes no no
C. no no yes
D. yes yes yes
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Using a physical measure, what amount of joint
processing cost is allocated to Product Z (round to the nearest dollar)?
A. $4,000
B. $3,243
C. $5,500
D. $4,757
Saturn Corporation
Material A is added at the start of production, while Material B is added uniformly
throughout the process.
Refer to Saturn Corporation Assuming a FIFO method of process costing, compute
EUP for conversion.
A. 2,240
B. 2,180
C. 2,280
D. 2,700
Davis Company
Davis Company uses a job-order costing system. Assume that Job #504 is the only one
in process. The following information is available:
Refer to Davis Company. What is the total cost of Job #504 assuming that overhead is
applied at the rate of 135% of direct labor cost (rounded to the nearest whole dollar)?
A. $192,650
B. $268,250
C. $275,000
D. $329,675
Andersen Corporation
Andersen Corporation has the following information for the current month:
All materials are added at the start of the production process. Andersen Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Andersen Corporation. Assume that the costs per EUP for material and
conversion are $2.00 and $2.25, respectively. Assuming that weighted average is used,
what is the cost assigned to ending inventory?
A. $55,312
B. $63,750
C. $66,375
D. $72,312
Magnificent Motor Corporation
The Engine Division of Magnificent Motor Corporation uses 5,000 carburetors per
month in its production of automotive engines. It presently buys all of the carburetors it
needs from two outside suppliers at an average cost of $100. The Carburetor Division
of Magnificent Motor Corporation manufactures the exact type of carburetor that the
Engine Division requires. The Carburetor Division is presently operating at its capacity
of 15,000 units per month and sells all of its output to a foreign car manufacturer at
$106 per unit. Its cost structure (on 15,000 units) is:
Assume that the Carburetor Division would not incur any variable selling costs on units
that are transferred internally.
Refer to Magnificent Motor Corporation. What is the minimum of the transfer price
range for a transfer between the two divisions?
A. $96
B. $90
C. $70
D. $106
Welch Corporation uses a predetermined overhead application rate of $.30 per direct
labor hour. During the year it incurred $345,000 dollars of actual overhead, but it
planned to incur $360,000 of overhead. The company applied $363,000 of overhead
during the year. How many direct labor hours did the company plan to incur?
A. 1,150,000
B. 1,190,000
C. 1,200,000
D. 1,210,000
Galveston Excursons Corporation
Galveston Excursons Corporation is considering the purchase of a new ocean-going
vessel that could potentially reduce labor costs of its operation by a considerable
margin. The new ship would cost $600,000 and would be fully depreciated by the
straight-line method over 15 years. At the end of 15 years, the ship will have no value
and will be scuttled. Galveston Excursons’ cost of capital is 14 percent, and its marginal
tax rate is 35 percent.
Refer to Galveston Excursons Corporation. If the ship produces equal annual labor cost
savings over its 10-year life, how much do the annual savings in labor costs need to be
to generate a net present value of $0 on the project? (Round to the nearest dollar.)
Present value tables or a financial calculator are required.
A. $ 83,685
B. $ 97,685
C. $146,906
D. $226,008