Which of the following would not be an appropriate cost driver to measure internal
failure?
A. design error
B. product failure
C. machine reliability
D. operator error
An important focus in product life cycle costing is
A. the activity base.
B. the target cost.
C. the cost driver.
D. variable costs.
Which of the following statements is not true?
A. JIT manufacturing strives for zero inventories.
B. JIT manufacturing strives for zero defects.
C. JIT manufacturing uses manufacturing cells.
D. JIT manufacturing utilizes long lead time and few deliveries.
Industrial Solutions Company
Industrial Solutions Company produces three products from the same process that has
joint processing costs of $4,100. Products R, S, and T are produced in the following
quantities: 250 gallons, 400 gallons, and 750 gallons. Industrial Solutions Company
also incurred advertising costs of $60,000. The ad was used to run sales for all three
products. The three products occupy floor space in the following ratio: 5:4:9. (Round all
answers to the nearest dollar.)
Refer to Industrial Solutions Company. Assume that Industrial Solutions chooses to
allocate its advertising cost among the three products. What amount of advertising cost
is allocated to Product R using the floor space ratio?
A. $30,000
B. $17,806
C. $1,139
D. $16,667
Peoria Company
Peoria Company has two departments (Processing and Packaging) and uses a job-order
costing system. Peoria applies overhead in Processing based on machine hours and on
direct labor cost in Packaging. The following information is available for August:
Refer to Peoria Company. What is the overhead application rate per machine hour for
Processing?
A. $ 0.79
B. $ 1.27
C. $13.22
D. $16.81
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. What is the material cost per equivalent unit using the
weighted average method?
A. $.58
B. $.62
C. $.77
D. $.82
Just-in-time (JIT) inventory systems
A. result in a greater number of suppliers for each production process.
B. focus on a “push” type of production system.
C. can only be used with automated production processes.
D. result in inventories being either greatly reduced or eliminated.
Jackson Company.
Jackson Company manufactures wood file cabinets. The following information is
available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company. What are prime costs and conversion costs, respectively if
there were 1,500 direct labor hours and $21,000 of raw material was purchased?
A. $29,100 and $33,900
B. $33,900 and $24,000
C. $33,900 and $29,100
D. $24,000 and $33,900
In a job-order costing system, the net cost of normal spoilage is equal to
A. estimated disposal value plus the cost of spoiled work.
B. the cost of spoiled work minus estimated spoilage cost.
C. the units of spoiled work times the predetermined overhead rate.
D. the cost of spoiled work minus the estimated disposal value.
Which of the following would fall within the range of tolerance for a production cycle?
A. yes yes
B. yes no
C. no no
D. no yes
In a JIT manufacturing environment, product costing information is least important for
use in
A. work in process inventory valuation.
B. pricing decisions.
C. product profitability analysis.
D. make-or-buy decisions.
Which service department cost allocation method considers all interrelationships of the
departments and reflects these relationships in equations?
A. step method
B. indirect method
C. algebraic method
D. direct method
Stayton Enterprises
Refer to Stayton Enterprises. For April, conversion cost incurred was
A. $36,000
B. $45,000.
C. $81,000.
D. $84,000.
In an internal transfer, the selling division records the event by crediting
A. Accounts Receivable and Cost of Goods Sold.
B. Cost of Goods Sold and Finished Goods.
C. Finished Goods and Accounts Receivable.
D. Finished Goods and Intracompany Sales.
The journal entry to record the incurrence and payment of overhead costs for factory
insurance requires a debit to
A. Cash and a credit to Manufacturing Overhead.
B. Manufacturing Overhead and a credit to Accounts Payable.
C. Manufacturing Overhead and a credit to Cash.
D. Work in Process Inventory and a credit to Cash.
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 variable
overhead efficiency variance?
A. $9,570 F
B. $9,570 U
C. $2,200 F
D. $2,200 U
When cost relationships are linear, total variable prime costs will vary in proportion to
changes in
A. direct labor hours.
B. total material cost.
C. total overhead cost.
D. production volume.