Materials used by Jefferson Company in producing Division C’s product are currently
purchased from outside suppliers at a cost of $10 per unit. However, the same materials
are available from Division A. Division A has unused capacity and can produce the
materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of
$9.50 per unit is negotiated and 25,000 units of material are transferred, with no
reduction in Division A’s current sales.
How much will Jefferson’s total income from operations increase?
a. $37,500
b. $100,000
c. $62,500
d. $150,000
Answer:
In a lean environment, the journal entry to record conversion costs would include a
debit to the raw and in process inventory account.
a. True
b. False
Answer:
The following data relate to direct labor costs for February:
What is the direct labor time variance?
a. $7,700 favorable
b. $7,700 unfavorable
c. $11,200 unfavorable
d. $11,200 favorable
Answer:
The investment turnover is the ratio of
a. income from operations to sales
b. income from operations to invested assets
c. assets to liabilities
d. sales to invested assets
Answer:
Finch Company began its operations on March 31 of the current year. Finch has the
following projected costs:
(1) Of the manufacturing costs, three-fourths are paid for in the month they are
incurred; one-fourth is paid in the following month.
(2) Insurance expense is $1,000 a month; however, the insurance is paid four times
yearly in the first month of the quarter, (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November.
The cash payments for Finch Company expected in the month of June are
a. $215,500
b. $188,800
c. $214,000
d. $212,000
Answer:
The controlling account for the cost ledger is
a. Finished Goods
b. Materials
c. Work in Process
d. Cost of Goods Sold
Answer:
A business operated at 100% of capacity during its first month and incurred the
following costs:
If 600 units remain unsold at the end of the month, what is the amount of inventory that
would be reported on the absorption costing balance sheet?
a. $24,300
b. $28,200
c. $22,800
d. $34,000
Answer:
Morocco Desk Co. purchases 6,000 feet of lumber at $6.00 per foot. The standard price
for direct materials is $5.00. The entry to record the purchase and unfavorable direct
materials price variance is
a. Direct Materials 30,000
Direct Materials Price Variance Accounts Payable 6,000
36,000
b. Direct Materials Accounts Payable 30,000
30,000
c. Direct Materials Direct Materials Price Variance 36,000
6,000
Accounts Payable
30,000
d. Work in Process Direct Materials Price Variance 36,000
6,000
Accounts Payable
30,000
Answer:
The rate of earnings is 12% and the cash to be received in 2 years is $10,000.
Determine the present value amount, using the following partial table of present value
of $1 at compound interest:
a. $8,930
b. $7,120
c. $7,970
d. $8,260
Answer:
Mallard Corporation uses the product cost concept of product pricing. Below is cost
information for the production and sale of 45,000 units of its sole product. Mallard
desires a profit equal to a 12% rate of return on invested assets of $800,000.
The unit selling price for the company’s product is
a. $19.35
b. $15.75
c. $22.05
d. $21.25
Answer:
Property tax expense is an example of a controllable cost for the supervisor of a
manufacturing department.
a. True
b. False
Answer:
Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of
$475,000, operating expenses of $79,500, and invested assets of $750,000.
Calculate:
(a) The rate of return on investment for Division G.
(b) The profit margin for Division G.
(c) The investment turnover for Division G.
Answer:
The cost of a manufactured product generally consists of direct materials cost, direct
labor cost, and factory overhead cost.
a. True
b. False
Answer:
integrated set of operating and financing budgets for a period of time
Match the phrase that follows with the term (a-e) it describes.
a. static budget
b. flexible budget
c. master budget
d. sales budget
e. production budget
Answer:
When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and
factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of
a. $12,400
b. $1,240
c. $124
d. $12.40
Answer:
The standard price and quantity of direct materials are separated because
a. GAAP and IFRS reporting requires separation
b. direct materials prices are controlled by the purchasing department and quantity used
is controlled by the production department
c. standard prices are more difficult to estimate than standard quantities
d. standard quantities change more frequently than standard prices
Answer:
Property tax expense for a department store’s store equipment is an example of a direct
expense.
a. True
b. False
Answer:
Allen Company used $71,000 of direct materials and incurred $37,000 of direct labor
costs during the current year. Indirect labor amounted to $2,700 while indirect materials
used totaled $1,600. Other operating costs pertaining to the factory included utilities of
$3,100, maintenance of $4,500, supplies of $1,800, depreciation of $7,900, and
property taxes of $2,600. There was no beginning or ending finished goods inventory,
but work in process inventory began the year with a $5,500 balance and ended the year
with a $7,500 balance.
Prepare a statement of cost of goods manufactured.
Answer:
Define nonfinancial performance measures. What are they used for and what are some
common examples?
Answer:
A project has estimated annual net cash flows of $80,000. It is estimated to cost
$600,000. Determine the cash payback period.
Answer:
Alexandra Company’s Molding Department opened on July 1. During July, 70.000 units
were completed and transferred out to the next department. On July 31, the 10,000 units
which remained in inventory were 40% complete with respect to conversion costs and
100% complete with respect to materials.
How many equivalent units of work did the Molding Department complete during July
for materials and conversion costs?
Answer:
The Creative Division of the Barry Company reported the following results for
December:
Based on this information, what were sales?
Answer:
Schedule of Activity Costs
From the above schedule, compute the percentage of non-value-added activities.
Answer:
Discuss the use of job order costing for professional services businesses. What are the
similarities and differences between service and manufacturing business job order
costing?
Answer: