The weighted average costing method assumes that units in beginning inventory are the
first units transferred.
Operational management should be directly involved with the strategic planning of an
organization.
The regression equation y = a+ bX assumes that the function is curvilinear in nature.
Monetary allocation measures recognize the revenue generating ability of each product
in a joint process.
A master budget is a planning document that presents expected variable and fixed
overhead costs at different activity levels.
Replacing a product after it has been sold is an external failure cost.
If a project’s internal rate of return is greater than or equal to an organization’s hurdle
rate, the project is considered to be an unacceptable investment.
The difference between actual and budgeted fixed factory overhead is referred to as a
fixed overhead volume variance.
Retailers generally have a much higher degree of conversion than do manufacturing or
professional firms.
Not-for-profit entities are required to allocate joint costs among fund-raising, program,
and administrative functions.
The net present value method provides the actual rate of return for a project.
Direct costing conforms with generally accepted accounting principles.
Total units produced during the period divided by the value-added processing time is
referred to as process productivity.
Return on investment was used in the 1900’s to evaluate business operations.
A decision in which projects are ranked according to their impact on achieving
company objectives is a screening decision.
Qualitative non-financial performance measures
A. are usually the most well-received by managers.
B. often reflect long-term organizational goals better than financial performance
measures.
C. can only be developed in the production area of an organization.
D. is limited by the number of critical success factors defined by the organization.
Who is not involved in the successful implementation of business process
reengineering (BPR)?
A. investors
B. customers
C. suppliers
D. top management
Owens Athletics, Inc. has developed a new design to produce hurdles that are used in
track and field competition. The company’s hurdle design is innovative in that the
hurdle yields when hit by a runner and its height is extraordinarily easy to adjust.
Management estimates expected annual capacity to be 90,000 units; overhead is applied
using expected annual capacity. The company’s cost accountant predicts the following
current year activities and related costs:
Other than any possible under- or overapplied fixed overhead, management expects no
variances from the previous manufacturing costs. Under- or overapplied fixed overhead
is to be written off to Cost of Goods Sold.
Required:
StatPro Corporation
StatPro Corporation is a manufacturer of a versatile statistical calculator. The following
information is a summary of defective and returned units for the previous year.
Refer to StatPro Corporation. The cost of processing customer returns is
A. $9,000.
B. $2,500.
C. $22,500.
D. $2,250.
Epplin Company
The following information is provided for Epplin Company for the month of
September:
Refer to Epplin Company. What is the volume variance?
A. $590 U
B. $590 F
C. $190 F
D. $190 U
A project has an initial cost of $100,000 and generates a present value of net cash
inflows of $120,000. What is the project’s profitability index?
A. .20
B. 1.20
C. .80
D. 5.00
What term identifies an accounting system in which the operations of the business are
broken down into reportable segments, and the control function of a foreperson, sales
manager, or supervisor is emphasized?
A. responsibility accounting
B. operations-research accounting
C. control accounting
D. budgetary accounting
Charleston Company uses a job-order costing system. During April, the following costs
appeared in the Work in Process Inventory account:
Charleston Company applies overhead on the basis of direct labor cost. There was only
one job left in Work in Process at the end of April which contained $5,600 of overhead.
What amount of direct material was included in this job?
A. $4,400
B. $4,480
C. $6,920
D. $8,000
Crosby Corporation
Crosby Corporation has two service departments: Data Processing and
Administration/Personnel. The company also has three divisions: X, Y, and Z. Data
Processing costs are allocated based on hours of use and Administration/Personnel costs
are allocated based on number of employees.
Assume that Data Processing provides more service than Administration/Personnel.
Refer to Crosby Corporation. Using the direct method, what amount of Data Processing
costs is allocated to Y (round to the nearest dollar)?
A. $158,475
B. $0
C. $220,000
D. $103,529
Product costing systems in use over the last 40 years
A. concentrated on using multiple cost pools and cost drivers.
B. were often technologically incapable of handling activity-based costing information.
C. have generally been responsive to changes in the manufacturing environment.
D. have been appropriate for managerial decision purposes as long as they met the
requirements of generally accepted accounting principles.
In activity-based costing, cost reduction efforts are directed at specific
A. cost categories.
B. cost pools.
C. processes.
D. cost drivers.
Which of the following is considered a value-added activity?
A. yes yes no
B. no no no
C. yes no yes
D. no yes yes
Actual overhead exceeds applied overhead and the amount is immaterial. Which of the
following will be true? Upon closing,
A. underapplied increase
B. overapplied decrease
C. overapplied increase
D. underapplied decrease
In a job-order costing system, the dollar amount of the entry that debits Finished Goods
Inventory and credits Work in Process Inventory is the sum of the costs charged to all
jobs
A. started in process during the period.
B. in process during the period.
C. completed and sold during the period.
D. completed during the period.
Kelley Corporation, began operations on October 1. It employs a job-order costing
system. Overhead is charged at a normal rate of $2.50 per direct labor hour. The actual
operations for the month of October are summarized as follows:
Required: Compute the following balances on October 31:
TriCities Corporation
TriCities Corporation adds material at the start to its production process and has the
following information available for August:
Refer to TriCities Corporation. Calculate equivalent units of production for material
using weighted average.
A. 32,000
B. 34,325
C. 37,125
D. 39,000
Period costs
A. are expensed in the same period in which they are incurred.
B. are always variable costs.
C. remain unchanged over a given period of time.
D. are associated with the periodic inventory method.
The source document that records the amount of raw material that has been requested
by production is the
A. job-order cost sheet.
B. bill of lading.
C. interoffice memo.
D. material requisition.
Brazosport Pipe Corporation
The capital budgeting committee of the Brazosport Pipe Corporation is evaluating the
possibility of replacing its old pipe-bending machine with a more advanced model.
Information on the existing machine and the new model follows:
Refer to Brazosport Pipe Corporation. If the company buys the new machine and
disposes of the existing machine, corporate profit over the five-year life of the new
machine will be ____ than the profit that would have been generated had the existing
machine been retained for five years.
A. $150,000 lower
B. $170,000 lower
C. $230,000 lower
D. $150,000 higher
Lincoln Corporation
Lincoln Corporation distributes its service department overhead costs directly to
producing departments without allocation to the other service departments. Information
for January is presented here.
Refer to Lincoln Corporation. Assume instead Lincoln Corporation distributes the
service department’s overhead costs based on the step method. Maintenance provides
more service than does Utilities. Which of the following is true?
A. Allocate maintenance expense to Departments A and B.
B. Allocate maintenance expense to Departments A and B and the Utilities Department.
C. Allocate utilities expense to the Maintenance Department and Departments A and B.
D. None of the above.
Tri-Cities Savings and Loan
Tri-Cities Savings and Loan has three departments that generate revenue: loans,
checking accounts, and savings accounts. Tri-Cities Savings and Loan has two service
departments: Administration/Personnel and Maintenance. The service departments
provide service in the order of their listing. The following information is available for
direct costs. Administration/ Personnel costs are best allocated based on number of
employees while Maintenance costs are best allocated based on square footage
occupied.
Refer to Tri-Cities Savings and Loan. Using the direct method, compute the amount
allocated to each department from Administration/Personnel.
When a project is chosen from a group and all other projects are excluded from further
consideration, the project is referred to as _________________________________.
Costs that are necessary to sustain an organization’s operations are referred to as
____________________________.
If a substandard product cannot be reworked, it is known as ____________________.
Why does a “push” based inventory control system generate larger inventory levels
than a “pull” system?
A binding contract between a company and one or more national taxing authorities that
provides the details of how transfer prices will be set is referred to as a(n)
_____________________________________________.