1) The bill of materials lists all of the raw materials needed to manufacture the job.
2) The number of partially completed units multiplied by the percentage of process
completed equals the number of equivalent units.
3) A cash collections budget is focused on the timing of cash receipts.
4) Sales margin is calculated as operating income divided by sales.
5) The cash budget is prepared before the operating budget.
6) CVP analysis helps managers prepare for and respond to economic changes, such as
increasing costs and pressure to drop sales price.
7) The variable overhead efficiency variance is calculated as Actual Hours (Actual Rate
– Standard Rate).
8) Both the static budget and the flexible budget used for performance evaluation are
developed before the period of actual production.
9) Rate of return on net sales is a measure of a company’s profitability.
10) An inventoriable cost could be the cost of the marketing and distribution of a
product.
11) To simplify the accounting, the journal entry to record the transfer of costs from one
WIP account to the next WIP account is generally made once a month to reflect all
physical transfers that occurred during the month.
12) The number of equivalent units is usually the same for direct materials and
conversion costs.
13) Here are selected data for Wilson Company:
If the company allocates manufacturing overhead based on direct labor cost, what are
the allocated manufacturing overhead costs?
A) $243,750
B) $226,800
C) $426,667
D) $240,000
14) You win the lottery and must decide how to take the payout. Use an 8% discount
rate. What is the present value of $15,000 a year received at the end of each of the next
six years?
A) $9,450
B) $90,000
C) $74,893
D) $69,345
15) Comfort Cloud manufactures seats for airplanes. The company has the capacity to
produce 100,000 seats per year, but is currently producing and selling 75,000 seats per
year. The following information relates to current production:
If a special sales order is accepted for 2,500 seats at a price of $310 per unit, fixed costs
increase by $6,500, and variable marketing and administrative costs for that order are
$25 per unit, how would operating income be affected? (NOTE: Assume regular sales
are not affected by the special order.)
A) Increase by $218,500
B) Decrease by $156,000
C) Increase by $162,500
D) Increase by $156,000
16) If the selling price per unit is $100, total fixed expenses are $600,000, and the
breakeven sales in dollars is $800,000, what is the variable expense per unit?
A) $33.33
B) $175.00
C) $75.00
D) $25.00
17) Here are selected data for Stehli Company:
If the company allocates manufacturing overhead based on direct labor cost, what are
the allocated manufacturing overhead costs?
A) $410,256
B) $249,600
C) $227,400
D) $253,500
18) (Present value tables are needed.) Georgia Peach Farms is upgrading its fruit
washing/separating machine. Georgia has narrowed the decision down to two machines:
Machine A and Machine B.Pertinent information for each machine follows:
Machine AMachine B
Investment$450,000$650,000
Useful life (years)1010
Estimated annual net cash inflows for useful life$75,000$120,000
Residual value$25,000$35,000
Depreciation methodstraight-linestraight-line
Required rate of return10%12%
Required:
a.Calculate the net present value of Machine A.
b.Calculate the net present value of Machine B.
c.Using the net present value method, which machine should Georgia select if it can
select only one investment?
19) The cost of testing incoming raw materials from a supplier would be classified as
a(n) ________ cost.
A) appraisal
B) prevention
C) internal failure
D) external failure
20) The following are all methods of analyzing capital investments except
A) Payback Period
B) Regression Analysis
C) Net Present Value (NPV)
D) Accounting Rate of Return (ARR)
21) What type of company resells products it purchases ready-made from suppliers?
A) Merchandiser
B) Retailer
C) Wholesaler
D) All of the above
22) Cuyahoga Valley Bicycles uses a standard part in the manufacture of several of its
bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of
$68,000 and variable costs of $70,000. The company can buy the part from an outside
supplier for $3.50 per unit, and avoid 30% of the fixed costs.
Assume that factory space freed up by purchasing the part from an outside source can
be used to manufacture another product that can be sold for $12,000 profit. If Cuyahoga
Valley Bicycles makes the part, what will its operating income be?
A) $37,600 greater than if the company bought the part
B) $37,600 less than if the company bought the part
C) $61,600 greater than if the company bought the part
D) $175,600 greater than if the company bought the part
23) Use the correct number to designate each item below. Assume a manufacturer.
1>direct materials
2>selling and general expenses
3>manufacturing overhead
4>direct labor
A)____rent expense on factory building
B)____sales supplies used
C)____factory supplies used
D)____indirect materials used
E)____wages of assembly line personnel
F)____cost of primary material used to make product
G)____depreciation expense on office equipment
H)____rent expense on office facilities
I)____insurance expired on factory equipment
J)____utilities incurred in the office
K)____advertising expense
L)____taxes paid on factory building
24) Which of the following items does not represent physical information in an
environmental management accounting system?
A) Pounds of cardboard recycled
B) Energy costs incurred to cool production equipment
C) Tons of garbage recycled
D) Gallons of waste water generated
25) The following selected data relates to Ivory Corporation:
If sales revenue per unit increases to $27 and 8,500 units are sold, what is the
contribution margin?
A) $357,000
B) $77,000
C) $59,500
D) $102,000
26) Stanley Company uses a job cost system. Manufacturing overhead has been
overapplied by $5,600 for the year. Actual overhead incurred was $105,000. Other
balances are:
What will be adjusted cost of goods sold after closing manufacturing overhead?
A) $295,600
B) $284,400
C) $226,500
D) $254,100
27) Selected financial data for The Portland Porcelain Works Coffee Mug Division is as
follows:
What is The Portland Porcelain Works Coffee Mug Division residual income?
A) $396,000
B) $71,875
C) $356,500
D) $342,125
28) Which of the following organizations are continually working to develop and
improve environmental reporting standards?
A) IASB
B) A4S
C) ISO
D) All of the above
29) If you invest $1,200 at the end of every year for five years at an interest rate of
10%, the balance of your investment in 5 years will be closest to
A) $1,933
B) $6,000
C) $7,326
D) $4,549
30) Neon Company manufactures widgets. The following data is related to sales and
production of the widgets for last year.
Using variable costing, what is the operating income for last year?
A) $143,000
B) $31,300
C) $69,300
D) $107,300
31) Ending WIP inventory has 100 units that are 70% complete for direct materials and
20% complete for conversion costs. For calculating costs per equivalent unit, which of
the following statements is TRUE?
A) The denominator would include 100 units for both
B) The denominator would include 70 units for direct materials and 20 for conversion
C) The denominator would include 20 units for direct materials and 80 for conversion
D) You cannot determine what constitutes the denominator
32) To follow is selected information about The Boston Company for the current year
and prior year.
What is the current year’s selling and general expenses percentage (as would be found
on a vertical analysis of the income statement for the current year)?
A) 25.05%
B) 14.43%
C) 159.40%
D) 23.00%
33) At Sunrise Corporation, direct materials are added at the beginning of the process
and conversions costs are uniformly applied. Other details include:
What is the cost per equivalent unit for direct materials?
A) $2.75
B) $3.00
C) $3.21
D) $3.08
34) The subscription sales manager for The New York Times would be in charge of a(n)
A) cost center
B) investment center
C) profit center
D) revenue center
35) Ayers Company reports the following standards for direct materials for the year:
Standard cost per pound$4.75
Standard amount per finished good8.5 pounds
During the year, 460,000 finished goods were produced. The direct materials price
variance was $14,200 unfavorable. The direct materials flexible budget variance was
$980 favorable.
Calculate the following items regarding direct materials for Ayers Company for the
year:
a.Direct materials quantity variance
b.Standard quantity of direct materials for actual production
c.Actual pounds of direct materials used for actual production
36) Eagle Company has a sales margin of 15%, a target rate of return of 14%, and
capital turnover of 2.5 . Its operating income is $87,000. The sales in dollars for Eagle
Company would be closest to
A) $580,000
B) $34,800
C) $13,050
D) $217,500
37) Which of the following statements is TRUE regarding managerial accounting
information?
A) It is audited by CPAs
B) It emphasizes relevance
C) It is prepared annually and quarterly
D) It must be prepared in conformity with generally accepted accounting principles
(GAAP)
38) The mixing department has 18,000 units and $50,000 in costs for which to account.
Of the 18,000 units, 12,000 were completed and transferred to the next department. The
6,000 remaining were 25% complete for conversion costs. Direct materials are added at
the beginning of the process, and the conversion costs are added evenly throughout the
process. The cost per equivalent unit is $2.25 for direct materials and $0.80 for
conversion costs. The total costs to account for are
A) $93,000
B) $50,000
C) $14,700
D) $18,300
39) Expected future data that differs among alternative courses of action are referred to
as
A) relevant information
B) historical information
C) predictable information
D) irrelevant information