1) All of the following are features of a standard cost system except:
A.Standards change as conditions change
B.Variances may be determined more often than monthly to allow for more timely
action
C.Standards are based on estimates
D.The company determines the actual cost of manufacturing a unit
2) Which of the following is not likely to cause a labor efficiency variance?
A.We produced more units than were budgeted
B.There was a flu outbreak and workers had to cover unfamiliar positions
C.We purchased materials that were poor in quality
D.One of the supervisors discovered a way to streamline a process
3) The form that serves as authorization to withdraw materials from the storeroom is
known as the:
A.Materials requisition
B.Purchase order
C.Purchase requisition
D.Returned materials report
4) Witt Company, like most manufacturers, maintains a continuous record of purchases,
materials issued into production and balances of all goods in stock, so that inventory
valuation data is available at any time. This is an example of a(n)
A.perpetual inventory system
B.inventory control account
C.periodic inventory system
D.inventory cost method
5) Which of the following budgets is used to provide an apples to apples comparison of
budgeted and actual performance at the actual unit volume attained?
A.Continuous budget
B.Flexible budget
C.Master budget
D.Static budget
6) The following information pertains to the Braun Company for March:
Using the four-variance method of factory overhead variance analysis, what is the
variable overhead spending variance?
A.$1,200 unfavorable
B.$200 unfavorable
C.$1,000 favorable
D.$200 favorable
7) Payroll records for selected employees of Tomco Industries for the forty-sixth week
of the year are as follows:
Employees are paid time-and-a-half for overtime.
Employer payroll tax rates are as follows:
FICA: 8% of first $100,000 of salary or wages
FUTA:1% of first $8,000 of salary or wages
SUTA: 4% of first $8,000 of salary or wages
Calculate:
(a) Total gross payroll for the selected employees.
(b) Total employer payroll taxes for the selected employees.
8) Which of the following terms best identifies the function of standard costs where any
deviation from standards can be quickly detected and responsibility pinpointed so
appropriate action may be taken?
A.Management by exception
B.Contribution approach
C.Marginal costing
D.Standardized accounting system
9) The entry to record depreciation of the production equipment would be:
A.Debit – Depreciation Expense – Equipment
Credit – Accumulated Depreciation – Equipment
B.Debit – Depreciation Expense – Equipment
Credit – Factory Overhead
C.Debit – Factory Overhead
Credit – Accumulated Depreciation – Equipment
D.Debit – Work-in-Process
10) Quinn Companys master budget called for 30,000 units of production. Budgeted
direct material costs at this level were $450,000 or $15 per unit. Quinn actually
produced 32,000 units and incurred direct material costs of $496,000. Quinn uses
flexible budgeting to evaluate variances and determined that there was a $16,000
unfavorable direct materials variance. All of the following reasons could have
contributed to the flexible budget variance except:
A.Quinn produced more than the master budget called for
B.Quinn did a poor job of controlling the purchase cost of the raw materials
C.Quinn did a poor job of controlling the quantity of the direct materials used in the
production process
D.None of these is correct
11) Which of the following represents the correct relationship between budgets and
inventories?
A.The direct materials budget includes the budgeted dollar value of the direct materials
inventory at the beginning and end of the budget period
B.The direct materials budget includes the budgeted number of units in the direct
materials inventory at the beginning and end of the budget period
C.The production budget includes the budgeted number of units in the work in process
inventory at the beginning and end of the budget period
D.The direct labor budget includes the budgeted number of units in the work in process
inventory at the beginning and end of the budget period
12) Break-even sales volume in units is determined by:
A.Dividing the fixed cost by the difference between the unit selling price and unit
variable costs
B.Subtracting the fixed cost from the contribution margin
C.Dividing the fixed cost by the unit selling price
D.Subtracting the variable cost per unit from the unit selling price
13) When computing variances from standard costs, the difference between actual and
standard price multiplied by actual quantity yields:
A.Combined price–quantity variance
B.Price variance
C.Volume variance
D.Mix variance
14) Which of the following is not true about the cost of a factory employees pension
plan?
A.It is incurred when paid to the employee during his/her retirement
B.It should be accrued systematically over the period of an employees active service
C.In some cases, it may be partially offset by contributions made by employees
D.It may be charged to general and administrative expenses under the premise that the
existence of a pension plan is beneficial to the company as a whole
15) The inventory method which results in the most recent cost being assigned to cost
of goods sold is:
A.First-in, first-out
B.Last-in, first-out
C.Last-in, last-out
D.Moving average
16) All of the following are features of a standard cost system except:
A.Standards should not be adjusted
B.Standards provide incentives for workers to keep costs in line
C.Comparisons between actual and standard are more effective than comparisons
between actual costs of the current period and those of the prior period
D.A standard cost system focuses management attention on materials prices and usages
17) The Tidle Manufacturing Company uses a job order cost system. Factory wages are
paid on a straight hourly basis with indirect labor getting $8.50 an hour and direct labor
getting $10.00 an hour.
During the week of January 7, the following hours were worked:
Salaries and wages are paid weekly, with administrative salaries totaling $16,500 and
salesperson’s salaries totaling $12,200.
The following deductions are to be considered:
Prepare journal entries to record:
a. The payroll.
b. The payment of the payroll.
c. The payroll distribution.
d. The employer’s payroll tax expense.
18) The Royale Corporation payroll for the first week in January was $15,000. The
amount of income tax withheld was 20 percent and the FICA, state unemployment, and
federal unemployment tax rates were 8 percent, 5 percent, and 1 percent, respectively.
The amount of the employees’ withholding taxes are:
A.$4,950
B.$4,200
C.$3,000
D.$5,100
19) The Institute of Management Accountants (IMA) Statement of Professional Practice
includes all of the following standards except:
A.Confidentiality
B.Commitment
C.Integrity
D.Competence
20) Harrison Industries produces 4,000 lunch boxes each day. The average number of
units in work in process is 12,000, having an average cost of $60,000. The annual
carrying costs related to inventory are 10%.
Consultants have determined that the work in process could be reduced by as much as a
third by rearranging the factory floor. What would the reduction in annual carrying
costs be if Harrison is able to implement the recommended changes?
A.$2,000
B.$1,500
C.$6,000
D.$4,000
21) If the amount of overtime premium is to be charged to all jobs worked on during the
period as a result of random scheduling of jobs, the debit will be to:
A.Factory Overhead
B.Payroll
C.Work in Process
D.Accrued Payroll
22) Material is added at the beginning of a process in a process costing system. The
beginning work in process inventory for this process this period was 30 percent
complete as to conversion costs. Using the first-in, first-out method of costing, the total
equivalent units for material for this process during this period are equal to the:
A.Units started this period in this process
B.Beginning inventory this period for this process
C.Units started this period in this process plus the beginning inventory
D.Units started this period in this process plus 70 percent of the beginning inventory
23) The following are the results of the least squares regression method which was run
to separate the fixed and variable components of the Zulli Corporations monthly factory
utility costs using the number of products produced:
y = 49,222.2992 + 5.09 x
R2 = .97765
a) Assume Zulli budgets production of 5,400 units in June, what should budgeted utility
costs be?
b) Explain what R2 means. Is this equation a good predictor of utility costs?
24) Factors to be considered in setting materials standards include all of the following
except:
A.Trend of prices of raw materials
B.Historical costs
C.Time necessary to perform tasks
D.New production processes or market developments
25) The following cost is an example of a variable factory overhead cost:
A.Plant utilities
B.Insurance on the factory building
C.Salary of the plant manager
D.Factory supplies
26) The most appropriate basis for allocating the factory building rent to specific
departments would be the:
A.Number of machines in each department
B.Number of employees in each department
C.Square footage of each department
D.Amount of time the plant manager spends in the department
27) Which of the following is not a cost that is accumulated in Work in Process?
A.Direct materials
B.Administrative expense
C.Direct labor
D.Factory overhead
28) When creating a balanced scorecard, the following guidelines should be followed in
choosing performance measures except:
A.There should not be too many performance measures
B.There should be more financial measures than any of the other categories
C.The measures should be consistent with company strategy
D.Employees should be able to understand and have control over the performance
measures on which they are evaluated
29) How should an efficiency variance that is material in amount be treated at the end
of an accounting period?
A.Reported as a deferred charge or credit
B.Allocated among work in process inventory, finished goods inventory, and cost of
goods sold
C.Charged or credited to cost of goods manufactured
D.Allocated among cost of goods manufactured, finished goods inventory, and cost of
goods sold
30) A standard cost system is one:
A.that provides a separate record of cost for each special-order product
B.that uses predetermined costs to furnish a measurement that helps management make
decisions regarding the efficiency of operations
C.that accumulates costs for each department or process in the factory
D.where costs are accumulated on a job cost sheet
31) During June, Birch Bay Company’s Department B equivalent unit product costs
computed under the FIFO method were as follows:
Materials are introduced at the end of the process in Department B. There were 4,000
units (60 % complete as to conversion costs) in work in process at June 30 . The total
costs assigned to the June 30 work in process inventory should be:
A.$20,000
B.$24,800
C.$27,200
D.$35,200
32) The Bisset Corporation uses Raw Material A in a manufacturing process.
Information as to balances on hand, purchases, and requisitions of Raw Material A is
given in the following table.
Raw Material A
If a perpetual inventory record of Raw Material A is maintained on a moving average
basis, the 140 units issued on March 16 will have a unit cost of (round to 3 decimal
places):
A.$1.513
B.$1.475
C.$1.55
D.$1.438
33) Which of the following items of cost would be least likely to appear on a
performance report based on responsibility accounting for the supervisor of an
assembly line in a large manufacturing situation?
A.Direct labor
B.Supervisor’s salary
C.Materials
D.Repairs and maintenance
34) A characteristic of a process cost accounting system is:
A.Costs are accumulated by order
B.Work in process inventory is restated in terms of equivalent production
C.It is used by a company manufacturing custom machinery
D.None of these is correct
35) The normal capacity of Noel Company is 4,000 units per month. At this volume,
budgeted fixed and variable factory overhead are $16,000 and $20,000, respectively. In
May, actual production was 4,200 units and actual overhead incurred was $37,900.
What was the amount of factory overhead allowed for the actual level of production in
May?
A.$36,000
B.$36,800
C.$37,000
D.$37,800
36) Which of the following would not be included on a payroll record?
A.The employees gross earnings
B.Amounts withheld from the employees earnings
C.Which jobs should be charged for the employees time
D.The amount of overtime paid to the employees
37) The Owens Company uses the machine hour method of applying factory overhead
to production. The budgeted factory overhead last year was $200,000, and there were
40,000 machine hours budgeted. Actual machine hours incurred during the period were
38,000, and actual factory overhead was $215,000. What was the amount of under- or
overapplied factory overhead?
A.$10,000 underapplied
B.$15,000 underapplied
C.$25,000 underapplied
D.$10,000 overapplied