Yield measures the ratio of the materials output quantity to the materials input quantity.
a. True
b. False
Answer:
If a company uses average costing instead of FIFO, it will still get the same unit costs.
a. True
b. False
Answer:
In a process cost system, product costs are accumulated by processing department
rather than by job.
a. True
b. False
Answer:
Period costs are costs that are incurred for the production requirements of a certain
period.
a. True
b. False
Answer:
Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to
be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending
inventory is 80,000 units. The quantities of direct materials expected to be used for each
unit of finished product are given below.
Material A 0.50 lb. per unit @ $0.60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of Material C used in production during the year is
a. $746,400
b. $724,800
c. $824,400
d. $758,160
Answer:
Conversion costs include materials, direct labor, and factory overhead.
a. True
b. False
Answer:
Garmo Co. has an operating leverage of 5. Next year’s sales are expected to increase by
10%. The company’s operating income will increase by 50%.
a. True
b. False
Answer:
Chelsa Manufacturing Co.’s static budget at 5,000 units of production includes $40,000
for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At
8,000 units of production, a flexible budget would show
a. variable costs of $64,000, and $28,000 of fixed costs
b. variable costs of $64,000, and $23,000 of fixed costs
c. variable costs of $72,000, and $23,000 of fixed costs
d. variable and fixed costs totaling $107,000
Answer:
When preparing the cash budget, all the following should be considered except
a. cash receipts from customers
b. depreciation expense
c. cash payments to suppliers
d. cash payments for equipment
Answer:
If divisional income from operations is $100,000, invested assets are $850,000, and the
minimum rate of return on invested assets is 8%, the residual income is $68,000.
a. True
b. False
Answer:
Setups are a significant time-consuming activity in traditional production environments.
a. True
b. False
Answer:
In the vertical analysis of an income statement, each item is generally stated as a
percentage of total assets.
a. True
b. False
Answer:
Penny, Inc. employs a process costing system. Direct materials are added at the
beginning of the process. Here is information about July’s activities:
Using the FIFO method, the number of units started and completed in July was
a. 14,250
b. 15,000
c. 13,400
d. 15,740
Answer:
In the short run, the selling price of a product should normally not be less than the
variable costs and expenses of making and selling it.
a. True
b. False
Answer:
Direct labor cost is an example of a period cost.
a. True
b. False
Answer:
Employee involvement in a product-oriented factory emphasizes employee teams,
rather than individual employees.
a. True
b. False
Answer:
As product costs are incurred in the manufacturing process, they are accounted for as
assets and reported on the balance sheet as inventory.
a. True
b. False
Answer:
Classify the following costs as either a product cost or a period cost:
a)
direct materials used
b)
factory utilities
c)
salespersons’ commissions
d)
salary of plant manager
e)
indirect materials used
f)
depreciation on store equipment
g)
indirect labor incurred
h)
advertising expense
i)
direct labor incurred
j)
factory machinery repairs and maintenance
k)
depreciation on factory machinery
l)
plant insurance expired
Answer:
For the past year, Iris Company had fixed costs of $6,708,000, a unit variable cost of
$444, and a unit selling price of $600. For the coming year, no changes are expected in
revenues and costs, except that a new wage contract will increase variable costs by $6
per unit. Determine the break-even sales (units) for (a) the past year and (b) the coming
year.
Answer:
A manufacturing company applies factory overhead based on direct labor hours. At the
beginning of the year, it estimated that factory overhead costs would be $360,000 and
direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were
$377,200, and actual direct labor hours were 36,000. What is the predetermined
overhead rate per direct labor hour?
a. $12.00
b. $10.00
c. $12.57
d. $10.48
Answer:
Finch, Inc. has bought a new server and must decide what to do with the old one. The
cost of the old server was originally $60,000 and has been depreciated $45,000. The
company has received two offers. One offer was made to purchase the equipment
outright for $18,500 less a 5% sales commission. The other offer was to lease the
equipment for $7,000 for the next five years but the company will be required to
provide maintenance and insurance totaling $3,000 per year. What offer should Finch,
Inc. accept?
Answer:
The Dean Company has sales of $500,000, and the break-even point in sales dollars of
$300,000. Determine the company’s margin of safety percentage.
Answer:
Briefly describe the time value of money. Why is the time value of money important in
capital investment analysis?
Answer:
Define ideal and currently attainable standards. Which type of standard should be used
and why?
Answer:
Using the data from the Terrace Industries, determine the divisional income from
operations for Districts 1 & 2.
Allocate service department expenses proportional to the sales of each district.
Answer: