The master budget is a static budget because it
A. is geared to only one level of production and sales.
B. never changes from one year to the next.
C. covers a preset period of time.
D. always contains the same operating and financial budgets.
A significant cost of quality that is not recorded in the accounting records is the
A. failure cost for a customer complaint center.
B. cost of reworking products to bring them up to specification.
C. opportunity costs of forgone future sales.
D. appraisal cost for product equipment.
Phillips Company has 3 divisions: X, Y, and Z. Division X’s income statement shows
the following for the year ended December 31:
Cost of goods sold is 75 percent variable and 25 percent fixed. Of the fixed costs, 60
percent are avoidable if the division is closed. All of the selling expenses relate to the
division and would be eliminated if Division X were eliminated. Of the administrative
expenses, 90 percent are applied from corporate costs. If Division X were eliminated,
Phillips’s income would
A. increase by $150,000.
B. decrease by $ 75,000.
C. decrease by $155,000.
D. decrease by $215,000.
A management information system should emphasize satisfying
A. external demands for information.
B. external and internal demands for information.
C. internal demands for information.
D. the Accounting Department’s demands for information.
Marshall Company has only 30,000 hours of machine time each month to manufacture
its two products. Product X has a contribution margin of $60, and Product Y has a
contribution margin of $72. Product X requires 6 hours of machine time, and Product Y
requires 10 hours of machine time. If Marshall Company wants to dedicate 85 percent
of its machine time to the product that will provide the most income, the company will
have a total contribution margin of
A. $216,000
B. $228,600.
C. $287,400
D. $300,000
In a joint costing process, which of the following would not be considered a sunk
cost?
A. direct material cost
B. direct labor cost
C. joint cost
D. costs incurred to further refine a product created by the process
When the number of units manufactured increases, the most significant change in unit
cost will be reflected as a(n)
A. increase in the fixed element.
B. decrease in the variable element.
C. increase in the mixed element.
D. decrease in the fixed element.
Information for two divisions of Superb Entertainment Company is given below:
In activity-based costing, preliminary cost allocations assign costs to
A. departments.
B. processes.
C. products.
D. activities.
Moore Company.
Moore Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #6, #9, and #13.
Direct material was requisitioned as follows for each job respectively: 30 percent, 25
percent, and 25 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000.
Other actual overhead costs totaled $36,000.
Refer to Moore Company. What is the total amount of overhead applied to Job #9?
A. $18,250
B. $26,350
C. $30,000
D. $31,620
McDonald Company
The following information relates to financial projections of McDonald Company:
Refer to McDonald Company. How many units would McDonald Company need to sell
to earn a profit before taxes of $15,000?
A. 9,375
B. 12,000
C. 15,000
D. 37,500
Harris Manufacturing incurs annual fixed costs of $250,000 in producing and selling a
single product. Estimated unit sales are 125,000. An after-tax income of $75,000 is
desired by management. The company projects its income tax rate at 40 percent. What
is the maximum amount that Harris can expend for variable costs per unit and still meet
its profit objective if the sales price per unit is estimated at $6?
A. $3.37
B. $3.59
C. $3.00
D. $3.70
Trinity Corporation manufactures products on a job-order basis. The job cost sheet for
Job #902 shows the following for June:
At the end of June, what total cost appears on the job cost sheet for Job #902?
A. $ 6,935
B. $ 6,985
C. $ 8,335
D. $10,015
Hahn Corporation
Hahn Corporation produces a single product that sells for $7.00 per unit. Standard
capacity is 100,000 units per year; 100,000 units were produced and 80,000 units were
sold during the year. Manufacturing costs and selling and administrative expenses are
presented below.
There were no variances from the standard variable costs. Any under- or overapplied
overhead is written off directly at year-end as an adjustment to cost of goods sold.
Hahn Corporation had no inventory at the beginning of the year.
Refer to Hahn Corporation. What is the net income under absorption costing?
A. $50,000
B. $80,000
C. $90,000
D. $120,000
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 total quality cost is
A. $15,000.
B. $15,750.
C. $28,500.
D. $11,250.
Of the following, which is the best reason for using activity-based costing?
A. to keep better track of overhead costs
B. to more accurately assign overhead costs to cost pools so that these costs are better
controlled
C. to better assign overhead costs to products
D. to assign indirect service overhead costs to direct overhead cost pools
Costs that are incurred to preclude defects and improper processing are:
A. prevention costs
B. detection costs
C. appraisal costs
D. failure costs