1) Bobbys Burger Place monitors its variances on an hourly basis. It is not uncommon
for Bobby to send workers home early when which of the following variances indicates
that he has over-scheduled the shift?
A.Unfavorable labor efficiency variance
B.Favorable labor rate variance
C.Unfavorable materials quantity variance
D.Favorable labor efficiency variance
2) If the amount of materials on hand at the end of the period is less than the control
account balance, the control account balance should be decreased by the following
entry:
A.Debit – Work in Process
Credit – Materials
B.Debit – Materials
Credit – Factory Overhead
C.Debit – Materials
Credit – Work in Process
D.Debit – Factory Overhead
3) The Mason Corporation budgeted overhead at $240,000 for the period for
Department A based on a budgeted volume of 60,000 direct labor hours. During the
period, Mason started and completed Job B25, which incurred 200 labor hours at a cost
of $2,200, and $5,000 of direct materials. What was the cost of Job B25?
A.$7,400
B.$8,000
C.$7,250
D.$13,800
4) The records of Andrews Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 1 / 3 completed at a cost of
$2,400 for materials, $825 for labor, and $5,000 for overhead.
Production costs for the month – materials – $20,695; labor – $13,050; overhead –
$41,500
Units completed and transferred to finished goods – 35,000
Work in process, end of month – 3,000 units; 3 / 4 completed
What is the unit cost for material?
A.$.66
B.$.59
C.$.56
D.$.62
5) A major difference between FIFO and average costing is:
A.The number of equivalent units in ending work in process
B.It is not possible to use FIFO when there is more than one department
C.FIFO separates beginning inventory from current production
D.The current months cost of production will be less
6) Chase Companys new product is expected to have a sales price of $15 and variable
unit price of $7. Fixed costs are expected to be $560,000. What is the break-even point
in sales dollars?
A.$840,000
B.$1,050,000
C.$560,000
D.$1,200,000
7) The following data relate to a year’s budgeted activity for Palisades Company, a
single product company:
Total fixed costs remain unchanged within the relevant range in which the company is
currently operating.
a. What is the projected annual break-even sales in units?
b. What dollar amount of sales would Jorgenson need to achieve operating income of
$50,000?
c. If fixed costs increased $15,000, how many more units must be sold to break even?
8) In a process cost system, how is the unit cost affected in a production cost report
when materials are added in a department subsequent to the first department and the
added materials result in additional units?
A.It causes an increase in the preceding department’s unit cost that necessitates an
adjustment of the transferred-in unit cost
B.It causes a decrease in the preceding department’s unit cost that necessitates an
adjustment of the transferred-in unit cost
C.It causes an increase in the preceding department’s unit cost but does not necessitate
an adjustment of the transferred-in unit cost
D.It causes a decrease in the preceding department’s unit cost but does not necessitate
an adjustment of the transferred-in unit cost
9) Information relating to direct labor for the McGill Company follow:
The entry to record the direct labor cost is:
A.Work in process 53,200
Labor rate variance 2,800
Labor efficiency variance 1,800
Payroll 48,600
B.Work in process 50,400
Labor rate variance 2,800
Payroll 53,200
C.Work in process 48,600
Labor rate variance 2,800
Labor efficiency variance 1,800
Payroll 53,200
D.Work in process 51,400
10) The data used to calculate the order point include all of the following except:
A.the costs of placing an order
B.the rate at which the material will be used
C.the estimated time interval between the placement and receipt of an order
D.the estimated minimum level of inventory needed to protect against stockouts
11) CPG Company manufactures chemicals. Chemical agent PL62 is refined in the
Refining department and, after it is transferred to the Mixing department, a reactive
agent is added to it. In January, 6,000 gallons of PL62 having a cost of $30,000 were
transferred from the refining to the Mixing department where 4,000 gallons of the
reactive agent were added. When calculating the inventory costs in the Mixing
department, what will the cost per unit relating to gallons transferred in from the
Refining department be?
A.$3.33
B.$3.00
C.$5.00
D.$7.50
12) Which of the following is not true about production departments?
A.They perform the actual manufacturing operations that physically change the units
being produced
B.Since they receive the benefit of work performed by service departments, service
department costs should be distributed to them
C.The cost of production departments should be distributed to other production
departments that benefit from their operations
D.Machining and painting would be examples of production departments
13) The margin of safety ratio is equal to:
A.Net operating income percentage / Contribution margin ratio
B.Contribution margin / Sales
C.Contribution margin / Net operating income
D.Margin of safety / Fixed cost
14) A company increased the selling price for its product from $1.00 to $1.20 a unit
when total fixed costs increased from $400,000 to $450,000 and variable cost per unit
remained unchanged. How would these changes affect the break-even point?
A.The break-even point in units would be increased
B.The break-even point in units would be decreased
C.The break-even point in units would remain unchanged
D.The effect cannot be determined from the information given
15) Activity-based costing considers non-volume-related activities that create costs such
as:
A.Direct labor usage
B.Machine operations
C.Consumption of indirect materials and energy usage
D.Machine setups and product design changes
16) When using a flexible budget, what occurs to fixed costs (on a per unit basis) as
production increases?
A.Fixed costs are not considered in flexible budgeting
B.Fixed costs per unit will decrease
C.Fixed costs per unit will remain unchanged
D.Fixed costs per unit will increase
17) The primary task of process costing is to allocate total cost between:
A.units finished during the period and units still in process at the end of the period
B.materials and conversion costs
C.units in process at the beginning of the period and units started during the period
D.units started during the period and units finished during the period
18) Of the following taxes, the only one that the employer pays in entirety is:
A.State income tax
B.State unemployment tax
C.FICA tax
D.Federal income tax
19) Characteristics that job order costing and process costing have in common include
all of the following except:
A.The use of predetermined factory overhead rates
B.Each can be used by service firms
C.The costs of materials and labor are charged to the departments where they are
incurred
D.The primary objective is to complete a unit cost for products
20) Under a job order system of cost accounting, Cost of Goods Sold is debited and
Finished Goods is credited for a:
A.Transfer of materials to the factory
B.Shipment of completed goods to the customer
C.Transfer of completed production to the finished goods storeroom
D.Purchase of goods on account
21) Wolf Company has two departments, Mixing and Curing. The following
information is available for September:
The entry to record the transfer of inventory from the curing department to the
warehouse is:
A.Finished goods 18,000
Work in process – Mixing 18,000
B.Finished goods 24,000
Work in process – Curing 24,000
C.Work in process – Curing 24,000
Work in process – Mixing 24,000
D.Work in process – Curing 4,500
22) A factory department that is an essential part of the organization, but does not work
directly on the product is a(n):
A.indirect department
B.overhead department
C.service department
D.flexible department
23) The Jurcevich Corporation manufactures and sells a single product. A standard cost
system is used by the company. The standard factory overhead cost for a unit of product
is as follows:
The overhead cost per unit was calculated for the year based on a 60,000 unit volume as
follows:
The charges to the manufacturing department for April are given below for the 5,200
units produced:
(a) Assuming Jurcevich uses the two-variance method of analyzing factory overhead,
calculate the following variances from standard cost:
(b) Prepare the journal entry to apply factory overhead to work in process and record
the variances.
24) Cost accounting differs from financial accounting in that financial accounting:
A.Is mostly concerned with external financial reporting
B.Is mostly concerned with individual departments of the company
C.Provides the additional information required for special reports to management
D.Puts more emphasis on future operations
25) On a variable costing income statement, the difference between sales and variable
cost of goods sold is called:
A.gross margin
B.contribution margin
C.profit margin
D.manufacturing margin
26) Costs that vary in direct proportion to volume changes are:
A.variable costs
B.factory overhead costs
C.semivariable costs
D.personnel costs
27) A law firm wanting to track the costs of serving different clients may use a:
A.process cost system
B.job order cost system
C.cost control system
D.standard cost system
28) Which of the following is a characteristic of a service organization?
A.Provides a tangible product
B.Carries large inventories
C.Receives payments for physical properties
D.Service is consumed at time it is provided
29) Consider the following information about the Gumm Company:
Budgeted fixed costs are $550,000. The break-even number of cases for the mint gum
is:
A.250,000
B.100,000
C.132,000
D.150,000
30) The term “conversion costs” refers to:
A.The sum of direct labor costs and all factory overhead costs
B.The sum of direct material costs and direct labor costs
C.All costs associated with manufacturing other than direct labor costs
D.Direct labor costs incurred to produce units of output
31) What type of direct material variances for price and quantity will arise if the actual
number of pounds of materials used exceeds standard pounds allowed but actual cost
was less than standard cost?
A.Favorable Favorable
B.Unfavorable Favorable
C.Favorable Unfavorable
D.Unfavorable Unfavorable
32) Underapplied factory overhead would result if:
A.Factory overhead costs incurred were greater than standard costs charged to
production
B.The plant was operated at less than normal capacity
C.Factory overhead costs incurred were less than standard costs charged to production
D.Factory overhead costs incurred were unreasonably large in relation to units produced
33) Shaw Corporation has developed the following flexible budget formula for annual
indirect labor cost:
Total costs = $9,600 + $0.75 per machine hour
Operating budgets for the current month are based upon 30,000 hours of planned
machine time. Indirect labor costs included in this planning budget are:
A.$23,300
B.$22,500
C.$32,100
D.$2,425
34) Which of the following is true about absorption costing?
A.No fixed factory overhead is charged to production
B.It is also known as direct costing
C.The term used to designate the difference between sales and cost of goods sold is the
manufacturing margin
D.Over-applied factory overhead is reflected in the income statement as a reduction
cost of goods sold
35) Joint costs are commonly allocated based upon relative:
A.Sales value
B.Marketing costs
C.Conversion costs
D.Prime costs