Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Match the appropriate definition (a) through (h) with the following terms:
(a) A department or unit that incurs costs without directly generating revenues.
(b) A center in which a manager is responsible for using the center's assets to generate
income for the center.
(c) Costs that are incurred for the joint benefit of more than one department and cannot
be readily traced to only one department.
(d) Costs readily traced to a specific department because they are incurred for the sole
benefit of that department.
(e) Costs incurred to produce two or more products at the same time.
(f) Costs that a manager can strongly influence or control.
(g) A department that incurs costs and generates revenues.
(h) Assigns managers the responsibility for costs and expenses under their control.
__________ (1) Direct expenses
__________ (2) Responsibility accounting system
__________ (3) Profit center
__________ (4) Controllable costs
__________ (5) Indirect expenses
__________ (6) Cost center
__________ (7) Joint cost
__________ (8) Investment center
Answer:
Midwest Rocks receives and produces an order. What is the companys cycle time
assuming the following times were measured during production of this order?
Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days
A. 1.8 days
B. .7 days
C. .95 days
D. 2 days
E. 2.5 days
Answer:
The sales journal is used for recording:
A. Credit purchases
B. Credit sales
C. Cash sales
D. Cash purchases
E. All Sales
Answer:
Tannwin Co. sells a new product called Accountomatic and has predicted the following
sales for the first four months of the current year:
Ending inventory for each month should be 20% of the next month's sales, and the prior
December 31 inventory is consistent with that policy. How many units should be
purchased in the first quarter of the year?
A. 5,100
B. 5,680
C. 6,300
D. 6,000
E. 5,700
Answer:
Alexander Bruce and Jonathon Wayne are managers of two product lines for Gotham
Incorporated. One of them is a candidate for promotion based on performance. Using
the following data:
a. Calculate the residual income (assume a target income of 10% return on assets) and
the investment center return on assets.
b. Indicate which manager should be recommended for promotion and why.
Answer:
A company issued 9%, 10-year bonds with a par value of $1,000,000 on September 1,
2013, when the market rate was 9%. The bonds were dated June 30, 2013. The bond
issue price included accrued interest. Interest is paid semiannually on December 31 and
June 30.
(a) Prepare the issuer's journal entry to record the issuance of the bonds.
(b) Prepare the issuer's journal entry to record the semiannual interest payment on
December 31, 2013.
Answer:
Below is accounting information for Cascade Company for 2013:
What was net income for the year?
A. $320,000
B. $296,000
C. $100,000
D. $457,000
E. $116,000
Answer:
A companys balance sheet and income statement accounts follow:
What is the companys return on common stockholders equity ratio for 2013?
A. 27.5%
B. 25.4%
C. 12.6%
D. 29.4%
E. 19.5%
Answer:
Wade Company is operating at 75% of its manufacturing capacity of 140,000 product
units per year. A customer has offered to buy an additional 20,000 units at $32 each and
sell them outside the country so as not to compete with Wade. The following data are
available:
In producing 20,000 additional units, fixed overhead costs would remain at their current
level but incremental variable overhead costs of $6 per unit would be incurred. What is
the effect on income if Wade accepts this order?
A. Income will decrease by $4 per unit.
B. Income will increase by $4 per unit.
C. Income will increase by $5 per unit.
D. Income will decrease by $5 per unit.
E. Income will increase by $11 per unit.
Answer:
The ending inventory of finished goods has a total cost of $9,000 and consists of 600
units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of
direct labor, how much direct materials cost was incurred in producing these units?
A. $3,750
B. $2,000
C. $4,000
D. $6,000
E. $9,000
Answer:
A company's beginning work in process inventory consisted of 20,000 units that were
1/5 complete with respect to direct labor. These beginning units were completed and
another 90,000 units were started during the current period. Of those started, 60,000
were finished and the remaining 30,000 were one-third complete at the end of the
period. Using the weighted-average method, the equivalent units of production were:
A. 60,000
B. 74,000
C. 76,000
D. 86,000
E. 90,000
Answer:
Which of the following is not a characteristic of all fraud?
A. It is done to provide direct or indirect benefit to the employee.
B. It violates the employees duties to his employer.
C. It costs the employer money.
D. It is secret.
E. Can be intentional or unintentional.
Answer:
Overhead costs:
A. Are directly related to production.
B. Can be traced to units of product in the same way that direct materials can.
C. Cannot be traced to units of product in the same way that direct labor can.
D. Are period costs.
E. Include only fixed costs.
Answer:
Preferred stock with a feature allowing preferred stockholders to share with common
shareholders in any dividends in excess of the percent or dollar amount stated on the
preferred stock is called:
A. Cumulative preferred stock
B. Callable preferred stock
C. Participating preferred stock
D. Convertible preferred stock
E. Preferential preferred stock
Answer:
Static budget is another name for:
A. Standard budget.
B. Flexible budget.
C. Variable budget.
D. Fixed budget.
E. Rolling budget.
Answer:
The Retained Earnings account has a credit balance of $17,000 before closing entries
are made. If total revenues for the period are $55,200, total expenses are $39,800 and
dividends are $9,000, what is the ending balance in the Retained Earnings account after
all closing entries are made?
A. $8,000
B. $15,400
C. $23,400
D. $17,000
E. $32,400
Answer:
The sales level at which a company neither earns a profit nor incurs a loss is the:
A. Relevant range.
B. Margin of safety.
C. Step-wise variable level.
D. Break-even point.
E. Contribution margin.
Answer:
A company has sales of $1,500,000, sales discounts of $102,000, sales returns and
allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net
income totaled $263,500, and cost of goods sold of $420,000. What is the net sales
amount for the period?
A. $1,500,000
B. $1,275,000
C. $1,725,000
D. $1,521,000
E. $1,479,000
Answer:
A list of all the accounts in the accounts receivable ledger with their balances and the
total is a(n):
A. Chart of accounts
B. Controlling account
C. Schedule of accounts receivable
D. Subsidiary ledger
E. Special journal
Answer:
A subsidiary ledger that contains a separate account for each supplier of the company is
a(n):
A. Controlling account
B. Accounts receivable ledger
C. Accounts payable ledger
D. General ledger
E. Special journal
Answer:
In a typical cash disbursements journal, you would expect to see the following columns:
A. Accounts payable dr.
B. Sales discounts dr.
C. Accounts receivable dr.
D. Inventory dr. (if perpetual method used).
E. Cost of Goods Sold dr. (if perpetual method used).
Answer:
Which of the following is not a benefit derived from budgeting?
A. Budgeting focuses management's attention on the future.
B. Budgeting provides coordination of departments.
C. Budgeting provides a basis for evaluating performance.
D. Budgeting provides motivation for managers and employees.
E. Budgeting ensures the achievement of all goals.
Answer:
The cost object(s) of the departmental overhead rate method is:
A. The unit of product.
B. The production departments of the company.
C. The production departments in the first stage and the unit of product in the second
stage.
D. The unit of product in the first stage and the production departments in the second
stage.
E. The production activities of the company.
Answer:
The adjusting entry to record the earned but unpaid salaries of employees at the end of
an accounting period is:
A. Debit Unpaid Salaries and credit Salaries Payable
B. Debit Salaries Payable and credit Salaries Expense
C. Debit Salaries Expense and credit Cash
D. Debit Salaries Expense and credit Salaries Payable
E. Debit Cash and credit Salaries Expense
Answer:
The following data relates to Tier One Companys estimated amounts for next year.
What is the companys plantwide overhead rate if direct labor hours are the allocation
base?
(Round to two decimal places.)
A. $3.89 per DLH
B. $3.00 per DLH
C. $0.33 per DLH
D. $0.26 per DLHE. $0.20 per DLH
Answer:
A cost that remains constant over a limited range of volume but increases by a lump
sum when volume increases beyond a maximum amount is a(n):
A. Step-wise cost
B. Fixed cost
C. Curvilinear cost
D. Incremental cost
E. Opportunity cost
Answer:
Aurora Corporation produces outdoor security lighting products. All products go
through three processes before completion. Use the expected overhead costs and related
data shown below to compute departmental overhead rates based on machine hours in
Department A1A; based on direct labor hours in Department B2B; and machine hours
in Department C3C.
A. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH.
B. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH.
C. Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.
D. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.
E. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.
Answer:
A company has the following per unit original costs and replacement costs for its
inventory:
Part A: 10 units with a cost of $3 and replacement cost of $2.50.
Part B: 40 units with a cost of $9 and replacement cost of $9.50.
Part C: 75 units with a cost of $8 and replacement cost of $7.50.
Under the lower of cost or market method, the total value of this company's ending
inventory must be reported as:
A. $990.00.
B. $947.50.
C. $967.50 or $947.50, depending upon whether LCM is applied to individual items or
the inventory as a whole.
D. $967.50.
E. $990.00 or $947.50, depending upon whether LCM is applied to individual items or
to the inventory as a whole.
Answer:
Assume New Belgium Brewing Company manufactures and distributes three types of
beer and that estimated per unit product costs and related information for the next year
are shown in the following table:
a. If New Belgium Brewing Company uses a plantwide overhead rate based on machine
hours, what is the total product cost per unit of Cocoa Mole Ale?
b. Blue Paddle is a traditional brew made in large quantities with long production runs.
Somersault is a seasonal beer made in small batches. Cocoa Mole Ale is a specialty beer
also made in small batches. Which of the overhead allocation methods studied in this
chapter would you recommend that New Belgium Brewing Company use and why?
Answer:
The current ratio:
A. Is used to measure a company's profitability.
B. Is used to measure the relation between assets and long-term debt.
C. Measures the effect of operating income on profit.
D. Is used to help evaluate a company's ability to pay its short-term obligations.
E. Is calculated by dividing current assets by equity.
Answer:
Use the following information to compute the following items:
(A. Calculate the cost of materials used
(B. Calculate the manufacturing costs incurred during the period.
(C. Calculate the Cost of Goods Manufactured during the period.
(D. Calculate the Cost of Goods Sold during the period.
(E. Calculate the amount by which overhead is under- or overapplied.
Answer:
Presented below are terms preceded by letters (a) through (g) and followed by a list of
definitions (1) through (7). Match the letter of the term with the definition. Use the
space provided preceding each definition.
(a) Net present value
(b) Capital budgeting
(c) Accounting rate of return
(d) Net cash flow
(e) Internal rate of return
(f) Payback period
(g) Hurdle rate
__________ (1) A discount rate that results in a net present value of zero.
__________ (2) Cash inflows minus cash outflows for the period.
__________ (3) A minimum acceptable rate of return.
__________ (4) The time expected to pass before the net cash flows from an investment
equals its initial cost.
__________ (5) Annual after-tax net income divided by annual average investment.
__________ (6) A process of analyzing alternative long-term investments.
__________ (7) Initial cost of an investment subtracted from discounted future cash
flows from the investment.
Answer:
A stock dividend is never a ________________ on the balance sheet because it will
never reduce _______________.
Answer:
A company that uses a job order cost accounting system incurred $10,000 of factory
payroll during May. Present the May 31 entry assuming $8,000 is direct labor and
$2,000 is indirect labor.
Answer:
Calculate the percent increases for each of the following selected balance sheet items.
Answer:
A _____________________ arises from a past decision and cannot be avoided or
changed; it is irrelevant to future decisions.
Answer:
A ___________ is an intermediary that buys products from manufacturers and sells to
retailers.
Answer:
Accrual accounting and the adjusting process rely on two principles: the
___________________ principle and the ________________________ principle.
Answer:
Chrono Co. held bonds of Ayrford Co. with a cost of $125,000 and a year-end market
value of $123,700. Chrono also held 1,500 shares of Avian common stock with a cost of
$25,000 and a year-end market value of $26,100. These are classified as long-term
available-for-sale securities. Prepare the journal entry to record the market value of the
investments as of its December 31 year-end.
Answer:
Product pricing, product mix decisions, and cost control are examples of
_________________ activities.
Answer:
____________________________ are banks authorized to accept deposits of amounts
payable to the federal government, including amounts due for payroll taxes.
Answer:
What is operating leverage? How can the degree of operating leverage be used in
analyzing changes in sales?
Answer:
A ______________________ accounting system records manufacturing activities using
a periodic inventory system. A ____________________ accounting system records
manufacturing activities using a perpetual inventory system.
Answer:
A company purchased equipment valued at $200,000 on January The equipment has an
estimated useful life of six years or 5 million units. The equipment is estimated to have
a salvage value of $13,400. Assuming the units of production method of depreciation,
what is the annual depreciation for the second year if 1.5 million units were produced?
A $41,445.91
B. $62,137.80
C. $31,100.00
D. $55,980.00
E. $33,333.00
Answer:
Identify and describe three common tools of financial statement analysis.
Answer:
As a long-term investment, Elmer's Equipment Enterprise purchased 35% of Sticky
Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both
companies. On the purchase date, the fair value and book value of Stickys net assets
were equal. During the year, Stickys earned net income of $430,000 and distributed
cash dividends of 0.42 cents per share. The fair value of Stickys assets at the end of the
year totaled $349,450. What is the journal entry, if any to record the net income for the
investment in Sticky?
Answer:
An equivalent unit of production is an estimate of efforts that is used to calculate the
______________ of each production component.
Answer:
A common focus of financial statement users in evaluating a company's performance
includes evaluation of its (1) ______________________________, (2)
________________________ and (3) ____________________________.
Answer:
