A decrease in the lead time would reduce the
A. order point.
B. safety stock.
C. economic order quantity.
D. ordering costs.
Another name for variable costing is
A. full costing.
B. direct costing.
C. standard costing.
D. adjustable costing.
Baker Company
Baker Company produces three products: A, B, and C from the same process. Joint
costs for this production run are $2,100.
If the products are processed further, Baker Company will incur the following disposal
costs upon sale: A, $3.00; B, $2.00; and C, $1.00.
Refer to Baker Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product B (round to the nearest dollar)?
A. $700
B. $416
C. $725
D. $959
Texas Metal Company
Texas Metal Company has developed standard overhead costs based on a monthly
capacity of 180,000 machine hours as follows:
During November, 90,000 units were scheduled for production, but only 80,000 units
were actually produced. The following data relate to November:
Actual machine hours used were 165,000.
Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).
All inventories are carried at standard cost.
Refer to Texas Metal Company. The variable overhead spending variance for November
was
A. $15,000 U.
B. $23,000 U.
C. $38,000 F.
D. $38,000 U.
The term “prime cost” refers to
A. all manufacturing costs incurred to produce units of output.
B. all manufacturing costs other than direct labor and raw material costs.
C. raw material purchased and direct labor costs.
D. the raw material used and direct labor costs.
Crosby Corporation
Crosby Corporation has two service departments: Data Processing and
Administration/Personnel. The company also has three divisions: X, Y, and Z. Data
Processing costs are allocated based on hours of use and Administration/Personnel costs
are allocated based on number of employees.
Assume that Data Processing provides more service than Administration/Personnel.
Refer to Crosby Corporation. Assume that Data Processing costs have been allocated
and the balance in Administration is $600,000. Using the step method, what amount is
allocated to Y?
A. $225,000
B. $128,571
C. $187,500
D. $200,000
Phelps Corporation
Phelps Corporation’s EOQ for Material A is 500 units. This EOQ is based on:
Refer to Phelps Corporation. What is the annual carrying cost per unit for Material A?
A. $0.50
B. $2.00
C. $2.50
D. $5.00
A process costing system
A. yes yes
B. no no
C. yes no
D. no yes
Triumph Division of Traveling Fantasies, is evaluated based on residual income
generated. In the most recent year, the Triumph Division generated a residual income of
$2,000,000 and net income of $5,000,000. The target rate of return for all divisions of
Traveling Fantasies is 20%. What was the return on investment for the Triumph
Division?
A. 40%
B. 13%
C. 20%
D. 33%
Beasley Company
Beasley Company prepared a cash budget by quarters for the upcoming year. Missing
data amounts are indicated with question marks or lower case letters; these lower case
letters will be referred to in the questions that follow.
Beasley requires a minimum balance of $10,000 to start a quarter.
All data are in thousands.
Beasley Corporation
Cash Budget
Refer to Beasley Company. The cash balance at the beginning of the second quarter
(item e) is:
A. $10
B. $14
C. $ 0
D. $ 7
A company producing which of the following would be most likely to use a time
standard for labor?
A. mattresses
B. custom-made picture frames
C. floral arrangements
D. stained-glass windows
Rosewood Corporation
Rosewood Corporation produces a single product. The following cost structure applied
to its first year of operations:
Refer to Rosewood Corporation. Assume for this question only that Rosewood
Corporation manufactured 5,000 units and sold 4,000 in the current year. If Rosewood
employs a costing system based on variable costs, the company would end the current
year with a finished goods inventory of
A. $4,000.
B. $8,000.
C. $6,000.
D. $5,000.
If a company has a policy of maintaining an inventory of finished goods at a specified
percentage of the next month’s budgeted sales, budgeted production for January will
exceed budgeted sales for January when budgeted
A. February sales exceed budgeted January sales.
B. January sales exceed budgeted December sales.
C. January sales exceed budgeted February sales.
D. December sales exceed budgeted January sales.
If no safety stock is carried, the average inventory is equal to the
A. order point/2.
B. order point x 2.
C. economic order quantity/2.
D. economic order quantity x 2.
Riley Company
Riley Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.
If A and C are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Riley Company. Using net realizable value at split-off, what amount of joint
processing cost is allocated to Product A (round to the nearest dollar)?
A. $2,718
B. $4,500
C. $6,062
D. $6,282