The weighted average method is thought by some accountants to be inferior to the
FIFO method because it
A. is more difficult to apply.
B. only considers the last units worked on.
C. ignores work performed in subsequent periods.
D. commingles costs of two periods.
CVP analysis requires costs to be categorized as
A. either fixed or variable.
B. direct or indirect.
C. product or period.
D. standard or actual.
In a perpetual inventory system, the sale of items for cash consists of two entries. One
entry is a debit to Cash and a credit to Sales. The other entry is a debit to
A. Work in Process Inventory and a credit to Finished Goods Inventory.
B. Finished Goods Inventory and a credit to Cost of Goods Sold.
C. Cost of Goods Sold and a credit to Finished Goods Inventory.
D. Finished Goods Inventory and a credit to Work in Process Inventory.
Pearce Company
Pearce Company uses a standard cost system for its production process. Pearce
Company applies overhead based on direct labor hours. The following information is
available for July:
Refer to Pearce Company Using the two-variance approach, what is the noncontrollable
variance?
A. $26,040 F
B. $0
C. $6,930 U
D. $13,260 U
Lewis Company uses a weighted average process costing system. Material is added at
the start of production. Lewis Company started 13,000 units into production and had
4,500 units in process at the start of the period that were 60 percent complete as to
conversion costs. If Lewis Company transferred out 11,750 units, how many units were
in ending Work in Process Inventory?
A. 1,250
B. 3,000
C. 3,500
D. 5,750
Putnam Company
Below is an income statement for Putnam Company:
Refer to Putnam Company. Assuming that the fixed costs are expected to remain at
$300,000 for the coming year and the sales price per unit and variable costs per unit are
also expected to remain constant, how much profit before taxes will be produced if the
company anticipates sales for the coming year rising to 125 percent of the current year’s
level?
A. $112,500
B. $187,500
C. $262,500
D. $300,000
A total variance is best defined as the difference between total
A. actual cost and total cost applied for the standard output of the period.
B. standard cost and total cost applied to production.
C. actual cost and total standard cost of the actual input of the period.
D. actual cost and total cost applied for the actual output of the period.
A primary characteristic of a performance management system is
A. consistency at all levels in the organization.
B. adaptability to differing situations in the organization.
C. efficiency of application to all individuals in the organization.
D. flexibility to delay rewards although performance objectives have been met.
An appraisal cost is created by
A. installing automated technology.
B. reworking products.
C. verifying procedures.
D. rescheduling and setup.
The Dessert Division of Incredible Edibles Corporation has the following segment
information:
What was Dessert Division’s return on investment?
A. 15%
B. 10%
C. 25%
D. 20%
A formula that indicates the optimal number of units to order is referred to as
__________________________________________________.
economic order quantity or
What is downsizing and how is it accomplished?
Taylor Corporation
Taylor Corporation manufactures and sells baseball bats. For a recent period, its
production and sales objectives were each set at 20,000 units. Also, for this period the
firm had estimated costs as follows:
Refer to Taylor Corporation. For this question only, assume Taylor Corporation actually
produced and sold 19,000 baseball bats. At this level of operation, Taylor Corporation’s
total costs were $170,000. Evaluate Taylor Corporation’s success in terms of
effectiveness and efficiency.
What is open-book management?
Another name for inventoriable costs is ____________________ costs.
Ecology Solutions Corporation
The Green Division of Ecology Solutions Co. has developed a wind generator that
requires a special “S” ball bearing. The Ball Bearing Division of Ecology Solutions Co.
has the capability to produce such a ball bearing.
Unfortunately, the Ball Bearing Division is operating at capacity and will need to
reduce production of another existing product, the “T” bearing, by 1,000 units per
month to provide the 600 “S” bearings needed each month by the Green Division. The
“T” bearing currently sells for $50 per unit. Variable costs incurred to produce the “T”
bearing are $30 per unit; variable costs to produce the new “S” bearing would be $60
per unit.
The Green Division has found an external supplier that would furnish the needed “S”
bearings at $100 per unit. Assume that both the Green Division and Ball Bearing
Division are independent, autonomous investment centers.
Refer to Ecology Solutions Co. What is the maximum price per unit that Green
Division would be willing to pay the Ball Bearing Division for the “S” bearing?
The difference between standard quantity allowed and quantity used for a unit of
output is known as an ______________________________.
Standards that reflect what is expected to occur are referred to as
______________________________.
Castle Homes Corporation
The Carpet Division of Castle Homes Corporation manufactures a single grade of
residential grade carpeting. The division has the capacity to produce 500,000 square
yards of carpet each year. Its current costs and revenues are shown here:
The Housing Division currently purchases 40,000 yards of carpeting (of the grade
produced by the Carpet Division) each year at a cost of $6.50 per square yard from an
outside vendor.
Refer to Castle Homes Corporation. Assume, for this question only, that the Carpet
Division is producing and selling 500,000 square yards of carpet to external buyers at a
price of $5 per square yard. What would be the effect on overall corporate profits if
Carpet Division reduces external sales of carpet by 40,000 square yards and transfers
the 40,000 square yards of carpet to the Housing Division?