1) matrix inc. calculates cost for an equivalent unit of production using both the
weighted-average and the fifo methods.
total equivalent units for materials under the weighted-average method are calculated to
be:
a.126,000 equivalent units
b.114,000 equivalent units
c.90,000 equivalent units
d.102,000 equivalent units
e.96,000 equivalent units
2) if a company is working on strategic positioning, what aspect of the firm is being
developed?
a.how the firm is perceived by its external environment, its competitors, and customers
b.where the firm’s physical plants, buildings, and warehouses will be located
c.the firm’s position on important issues, such as the environment and government
regulations
d.which competitive strategy the firm will use to achieve a sustainable competitive
advantage
3) barstow manufacturing company has two service departments product design and
engineering support, and two production departments assembly and finishing. the
distribution of each service department’s efforts to the other departments is shown
below:
the direct operating costs of the departments (including both variable and fixed costs)
were as follows:
the total cost accumulated in the assembly department using the reciprocal method is
(calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and
round all dollar amounts to the nearest whole dollar):
a.$1,890,000
b.$627,143
c.$682,551
d.$1,062,857
e.$1,007,449
4) if a costing system uses a single base to allocate overhead costs that are results of
several production activities:
a.products that use relatively more of this base tend to be undercosted
b.products that use relatively less of this base tend to be overcosted
c.products that use relatively more of this base tend to be overcosted
d.products may be over- or under-costed, depending on the activity level
e.products may be over- or under-costed, depending on the overhead rate
5) atlantic manufacturing company uses process costing. all materials are added at the
beginning of the process. the normal spoilage rate is calculated as 10% of good units
completed.
the cost of the beginning work-in-process in the month of may is $3,000,000, including
$1,600,000 of input of materials, 100,000 units, and $1,400,000 for conversion costs.
the beginning work-in-process is 70% complete.
during may, the input includes $7,400,000 for materials, 800,000 units started and
$4,190,000 for conversion costs. there were 700,000 good units finished. in addition,
the ending work-in-process in may is 100,000 units with 60% complete. the abnormal
spoilage is 30,000 units. all spoilage occurred when all processing was complete, at the
final inspection.
required: use the weighted-average method to calculate:
(a) the dollar value of abnormal spoilage.
(b) the cost of the good units finished.
(c) the cost of ending work-in-process inventory.
6) complete the inventory formula:
beginning inventory + ______ = ________ + ending inventory
a.cost added; cost transferred out
b.cost transferred out; cost added
c.cost of goods sold; cost added
d.cost added; cost of goods manufactured
7) kelvin co. produces and sells socks. variable costs are budgeted at $4 per pair, and
fixed costs for the year are expected to total $90,000. the selling price is expected to be
$6 per pair.
the sales units required for kelvin co. to make a before-tax profit of $12,000 are:
a.46,000 units
b.51,500 units
c.50,000 units
d.51,000 units
e.52,000 units
8) jackson inc. listed the following data for 2013:
if overhead is applied based on direct labor hours, overapplied/underapplied overhead
is:
a.$136,650 overapplied
b.$136,650 underapplied
c.$174,775 underapplied
d.$174,775 overapplied
e.$-0-
9) nerrod company sells its products at $500 per unit, net 30 . the firm’s gross margin
ratio is 40 percent. the firm has estimated the following operating costs:
nerrod company has gathered the following data pertaining to activities it performed for
two of its customers:
what is nerrod’s total customer-sustaining cost applicable to ninto?
a.$400
b.$600
c.$4,000
d.$6,300
e.$6,420
10) departmental rates are appropriate when all the following exist except:
a.not all products pass through the same processes
b.departments are not similar in function
c.departments have dissimilar cost drivers
d.all departments have similar cost drivers and cost usage characteristics
e.products consume departmental resources in a significantly different manner
11) during which step of value chain analysis will the company discover whether or not
it has a cost advantage, and why?
a.during the first step, when the value-chain activities are identified
b.during the first step, when the cost driver(s) are identified
c.during the second step, when the firm develops a competitive advantage by either
reducing cost or adding value
d.the entire purpose of value chain analysis is to determine if the company has a cost
advantage; therefore, it occurs in all steps
e.in the third step, when the company adopts and implements the balanced scorecard
12) the dodd-frank act (2010) includes a variety of new regulations, including the
creation of:
a.the cost accounting standards board
b.the consumer financial protection bureau
c.the financial services industry control commission
d.the wall street reform and protection board
e.the executive compensation review board
13) which of the following journal entries is correct if scrap is being incurred and sold
for all jobs in common in the amount of $600?
a.
b.
c.
d.
14) based on the maintenance expenses of a company are to be analyzed for purposes of
constructing a flexible budget. examination of past records disclosed the following
costs and volume measures:
using the high-low technique, estimate the annual fixed cost for maintenance
expenditures:
a.$447,400
b.$368,800
c.$532,900
d.$571,200
e.$218,700
15) barnes co. incurred the following costs during july:
what was the amount of direct materials used and direct labor for july?
a.option a
b.option b
c.option c
d.option d
16) diamond company has three product lines, a, b, and c. the following financial
information is available:
assuming that product line c is discontinued and the manufacturing space formerly
devoted to this line is rented for $6,000 per year, operating income for the company
will:
a.be unchangedthe two effects cancel each other out
b.increase by $3,300
c.increase by $4,500
d.increase by $7,200
e.increase by some other amount
17) which of the following methods considers all reciprocal flows between service
departments through simultaneous equations?
a.dual method
b.step method
c.reciprocal method
d.direct method
e.the net realizable value method
18) jch company conducts business in the lumber and building products industry. last
week, jch purchased 50 railcars of lumber from a mill in oregon and sold all 50 to a
home depot store in north carolina. in this instance, jch company would most likely be
classified as a:
a.manufacturer
b.retailer
c.warehouse
d.wholesaler
19) pierce co. manufactures a single product that goes through two processes mixing
and cooking. the following data pertains to the mixing department for september 2013 .
material r is added at the beginning of work in the mixing department. material s is also
added in the mixing department, but not until units of product are thirty percent
completed with regard to conversion. conversion costs are incurred uniformly during
the process.
required:
(1) calculate the equivalent units for material r using the weighted-average method.
(2) calculate the equivalent units for material s using the weighted-average method.
(3) calculate the equivalent units for conversion using the weighted-average method.
(4) calculate the unit costs using the weighted-average method.
(5) calculate the cost of units completed and transferred out using the weighted-average
method.
(6) calculate the cost of ending work in process using the weighted-average method.
20) discuss the components of each of the following manufacturing cost budgets:
1> production budget
2> direct materials purchases budget
3> direct labor budget
4> factory overhead budget
5> cost of goods manufactured budget
6> cost of goods sold budget.
21) chen textile company’s job a had normal spoilage with the estimated disposal selling
price of $500 in march attributable to this particular job; its job b had normal spoilage
with the estimated cost of $300 from the general production process failure and
abnormal spoilage of $100. the company also incurred scrap due to a specific job and
sold it for $60 cash. it also sold the scrap common to all jobs for $110 cash in march.
required:
(1) make the necessary journal entries to record normal and abnormal spoilage costs.
(2) make the necessary journal entries to record both types of scrap sold.
22) gallery 12 company operates the franchise for grade school and high school pictures
taken annually at some 4,000 sites in the upper midwestern u.s. one of the continuing
problems in this industry is retakes–returning to a site to re-photograph students who
do not like the results of their first sitting.
until now, no charge has been made for the second picture session; the cost is spread
over all customers and reflected in the pricing of photo packages. gallery 12 executives
have proposed a $4 charge for a second sitting with slightly lowered picture prices for
students who select poses from the first sitting. you are part of a management team that
has analyzed the alternative proposal, and your team has just presented the following
data to top management.
required:
1> the current level of sittings is 1.4 million, and contribution margin per sitting is
unchanged at $2.76. calculate the projected change in operating profit from an increase
of 100,000 sittings that the company could produce because of time savings from
reduced picture retake sittings. fixed costs are not expected to change under the new
proposal.
2> explain why the margin of safety (mos) almost doubles from 12 percent to 20
percent, while the degree of operating leverage (dol) falls by almost one-third (3.63
down to 2.37). as above, assume that fixed costs do not change.
23) dockille, inc., is preparing its budget for the second quarter of the calendar year. the
following sales data (in units) have been forecasted:
additional information:
desired ending inventory each month–finished goods: 30% of next month’s sales
desired ending inventory each month–raw materials: 25% of next month’s production
needs
number of raw material units required per finished unit: 4
required: how many units of raw materials should be purchased in the 2ndquarter?
24) the following data relates to the solar products company:
required:
prepare a statement of cost of goods manufactured and cost of goods sold.
25) contrast operating budgets and financial budgets. how do these budgets relate to the
master budget for a period? what is the culmination of the master budgeting process?