Expatriate workers should receive a compensation package that reflects cost of living
factors and currency fluctuations.
When multiple labor categories are used, the monetary impact of using a higher or
lower number of hours than a standard allows is referred to as a labor yield variance.
In an actual cost system, actual production overhead costs are typically accumulated in
an Overhead Control account and assigned to Work in Process at the end of the period.
A budget variance is a controllable variance.
A conversion variance combines labor and overhead variances.
Direct materials are normally considered unit-level costs.
Reducing the time-to-market for a new product
A. is only possible if a company has formed strategic alliances with its suppliers.
B. generally increases long-run product costs because of the need to develop new
production processes.
C. results in the ability of a firm to pursue a cost leadership competitive strategy.
D. may result in design flaws, a need for engineering change orders, and customer “bad
will.”
The Lumber Division
The Lumber Division of Home Innovations Company reported the following results for
a recent year
Refer to the Lumber Division
What was the asset turnover ratio of the Lumber Division?
A. 1.538
B. 2.97
C. 0.650
D. 1.20
Overapplied overhead will result if
A. the plant is operated at less than expected capacity.
B. overhead costs incurred were greater than estimated overhead costs.
C. overhead costs incurred were less than overhead costs charged to production.
D. overhead costs incurred were greater than overhead charged to production.
Mayflower Corporation manufactures products on a job-order basis. The job cost sheet
for Job #656 shows the following for September:
At the end of September, what total cost appears on the job cost sheet for Job #656?
A. $5,725
B. $5,765
C. $6,765
D. $8,325
Comparing the way a “best-in-class” company performs a specific activity (such as
distribution) is called
A. process benchmarking.
B. results benchmarking.
C. total quality management benchmarking.
D. SPC benchmarking.
Indirect costs should be allocated for all of the following reasons except to
A. motivate managers.
B. determine the full cost of a product.
C. motivate general administration.
D. compare alternatives for decision making.
Robertson Company.
Robertson Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #8, #12, and #15.
Direct material was requisitioned as follows for each job respectively: 25 percent, 30
percent, and 30 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000.
Other actual overhead costs totaled $50,000.
Refer to Robertson Company. How much overhead is applied to Work in Process?
A. $ 95,000
B. $ 119,938
C. $ 162,900
D. $ 164,938
Budgeted sales for Parker Corporation for the second quarter the year are shown
below:
The company has a policy that requires the ending inventory in each period to be 15
percent of the following period’s sales. Assuming that the company follows this policy,
what quantity of production should be scheduled for May?
A. 28,800 units
B. 29,700 units
C. 25,000 units
D. 31,200 units
Spears Manufacturing Company
Spears Manufacturing Company produces beach chairs. Chair frames are all the same
size, but can be made from plastic, wood, or aluminum. Regardless of frame choice, the
same sailcloth is used for the seat on all chairs. Spears has set a standard for sailcloth of
$9.90 per square yard and each chair requires 1 square yard of material. Spears
produced 500 plastic chairs, 100 wooden chairs, and 250 aluminum chairs during June.
The total cost for 1,000 square yards of sailcloth during the month was $10,000. At the
end of the month, 50 square yards of sailcloth remained in inventory.
Refer to Spears Manufacturing Company. Assuming that there was no sailcloth in
inventory at the beginning of June, the unfavorable material quantity variance for the
month was
A. $ 495.
B. $ 500.
C. $ 990.
D. $1,000.
A budget is
A. a planning tool.
B. a control tool.
C. a means of communicating goals to the firm’s divisions.
D. all of the above.
The first step in determining the cost per EUP per cost component under the weighted
average method is to
A. add the beginning Work in Process Inventory cost to the current period’s production
cost.
B. divide the current period’s production cost by the equivalent units.
C. subtract the beginning Work in Process Inventory cost from the current period’s
production cost.
D. divide the current period’s production cost into the EUP.
Which method of evaluating capital projects assumes that cash inflows can be
reinvested at the discount rate?
A. internal rate of return
B. payback period
C. profitability index
D. accounting rate of return
Boston Bakers
Boston Bakers is trying to decide whether it should keep its existing bread-making
machine or purchase a new one that has technological advantages (which translate into
cost savings) over the existing machine. Information on each machine follows:
Refer to Boston Bakers. The $10,000 cost of the original machine represents a(n)
A. sunk cost.
B. future relevant cost.
C. historical relevant cost.
D. opportunity cost.
The primary reason that managers impose a minimum cash balance in the cash budget
is
A. because management needs discretionary cash for unforeseen business opportunities.
B. managers lack discipline to control their spending.
C. that it protects the organization from the uncertainty of the budgeting process.
D. that it makes the financial statements look more appealing to creditors.
A sub-unit of an organization is evaluated on the basis of its ROI. If this sub-unit’s
sales and expenses both increase by $30,000, how will the following measures be
affected?
A. increase increase increase
B. indeterminate increase decrease
C. no change increase decrease
D. no change decrease no change
Robert Wilson Company
Below is an income statement for Robert Wilson Company:
Refer to Robert Wilson Company. What was the company’s margin of safety?
A. $ 37,500
B. $ 75,000
C. $125,000
D. $150,000
What are the major assumptions of CVP analysis?
Why is it important for managers to be able to rank projects?
A loss that occurs uniformly throughout a production process is referred to as a
__________________ loss.
What are four common methods used to allocate service department costs?
Berkshire Company
The following information is available for Berkshire Company for the current year:
Standard:
Material X: 3.0 pounds per unit @ $4.20 per pound
Material Y: 4.5 pounds per unit @ $3.30 per pound
Class S labor: 3 hours per unit @ $10.50 per hour
Class US labor: 7 hours per unit @ $8.00 per hour
Actual:
Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used)
Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used)
Class S labor: 3.8 hours per unit @ $10.60 per hour
Class US labor: 5.7 hours per unit @ $7.80 per hour
Berkshire Company produced a total of 45,750 units.
Refer to Berkshire Company. Compute the labor rate, mix, and yield variances (round
to the nearest dollar).
A structure of interrelated elements that enables management to plan, control, and
evaluate performance is referred to as a
_____________________________________________.
The performance measure that considers routine interruptions is known as
____________________ capacity.