1) the following table was taken from firm x’s production cost report:
what is the number of weighted-average equivalent units?
a.40,000
b.50,000
c.48,000
d.38,000
2) the following costs were for bikeway inc., a bicycle manufacturer:
at an output level of 1,000 bicycles, per unit variable cost is calculated to be:
a.$100.00
b.$101.50
c.$125.00
d.$126.32
e.$131.58
3) abc company uses a materials inventory account to record both direct and indirect
materials. abc charges direct materials to wip, while indirect materials are charged to
the factory overhead account. during the month of april, the company has the following
cost information:
the amount of direct materials issued is:
a.$110,000
b.$30,000
c.$90,000
d.$80,000
e.$50,000
4) harmon inc. produces joint products l, m, and n from a joint process. information
concerning a batch produced in may at a joint cost of $75,000 was as follows:
the amount of joint costs allocated to product l using the physical measure 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.$23,438
b.$33,434
c.$40,313
d.$27,109
e.$11,250
5) the type of compensation plan that focuses on the difference between actual
performance (sales, operating income, etc.) and budgeted performance is refers to:
a.the use of flexible budgets for performance evaluation
b.the use of the master budget for performance evaluation
c.the use of “rolling financial forecasts”
d.the use of a fixed-performance contract
e.the use of a kaizen forecast
6) the weighted-average method of process costing makes no distinction between the
cost incurred prior to the current period and the cost incurred in:
a.a future period
b.the current period
c.either a future period or the current period
d.both a future period and the current period
e.the operational process
7) all of the following are examples of companies using job costing systems except:
a.fedex
b.paramount pictures
c.jiffy lube international
d.international paper
e.a professional service firm
8) hart company sold 5,000 units for a price of $50 per unit and had the following
information:
if the sales price per unit were to increase by 10%, variable expenses were to increase
by 12.5% and fixed expenses were to increase by 20%, what would be the new
contribution margin per unit?
a.$19
b.$21
c.$23
d.$25
e.$32
9) which one of the following is most relevant to a manufacturing
equipment-replacement decision?
a.original cost of the old equipment
b.disposal (salvage) value of the old equipment
c.gain or loss on the disposal of the old equipment
d.original cost less accumulated depreciation of the old equipment
e.a lump-sum write-off amount from the disposal of the old equipment
10) cost allocation provides a service firm a basis for evaluating the:
a.cost and profitability of its services
b.value of its services
c.manufacturing costs for the company
d.profitability of its customers
11) a volume-based rate is an appropriate overhead application base when:
a.several well-differentiated products are manufactured
b.direct labor costs are large
c.direct material costs are large relative to direct labor costs incurred
d.only one product is manufactured
e.manufacturing is process-based
12) the competitive strategy in which the firm succeeds by producing at the lowest cost
in the industry is termed:
a.differentiation
b.cost advantage
c.price strategy
d.cost leadership
e.resource-based strategy
13) wings co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours,
and had the following manufacturing overhead:
using abc, overhead cost assigned to job #971 for inspections is:
a.$2,300
b.$990
c.$6,500
d.$690
e.$1,020
14) georgia meadows company uses the high-low method to analyze production costs.
the following information relates to the production data for the first six months of the
year.
what is the estimated total cost at an operating level of 8,000 hours?
a.$9,525
b.$9,835
c.$10,185
d.$10,325
15) harmon inc. produces joint products l, m, and n from a joint process. information
concerning a batch produced in may at a joint cost of $75,000 was as follows:
the amount of joint costs allocated to product n using the net realizable value 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.$3,614
b.$4,688
c.$23,438
d.$33,434
e.$46,875
16) abc, inc. is considering whether to repair a five-year-old fork lift or purchase a used
one as a replacement. the company estimates that it would take $3,000 to repair the
existing fork lift, which is the same amount needed to purchase the used fork lift.
cost-related information for both assets is as follows:
the cost(s) not relevant for this asset-replacement decision is/are:
a.the acquisition cost of the used fork lift
b.the acquisition cost of the existing fork lift
c.the repairs cost for the existing fork lift
d.the annual operating costs for the existing fork lift
e.the annual operating costs for the used fork lift
17) the range of the cost driver in which the actual value of the cost driver is expected
to fall is called the:
a.actual cost range
b.driver range
c.activity range
d.expected cost range
e.relevant range
18) boone co.’s sales, based on past experience, are 20% cash sales and 80% credit
sales. credit sales are typically collected as follows: 40% in the month of sale, 50% in
the month after the sale, and 10% in the second month. on december 31, the accounts
receivable balance is $54,000, of which $12,000 is from november sales. total sales for
january and february are budgeted to be $100,000 and $120,000, respectively.
what are boone co.’s budgeted cash receipts for january?
a.$74,200
b.$85,000
c.$87,000
d.$94,200
e.$99,000
19) as indicated in the text, one of the behavioral issues associated with budgeting deals
with the linkage of employee compensation to budgeted performance. in this regard,
distinguishbetween so-called fixed performance contracts (i.e., a traditional approach)
and the following two recommended alternatives: (1) linear compensation plans, and
(2) the use of relative performance (relative improvement) contracts along with “rolling
financial forecasts.” with respect to the use of fixed performance contracts, define what
is meant by the term “gaming the performance indicator.” with respect to the use of
relative performance contracts, define what is meant by the term “rolling financial
forecasts.”
20) west company budgeted the following credit sales during the current year:
september, $75,000; october, $108,000; november, $90,000; december, $96,000.
experience has shown that cash from the credit sales is received as follows: 10% in the
month of sale, 50% in the first month after sale, 35% in the second month after sale,
and 5% is uncollectible. all collections in the month of sale are subject to 2 percent cash
discount.
required: how much total cash can west company expect to collect in november?
21) firms a and b both produce and sell computer cables. the sales price is $5 per cable.
data for both firms at a sales volume of 100 units are as follows:
required: which firm’s profit or loss is more sensitive to changes in sales volume?
explain.
22) consider the following information for blue water equipment, inc., a manufacturer
of sailboat rigging, blocks, and cordage.
required:
prepare a statement of cost of goods manufactured and an income statement for blue
water equipment, inc. for the year.
23) choco chocolata is a cookie company in juarez, mexico that produces and sells
american-style chocolate chip cookies with extremely high quality and service. the
owner would like to identify the various costs incurred during each year in order to plan
and control the costs in the business. chocolata’s costs are the following (in thousands of
pesos):
required:
(1) what is the total amount of product costs?
(2) what is the total amount of period costs?
24) explain benefits of implementing a master budgeting system.
25) required: consider the contemporary management techniques and how they might
be used in each of the following industry groups. for which industry type is each
management technique most applicable?
1) manufacturing, for example, auto manufacturing, appliances, and consumer
electronics
2) professional service firms, for example, accounting firms, law firms, and medical
practices
3) retail firms, for example, walmart and sears
26) powell company uses a job costing system. during the month of may, powell spent
most of its time on job a50, which was started late in april. following is cost
information for job a50, other may costs, and relevant annual estimates.
required:
(1) what is the overhead to be applied for may to job a50 upon completion on may 15?
(2) what are total manufacturing costs for may for job a50?
(3) prepare the journal entry when job a50 is completed on may 15, assuming that the
may 1 work-in-process inventory for job a50 was $600.
(4) what is the profit on job a50 when it is sold on may 15?
(5) calculate the under-or over-applied overhead for may.
27) fashions, inc. is a retail store that sells sweaters and jackets. in the past, it has
bought all its sweaters from a supplier for $20 per unit and had no fixed costs for this
line of clothing. however, fashions has the opportunity to acquire a small manufacturing
facility where it could produce its own sweaters. the projected data for producing its
own sweaters are as follows:
required:
1> if fashions acquired the manufacturing facility, how many sweaters would it have to
produce in order to break even? (round your answer up, to the nearest whole number.)
2> to earn an after tax profit of $125,000 per month, how many sweaters would
fashions have to sell if it buys the sweaters from the supplier? if it produces its own
sweaters? fashion’s combined income tax rate is 30%. (round your answer up, to the
nearest whole number.)
3> what is the profit-indifference sales volume in terms of the two options under
consideration? (ignore income tax effects.) show a computation of operating income to
prove your answer.
