1) Process costing ________.
A) allocates all product costs, including materials, and labor
B) results in different costs for different units produced
C) is commonly used by general contractors who construct custom-built homes
D) is used exclusively in manufacturing
2) A push-through system that manufactures finished goods for inventory on the basis
of demand forecasts is referred to as ________.
A) just-in-time purchasing
B) materials requirements planning
C) relevant total costs
D) economic order quantity
3) Which of the following information is needed to prepare a flexible budget?
A) actual units sold
B) actual variable cost
C) actual selling price per unit
D) actual fixed cost
4) At the Verill Company, the cost of the library and information center has always been
charged to the various departments based upon number of employees. Recently,
opinions gathered from the department managers indicate that the number of engineers
within a department might be a better predictor of library and information center costs.
Total library and information center costs are $200,000.
If the number of engineers is considered the cost driver, what amount of library and
information center costs will be allocated to Department A?
A) $30,000
B) $33,750
C) $0
D) $66,667
5) Which of the following statements is true of just-in-time (JIT) purchasing?
A) In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that
minimizes the sum of annual relevant stockout and carrying costs.
B) JIT purchasing is guided solely by the EOQ model because that model emphasizes
the tradeoff between relevant carrying and ordering costs.
C) In JIT purchasing, raw materials (or goods) are purchased so that products are
delivered just as needed for production or sales.
D) Only disadvantage of JIT purchasing is the higher level carrying and inspection
costs.
6) Bekits Corporation manufactured 37,500 grooming kits for horses during March. The
following fixed overhead data relates to March:
What is the flexible-budget amount?
A) $134,375.50
B) $124,740.00
C) $129,937.50
D) $133,000.00
7) The selling price per unit less the variable cost per unit is the ________.
A) fixed cost per unit
B) gross margin
C) margin of safety
D) contribution margin per unit
8) Whippany manufacturing wants to estimate costs for each product they produce at its
Troy plant. The Troy plant produces three products at this plant, and runs two flexible
assembly lines. Each assembly line can produce all three products.
Required:
a.Classify each of the following costs as either direct or indirect for each product.
b.Classify each of the following costs as either fixed or variable with respect to the
number of units produced of each product.
9) Mark Papers employs 15 full-time employees and 10 trainees. Direct and indirect
costs are applied on a professional labor-hour basis that includes both employee and
trainee hours. Following is information for 2014:
What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively,
per professional labor-hour?
A) $30.00; $4.50
B) $35.00; $4.00
C) $32.40; $5.00
D) $27.00; $5.00
10) To the nearest whole dollar, what should be the total lease cost at a sales volume of
30,900 units in a month? (Assume that this sales volume is within the relevant range.)
A) $742,317
B) $692,160
C) $704,480
D) $716,800
11) Which of the following steps in designing an accounting-based performance
measure includes decisions such as defining assets as total assets or net assets in the
calculation of return on assets?
A) choosing performance measures that align with top management’s financial goals
B) choosing the time horizon of each performance measure
C) choosing the details for each performance measure
D) choosing a target level of performance
12) Norton’s Convenience store has a variable demand. The daily demand ranges from
270 to 330 customers a day who average purchasing 5 items each. The average daily
demand is 300 customers. The convenience store currently operates 12 hours a day.
Each order takes approximately 2 minutes.
Required:
a.What is the average customer waiting time, in minutes?
b.What is the cycle time for an order?
c.Norton has decided that the waiting time is too long and has increased the hours the
store is open to 15 hours. What is the waiting time now?
13) What is the allocated joint costs of Condensed Milk?
A) $35,200
B) $10,800
C) $12,500
D) $34,700
14) Nile Corp. has identified three cost pools to allocate overhead costs. The following
estimates are provided for the coming year:
The accounting records show the Mossman Job consumed the following resources:
Using the three cost pools to allocate overhead costs, what is the total amount of
overhead costs to be allocated to the Mossman Job?
A) $389.00
B) $380.00
C) $385.50
D) $376.00
15) Which of the following statements is true of a peanut-butter costing system?
A) A peanut-butter costing system typically has more-homogeneous indirect cost pools.
B) A peanut-butter costing system broadly averages or spreads the cost of resources
uniformly to cost objects.
C) A peanut-butter costing system assumes that all costs are variable.
D) In a peanut-butter costing system, costs of activities are used to assign costs to other
cost objects such as products or services based on the activities the products or services
consume.
16) The dual-rate cost-allocation method classifies costs in each cost pool into a
________.
A) budgeted-cost pool and an actual-cost pool
B) variable-cost pool and a fixed-cost pool
C) direct-cost pool and an indirect-cost pool
D) direct-cost pool and a reciprocal-cost pool
17) In joint costing, the sales value at splitoff method is used frequently ________.
A) in a dynamic business environment where the selling prices change frequently
B) in anticipation of subsequent management decisions
C) when selling prices are dependent on further processing decisions
D) since the selling-price data exists at the splitoff
18) Following a strategy of product differentiation, Arseniq Company makes a high-end
Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015:
Arseniq produces no defective units but it wants to reduce direct materials usage per
unit of XT15. Manufacturing conversion costs in each year depend on production
capacity defined in terms of XT15 units that can be produced. Selling and
customer-service costs depend on the number of customers that the customer and
service functions are designed to support. Arseniq had 140 customers in 2014 and 145
customers in 2015.
What is the net effect on operating income as a result of the productivity component?
A) $875,000 U
B) $206,250 F
C) $875,000 F
D) $206,250 U