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When a decision is made among a number of alternatives, the benefit that is lost by
choosing one alternative over another is the:
A. realized cost.
B. opportunity cost.
C. conversion cost.
D. accrued cost.
Answer:
In computing its predetermined overhead rate, Marple Company inadvertently left its
indirect labor costs out of the computation. This oversight will cause:
A. Manufacturing Overhead to be overapplied.
B. the Cost of Goods Manufactured to be understated.
C. the debits to the Manufacturing Overhead account to be understated.
D. the ending balance in Work in Process to be overstated.
Answer:
Data from Kooistra Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770.
The average collection period for Year 2 is closest to:
A. 0.9 days
B. 38.8 days
C. 40.2 days
D. 1.1 days
Answer:
Reference: 8-3
Macphail Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its flexible budgets. During April, the company budgeted
for 5,600 units, but its actual level of activity was 5,650 units. The company has
provided the following data concerning the formulas used in its budgeting and its actual
results for April:
Data used in budgeting:
Actual results for April:
The overall revenue and spending variance (i.e., the variance for net operating income
in the revenue and spending variance column) for April would be closest to:
A) $4,880 U
B) $4,090 F
C) $4,090 U
D) $4,880 F
Answer:
Reference: 8-31
Kibodeaux Corporation makes a product with the following standard costs:
The company budgeted for production of 3,300 units in June, but actual production was
3,400 units. The company used 33,240 liters of direct material and 320 direct
labor-hours to produce this output. The company purchased 35,900 liters of the direct
material at $4.90 per liter. The actual direct labor rate was $22.70 per hour and the
actual variable overhead rate was $2.70 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The materials price variance for June is:
A) $3,332 F
B) $3,590 U
C) $3,332 U
D) $3,590 F
Answer:
Hartzog Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $5 thousand. The market price of common stock at the end of
Year 2 was $7.04 per share.
The gross margin percentage for Year 2 is closest to:
A. 41.5%
B. 70.9%
C. 15.2%
D. 658.8%
Answer:
Hadlock Company, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the total period cost for the month under the variable costing approach?
A. $125,600
B. $108,800
C. $176,800
D. $68,000
Answer:
Hassick Corporation produces and sells a single product whose contribution margin
ratio is 63%. The company's monthly fixed expense is $460,530 and the company's
monthly target profit is $19,000. The dollar sales to attain that target profit is closest to:
A. $290,134
B. $302,104
C. $761,159
D. $731,000
Answer:
Jarvinen Company, which has only one product, has provided the following data
concerning its most recent month of operations:
The company produces the same number of units every month, although the sales in
units vary from month to month. The company's variable costs per unit and total fixed
costs have been constant from month to month.
What is the net operating income for the month under variable costing?
A. $11,600
B. $2,900
C. $8,700
D. $0
Answer:
A manufacturer of playground equipment uses a standard costing system in which
standard machine-hours (MHs) is the measure of activity. Data from the company's
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead volume variance for the period to the
nearest dollar?
A. $486 F
B. $1,105 U
C. $619 U
D. $612 U
Answer:
Personnel administration is an example of a:
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Facility-level activity.
Answer:
Pellman Inc., which produces a single product, has provided the following data for its
most recent month of operations:
There were no beginning or ending inventories.
The unit product cost under absorption costing was:
A. $91
B. $72
C. $25
D. $32
Answer:
Moncrief Inc. produces and sells a single product. The selling price of the product is
$170.00 per unit and its variable cost is $62.90 per unit. The fixed expense is $300,951
per month. The break-even in monthly unit sales is closest to:
A. 4,785 units
B. 2,810 units
C. 3,122 units
D. 1,770 units
Answer:
What was the variable overhead efficiency variance for the period to the nearest dollar?
A) $1,746 U
B) $70 U
C) $820 F
D) $74 U
Answer:
Chae Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 500
units. The costs and percentage completion of these units in beginning inventory were:
A total of 8,100 units were started and 7,500 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 80% complete with respect to materials and 75% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
How many units are in ending work in process inventory in the first processing
department at the end of the month?
A. 1,100
B. 900
C. 600
D. 7,600
Answer:
Cress Company makes four products in a single facility. Data concerning these products
appear below:
The milling machines are potentially the constraint in the production facility. A total of
11,500 minutes are available per month on these machines.
How many minutes of milling machine time would be required to satisfy demand for all
four products?
A. 12,000
B. 10,800
C. 9,000
D. 11,500
Answer:
When the actual direct labor-hours is less than the standard direct labor-hours allowed
for the actual output of the period, the journal entry would include:
A) Debit to Wages Payable; Credit to Labor Efficiency Variance
B) Debit to Work-In-Process; Credit to Labor Efficiency Variance
C) Debit to Wages Payable; Debit to Labor Efficiency Variance
D) Debit to Work-In-Process; Debit to Labor Efficiency Variance
Answer:
All other things being equal, if a division's traceable fixed expenses increase:
A. the division's contribution margin ratio will decrease.
B. the division's segment margin ratio will remain the same.
C. the division's segment margin will decrease.
D. the overall company profit will remain the same.
Answer:
Under Lamprey Company's job-order costing system, manufacturing overhead is
applied to Work in Process inventory using a predetermined overhead rate. During
January, Lamprey's transactions included the following:
Lamprey Company had no beginning or ending inventories. What was the cost of goods
manufactured for January?
A. $302,000
B. $310,000
C. $322,000
D. $330,000
Answer:
All other things the same, which of the following would increase residual income?
A. Increase in average operating assets.
B. Decrease in average operating assets.
C. Increase in minimum required return.
D. Decrease in net operating income.
Answer:
Excerpts from Dibello Corporation's comparative balance sheet appear below:
Which of the following is the correct treatment within the operating activities section of
the statement of cash flows using the indirect method?
A. The change in Accounts Receivable is added to net income; The change in
Inventory is added to net income
B. The change in Accounts Receivable is added to net income; The change in Inventory
is subtracted from net income
C. The change in Accounts Receivable is subtracted from net income; The change in
Inventory is subtracted from net income
D. The change in Accounts Receivable is subtracted from net income; The change in
Inventory is added to net income
Answer:
Robledo Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed expenses are $625,000 per month. The company is currently selling 9,000 units
per month.
This question is to be considered independently of all other questions relating to
Robledo Corporation. Refer to the original data when answering this question.
The marketing manager would like to introduce sales commissions as an incentive for
the sales staff. The marketing manager has proposed a commission of $8 per unit. In
exchange, the sales staff would accept a decrease in their salaries of $57,000 per month.
(This is the company's savings for the entire sales staff.) The marketing manager
predicts that introducing this sales incentive would increase monthly sales by 100 units.
What should be the overall effect on the company's monthly net operating income of
this change?
A. increase of $56,200
B. decrease of $121,800
C. increase of $712,200
D. decrease of $7,800
Answer:
Sommers Fabrication Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours (MHs) at
$9.70 per MH. The company budgeted its fixed manufacturing overhead cost at
$67,000 for the month. During the month, the actual total variable manufacturing
overhead was $66,660 and the actual total fixed manufacturing overhead was $70,000.
The actual level of activity for the period was 6,600 MHs. What was the total of the
variable overhead rate and fixed manufacturing overhead budget variances for the
month?
A. $2,640 unfavorable
B. $5,640 favorable
C. $2,640 favorable
D. $5,640 unfavorable
Answer:
On April 1, Stelter Corporation had $34,000 of raw materials on hand. During the
month, the company purchased an additional $60,000 of raw materials. During April,
$70,000 of raw materials were requisitioned from the storeroom for use in production.
These raw materials included both direct and indirect materials. The indirect materials
totaled $7,000. Prepare journal entries to record these events. Use those journal entries
to answer the following questions:
The credits to the Work in Process account as a consequence of the raw materials
transactions in April total:
A. $70,000
B. $63,000
C. $0
D. $60,000
Answer:
Cress Company makes four products in a single facility. Data concerning these products
appear below:
The milling machines are potentially the constraint in the production facility. A total of
11,500 minutes are available per month on these machines.
Which product makes the LEAST profitable use of the milling machines?
A. Product A
B. Product B
C. Product C
D. Product D
Answer:
Selected year-end data for the Brayer Company are presented below:
The company has no prepaid expenses and inventories remained unchanged during the
year. Based on these data, the company's inventory turnover ratio for the year was
closest to:
A. 1.20
B. 2.40
C. 1.67
D. 2.33
Answer:
On April 1, Stelter Corporation had $34,000 of raw materials on hand. During the
month, the company purchased an additional $60,000 of raw materials. During April,
$70,000 of raw materials were requisitioned from the storeroom for use in production.
These raw materials included both direct and indirect materials. The indirect materials
totaled $7,000. Prepare journal entries to record these events. Use those journal entries
to answer the following questions:
The debits to the Work in Process account as a consequence of the raw materials
transactions in April total:
A. $60,000
B. $0
C. $70,000
D. $63,000
Answer:
The following production and average cost data for two levels of monthly production
volume have been supplied by a company that produces a single product:
The best estimate of the total cost to manufacture 1,200 units is closest to:
A. $132,160
B. $121,920
C. $129,600
D. $137,280
Answer:
Reference: 8-60
Marten Corporation makes a product with the following standards for direct labor and
variable overhead:
In May the company produced 2,800 units using 300 direct labor-hours. The actual
variable overhead cost was $1,620. The company applies variable overhead on the basis
of direct labor-hours.
The variable overhead efficiency variance for May is:
A) $100 U
B) $108 F
C) $108 U
D) $100 F
Answer:
The following data have been provided by a retailer that sells a single product.
What is the best estimate of the company's variable selling and administrative expense
per unit?
A. $4.17 per unit
B. $0.24 per unit
C. $0.90 per unit
D. $0.71 per unit
Answer:
The opportunity cost of making a component part in a factory with no excess capacity is
the:
A. variable manufacturing cost of the component.
B. fixed manufacturing cost of the component.
C. total manufacturing cost of the component.
D. net benefit foregone from the best alternative use of the capacity required.
Answer:
