actual cost > standard cost at actual volumes
Match the following descriptions with the term (a-e) it describes:
a. Ideal standard
b. Nonfinancial performance measure
c. Currently attainable standard
d. Unfavorable cost variance
e. Favorable cost variance
Discontinuing a segment or product may not be the best choice when the segment is
contributing to fixed expenses.
a. True
b. False
For purposes of analysis, mixed costs are
a. classified as fixed costs
b. classified as variable costs
c. classified as period costs
d. separated into their variable and fixed cost components
Costs other than direct materials cost and direct labor cost incurred in the
manufacturing process are classified as factory overhead cost.
a. True
b. False
The major advantage of the rate of return on investment over income from operations as
a divisional performance measure is that divisional investment is directly considered
and thus comparability of divisions is facilitated.
a. True
b. False
The production department is proposing the purchase of an automatic insertion
machine. It has identified 3 machines and has asked the accountant to analyze them to
determine the best average rate of return.
a. Machine B
b. Machine C
c. Machine B or C
d. Machine A
Recording jobs completed would include a credit to
a. Factory Overhead
b. Finished Goods
c. Work in Process
d. Cost of Goods Sold
Data for Divisions A, B, C, D, and E are as follows:
(a) Determine the missing items, identifying each by letter (a’“o).
(b) Which division is most profitable in terms of income from operations?
(c) Which division is most profitable in terms of rate of return on investment?
Round percentage and turnover values to one decimal point.
Determining the transfer price as the price at which the product or service transferred
could be sold to outside buyers is known as the
a. cost price approach
b. negotiated price approach
c. revenue price approach
d. market price approach
When a firm adopts a just-in-time operating environment,
a. new, more efficient machinery and equipment must be purchased and installed in the
original layout
b. machinery and equipment are moved into small autonomous production lines called
manufacturing cells
c. new machinery and equipment must be purchased from franchised JIT dealers
d. employees are retrained on different equipment but the plant layout generally stays
unchanged
Assume that Division Blue has achieved a yearly income from operations of $110,000
using $900,000 of invested assets. If management has set a minimum acceptable rate of
return of 11%, the residual income is
a. $99,000
b. $691,000
c. $209,000
d. $11,000
At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are
estimated to be 4,000 units. (a) How much would absorption costing income from
operations differ between a plan to produce 8,000 units and a plan to produce 10,000
units? (b) How much would variable costing income from operations differ between the
two production plans?
The most effective means of presenting standard factory overhead cost variance data is
through a factory overhead cost variance report.
a. True
b. False
Changes in technology, machinery, or production methods may make past cost data
irrelevant when setting standards.
a. True
b. False
When management seeks to achieve personal departmental objectives that may work to
the detriment of the entire company, the manager is experiencing
a. budgetary slack
b. padding
c. goal conflict
d. cushions
What is the purpose of the statement of cost of goods manufactured?
a. to determine the ending materials inventory
b. to determine the ending work in process inventory
c. to determine the amounts transferred to finished goods
d. all of these
If a department that applies FIFO process costing starts the reporting period with
50,000 physical units that were 25% complete with respect to direct materials and 40%
complete with respect to conversion, it must add 12,500 equivalent units of direct
materials and 20,000 equivalent units to direct labor to complete them.
a. True
b. False
Which of the following is not an assumption underlying cost-volume-profit analysis?
a. The break-even point will be passed during the period.
b. Total sales and total costs can be represented by straight lines.
c. Costs can be accurately divided into fixed and variable components.
d. The sales mix is constant.
Which of the following is a cost pool used with the activity-based costing method?
a. total selling and administrative overheads
b. direct material dollars
c. total factory overheads
d. production setups
Companies that use the average costing method for process costing have unit costs that
include costs from more than one accounting period.
a. True
b. False
The Kaumajet Factory produces two products’”table lamps and desk lamps. It has two
separate departments – Finishing and Production. The overhead budget for the Finishing
Department is $550,000, using 500,000 direct labor hours. The overhead budget for the
Production Department is $400,000 using 80,000 direct labor hours.
If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of
production, what is the total amount of factory overhead the Kaumajet Factory will
allocate to desk lamps using the multiple production department factory overhead rate
method with an allocation base of direct labor hours, if 26,000 units are produced?
a. $540,000
b. $187,200
c. $475,000
d. $288,600
The recording of the jobs completed would include a debit to
a. Factory Overhead
b. Finished Goods
c. Work in Process
d. Cost of Goods Sold
Classify the following costs as direct, indirect, or neither:
a)
labor for machine maintenance
b)
factory equipment depreciation
c)
materials not traceable to specific products
d)
office equipment depreciation
e)
materials traceable to specific products
f)
insurance expired on administrative facilities
g)
product assembly labor incurred
h)
administrative office salaries
i)
salespersons’ salaries
j)
utilities on factory building
k)
utilities on administrative facilities
Ideal standards are developed under conditions that assume no idle time, no machine
breakdowns, and no materials spoilage.
a. True
b. False