1) Under a modified wage plan, Jim Phillips works an eight-hour day and earns $.50 for
each finished unit he produces in excess of 200 units. However, he is guaranteed $12.50
per hour as a minimum wage. His production this week was a follows:
How much was the make-up guarantee paid to Jim this week?
A.$10
B.$5
C.$15
D.$12.50
2) Alyssa Corporation uses a standard cost system. Direct labor information for Product
CER for the month of October is as follows:
What are actual hours worked?
A.1,330
B.1,400
C.1,500
D.1,300
3) All of the following personnel would be classified as indirect labor except the:
A.machinist
B.supervisor
C.fork lift driver
D.plant janitor
4) Franklin Company is a medium-sized manufacturer of bicycles. During the year a
new line called “Radical” was made available to Franklin’s customers. The break-even
point for sales of Radical is $250,000 with a contribution margin ratio of 40 percent.
Assuming that the profit for the Radical line during the year amounted to $80,000, total
sales during the year would have amounted to:
A.$450,000
B.$420,000
C.$400,000
D.$475,000
5) The following information is available for the month of April from the Second
department of the Armque Corporation:
Materials are added at the end of the process in the Second department. Using the
first-in, first-out method, what are the equivalent units of production for materials and
conversion costs for the month of April?
A.250,000259,000
B.280,000259,000
C.340,000271,000
D.280,000271,000
6) In a four-variance method analyzing factory overhead, the variable factory overhead
spending variance measures:
A.The effect of differences in the actual variable factory overhead and the standard
variable factory overhead rate multiplied by the actual hours
B.The difference in the actual hours incurred and standard hours allowed for a given
level of production
C.The difference between actual and applied variable factory overhead
D.The difference between actual variable factory overhead and budgeted variable
factory overhead
7) A weekly payroll summary made from labor time records shows the following data
for TMC Company:
Other information:
a. Overtime is payable at one-and-a-half times the regular rate of pay for an employee
and is distributed to all jobs worked on during the period.
b. Income taxes withheld (FIT) are $50 for employees with $610 or more of gross
income in the period and $40 for those who earn less.
c. Each married employee contributes $60 for health insurance; single employees
contribute $30.
d. FICA taxes are 8% on the first $100,000 of gross pay; FUTA and SUTA are 1% and
4%, respectively, on the first $8,000 of gross pay. Since this is January, none of the
employees have reached the limitations.
Required:
1> Determine the net pay of each employee.
2> Prepare the journal entries for the following:
a. Recording the payroll.
b. Paying the payroll.
c. Distributing the payroll.
8) Which of the following is the best example of a non-financial performance measure
for the customer perspective of an airlines balanced scorecard?
A.Percentage of seats filled
B.Pilot flight hours
C.Percentage of on-time arrivals
D.Revenue per flight
9) To successfully employ an ABC system, a company must first identify:
A.Non-volume related activities in the factory that create costs
B.Cost drivers
C.Cost pools
D.Overhead allocation rates
10) An employee regularly earns $15 per hour for an 8-hour day with time-and-a-half
for overtime hours. Assuming that the employee works a 12-hour day, the total amount
of overtime premium is:
A.$90
B.$60
C.$30
D.$7.50
11) Fill in the missing figures below:
Units produced 7,900
Standard hours per unit 5 hours
Standard hours allowed (a)
Standard rate per hour $12.00
Actual hours worked 39,900
Actual labor cost (b)
Labor rate variance $5,985 favorable
Labor efficiency variance (c)
12) Wage plans that encourage employees to work harder and earn more by producing a
high level of output are known as:
A.Modified wage plans
B.Salary wage plans
C.Piece-rate plans
D.Hourly-rate plans
13) Filmac, Inc. uses speakers when assembling computers. Information as to balances
on hand, purchases, and requisitions of speakers is given in the following table.
If a perpetual inventory record of speakers is maintained on a LIFO basis, the March 8
issue will consist of:
A.20 units @ $14.00 and 50 units @ $16.00
B.70 units @ $14.00
C.50 units @ $16.00 and 20 units @ $14.00
D.70 units @ $16.00
14) Natasha’s Interior Designs has support staff for its professional designers. The two
professionals work a total of 1,800 hours each and make $45,000 each per year. The
total support budget is $90,000, of which $60,000 is professional support, and $30,000
is general office overhead. A job requiring 30 professional hours should be billed how
much for overhead if a simplified costing approach is used and hours are the cost
driver?
A.$25
B.$30
C.$600
D.$750
15) Plemmon Company adds materials at the beginning of the process in the forming
department, which is the first of two stages of its production cycle. Information
concerning the materials used in the forming department in April follows:
Using the average cost method, what is the materials cost of the work in process at
April 30 (rounded to nearest dollar)?
A.$7,154
B.$6,200
C.$7,750
D.$6,417
16) Which of the following is not true about budgeting?
A.It is a formal method of detailed financial planning
B.It is used to help a company reach long-term and short-term objectives
C.It aids in the efficient use of resources
D.All of the above are true
17) The average cost method of process costing differs from the FIFO method of
process costing in that the average cost method:
A.Requires that ending work in process inventory be stated in terms of equivalent units
of production
B.Can be used under any cost-flow assumption
C.Does not consider the degree of completion of beginning work in process inventory
when computing equivalent units of production
D.Considers the ending work in process inventory only partially complete
18) John Elton, who is classified as direct labor, earns $1,000 per week and is entitled to
four weeks of vacation and 10 holidays each year. How much should be accrued for his
holiday pay each week?
A.$38.46
B.$40.00
C.$67
D.$130.00
19) Which of the following is generally not considered a service organization?
A.Hair stylists
B.Lawyers
C.Auto dealerships
D.Plumbers
20) A major disadvantage of the observation method of analyzing cost behavior is:
A.It bases its solution on only two observations
B.It results in its analyzed cost being treated as either fixed or variable, based on which
type of behavior it more closely resembles
C.Two persons could draw different lines through the data points
D.It enables non-representative points, called outliers, to be identified
21) Absorption cost is required for:
A.income tax purposes
B.external financial reporting but not income tax purposes
C.both external financial reporting and income tax purposes
D.neither external financial reporting nor income tax purposes
22) A study that highlights the significant cost and revenue data between two
alternatives is a(n):
A.cost analysis
B.income analysis
C.differential analysis
D.distribution analysis
23) Gilday Furniture Inc. produces custom furniture. Wood chips are an inevitable
by-product of the cutting process, and are considered scrap. Gilday is unable to use this
scrap; however, the company has an agreement to sell the scrap at market prices to a
local company that processes the wood chips to make industrial fillers.
Record the entries required for scrap under each of the following conditions:
(a) The revenue received for scrap is to be treated as other income. The market value of
wood chips is stable and is currently $200 per ton. The company has seven tons on
hand.
(b) The revenue received for scrap is to be treated as a reduction in manufacturing cost,
but cannot be identified with a specific job. A firm price is not determinable for the
scrap until it is sold. It is eventually sold for cash of $800.
(c) The revenue received for scrap is to be treated as a reduction in manufacturing cost,
and five tons of scrap are related to a special job where the company made numerous
round tables. The market value of wood chips is stable and is currently $200 per ton.
24) Donellan Company produces a special gear used in automatic transmissions. Each
gear sells for $30, and the company sells approximately 500,000 gears each year. Unit
cost data for the year follows:
Donellan has received an offer from a foreign manufacturer to purchase 25,000 gears.
Domestic sales would be unaffected by this transaction. If the offer is accepted, variable
distribution costs will increase $1.00 per gear for insurance, shipping, and import
duties. The relevant unit cost to a pricing decision on this offer is:
A.$18.00
B.$20.00
C.$24.00
D.$26.00
25) Janet is the purchasing agent at Frameco Manufacturing. Her duties include vendor
selection and ordering materials. Due to a recent economic downturn and resulting cut
backs, Janet has been assigned the additional duty or preparing receiving reports after
comparing the goods received to the purchase order. This is an example of:
A.unlimited access to materials
B.independence of assigned functions
C.misappropriation of assets
D.a lack of segregation of duties
26) Information concerning Department A of Ali Company for the month of June is as
follows:
All materials are added at the beginning of the process. Using the first-in, first-out
method, the cost (rounded to two places) per equivalent unit for materials for June is:
A.$0.63
B.$0.90
C.$0.77
D.$0.78
27) A cost object in a process cost system is usually a:
A.Department
B.Job
C.Specific product
D.Employee
28) Determining whether the benefit received from more refined information exceeds
the cost of obtaining the information is a(n):
A.Pricing decision
B.Activity-based cost model
C.Cost/benefit decision
D.Cost performance report
29) After the observations of cost and production data are plotted on graph paper, a line
is drawn by visual inspection representing the trend shown by most of the data points
using the:
A.Observation method
B.High-low method
C.Method of least squares
D.Scattergraph method
30) The payroll summary for EVB Inc. for the period August 3 – 10 is as follows:
The entry to record the payment of earnings to the employees would include:
A.A debit to payroll for $105,000
B.A credit to wages payable for $80,600
C.A debit to wages payable for $80,600
D.A credit to cash of $105,000
31) The production report for Phillips Industries, which had no beginning inventory at
the beginning of the month, included the following information for September:
If the equivalent units for Septembers production were 77,400, how many units were in
process at the end of the month, and how complete were they?
A.9,000; 30%
B.9,000; 60%
C.3,000; 90%
D.6,000; 90%
32) The Lucas Manufacturing Company has two production departments (fabrication
and assembly) and three service departments (general factory administration, factory
maintenance, and factory cafeteria). A summary of costs and other data for each
department, prior to allocation of service department costs for the year ended June 30,
appears below:
The costs of the general factory administration department, factory maintenance
department, and factory cafeteria are allocated on the basis of direct labor hours, square
footage occupied, and number of employees, respectively.
Assuming that Lucas elects to distribute service department costs to production
departments using the direct distribution method, the amount of general factory
administration department costs that would be allocated to the assembly department
would be (round all final calculations to the nearest dollar):
A.$30,400
B.$25,650
C.$0
D.$49,600
33) The Tijama Manufacturing Company has determined the cost of manufacturing a
unit of product to be as follows, based on normal production of 50,000 units per year:
Operating statistics for the month of August and September include:
The selling price is $70 per unit. There were no inventories on August 1, and there is no
work in process at September 30 .
Prepare comparative income statements for each month under the following methods:
34) Good Locks is a high end salon which offers hair cuts and styling and manicures
and pedicures. Debbie Tresser is the owner of Good Locks and she is working with a
consultant to develop a balanced scorecard to be used to evaluate the performance of
Good Locks and to focus her efforts on making improvements to operations when
necessary.
Required:
1> Name the four perspectives of a balanced scorecard.
2> For each of the four perspectives, name two measures Debbie should consider
including in her scorecard.
35) Kelley and Wright, Attorneys, have the following budgeted items for the month of
May:
Prepare a budgeted income statement for the month of May.
36) The records of Jordan Company reflect the following data:
Work in process, beginning of the month – 4,500 units; 30% completed at a cost of
$16,700 for materials, $7,600 for labor, and $10,400 for overhead.
Production costs for the month – materials – $54,300 labor; – $25,400; overhead –
$34,600
Units completed and transferred to finished goods – 18,000
Work in process, end of month – 5,000 units; 40% completed
Calculate the unit cost for the month for materials, labor and factory overhead.
37) Estimates made for a production department of the Automate Company for the
month of October show:
Factory overhead is applied on the basis of direct labor hours. On October 31, the
records show these actual figures:
Prepare the entry or entries to 1> apply factory overhead to production; 2> record actual
factory overhead incurred assuming all items were purchased from vendors; 3> close
out the two factory overhead account balances to set up the overapplied or underapplied
factory overhead; and 4> to close the balance in under- or overapplied factory overhead
to Cost of Goods Sold.
38) Listed below are balanced scorecard measure for various companies. Label each as
either Learning and Growth, Internal Business Processes, Customer or Financial.
39) Delaney Company has the following flexible budget formulas and amounts:
Actual results for the month of October for the production and sale of 48,000 units were
as follows:
Prepare a performance report for the month of October.
40) Charleston Ltd. manufactures school desks. The companys forecasted income
statement for the year, before any special orders, is as follows:
Fixed costs in the forecasted income statement are $13,500 in manufacturing and
$2,700 in selling. The company has capacity to produce 2,000 units, but has received a
special order for 800 units at $15 from an overseas company, and would have to replace
some of its regular business to accept it. Charleston will incur an additional $3 per unit
in shipping should they accept the offer.
1> Calculate Charlestons current contribution margin per unit.
2> Should Charleston accept the special order for 800 units?
3> Assume the special order had the same terms, but was for 300 units. Should
Charleston accept it?