Operational issues are made by managers closest to the operations
Match each of the following phrases as describing (a) an advantage, (b) a
disadvantage, or (c) neither of decentralization.
a. Advantage of decentralization
b. Disadvantage of decentralization
c. Neither an advantage or disadvantage
The inventory at June 1 and costs charged to Work in Process’”Department 60 during
June are as follows:
During June, 32,000 units were placed into production and 31,200 units were
completed, including those in inventory on June 1. On June 30, the inventory of work in
process consisted of 4,600 units which were 40% completed. Inventories are costed by
the average cost method and all materials are added at the beginning of the process.
Determine the following, presenting your computations:
(a) Equivalent units of production for conversion cost
(b) Conversion cost per equivalent unit and material cost per equivalent unit.
(c) Total and unit cost of finished goods completed in the current period
(d) Total cost of work in process inventory at June 30
If the standard to produce a given amount of product is 1,000 units of direct materials at
$11 and the actual was 800 units at $12, the direct materials price variance was $800
unfavorable.
a. True
b. False
The computations involved in the net present value method of analyzing capital
investment proposals are more involved than those for the average rate of return
method.
a. True
b. False
The Dawson Company manufactures small lamps and desk lamps. The following shows
the activities per product and the total overhead information:
Calculate the total factory overhead to be charged to desk lamps.
a. $306,667
b. $235,000
c. $230,000
d. $225,000
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently; the
company uses a single plantwide factory overhead rate for allocating overhead to
products. However, management is considering moving to a multiple department rate
system for allocating overhead. The following table presents information about
estimated overhead and direct labor hours.
Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge
Marketing Inc.’s Product B.
a. $496.00
b. $144.00
c. $640.00
d. $320.00
Periodic comparisons between planned objectives and actual performance are reported
in:
a. zero-base reports
b. budget performance reports
c. master budgets
d. budgets
Production and sales estimates for April are as follows:
The budgeted total sales for April is
a. $200,000
b. $230,000
c. $270,000
d. $250,000
Tara Company’s budget shows the following credit sales for the current year:
September, $25,000; October, $36,000; November, $30,000; December, $32,000.
Experience has shown that payment for credit sales is received as follows: 15% in the
month of sale, 60% in the first month after sale, 20% in the second month after sale,
and 5% is uncollectible. How much cash will Tara Company expect to collect in
November as a result of current and past credit sales?
a. $19,700
b. $28,400
c. $30,000
d. $31,100
Beginning work in process is equal to
a. cost of goods manufactured plus ending work in process minus manufacturing costs
incurred during the current period
b. cost of goods manufactured minus ending work in process plus manufacturing costs
incurred during the current period
c. ending work in process plus manufacturing costs incurred during the current period
d. manufacturing costs incurred during the current period minus ending work in process
Traditional manufacturing emphasizes all of the following except
a. team oriented employee involvement
b. process-oriented layout
c. push manufacturing
d. cost accumulation by department
Which of the following is true of the cash payback period?
a. the longer the payback, the longer the estimated life of the asset
b. the longer the payback, the sooner the cash spent on the investment is recovered
c. the shorter the payback, the less likely the possibility of obsolescence
d. all of the answers are correct
Activity-based costing is determined by charging products for only the services
(activities) they used during production.
a. True
b. False
Budgets need to be fair and attainable for employees to consider the budget important
in their normal daily activities. Which of the following is not considered a human
behavior problem?
a. setting goals among managers that conflict with one another
b. setting goals too tightly making it difficult to meet performance expectation
c. allowing employees the opportunity to be a part of the budget process
d. allowing goals to be so low that employees develop a ‘spend it or lose it’ attitude
On what effects does contribution margin analysis focus?
a. the quantity factor
b. the unit cost factor
c. the unit sales price factor
d. all of the above
If yearly insurance premiums are increased, this change in fixed costs will result in an
increase in the break-even point.
a. True
b. False
The direct materials costs and direct labor costs incurred by a production department
are referred to as conversion costs.
a. True
b. False
Philadelphia Company has the following information for March:
Determine the March (a) manufacturing margin, (b) contribution margin, and (c)
income from operations for Philadelphia Company.
The point in operations at which revenues and expenses are exactly equal is called the
break-even point.
a. True
b. False
A production supervisor’s salary that does not vary with the number of units produced is
an example of a fixed cost.
a. True
b. False
A variable cost system is an accounting system where standards are set for each
manufacturing cost element.
a. True
b. False
earnings per share (EPS) on common stock
Match each ratio that follows to its use (items a’“h). Items may be used more than
once.
a. assess the profitability of the assets
b. assess the effectiveness in the use of assets
c. indicate the ability to meet currently maturing obligations
d. indicate the margin of safety to creditors
e. indicate instant debt-paying ability
f. assess the profitability of the investment by common stockholders
g. indicate future earnings prospects
h. indicate the extent to which earnings are being distributed to common stockholders
The Kwanika Co. operates in a lean manufacturing environment. During its first year of
operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its
cell X-22. Material costs were $7 per unit. Cell X-22 conversion costs were budgeted
for the year as follows:
During January, material for 8,400 units was purchased on account. There were 8,200
units manufactured and 8,000 were sold shipped to customers for $35 each. Journalize:
(a) the material purchases; (b) the application of conversion costs; (c) the transfer from
work in process to finished goods; and (d) the sales (were made on account) and
associated cost of goods sold for the month of January.
The process cost system is appropriate where few products are manufactured and each
product is made to customers’ specifications.
a. True
b. False
If factory overhead applied exceeds the actual costs, overhead is said to be under
applied.
a. True
b. False