1) which of the following would likely be the most appropriate cost driver to allocate
machine set-up costs to products?
a.machine hours
b.direct labor hours
c.number of production runs
d.number of products
e.number of purchase orders
2) framing house, inc. produces and sells picture frames. variable costs are expected to
be $17 per frame; fixed costs for the year are expected to total $130,000. the budgeted
selling price is $25 per frame.
the sales dollars required to make a before-tax profit of $20,000 for framing house are
calculated to be:
a.$445,650
b.$468,750
c.$476,350
d.$406,150
e.$412,050
3) zero-base budgeting (zbb):
a.involves the review of changes made to an organization’s original budget
b.does not provide a projection of annual expenditures
c.has as the primary objective to reduce budget expenditures to zero
d.involves rigorous review of each cost item before inclusion in the budget
e.emphasizes zero increase in expenditures
4) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, applied quality control factory overhead for the great p
model per unit is (rounded to the nearest cent):
a.$4.60
b.$9.45
c.$13.44
d.$15.12
e.$42.61
5) abc company uses a materials inventory account to record both direct and indirect
materials. abc charges direct materials to wip, while indirect materials are charged to
the factory overhead account. during the month of april, the company has the following
cost information:
the credit to the materials inventory account for materials used is:
a.$110,000
b.$30,000
c.$90,000
d.$80,000
e.$50,000
6) which of the following is an example of a physical measure used in the physical
measure method?
a.pounds
b.minutes
c.seconds
d.dollars
e.volume
7) the two main advantages of using predetermined factory overhead rates are to
provide more accurate unit cost information and to:
a.simplify the accounting process
b.provide cost information on a timely basis
c.insure transmission of correct data
d.extend the useful life of the cost data
e.adjust for variances in data sources
8) lond company produces joint products jana and reta, and by-product bynd. jana is
sold at split-off; reta and bynd undergo additional processing. production data
pertaining to these products for the year ended december 31, 2013 were as follows:
lond had no beginning or ending inventories and no materials were spoiled in
production. bynd’s net realizable value is deducted from joint costs. joint costs are
allocated to joint products to achieve the same gross margin percentage for each joint
product.
required:
prepare the following information for lond company for the year ended december 31,
2013:
1> total gross margin.
2> allocation of joint costs to jana and reta.
3> separate gross margins for jana and reta.
9) which of the following provides the most accurate cost estimation?
a.regression analysis with r-squared of 0.12
b.regression analysis with f value of 1.2
c.high-low method
d.regression analysis with r squared of 0.89
10) the journal entry to record incurred direct labor would include a credit to:
a.work-in-process inventory
b.accrued payroll
c.factory overhead
d.materials inventory
e.finished goods inventory
11) patagonia, maker of clothing and gear for outdoor enthusiasts, is very conscious of
sustainability issues. the company chose not to produce a product because:
a.the cost of manufacturing the product exceeded its target cost
b.there was not sufficient demand for the product at the planned price
c.the environmental impact of toxic waste was unacceptable
d.the environmental impact of producing the product in terms of carbon emissions and
energy consumptions was unacceptable
e.the company could not justify adding another product when there were acceptable
alternatives already in the company’s product offerings
12) castenet company uses a volume-based costing system that applies overhead cost
based on direct labor hours at $250 per direct labor hour.
the company is considering adopting an activity-based costing system with the
following data:
the two jobs processed in the month of june had the following characteristics:
required:
1> compute the unit manufacturing cost of each job under the firm’s current
volume-based costing system.
2> compute the unit manufacturing cost of each job under the activity-based costing
system.
3> compare the unit manufacturing cost for jobs a and b computed in requirements 1
and 2
(a) why do the two cost systems differ in their total cost for each job?
(b) why might these differences be important to the company?
13) framing house, inc. produces and sells picture frames. variable costs are expected to
be $17 per frame; fixed costs for the year are expected to total $130,000. the budgeted
selling price is $25 per frame.
the sales dollars required by framing house to make an after-tax profit of $10,000, given
an income tax rate of 20 percent, are calculated to be (round intermediate calculation(s)
to nearest whole number):
a.$436,500
b.$439,000
c.$442,750
d.$460,000
e.$445,325
14) in a joint production process, joint product costs are:
a.those costs incurred after the split-off point
b.allocated to outputs (products) to facilitate short-term decision making
c.not relevant to the decision whether to produce at all
d.those that are incurred before the point in the process when individual products arise
e.relatively small compared to costs incurred after the split-off point
15) the sand cruiser is a takeout food store at a popular beachside resort. teresa texton,
owner of the sand cruiser, was deciding how much refrigerator space to devote to four
different beverages. appropriate data on the four beverages follow:
the contribution per foot of front shelf space per day for limeade is:
a.$165.00
b.$162.00
c.$154.00
d.$134.40
e.$153.90
16) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, applied machinery overhead for the great p model per unit
is (rounded to the nearest cent):
a.$4.60
b.$9.45
c.$13.44
d.$15.12
e.$42.61
17) williams corporation’s department a has the following information:
required:
1> use the fifo method to calculate:
(a) equivalent units.
(b) cost per unit, rounded to three decimal places.
(c) cost completed and transferred out, rounded to the nearest whole dollar.
(d) cost in the ending work-in-process inventory, rounded to the nearest whole dollar.
2> use the weighted-average method to answer a through d in requirement 1 .
