1) Total manufacturing costs is comprised of ________.
A) direct materials costs and period costs
B) direct materials costs, direct manufacturing labor costs, and manufacturing overhead
costs
C) indirect materials costs, indirect manufacturing labor costs, and manufacturing
overhead costs
D) prime costs and period costs
2) Which of the following statements is true of the production method of accounting for
byproducts?
A) It makes no journal entries until the byproduct is sold.
B) It is the preferred method because of the matching principle.
C) It records revenues of the byproduct in the income statement as revenue.
D) It adds revenues of the byproduct to the cost of goods sold in the income statement.
3) The most important planning tool is a ________.
A) performance evaluation report
B) fishbone diagram
C) control chart
D) budget
4) Activity-based costing is most likely to yield benefits for companies ________.
A) with complex product design processes
B) with operations that remain fairly consistent
C) in a monopolistic market
D) having nominal percentage of indirect costs
5) In general, if inventory increases during an accounting period, ________.
A) variable costing will report less operating income than absorption costing
B) absorption costing will report less operating income than variable costing
C) variable costing and absorption costing will report the same operating income
D) both variable costing and absorption costing will show losses
6) The net present value method assumes that project cash flows can be reinvested at
the company’s ________.
A) internal rate of return
B) required rate of return
C) growth rate
D) accounting rate of return
7) Activity-based costing information can be used for ________.
A) product-mix decisions
B) pricing decisions
C) advertisement decisions
D) inventory valuation
8) The regional sales office manager of a national firm is most likely responsible for
a(n) ________.
A) revenue center
B) investment center
C) cost center
D) profit center
9) Complete reciprocated costs ________.
A) are less than the support department’s own costs
B) include the support department’s costs plus any interdepartmental cost allocations
C) are used for step-down allocations
D) are also referred to as budgeted costs
10) Debated items that some companies include as direct manufacturing labor include
________.
A) fringe benefits
B) overtime
C) idle time
D) plant supervisor’s salary
11) At an activity level of 8,800 units, Pember Corporation’s total variable cost is
$146,520 and its total fixed cost is $219,296.
Required:
For the activity level of 8,900 units, compute: (a) the total variable cost; (b) the total
fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed
cost per unit; and (f) the average total cost per unit. Assume that this activity level is
within the relevant range.
12) Assume your goal in life is to retire with two million dollars. How much would you
need to save at the end of each year if interest rates average 6% and you have a 25-year
work life?
A) $43,118
B) $55,596
C) $36,453
D) $75,503