A favorable cost variance occurs when actual cost is less than budgeted cost at actual
volumes.
a. True
b. False
The Lucy Corporation purchased and used 129,000 board feet of lumber in production,
at a total cost of $1,548,000. Original production had been budgeted for 22,000 units
with a standard material quantity of 5.7 board feet per unit and a standard price of $12
per board foot. Actual production was 23,500 units.
The materials quantity variance is
a. 63,000 favorable
b. 63,000 unfavorable
c. 59,400 favorable
d. 59,400 unfavorable
If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost
after modifying the style is estimated to be $48, the differential cost for this situation is
$48.
a. True
b. False
Production estimates for August are as follows:
Estimated inventory (units), August 1 12,000
Desired inventory (units), August 31 9,000
Expected sales volume (units), August 75,000
For each unit produced, the direct materials requirements are as follows:
Material A ($5 per lb.) 3 lbs.
Material B ($18 per lb.) 1/2 lb.
The number of pounds of Materials A and B required for August production is
a. 216,000 lbs. of A; 72,000 lbs. of B
b. 216,000 lbs. of A; 36,000 lbs. of B
c. 225,000 lbs. of A; 37,500 lbs. of B
d. 234,000 lbs. of A; 39,000 lbs. of B
Which of the following would not be considered a good managerial tool in making a
decision for determining a capital investment?
a. evaluating further assets that are dissimilar in nature or have different useful lives
b. using only quantitative measures to evaluate asset purchases
c. analyzing lease versus purchase option
d. considering income tax ramifications
A disadvantage of static budgets is that they
a. are dependent on previous year’s actual results
b. cannot be used by service companies
c. do not show possible changes in underlying activity levels
d. show the expected results of a responsibility center for several levels of activity
What pricing concept is used if all costs are considered and a fair markup is added to
determine the selling price?
a. total cost concept
b. demand-based concept
c. variable cost concept
d. fixed cost concept
Office salaries expense for a department store is an indirect expense.
a. True
b. False
Lead time is the process time between start and completion.
a. True
b. False
In evaluating the performance of salespersons, the salesperson with the highest level of
sales should be evaluated as the best performer.
a. True
b. False
How are the objectives of lean manufacturing achieved?
a. Product-oriented production layout
b. Employee involvement
c. Supplier partnering
d. All of the above
Which of the following is the most useful in analyzing companies of different sizes?
a. comparative statements
b. common-sized financial statements
c. price-level accounting
d. audit report
The following budget data are available for Sharp Company:
If factory overhead is applied based on direct labor hours, the amount of overhead to be
applied is
a. $180,000
b. $181,000
c. $172,500
d. $184,000
Management will use both variable and absorption costing in all of the following
activities except:
a. controlling costs
b. product pricing
c. production planning
d. controlling inventory levels
Managers in service firms do not find contribution margin analysis reports useful
because their firms do not sell inventory.
a. True
b. False
Sifton Electronics Corporation manufactures and assembles electronic motor drives for
video cameras. The company assembles the motor drives for several accounts. The
process consists of a lean cell for each customer. The following information relates only
to one customer’s lean cell for the coming year. Projected labor and overhead,
$7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to
produce 27,500 motor drives. Actual production for August was 1,600 units, and motor
drives shipped amounted to 1,380 units.
From the foregoing information, determine the production costs transferred to Finished
Goods during August.
a. $369,840
b. $408,480
c. $428,800
d. $473,600
An acceleration in the collection of receivables will tend to cause the accounts
receivable turnover to
a. decrease
b. remain the same
c. either increase or decrease
d. increase