Which of the following would be included in the cost of a product manufactured
according to variable costing?
a. sales commissions
b. office supply costs
c. interest expense
d. direct materials
The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years and
no residual value, is expected to yield total net income of $300,000 for the 5 years. The
expected average rate of return is 37.5%.
a. True
b. False
Carmelita Inc., has the following information available:
At the beginning of the period, there were 500 units in process that were 60% complete
as to conversion costs and 100% complete as to direct materials costs. During the
period, 4,500 units were started and completed. Ending inventory contained 340 units
that were 30% complete as to conversion costs and 100% complete as to materials
costs. The company uses the FIFO process cost method.
The cost of completing a unit during the current period was a. $36.19
b. $34.88
c. $35.95
d. $35.89
If the costs for direct materials, direct labor, and factory overhead were $277,300,
$52,600, and $61,000, respectively, for 14,000 equivalent units of production, the total
conversion cost was $390,900.
a. True
b. False
The following data is given for the Bahia Company:
Overhead is applied on standard labor hours.
The fixed factory overhead controllable variance is
a. $65 unfavorable
b. $65 favorable
c. $540 unfavorable
d. $540 favorable
When the rate of return on total assets ratio is greater than the rate of return on common
stockholders’ equity ratio, the management of the company has effectively used
leverage.
a. True
b. False
Division D of Saunders Company has sales of $350,000, cost of goods sold of
$120,000, operating expenses of $58,000, and invested assets of $150,000.
What is the rate of return on investment for Division D?
a. 153.3%
b. 114.7%
c. 87.2%
d. 233%
Rylan Corporation received an offer from an exporter for 25,000 units of product at $16
per unit. The acceptance of the offer will not affect normal production or domestic sales
prices. The following data are available:
What is the amount of the income or loss from acceptance of the offer?
a. $125,000 loss
b. $25,000 income
c. $125,000 income
d. $25,000 loss
an example is the number of customer complaints
Match the following descriptions with the term (a-e) it describes:
a. Ideal standard
b. Nonfinancial performance measure
c. Currently attainable standard
d. Unfavorable cost variance
e. Favorable cost variance
Under the cost price approach, the transfer price is the price at which the product or
service transferred could be sold to outside buyers.
a. True
b. False
Which of the following is an example of value-added time?
a. Processing time
b. Wait time during inspection
c. Wait time in inventory
d. Both B and C
Which of the following is not a characteristic of useful managerial accounting reports?
a. accurate
b. GAAP’”adhering
c. historical and estimated data
d. prepared as needed
The formula to compute the direct labor rate variance is to calculate the difference
between
a. Actual costs + (Actual hours × Standard rate)
b. Actual costs ‘“ Standard cost
c. (Actual hours × Standard rate) ‘“ Standard costs
d. Actual costs ‘“ (Actual hours × Standard rate)
Which of the following represents the factory overhead applied to a product?
a. predetermined factory overhead rate times estimated activity base
b. actual factory overhead rate times estimated activity base
c. predetermined factory overhead rate times actual activity base
d. actual factory overhead rate times actual activity base
Fixed costs are $50 per unit and variable costs are $125 per unit. Production was
130,000 units, while sales were 125,000 units. Determine (a) whether variable costing
income from operations is less than or greater than absorption costing income from
operations, and (b) the difference in variable costing and absorption costing income
from operations.