Stillwater Corporation
The following information is available for Stillwater Corporation for the current year:
All materials are added at the start of production.
Refer to Stillwater Corporation. Using FIFO, what are equivalent units for material?
a. 75,000
b. 72,500
c. 84,500
d. 70,000
Which of the following have an impact on long-term variable costs?
a. no no
no
b. no yes
yes
c. yes no
yes
d. yes yes
yes
Harris Manufacturing incurs annual fixed costs of $250,000 in producing and selling a
single product. Estimated unit sales are 125,000. An after-tax income of $75,000 is
desired by management. The company projects its income tax rate at 40 percent. What
is the maximum amount that Harris can expend for variable costs per unit and still meet
its profit objective if the sales price per unit is estimated at $6?
a. $3.37
b. $3.59
c. $3.00
d. $3.70
Epplin Company
The following information is provided for Epplin Company for the month of
September:
Refer to Epplin Company. What is the fixed spending variance?
a. $590 U
b. $590 F
c. $190 F
d. $190 U
ERP systems are
a. packaged software.
b. methods of examining processes.
c. ways to downsize.
d. ways to expand geographical operations.
ERP stands for
a. enterprise resource production.
b. enterprise resource purchasing.
c. enterprise resource planning.
d. enterprise resource processing.
The balanced scorecard perspective that addresses how well the organization is meeting
specific customer-based criteria is the:
a. learning and growth perspective
b. internal business perspective
c. customer value perspective
d. financial perspective
Depreciation on the production equipment would appear in which of the following
budgets?
a. cash budget
b. production budget
c. selling and administrative expense budget
d. manufacturing overhead budget
Prepare the necessary journal entries from the following information for Alltizer
Company, which uses a perpetual inventory system.
a. Purchased raw material on account, $56,700.
b. Requisitioned raw material for production as follows: direct material-80 percent of
purchases; indirect material-15 percent of purchases.
c. Direct labor wages of $33,100 are accrued as are indirect labor wages of $12,500.
d. Overhead incurred and paid for is $66,900.
e. Overhead is applied to production based on 110 percent of direct labor cost.
f. Goods costing $97,600 were completed during the period.
g. Goods costing $51,320 were sold on account for $77,600.
Denson Company manufactures computer stands. What is the beginning balance of
Finished Goods Inventory if Cost of Goods Sold is $107,000; the ending balance of
Finished Goods Inventory is $20,000; and Cost of Goods Manufactured is $50,000 less
than Cost of Goods Sold?
a. $70,000
b. $77,000
c. $157,000
d. $127,000
A selling cost is a(n)
a. yes yes
no
b. yes no
no
c. no yes
no
d. no yes
yes
Which of the following strategies is used to deal with uncertaintyrelated to a specific
event?
a. Statistical analysis
b. Cost restructuring
c. Hedging
d. Insurance
Residual income is used as a performance measure in which of the following types of
centers?
a. yes no
yes
b. yes yes
yes
c. no yes
yes
d. no yes
no
An unfavorable fixed overhead volume variance is most often caused by
a. actual fixed overhead incurred exceeding budgeted fixed overhead.
b. an over-application of fixed overhead to production.
c. an increase in the level of the finished inventory.
d. normal capacity exceeding actual production levels.
Richards Company
The following information has been taken from the cost records of Richards Company
for the past year:
Refer to Richards Company. Cost of Goods Manufactured was
a. $636.
b. $716.
c. $736.
d. $766.
An activity center is an organizational unit
a. that makes a single product or performs a single service.
b. in which only value-added activities are performed.
c. that incurs only unit, batch, or product/process level costs.
d. for which management wants separate activity information.
On a balanced scorecard, which of the following would be most appropriate to measure
financial performance?
a. Market share
b. Customer retention
c. Percentage of sales from new products
d. Investment in intellectual capital
The level of discretionary costs
a. are set by management for one period at a time.
b. cannot be changed in the short run.
c. are determined when capital investment is undertaken.
d. always varies with sales.
The difference between actual sales and budgeted sales is
a. a flexible budget variance.
b. an efficiency measure.
c. required in program budgeting.
d. an effectiveness measure.
A budget manual should include which of the following?
a. a list of specific budgetary activities to be performed
b. original, revised, and approved budgets
c. a calendar of scheduled budgetary activities
d. all of the above
Ellis Corporation
The following information was extracted from the first year absorption-based
accounting records of Ellis Corporation
Refer to Ellis Corporation. If Ellis Corporation had used variable costing in its first year
of operations, how much income (loss) before income taxes would it have reported?
a. ($6,000)
b. $54,000
c. $26,000
d. $ 2,000
Ellis Corporation
The following information was extracted from the first year absorption-based
accounting records of Ellis Corporation
Refer to Ellis Corporation. What is Cost of Goods Sold for Ellis Corporation’s first
year?
a. $80,000
b. $90,000
c. $48,000
d. can’t be determined from the information given
A company may set predetermined overhead rates based on normal, expected annual, or
theoretical capacity. At the end of a period, the fixed overhead spending variance would
a. be the same regardless of the capacity level selected.
b. be the largest if theoretical capacity had been selected.
c. be the smallest if theoretical capacity had been selected.
d. not occur if actual capacity were the same as the capacity level selected.
The traditional compensation package provides
a. fixed monthly or weekly salaries plus performance bonuses.
b. the same salary structure for all groups of employees.
c. no incentive for non-top management to improve performance.
d. no need to include incentive compensation.
Andersen Corporation
Andersen Corporation has the following information for the current month:
All materials are added at the start of the production process. Andersen Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Andersen Corporation. What are equivalent units of production for material,
assuming FIFO?
a. 91,000
b. 92,000
c. 95,000
d. 110,000
With respect to fixed costs, CVP analysis assumes total fixed costs
a. per unit remain constant as volume changes.
b. remain constant from one period to the next.
c. vary directly with volume.
d. remain constant across changes in volume.
In which of the following stages of the product life cycle would operating losses notbe
expected?
a. growth
b. development
c. introduction
d. decline
Modern management accounting can be characterized by its
a. flexibility.
b. standardization.
c. complexity.
d. precision.
Which of the following are drawbacks to applying actual overhead to production?
a. A delay occurs in assigning costs to jobs or products.
b. Fluctuations in quantities produced during a period could cause varying per-unit
charges for fixed overhead.
c. Seasonality of overhead costs may cause distortions in job or product costs.
d. all answers are correct.
Cost allocation bases in activity-based costing should be
a. cost drivers.
b. value-added activities.
c. activity centers.
d. processes.
Income taxes are levied on
a. net cash flow.
b. income as measured by accounting rules.
c. net cash flow plus depreciation.
d. income as measured by tax rules.
Which of the following is a false statement about scrap and by-products?
a. Both by-products and scrap are salable.
b. A by-product has a higher sales value than does scrap.
c. Management’s goal is to produce both scrap and by-products.
d. Both scrap and by-products are incidental outputs to the joint process.
Define value chain and provide a graphic of the interacting flows of information within
the value chain.
Distribution costs are an example of period costs.
Discuss how variable and fixed overhead application rates are calculated.
A cost that shifts upward or downward when activity changes by a certain interval is
referred to as a ____________________ cost.
Machine setup is normally considered a batch-level cost
In a service industry, direct materials are usually insignificant in amount and
cannoteasily be traced to a cost object.
Speed of delivery is an example of a leading indicator.
Define residual income. Evaluate residual income as a measure of performance.
Strategic alliances can result in improved operating efficiencies for multiple
organizations.
Open-book management is most effective in decentralized organizations.
The balanced scorecard perspective that focuses on using a firm’s intellectual capital to
adapt to customer needs through product or service innovations is the
______________________________ perspective.
The formula for usage variance is (AQ – SQ) * SP.
The costing technique that treats fixed manufacturing overhead as a period cost is
referred to as ______________ or ____________ costing.
Top management personnel are the key players in open-book management.
Accountants have little involvement with business processing reengineering (BPR)
initiatives.