The Swan Company produces its product at a total cost of $43 per unit. Of this amount,
$8 per unit is selling and administrative costs. The total variable cost is $30 per unit and
the desired profit is $20 per unit.
Determine the markup percentage on product cost.
a. 80%
b. 46.5%
c. 70%
d. 110%
Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of
Arks and 56,000 units of Bins. Related data are:
What was Carter Co.’s unit selling price of E, with E representing one overall
“enterprise” product?
a. $200
b. $100
c. $80
d. $88
Though favorable fixed factory overhead volume variances are usually good news, if
inventory levels are too high, additional production could be harmful.
a. True
b. False
The total cost concept includes all manufacturing costs plus selling and administrative
expenses in the cost amount to which the markup is added to determine product price.
a. True
b. False
On November 14, the Milling Department accepted Job 111407A for 1,000 pounds of
cereal mix.
Overhead is applied at $5.75 per pound completed. The recipe produced 1,025 pounds
of cereal mix.
(a) Record the journal entry to transfer raw materials to Job 111407A.
(b) Record the journal entry for direct labor incurred for Job 111407A.
(c) Record the journal entry to apply manufacturing overhead to Job 111407A.
(d) Record the journal entry to transfer Job 111407A to Finished Goods on November
14.
ratio of sales to assets
Match each ratio that follows to its use (items a’“h). Items may be used more than
once.
a. assess the profitability of the assets
b. assess the effectiveness in the use of assets
c. indicate the ability to meet currently maturing obligations
d. indicate the margin of safety to creditors
e. indicate instant debt-paying ability
f. assess the profitability of the investment by common stockholders
g. indicate future earnings prospects
h. indicate the extent to which earnings are being distributed to common stockholders
Shanghai Company sells glasses, fine china, and everyday dinnerware. They use
activity-based costing to determine the cost of the shipping and handling activity. The
shipping and handling activity has an activity rate of $14 per pound. A box of glasses
weighs 2 lbs., the box of china weighs 4 lbs., and a box of everyday dinnerware weighs
6 lbs. (a) Determine the shipping and handling activity for each product and (b)
determine the total shipping and receiving costs for the china if 3,500 boxes are
shipped.
During the period, labor costs incurred on account amounted to $175,000, including
$150,000 for production orders and $25,000 for general factory use. In addition, factory
overhead charged to production was $32,000. The entry to record the direct labor costs
is
a. Work in Process Wages Payable 150,000
150,000
b. Work in Process Wages Payable 175,000
175,000
c. Wages Payable Work in Process 175,000
175,000
d. Wages Payable Work in Process 150,000
150,000
If fixed costs are $500,000 and the unit contribution margin is $20, what is the
break-even point in units if fixed costs are reduced by $80,000?
a. 25,000
b. 29,000
c. 4,000
d. 21,000
Hill Co. can further process Product O to produce Product P. Product O is currently
selling for $60 per pound and costs $42 per pound to produce. Product P would sell for
$82 per pound and would require an additional cost of $13 per pound to produce.
The differential revenue of producing Product P is $22 per pound.
a. True
b. False
Earned by profit centers
Match the definition that follows with the term (a-e) it defines.
a. Controllable revenues
b. Profit margin
c. Investment turnover
d. Rate of return on investments
e. Residual income
The amount journalized showing the cost added to finished goods is taken from the cost
of production report.
a. True
b. False
If variable cost of goods sold totaled $80,000 for the year (16,000 units at $5.00 each)
and the planned variable cost of goods sold totaled $86,250 (15,000 units at $5.75
each), the effect of the unit cost factor on the change in contribution margin is:
a. $12,000 increase
b. $5,750 decrease
c. $12,000 decrease
d. $5,750 increase
The relationship of $325,000 to $125,000, expressed as a ratio, is
a. 2.0
b. 2.6
c. 2.5
d. 0.45
Rework
Identify the following quality control activities as either value-added or
non-value-added.
a. Value-added
b. Non-value-added
Under the lean production concept, employees are better utilized if they are experts in
one operation rather than wasting time training them to learn various production
operations.
a. True
b. False
Under which inventory costing method could increases or decreases in income from
operations be misinterpreted to be the result of operating efficiencies or inefficiencies?
a. only variable costing
b. only absorption costing
c. both variable and absorption costing
d. neither variable nor absorption costing
The graph of a variable cost when plotted against its related activity base appears as a
a. circle
b. rectangle
c. straight line
d. curved line
Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory
overhead for a lawn mower manufacturer.
1) Wheels
2) Depreciation on worker’s tools
3) Wages of assemblers
4) Grease for wheel axles
When a bottleneck occurs between two products, the company must determine the
contribution margin for each product and manufacture the product that has the highest
contribution margin per bottleneck hour.
a. True
b. False
Department F had 4,000 units in Work in Process that were 40% completed at the
beginning of the period at a cost of $12,500. Of the $12,500, $8,000 was for material
and $4,500 was for conversion costs. 14,000 units of direct materials were added during
the period at a cost of $28,700. 15,000 units were completed during the period, and
3,000 units were 75% completed at the end of the period. All materials are added at the
beginning of the process. Direct labor was $32,450 and factory overhead was $18,710
If the average cost method is used, the materials cost per unit (to the nearest cent)
would be
a. $2.04
b. $1.59
c. $1.91
d. $2.00
Standard and actual costs for direct materials for the manufacture of 1,000 units of
product were as follows:
Determine the direct materials (a) quantity variance, (b) price variance, and (c) total
cost variance.
An October sales forecast projects 7,000 units are going to be sold at a price of $11.50
per unit. The desired ending inventory in units is 15% higher than the beginning
inventory of 1,000 units. Total October sales are anticipated to be
a. $69,000
b. $80,500
c. $70,000
d. $92,000
The following data are available for Martin Solutions, Inc.
(1) Determine for each year:
(a) The inventory turnover
(b) The number of days’ sales in inventory (Round intermediate calculation to the
nearest whole number and your final answer to one decimal place).
(2) What conclusions can be drawn from these data concerning the inventories?
