Which of the following true of nonfinancial measures of quality?
A) They direct attention to financial processes that help managers identify the precise
problem areas that need improvement.
B) They focus managers’ attention on how poor quality affects operating income.
C) They assist in problem solving by comparing costs and benefits of different
quality-improvement programs and by setting priorities for cost reduction.
D) They provide immediate short-run feedback on whether quality-improvement efforts
are succeeding.
Extreme Manufacturing Company provides the following ABC costing information:
The above activities are used by Departments A and B as follows:
How much of the account inquiry cost will be assigned to Department A?
A) $54,000
B) $320,000
C) $160,000
D) $84,000
Responsibility accounting ________.
A) emphasizes controllability
B) focuses on who should be asked about the information
C) attempts to assign blame for problems to a specific manager
D) attempts to create a decentralized organization
Ply Corp manufactures doors. Classify each of the following quality costs as prevention
costs, appraisal costs, internal failure costs, or external failure costs.
a. Retesting of reworked products
b. Downtime due to quality problems
c. Analysis of the cause of defects in production
d. Depreciation of test equipment
e. Warranty repairs
f. Lost sales arising from a reputation for poor quality
g. Quality circles
h. Rework direct manufacturing labor and overhead
i. Net cost of spoilage
j. Technical support provided to suppliers
k. Audits of the effectiveness of the quality system
l. Plant utilities in the inspection area
m. Reentering data because of keypunch errors
________ Prevention costs
________ Appraisal costs
________ Internal failure costs
________ External failure costs
________ sector companies purchase materials and components and convert them into
finished goods.
A) Merchandising
B) Service
C) Manufacturing
D) Professional
________ includes providing financial information for reports to managers and
shareholders, and overseeing the overall operations of the accounting system.
A) Risk management
B) Treasury management
C) Controllership
D) Strategic planning
Place the four business functions in the order they appear along the value chain:
Customer service
Design
Marketing
Production
A) Customer Service, Design, Production, Marketing
B) Customer Service, Marketing, Production, Design
C) Design, Production, Marketing, Customer Service
D) Design, Customer Service, Production, Marketing
Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing
system uses two cost categories, direct materials and conversion costs. Each product
must pass through the Assembly Department and the Testing Department. Direct
materials are added at the beginning of the production process. Conversion costs are
allocated evenly throughout production. Timekeeper Inc. uses weighted-average
costing.
What amount of direct materials costs is assigned to the ending Work-in-Process account
for June?
(Round intermediary calculations to the nearest whole dollar.)
A) $108,000
B) $77,389
C) $108,076
D) $55,779
Which of the following statements best defines setup time?
A) It is the time required to manufacture an item, including order preparation time,
inspection time, and customer delivery time.
B) It is the time required to get equipment, tools, and materials ready to start the
production of a component or product.
C) It is a time or period ranging from the time when a customer orders goods to the
time when they are delivered to the customer.
D) It is the time required to create a new product to be sold by a business to its
customers.
To reduce budgetary slack management may ________.
A) incorporate stretch or challenge targets
B) use external benchmark performance measures
C) award bonuses for achieving budgeted amounts
D) reduce projected cost targets by 10% across all areas
Which of the following statements best define split off point in joint costing?
A) It is the point at which managers decide to discontinue one or more of the products.
B) It is the point at which the managers decide to outsource some of its production
processes.
C) It is the juncture in a joint production process when two or more products become
separately identifiable.
D) It is the juncture at which decisions determining joint costs of various products to be
produced are taken.
Jane Industries manufactures plastic toys. During October, Jane’s Fabrication
Department started work on 10,400 models. During the month, the company completed
11,200 models, and transferred them to the Distribution Department. The company
ended the month with 2200 models in ending inventory. There were 3000 models in
beginning inventory. All direct materials costs are added at the beginning of the
production cycle and conversion costs are added uniformly throughout the production
process. The FIFO method of process costing is being followed. Beginning work in
process was 30% complete as to conversion costs, while ending work in process was
55% complete as to conversion costs.
What is the amount of direct materials cost assigned to ending work-in-process inventory
at the end of October?
(Round intermediary calculations to the nearest cent.)
A) $19,783
B) $20,337
C) $10,923
D) $14,916
Budgets should ________.
A) not be so rigid that if conditions change, adjustments in spending can be made
B) be administered rigidly
C) only be developed for short periods of time such as quarters
D) include only variable costs
Goodard Inc. planned to use $153 of material per unit but actually used $140 of
material per unit, and planned to make 1,100 units but actually made 940 units.
The flexible-budget amount for materials is ________.
A) $168,300
B) $143,820
C) $154,000
D) $131,600
Banta Corporation is in the business of selling computers. The following expenses were
incurred in March 2017:
What will be the breakeven point if variable costing is used? (Round your final answer up
to the next whole unit.)
A) 97 units
B) 208 units
C) 182 units
D) 129 units
Glossier Images Inc., produces decorative statues. Management has provided the
following information:
What is the total throughput contribution?
A) $2,100,600
B) $1,233,750
C) $1,361,500
D) $1,029,000
Twenty Technologies, currently sells 17″ monitors for $280. It has costs of $220. A
competitor is bringing a new 17″ monitor to market that will sell for $230. Management
believes it must lower the price to $230 to compete in the market for 17″ monitors.
Twenty Technologies believes that the new price will cause sales to increase by 10%,
even with a new competitor in the market. Twenty Technologies’ sales are currently
5100 monitors per year.
What is the target cost if the target operating income is 25% of sales?
A) $230.00
B) $210.00
C) $172.50
D) $165.00
Activity-based-costing analysis makes no distinction between ________.
A) direct-materials inventory and work-in-process inventory
B) short-run variable costs and short-run fixed costs
C) parts of the supply chain
D) components of the value chain
Costs such as supervision, plant and equipment (production) depreciation, maintenance,
supplies, and power. are included in the ________.
A) capital expenditures budget
B) distribution costs budget
C) revenues budget
D) manufacturing overhead budget
Columbus Company provides the following ABC costing information:
The above activities used by their three departments are:
If labor hours are used to allocate the non-labor, overhead costs, what is the overhead
allocation rate?
A) $75.00 per hour
B) $26.67 per hour
C) $42.00 per hour
D) $33.00 per hour
A major concern that arises with multiple regression is multicollinearity, which exists
when ________.
A) the dependent variable is not normally distributed
B) the standard errors of the coefficients of the individual variables decrease
C) the R2 statistic is low
D) two or more independent variables are highly correlated with one another
A company using responsibility accounting system decides to exclude all uncontrollable
costs from a manager’s performance report. Jenson is the machine supervisor. Which of
the following costs will impact Jenson’s performance report?
A) rent and taxes paid on by the company
B) cost of materials used in manufacture
C) direct labor cost
D) cost of power consumed by the plant
Netzone Company is in semiconductor industry and fabrication of silicon-wafer chips
splits off two types of memory chips, Standard and Premium. The following
information was collected for last quarter of the calendar year:
The cost of purchasing 400 kgs of direct materials and processing it up to the split-off
point to yield a total of 16,800 chips of good products was $1,950,000. Beginning
inventories totalled 140 chips for Standard and 90 chips for Premium. Ending inventory
amounts reflected 140 chips of Standard and 90 chips of Premium. October costs per unit
were the same as November. When using a physical-volume measure, what is the
approximate amount of joint costs that will be allocated Standard chips? (Round
intermediary percentages to the nearest hundredth.)
A) $1,226,415
B) $1,189,623
C) $975,000
D) $1,160,640
Outose Concept manufactures small tables in its Processing Department. Direct
materials are added at the initiation of the production cycle and must be bundled in
single kits for each unit. Conversion costs are incurred evenly throughout the
production cycle. Before inspection, some units are spoiled due to undetectable
materials defects. Spoiled units generally constitute 3% of the good units. Data for
December 2017 are as follows:
Abnormal spoilage totals ________.
A) 2430 units
B) 8100 units
C) 5913 units
D) 2187 units
Which of the following reduces manufacturing cycle times and delays?
A) increasing the capacity of a bottleneck resource
B) selling of an existing equipment to save up on depreciation costs
C) increasing the time it takes for setups and processing
D) outsourcing the job to a third party
The River Falls Company has two divisions. The Cutting Division prepares timber at its
sawmills. The Coating Division prepares the cut lumber into finished wood for the
furniture industry. No inventories exist in either division at the beginning of 20X5.
During the year, the Cutting Division prepared 60,000 cords of wood at a cost of
$720,000. All the lumber was transferred to the Coating Division, where additional
operating costs of $5 per cord were incurred. The 600,000 boardfeet of finished wood
were sold for $2,500,000.
Required:
a. Determine the operating income for each division if the transfer price from Cutting to
Coating is at cost – $12 a cord.
b. Determine the operating income for each division if the transfer price is $9 per cord.
c. Since the Cutting Division sells all of its wood internally to the Coating Division,
does the manager care what price is selected? Why? Should the Cutting Division be a
cost center or a profit center under the circumstances?
Given this change in the cost ________.
A) SR6 will now command a higher sales price
B) SR6 has benefited from the new system
C) SR6 is definitely more accurately costed
D) the costing results for SR6 under the new system depend on the adequacy and
quality of the estimated cost drivers and costs used by the system
BarGraphs Corp. had capacity to produce 12,000 units of L3 using 30,000 kg of direct
materials. BarGraphs produced 11,650 units of L3 by processing 25,500 kg of direct
materials. Conversion cost per unit is $7.50. BarGraphs can add or reduce
manufacturing capacity in increments of 4500 kgs.
What is the cost of unused capacity for conversion costs of BarGraphs?
A) $3000
B) $4500
C) $13,500
D) $2625
Brilliant Accents Company manufactures and sells three styles of kitchen faucets:
Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to
manufacture 1,000-unit batches of brass, chrome, and white faucets, respectively. The
following additional data apply:
BRASS CHROME WHITE
Projected sales in units 30,000 50,000 40,000
PER UNIT data:
Selling price $40 $20 $30
Direct materials $ 8 $ 4 $ 8
Direct labor $15 $ 3 $ 9
Overhead cost based on direct labor hours
(traditional system) $12 $ 3 $ 9
Hours per 1000-unit batch:
Direct labor hours 40 10 30
Machine hours 25 25 10
Setup hours 1.0 0.5 1.0
Inspection hours 30 20 20
Total overhead costs and activity levels for the year are estimated as follows:
Required:
a. Using the traditional system, determine the operating profit per unit for the brass style of
faucet.
b. Determine the activity-cost-driver rate for setup costs and inspection costs.
c. Using the ABC system, for the brass style of faucet:
1. compute the estimated overhead costs per unit.
2. compute the estimated operating profit per unit.
d. Explain the difference between the profits obtained from the traditional system and the
ABC system. Which system provides a better estimate of profitability? Why?
The following information applies to Krynton Corp. which supplies microscopes to
laboratories throughout the country. Krynton purchases the microscopes from a
manufacturer which has a reputation for very high quality in its manufacturing
operation.
What are the annual relevant ordering costs, assuming that relevant total costs are
minimal?
A) $824
B) $3719
C) $3500
D) $3294
Lancelot Manufacturing is a small textile manufacturer using machine-hours as the
single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year
for the company and for the Case High School band jacket job.
What are the total manufacturing costs of this job?
A) $2,400
B) $2,805
C) $2,895
D) $1,995
Which of the following companies is most likely to use an operation-costing system?
A) a company involved in manufacture of ball bearing on a large scale
B) a company that has been awarded a contract to construct a bridge for the government
C) a company that makes suits for which the basic design is same, but depending on
specifications, each batch of suits varies somewhat from other batches
D) a furniture making company which makes furniture pieces as per the specifications
of the customers