1) Yes! Co., had 3,000 units of work in process on April 1 that were 60% complete.
During April, 11,000 units were started and as of April 30, 4,000 units that were 40%
complete remained in production. How many units were completed during April?
A.10,000
B.9,800
C.11,000
D.12,200
E.None of the other answers are correct
2) All of the following statements about an operation-costing system are true except:
A.direct material and conversion costs are traced to each batch of product produced
B.direct-material cost is traced to each batch produced
C.conversion costs are applied to products on a departmental basis using a
predetermined application rate
D.batches of product pass sequentially through the same processes
E.conversion activities are similar across product lines but direct materials differ
significantly
3) All of the following are expensed under variable costing except:
A.variable manufacturing overhead
B.fixed manufacturing overhead
C.variable selling and administrative costs
D.fixed selling and administrative costs
E.variable selling and administrative costs and fixed selling and administrative costs
4) Product costing in a manufacturing firm is the process of:
A.accumulating the company’s period costs
B.allocating costs among the firm’s departments
C.placing a value on the company’s fixed assets
D.assigning costs to the firm’s inventory
E.assigning costs to the company’s managers
5) McArthur Corp., which began business at the start of the current year, had the
following data:
Planned and actual production: 40,000 units
Sales: 38,000 units at $15 per unit
Production costs:
Variable: $5 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The gross margin that the company would disclose on an absorption-costing income
statement is:
A.$0
B.$133,000
C.$166,500
D.$342,000
E.None of the other answers are correct
6) Riverside Florists uses an activity-based costing system to compute the cost of
making floral bouquets and delivering the bouquets to its commercial customers.
Company personnel who earn $180,000 typically perform both tasks; other firm-wide
overhead is expected to total $70,000. These costs are allocated as follows:
Riverside anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming
year.
The cost of wages and salaries and other overhead that would be charged to each
delivery is closest to:
A.$19.63
B.$20.31
C.$26.75
D.$40.63
E.None of the other answers is correct
7) Lone Star has computed the following unit costs for the year just ended:
Under variable costing, each unit of the company’s inventory would be carried at:
A.$35
B.$55
C.$65
D.$84
E.None of the other answers are correct
8) Grime-X is studying the profitability of a change in operation and has gathered the
following information:
Should Grime-X make the change?
A.Yes, the company will be better off by $6,000
B.No, because sales will drop by 3,000 units
C.No, because the company will be worse off by $4,000
D.No, because the company will be worse off by $22,000
E.It is impossible to judge because additional information is needed
9) Mayze Production Company, which uses activity-based budgeting, is in the process
of preparing a manufacturing overhead budget. Which of the following would likely
appear on that budget?
A.Batch-level costs: Production setup
B.Unit-level costs: Depreciation
C.Unit-level costs: Maintenance
D.Product-level costs: Insurance and property taxes
E.Facility and general operations-level costs: Indirect material
10) A company’s sales margin:
A.must, by definition, be greater than the firm’s net sales
B.has basically the same meaning as the term “contribution margin”
C.is computed by dividing sales revenue by income
D.is computed by dividing income by sales revenue
E.shows the sales dollars generated from each dollar of income
11) Which of the following bodies oversees audits and auditors, and sanctions firms and
individuals for violations of laws and regulations?
A.American Institute of Certified Public Accountants (
B.American Accounting Association (AAA)
C.Public Company Accounting Oversight Board (PCAOB)
D.Financial Accounting Standards Board (FASB)
E.Accounting Principles Board (APB)
12) Vince’s Pizza delivers pizzas to dormitories and apartments near a major state
university. The company’s annual fixed costs are $48,000. The sales price averages $9,
and it costs the firm $3 to make and deliver each pizza.
Required:
A. How many pizzas must Vince’s sell to break even?
B. How many pizzas must the company sell to earn a target profit of $54,000?
C. If budgeted sales total 9,900 pizzas, how much is the company’s safety margin in
dollars?
D. Vince’s assistant manager, an accounting major, has suggested that the firm should
try to increase the contribution margin per pizza. Explain the meaning of “contribution
margin” in layman’s terms.
13) Which of the following statements pertain to both variable costing and absorption
costing?
A.The income statement discloses the amount of gross margin generated during the
reporting period
B.Fixed selling and administrative expenses are treated in the same manner as fixed
manufacturing overhead
C.Both variable and absorption costing can be used for external financial reporting
D.Variable selling costs are written-off as expenses of the accounting period
E.Fixed manufacturing overhead is attached to each unit produced
14) Grist Enterprises is converting to an activity-based costing system It wishes to
depict the various activities in its manufacturing process along with the activities’
relationships. Which of the following is a tool that the company can use to accomplish
this task?
A.Storyboards
B.Activity relationship charts (ARCs)
C.Decision trees
D.Simulation games
E.Process organizers
15) Successful adoptions of activity-based costing typically occur when companies rely
heavily on:
A.finance personnel
B.accounting personnel
C.manufacturing personnel
D.office personnel
E.multidisciplinary project teams
16) Which of the following variances are most similar with respect to the manner in
which they are calculated?
A.Labor rate variance and labor efficiency variance
B.Material price variance and material quantity variance
C.Material price variance, material quantity variance, and total material variance
D.Material price variance and labor rate variance
E.Material price variance and labor efficiency variance
17) Which of the following is a criticism of standard costing, as applied to today’s
manufacturing environment?
A.Standards tend to be relevant for only a short period of time because of shorter
product life cycles
B.Variance information is usually aggregated (i.e., combined) rather than associated
with a particular batch of goods or a specific product line
C.Traditional standard costing has a fairly narrow orientation, failing to focus on
broader issues such as the overall costs of ownership
D.Standard costing pays considerable attention to labor cost and labor efficiency, which
are becoming a relatively unimportant factor of production
E.All of the other answers are correct
18) Which of the following acts strives to improve corporate governance and the quality
of corporate accounting/reporting?
A.Robinson-Patman
B.Taft-Hartley
C.Sarbanes-Oxley
D.Bush-Cheney
E.Franks-Ashcroft
19) Portofina Manufacturing uses a weighted-average process-costing system. The
following figures pertain to July:
All materials are introduced at the start of the process, and conversion cost is incurred
evenly throughout production. The company used direct materials that cost $640,000;
conversion amounted to $8 per equivalent unit.
Required:
A. Calculate the direct materials cost per equivalent unit.
B. Calculate the cost of units completed and transferred.
C. What percentage of conversion work will be performed on the 40,000-unit ending
work-in-process inventory during August?
D. In all likelihood, were all of the 120,000 completed units begun in July? Explain.
20) Swanson and Associates presently leases a copy machine under an agreement that
calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000
copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies.
The company uses the high-low method to analyze costs.
How much would Swanson’s pay if it made 5,500 copies?
A.$382.50
B.$322
C.$300
D.$292.50
E.None of the other answers is correct.
21) Soloman Corporation recently purchased 25,000 gallons of direct material at $5.60
per gallon. Usage by the end of the period amounted to 23,000 gallons. If the standard
cost is $6.00 per gallon and the company believes in computing variances at the earliest
point possible, the direct-material price variance would be calculated as:
A.$800F
B.$9,200F
C.$9,200U
D.$10,000F
E.$10,000U
22) Swanson and Associates presently leases a copy machine under an agreement that
calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000
copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies.
The company uses the high-low method to analyze costs.
Swanson’s variable cost per copy is:
A.$0.040
B.$0.051
C.$0.053
D.$0.056
E.None of the other answers is correct
23) A recent income statement of Dragonwood Corporation reported the following data:
If the company desired to earn a target profit of $1,270,000, it would have to sell:
A.5,778 units
B.8,600 units
C.10,160 units
D.11,908 units
E.None of the other answers is correct
24) When using normal costing, the total production cost of a job is composed of:
A.direct material and direct labor
B.direct material, direct labor, manufacturing overhead, and outlays for selling costs
C.direct material, direct labor, manufacturing overhead, and outlays for both selling and
administrative costs
D.direct material, direct labor, and applied manufacturing overhead
E.direct material, direct labor, and actual manufacturing overhead
25) Zena Company manufactures two products (A and B) from a joint process that cost
$200,000 for the year just ended. Each product may be sold at the split-off point or
processed further. Additional processing requires no special facilities, and production
costs of further processing are entirely variable and traceable to the products involved.
Further information follows.
If the joint costs are allocated based on the physical-units method, the amount of joint
cost assigned to product A would be:
A.$80,000
B.$100,000
C.$104,000
D.$120,000
E.None of the other answers are correct
26) Roberts Corp., which began business at the start of the current year, had the
following data:
Planned and actual production: 40,000 units
Sales: 37,000 units at $15 per unit
Production costs:
Variable: $4 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The contribution margin that the company would disclose on a variable-costing income
statement is:
A.$97,500
B.$147,000
C.$166,500
D.$370,000
E.None of the other answers are correct
27) The selected amounts that follow were taken from Kandace Corporation’s
accounting records:
Required:
Compute the following:
A. Manufacturing overhead.
B. Work-in-process inventory, 12/31 .
C. Finished-goods inventory, 1/1 .
D. Cost of goods sold.
E. Gross margin.
F. Net income.
28) Which of the following calculations can be used to measure a company’s degree of
operating leverage?
A.Contribution margin sales
B.Contribution margin income
C.Sales contribution margin
D.Sales income
E.Sales fixed costs
29) Operation costing might be used to determine the cost of all of the following
products except:
A.sweaters
B.automobiles
C.living-room sofas
D.dishwashing detergent
E.high-definition (HD) and surround-sound cables