The limitations of financial performance measures reinforce the importance of the
balanced scorecard.
Companies are now spending less amounts of cash to ensure that their data and
information are secure.
Amounts needed for the preparation of the budgeted balance sheet are taken from
various operating and financial budgets.
In a manufacturing company, administrative costs are included in period costs.
If a company reduces its fixed costs, the operating income will increase by the same
amount as the cost reduction.
The collection of time records is an accounting information system activity that is
classified as a business transaction involving the sale of merchandise inventory.
Warren Manufacturing began business on January 1. During its first year of operation,
Warren worked on five industrial jobs and reported the following information at
year-end:
What was the balance in Finished Goods Inventory at year-end?
A) $35,000
B) $21,000
C) $44,500
D) $23,500
The Work-in-Process Inventory account includes the ________.
A) goods that are ready to be sold
B) goods that are partially completed
C) goods that have been sold in the market
D) goods that are damaged during production
Gamma Corp. has prepared a preliminary cash budget for the third quarter as shown
below:
Subsequently, the marketing department revised its figures for cash collections. New
data are as follows: $52,000 in July, $55,000 in August, and $42,000 in September.
Based on the new data, calculate the new projected cash balance at the end of July.
A) $13,500
B) $4,400
C) $7,000
D) $7,800
The first-in, first-out (FIFO) method creates better month-to-month cost comparisons
than the weighted-average method ________.
A) because it does not recognize transferred in units from other processes
B) when there are substantial quantities of units in process at the end of the period
C) because it merges costs from the prior period with the current period
D) because it is used by industries that do not experience significant cost changes
A company has prepared the operating budget, the cash budget, and the budgeted
income statement and is now preparing the budgeted balance sheet. The balance of
Retained Earnings can be taken from the ________.
A) inventory, purchases, and cost of goods sold budget
B) operating budget
C) cash budget
D) budgeted income statement and the balance sheet of the previous year
An Enterprise Resource Planning system (ERP) ________.
A) is a cost management system in which a company produces products just in time to
satisfy needs
B) requires the implementation of Total Quality Management
C) integrates all worldwide functions, departments, and data of a company into a single
system
D) cannot be implemented in service companies
Pluto Hand Blenders Company sold 3,000 units in October at a sales price of $45 per
unit. The variable cost is $25 per unit. Calculate the total contribution margin.
A) $135,000
B) $60,000
C) $75,000
D) $37,500
The management of Chung Fire Alarms has calculated the following variances:
What is the total direct labor variance of the company?
A) $15,000 F
B) $12,000 F
C) $28,500 F
D) $1,500 F
The following details are provided by a manufacturing company:
Calculate the payback period for the investment. (Round your answer to two decimal
places.)
A) 2.75 years
B) 2.82 years
C) 2.55 years
D) 2.77 years
Bentz Fashions uses standard costs for its manufacturing division. From the following
data, calculate the total fixed overhead variance.
A) $13,000 U
B) $13,000 F
C) $13,500 U
D) $13,500 F
Huntswell Corporation has two major divisions: Agricultural Products and Industrial
Products. It provides the following information for the year.
Calculate the profit margin for the Industrial Division of the company. (Round your
answer to two decimal places.)
A) 3.96%
B) 5.18%
C) 17.44%
D) 12.57%
Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct
labor hours. It has provided the following information for the year:
Based on the above information, calculate Q-dot’s predetermined overhead allocation
rate. (Round your answer to two decimal places.)
A) $1.05 per machine hour
B) 7.71% of direct labor cost
C) 35.00% of direct materials cost
D) $20.11 per direct labor hour
The journal entry to issue $600 of direct materials and $30 of indirect materials to
production involves debit(s) to the ________.
A) Work-in-Process Inventory account for $600 and Finished Goods Inventory account
for $30
B) Manufacturing Overhead account for $630
C) Work-in-Process Inventory account for $600 and Manufacturing Overhead account
for $30
D) Work-in-Process Inventory account for $630
If a company wants to be a price-taker, which of the following strategies should be
taken?
A) Enter a competitive market and focus on cost cutting.
B) Produce a unique product.
C) Exploit the value of a fashionable brand name.
D) Differentiate the product clearly from the competitors.
Bendas Company, a manufacturer of small appliances, had the following activities,
allocated costs, and allocation bases:
The above activities are carried out at two of its regional offices.
How much of the account verification costs will be assigned to the Northeast Office?
(Round any intermediate calculations to the nearest cent and your final answer to the
nearest dollar.)
A) $371
B) $86
C) $627
D) $68
Gardner Machine Shop estimates manufacturing overhead costs for the coming year at
$318,000. The manufacturing overhead costs will be allocated based on direct labor
hours. Gardner estimates 5,000 direct labor hours for the coming year. In January,
Gardner completed Job A33, which used 70 machine hours and 23 direct labor hours.
What was the amount of manufacturing overhead allocated to Job A33? (Round any
intermediate calculations to the nearest cent, and your final answer to the nearest
dollar.)
A) $1,463
B) $4,452
C) $5,915
D) $4,543
Star Stationery Company is a price-taker and uses target pricing. Refer to the following
information:
What is the target full product cost per year? Assume all units produced are sold.
A) $18,000,000
B) $17,730,000
C) $27,000,000
D) $9,600,000
