In a decentralized company, segment managers may not fully understand the big picture
when making decisions.
Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to
Finished Goods Inventory.
Decentralization may cause the company to duplicate certain costs or activities.
When setting sales prices in the long run, the sales price must cover the full
cost’”including fixed costs.
In a manual accounting information system, reports and financial statements must be
created using Word documents, Excel spreadsheets, or PowerPoint.
Repair and maintenance costs for manufacturing equipment are included in
manufacturing overhead.
Activity-based management (ABM) uses activity-based costs to make decisions that
increase profits while meeting customer needs.
A process costing system is used when a company produces identical units through a
series of production steps.
During September, the Filtering Department of Coronet, Inc. had a beginning
Work-in-Process Inventory of 800 units with costs of $120,000. During the month, 600
units were transferred in from the Milling Department with transferred in costs of
$187,000. It had 100 units in ending Work-in-Process Inventory. What is the total cost
of production for the units transferred to the Filtering Department in September under
the first-in, first-out (FIFO) method?
A) $275,835
B) $120,000
C) $187,000
D) $307,000
Blue Company has four customers: A, B, C, and D. The accounts receivable balance in
the general ledger is $8,583 and the accounts receivable subsidiary ledger of customers
A, C, and D have $1,446, $3,596, and $3,340, respectively. Calculate the amount in the
accounts receivable subsidiary ledger account of customer B.
A) $8,382
B) $1,647
C) $791
D) $201
Which of the following describes the production budget?
A) It aids in planning to ensure the company has adequate inventory and cash on hand.
B) It provides the quantity of finished goods to be produced during a budget period.
C) It depicts the breakdown of sales on the basis of terms and conditions of collection
of sales revenue.
D) It helps in planning to ensure the business has adequate cash.
The production manager is responsible for ________.
A) all product costs
B) decisions to acquire new equipment
C) his or her own salary
D) efficiently and effectively producing quality products
An accounting information system is said to have good control characteristics, if it
________.
A) works smoothly with the business’s employees and organizational structure
B) safeguards a business’s assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time
Under the just-in-time management system, ________.
A) a company’s storage costs increase
B) a company’s inventory insurance costs increase
C) the floor space available for production increases
D) the risk of the inventory becoming obsolete increases
Damsel, Inc. is a large manufacturer of auto tires. Damsel has provided the following
information:
Calculate the amount of ending Finished Goods Inventory reported on Damsel’s balance
sheet.
A) $32,000
B) $71,000
C) $34,500
D) $6,500
Powers, Inc. manufactures two kinds of bags-totes and satchels. The company allocates
manufacturing overhead using a single plantwide rate with direct labor cost as the
allocation base. Estimated overhead costs for the year are $25,750. Additional estimated
information is given below.
Calculate the amount of overhead to be allocated to Satchels, if the actual units
produced and direct labor costs equal the estimated amounts. (Round any percentages to
two decimal places and your final answer to the nearest dollar.)
A) $495
B) $13,733
C) $12,017
D) $22,750
Which of following statements is true of short-term decision making?
A) Fixed costs and variable costs must be analyzed separately.
B) All costs behave in the same way.
C) Unit manufacturing costs are variable costs.
D) All costs involved in a decision are considered relevant.
Madsen, Inc. intends to increase its profits by 50% in the next fiscal year. Which of the
following is most likely to be a lead indicator in Madsen’s performance report?
A) return on investment
B) number of repeat customers
C) net profit margin
D) sales revenue growth