1) Operation costing:
A.tends to parallel job-order costing with respect to the treatment of conversion cost
B.tends to parallel process costing with respect to the treatment of conversion cost
C.tends to parallel process costing with respect to the treatment of direct materials
D.would likely be used by a manufacturing plant that produces one model of a single
product
E.is commonly known as a joint-costing system
2) If a proposal’s profitability index is greater than one:
A.the net present value is negative
B.the net present value is positive
C.the net present value is zero
D.none of these, because the net present value cannot be gauged by the profitability
index
E.the proposal should be rejected
3) Rogillo, Inc. had an unfavorable labor efficiency variance and an unfavorable
materials quantity variance. Which department might be held accountable for these
variances?
A.Purchasing, because bad materials can harm labor efficiency
B.Production, because inefficient workers may use more materials than allowed
C.Marketing
D.Shipping
E.Both Purchasing, because bad materials can harm labor efficiency and Production,
because inefficient workers may use more materials than allowed
4) Which of the following choices correctly depicts a cost that arises from a batch-level
activity and one that arises from a facility-level activity?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
5) Lake Appliance produces washers and dryers in an assembly-line process. Labor
costs incurred during a recent period were: corporate executives, $500,000;
assembly-line workers, $180,000; security guards, $45,000; and plant supervisor,
$110,000. The total of Lake’s direct labor cost was:
A.$110,000
B.$180,000
C.$155,000
D.$235,000
E.$735,000
6) The primary difference between normalized and actual costing methods lies in the
determination of a job’s:
A.direct material costs
B.direct labor costs
C.manufacturing overhead costs
D.selling costs
E.administrative costs
7) Which of the following choices correctly denotes managerial functions that are
commonly associated with budgeting?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
8) Which of the following is taken into account by the net-present-value method?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
9)
Julio Company purchased a $200,000 machine that has a four-year life and no salvage
value. The company uses straight-line depreciation on all asset acquisitions and is
subject to a 30% tax rate. The proper cash flow to show in a discounted-cash-flow
analysis as occurring at time 0 would be:
A.$(200,000)
B.$(140,000)
C.$(35,000)
D.$15,000
E.$50,000
10) Baxley Products manufactures office furniture by using an assembly-line process.
All direct materials are introduced at the start of the process, and conversion cost is
incurred evenly throughout manufacturing. An examination of the company’s
Work-in-Process account for August revealed the following selected information:
Debit side
August 1 balance: 600 units, 40% complete; cost, $44,600*
Production started: 1,800 units
Direct materials used during August: $90,000
August conversion cost: $51,400
Credit side
Production completed: 1,400 units
*Supplementary records disclosed direct material cost of $30,000 and conversion cost
of $14,600.
Conversations with manufacturing personnel revealed that the ending work in process
was 80% complete.
Required:
A. Determine the number of units in the August 31 work-in-process inventory.
B. Calculate the cost of goods completed during August, and prepare the appropriate
journal entry to record completed production.
C. Determine the cost of the August 31 work-in-process inventory.
11) The day-to-day work of management teams will typically comprise all of the
following activities except:
A.decision making
B.planning
C.costminimizing
D.directing operational activities
E.controlling
12) Southern Lake Chemical manufactures a product called Zubek. Direct materials are
added at the beginning of the process, and conversion activity occurs uniformly
throughout production. The beginning work-in-process inventory is 60% complete with
respect to conversion; the ending work-in-process inventory is 20% complete. The
following data pertain to May:
Using the weighted-average method of process costing, the total costs remaining in
work in process on May 31 are:
A.$0
B.$12,040
C.$17,480
D.$25,640
E.None of the answers is correct
13) Which of the following choices correctly shows how costs are accumulated in a
process-costing system?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
14) Capital turnover shows:
A.the income generated by each dollar of capital investment
B.the sales dollars generated by each dollar of capital investment
C.the contribution margin generated by each dollar of capital investment
D.the capital investment generated by each sales dollar
E.the capital investment generated by each dollar of income
15) Hammett has a single production department, and uses a process-costing system.
The balance in its Work-in-Process account on January 1 was $68,000. The account was
charged with direct materials, direct labor, and manufacturing overhead of $450,000
throughout the year. If a review of the accounting records determined that $86,000 of
goods were still in production at year-end, Hammett should make a journal entry on
December 31 that includes:
A.a debit to Cost of Goods Sold for $432,000
B.a debit to Finished-Goods Inventory for $432,000
C.a debit to Work-in-Process Inventory for $432,000
D.a debit to Finished-Goods Inventory for $86,000
E.a credit to Work-in-Process Inventory for $86,000
16) The budgeted income statement, budgeted balance sheet, and budgeted statement of
cash flows comprise:
A.the final portion of the master budget
B.the depiction of an organization’s overall actual financial results
C.the first step of the master budget
D.the portion of the master budget prepared after the sales forecast and before the
remainder of the operational budgets
E.the second step of the master budget
17) CVP analysis can be used to study the effect of:
A.changes in selling prices on a company’s profitability
B.changes in variable costs on a company’s profitability
C.changes in fixed costs on a company’s profitability
D.changes in product sales mix on a company’s profitability
E.All of the other answers are correct
18) A manufacturer’s raw-material purchasing department would likely be classified as
a:
A.cost center
B.revenue center
C.profit center
D.investment center
E.contribution center
19) Which of the following choices correctly notes a characteristic associated with
perfection standards and one associated with practical standards?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
20) When graphed, a typical fixed cost appears as:
A.a horizontal line
B.a vertical line
C.a u-shaped line
D.a diagonal line that slopes downward to the right
E.a diagonal line that slopes upward to the right
21) Given the following information, what is the cost of unused capacity? Cost of
material supplied is $8,600; Cost of material used is $8,000; Cost of material used per
shelf is $8; Cost of material supplied per shelf is $8.60.
A.$600
B.$6,000
C.$0.60
D.$1,000
E.There is no unused capacity
22) Which of the following cost-reduction and process-improvement techniques is often
used in conjunction with target costing?
A.Linear programming
B.Deterministic simulations
C.Cost allocation
D.Budgetary padding
E.Value engineering
23) O’Dale sells three products: R, S, and T. Budgeted information for the upcoming
accounting period follows.
The company’s weighted-average unit contribution margin is:
A.$3.00
B.$3.55
C.$4.00
D.$19.35
E.None of the other answers is correct
24) The Razooks Company, which manufactures office equipment, is ready to introduce
a new line of portable copiers. The following copier data are available:
What price will the company charge if the firm uses cost-plus pricing based on variable
manufacturing cost and a markup percentage of 220%?
A.$396.00
B.$495.00
C.$576.00
D.$643.50
E.None of the other answers are correct
25) Product costs incurred after the split-off point in a joint processing environment are
called:
A.separable processing costs
B.joint product costs
C.non-relevant costs
D.scrap costs
E.spoilage costs
26) Under an activity-based costing system, what is the per-unit overhead cost of
Deluxe?
A.$272
B.$282
C.$320
D.$440
E.None of the other answers is correct
27)
In eight years, Lai Sing Company plans to receive $11,000 cash from the sale of a
machine that has a $16,000 book value. If the firm is subject to a 30% income tax rate
and has a 12% after-tax hurdle rate, the correct discounted net cash flow would be:
A.$606
B.$1,414
C.$3,838
D.$5,050
E.None of the other answers are correct
28) Which of the following choices correctly depicts whether McDonald’s, the
University of Wisconsin, and Apple Inc. would have a need for managerial accounting?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
29) Calamari Manufacturing produces small electric engines. Identify the following
costs as direct materials (DM), direct labor (DL), manufacturing overhead (MOH), or a
period cost (PC). Also indicate whether the cost is variable (V) or fixed (F) with respect
to behavior.
A. Commissions paid to salespeople
B. Straight-line depreciation on the factory building
C. Salary of the plant supervisor
D. Wages of the assembly-line workers
E. Machine lubricant used in production activities
F. Engine casings used in production activities
G. Advertising placed in trade journals
H. Lease payments for the president’s automobile
I. Property taxes paid on the factory facilities
30) Song, Inc., uses the high-low method to analyze cost behavior. The company
observed that at 22,000 machine hours of activity, total maintenance costs averaged
$33.40 per hour. When activity jumped to 25,000 machine hours, which was still within
the relevant range, the average total cost per machine hour was $30.40.
On the basis of this information, what were total maintenance costs when the company
experienced 23,000 machine hours?
A.$193,200
B.$550,000
C.$734,800
D.$743,200
E.$760,000
31)
Assume that the company computes variances at the earliest point in time.
The direct-material price variance is:
A.$4,620F
B.$4,620U
C.$5,200F
D.$5,200U
E.none of the other answers are correct
32) Which of the following transfer-pricing methods can lead to dysfunctional
decision-making behavior by managers?
A.Variable cost
B.Full cost
C.External market price
D.A professionally negotiated, amicable settlement between the buying and selling
divisions
E.None of the other answers are correct