1) The Gingham Company’s budgeted income statement reflects the following amounts:
Sales are collected 50% in the month of sale, 30% in the month following sale, and
19% in the second month following sale. One percent of sales is uncollectible and
expensed at the end of the year.
Gingham pays for all purchases in the month following purchase and takes advantage of
a 3% discount. The following balances are as of January 1:
*Of this balance, $35,000 will be collected in January and the remaining amount will be
collected in February.
The monthly expense figures include $5,000 of depreciation. The expenses are paid in
the month incurred.
Gingham’s expected cash balance at the end of February is:
A.$87,000
B.$89,160
C.$92,000
D.$94,160
E.$113,300
2) An unfavorable labor rate variance is created when:
A.actual labor hours worked exceed standard hours allowed
B.actual hours worked are less than standard hours allowed
C.actual wages paid are less than amounts that should have been paid
D.actual units produced exceed budgeted production levels
E.actual wages paid exceed amounts that should have been paid for the number of hours
worked
3) Tiara Company has the following historical collection pattern for its credit sales:
70% collected in month of sale
15% collected in the first month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted credit sales for the last six months of the year follow.
Required:
A. Calculate the estimated total cash collections during October.
B. Calculate the estimated total cash collections during the year’s fourth quarter.
4) The difference between budgeted fixed manufacturing overhead and the fixed
overhead applied to production is the:
A.sum of the spending and efficiency variances
B.controllable variance
C.efficiency variance
D.spending variance
E.volume variance
5)
Refer to the figure above. The slope of line A is equal to the:
A.fixed cost per unit
B.selling price per unit
C.profit per unit
D.variable cost per unit
E.unit contribution margin
6) A custom-home builder would likely utilize:
A.job-order costing
B.process costing
C.mass customization
D.process budgeting
E.joint costing
7) Yellow Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and
fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level
would Yellow Dot have to achieve to earn a target profit of $240,000?
A.$400,000
B.$500,000
C.$600,000
D.$750,000
E.$900,000
8) Smythe Manufacturing has 27,000 labor hours available for producing X and Y.
Consider the following information:
If Smythe follows proper managerial accounting practices, which of the following
production schedules should the company set?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
9) All other things being equal, which of the following would be the most attractive to
an investor?
A.A cash inflow of $10,000 in five years
B.A cash inflow of $2,000 each year for the next five years
C.A cash inflow of $5,000 in year 1 and $5,000 in year 5
D.A cash inflow of $10,000 today
E.All of these would be equally attractive to an investor
10) A company that is operating at full capacity should emphasize those products and
services that have the:
A.lowest total per-unit costs
B.highest contribution margin per unit
C.highest contribution margin per unit of scarce resource
D.highest operating income
E.highest sales volume
11) Which of the following would not be classified as a product cost?
A.Direct materials
B.Direct labor
C.Indirect materials
D.Insurance on a manufacturing plant
E.Sales commissions
12) Gridiron Merchandising anticipated selling 27,000 units of a major product and
paying sales commissions of $6 per unit. Actual sales and sales commissions totaled
27,500 units and $171,400, respectively. If the company used a flexible budget for
performance evaluations, Gridiron would report a cost variance of:
A.$6,400U
B.$6,400F
C.$9,400U
D.$9,400F
E.None of the other answers are correct
13) Franz began business at the start of this year and had the following costs: variable
manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling
and administrative costs per unit, $2; and fixed selling and administrative costs,
$220,000. The company sells its units for $45 each. Additional data follow.
There were no variances.
The income (loss) under absorption costing is:
A.$(7,500)
B.$9,000
C.$15,000
D.$18,000
E.None of the other answers are correct
14) Laredo manufactures Nuts and Bolts from a joint process (cost = $80,000). Five
thousand pounds of Nuts can be sold at split-off for $20 per pound; ten thousand
pounds of Bolts can be sold at split-off for $15 per pound. For product costing purposes
Laredo allocates joint costs using the relative sales value method.
The amount of joint cost allocated to Bolts would be:
A.$32,000
B.$40,000
C.$48,000
D.$60,000
E.$80,000
15) The following tasks are associated with an activity-based costing system:
1 Assignment of cost to products
2 Calculation of pool rates
3 Identification of cost drivers
4 Identification of cost pools
Which of the following choices correctly expresses the proper order of the preceding
tasks?
A.1, 2, 3, 4
B.2, 4, 1, 3
C.3, 4, 2, 1
D.4, 2, 1, 3
E.4, 3, 2, 1
16) Which of the following would be considered when preparing a company’s sales
forecast?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
17) The costs that follow all have applicability for a manufacturing enterprise. Which of
the choices listed correctly denotes the costs’ applicability for a service provider?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
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) The fixed-overhead budget and volume variances are:
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
20) Performance reports help managers:
A.use management by exception and effectively control operations
B.decide whether a cost, profit, or investment center framework is appropriate
C.design their organizational hierarchy
D.pinpoint trouble spots
E.use management by exception and effectively control operations and pinpoint trouble
spots
21) Cost management systems tend to focus on an organization’s:
A.machines
B.employees
C.activities
D.customers
E.rules and regulations
22) When considering safety stock and its effect on EOQ, which of the following
statements is false?
A.Safety stock is equal to the potential excess usage of an input
B.The reorder point is affected by the existence of safety stock
C.Safety stock decreases inventory holding costs
D.Safety stock decreases the potential costs caused by inventory shortages
E.Fluctuations in monthly usage of a material indicate the desirability of a safety stock
23) Which of the following is a typical internal control?
A.The use of password-protected computers and software
B.The requirement that separate individuals authorize cash disbursements and sign
checks
C.The use of physical controls over inventories to prevent loss from theft
D.A physical count of inventory at year-end to verify amounts shown on the company’s
accounting records
E.All of the other answers are correct
24) Consider the following items:
A. Tomatoes used in the manufacture of Hunts ketchup
B. Administrative salaries of executives employed by Jet Blue Airlines
C. Wages of assembly-line workers at a Ford plant
D. Marketing expenditures of the Atlanta Braves baseball club
E. Commissions paid to Coca-Cola’s salespeople
F. Straight-line depreciation on manufacturing equipment owned by Dell Computer
G. Shipping charges incurred by Office Depot on out-going orders
H. Speakers used in Sony home-theater systems
I. Insurance costs related to a Mary Kay Cosmetics’ manufacturing plant
Required:
Complete the table that follows and classify each of the costs listed as (1) a product or
period cost and (2) a variable or fixed cost by placing an “X” in the appropriate column.
25) 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 total
variable cost and a markup percentage of 160%?
A.$150
B.$384
C.$390
D.$624
E.None of the other answers are correct
26) Which of the following involves the coordination of daily business functions within
an organization?
A.Decision making
B.Planning
C.Directing operational activities
D.Controlling
E.Motivating