Which of the following is the correct formula for the profit margin ratio?
A) Net profit / Sales
B) Net sales / Average total assets
C) Net profit × Capital invested
D) Operating income / Net sales
A cash payments journal is a special journal that ________.
A) differs from the cash disbursements journal
B) eliminates the need to perform a bank reconciliation
C) is used to record cash payments by check and currency
D) is used to record the net of cash payments and cash receipts by check and currency
The journal entry for adjustment of underallocated manufacturing overhead includes a
________.
A) credit to Finished Goods Inventory
B) credit to Manufacturing Overhead
C) debit to Work-in-Process Inventory
D) credit to Cost of Goods Sold
Which of the following is an attribute of traditional costing systems?
A) raw materials are ordered in large quantities
B) production is completed in self-contained work cells
C) suppliers make frequent deliveries of small quantities of raw materials
D) management works with suppliers to ensure defect-free raw materials
Carey, Inc. provides the following information:
Calculate the return on investment.
A) 10%
B) 45%
C) 4%
D) 14%
Under the just-in-time costing system, a credit purchase of raw materials is recorded by
________.
A) debiting the Raw Materials Inventory account
B) crediting the Conversion Costs account
C) debiting the Raw and In-Process Inventory account
D) crediting the Cash account
KRD Supplies Corporation provided the following information for the year:
What was the amount of the manufacturing overhead costs?
A) $313,000
B) $45,000
C) $292,000
D) $491,000
Rickman, Inc. reports the following information:
There are no beginning inventories. What is the ending balance in Finished Goods
Inventory using variable costing?
A) $4,900
B) $3,500
C) $5,500
D) $7,697
Cash disbursement journals also are known as ________.
A) sales journals
B) purchases journals
C) cash receipts journals
D) cash payments journals
The income statement of a service company will most likely include ________.
A) salaries expense
B) factory overhead
C) cost of goods sold
D) direct materials
Medbam, Inc. has collected the following data. (There are no beginning inventories.):
What is the operating income using absorption costing? (Round any intermediate
calculations to the nearest cent, and your final answer to the nearest dollar.)
A) $44,402
B) $36,002
C) $16,002
D) $24,402
At the end of the year, Metro, Inc. has an unadjusted credit balance in the
Manufacturing Overhead account of $820. Which of the following is the year-end
adjusting entry needed to adjust the account?
A) A debit to Cost of Goods Sold of $820 and a credit to Finished Goods Inventory of
$820
B) A debit to Manufacturing Overhead of $820 and a credit to Finished Goods
Inventory of $820
C) A debit to Manufacturing Overhead of $820 and a credit to Cost of Goods Sold of
$820
D) A debit to Cost of Goods Sold of $820 and a credit to Manufacturing Overhead of
$820
Akao Products uses a standard cost system. Overhead costs are allocated based on
direct labor hours. In the first quarter, Akao had an unfavorable efficiency variance for
variable overhead costs. Which of the following scenarios is a reasonable explanation
for this variance?
A) The actual number of direct labor hours was lower than the budgeted hours.
B) The actual variable overhead costs were higher than the budgeted costs.
C) The actual variable overhead costs were lower than the budgeted costs.
D) The actual number of direct labor hours was higher than the budgeted hours.
Haskins Products sells 2,100 kayaks per year at a sales price of $450 per unit. Haskins
sells in a highly competitive market and uses target pricing. The company has
calculated its target full product cost at $740,000 per year. Total variable costs are
$330,000 per year and cannot be reduced. Assume all products produced are sold. What
are the target fixed costs?
A) $945,000
B) $205,000
C) $330,000
D) $410,000
The budget process is a loop that consists of ________.
A) planning, acting, and controlling
B) developing strategies, planning, acting, and controlling
C) developing strategies, planning, and acting
D) developing strategies, acting, and controlling
Janeway, Inc. has a cash balance of $24,000 on April 1. The company is now preparing
the cash budget for the second quarter. Budgeted cash collections and payments are as
follows:
There are no budgeted capital expenditures or financing transactions during the quarter.
Based on the above data, calculate the projected cash balance at the end of June.
A) $37,700
B) $48,000
C) $50,700
D) $62,700
When using management by exception, which of the following variances would not
affect the production manager?
A) direct materials efficiency
B) variable overhead efficiency
C) direct labor cost
D) direct labor efficiency
Littleton Promotional Services uses a job order system for costing and billing
promotional services for dance and ballet performances. Littleton has four public
relations specialists and office staff. At the beginning of 2016, Littleton estimated the
total cost of salaries and benefits for the public relations specialists at $684,000 and a
total of 7,200 billable hours for the year. The office and administrative costs were
estimated at $432,000. The allocation base for office and administrative costs is billable
hours. A new client is contracting with Littleton to promote a ballet tour in the United
States Littleton estimates that the job will require 38 billable hours of specialist time. If
Littleton wishes to have a 20% mark up on cost on the job, what price should Littleton
quote to the client?
A) $3,610
B) $2,280
C) $8,128
D) $2,238
