Distribution costs are an example of period costs.
An organization’s value chain can aid in the reduction of non-value added activities.
The operation of a management control system is readily observable.
The Internal Revenue Service allows the use of both variable and absorption costing.
An activity-based costing system should be evaluated with regard to the benefits it can
provide an organization versus the costs of implementing it.
In an actual cost system, overhead is assigned to Work in Process Inventory with a debit
entry to the account.
A company that manufactures large quantities of homogenous goods will use a process
costing system.
The difference between the standard hours worked for a specific level of production and
the actual hours worked is the labor efficiency variance.
In a complex production environment, it is more difficult to compute a single EUP rate
for conversion costs.
Business value-added activities increase the value of a product without increasing
production time.
Balances for Accounts Receivable and Sales Discounts are projected after the cash
collections schedule is prepared.
Target costing is most frequently used in the development stage of a product.
Painter Corporation
Painter Corporation has the following information for the current month:
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Painter Corporation. What are equivalent units of production for material
assuming weighted average is used?
A. 107,000
B. 116,500
C. 120,000
D. 115,000
In joint-product costing and analysis, which of the following costs is relevant in the
decision when a product should be sold to maximize profits?
A. Separable costs after the split-off point
B. Joint costs to the split-off point
C. Sales salaries for the production period
D. Costs of raw materials purchased for the joint process.
Galveston Excursons Corporation
Galveston Excursons Corporation is considering the purchase of a new ocean-going
vessel that could potentially reduce labor costs of its operation by a considerable
margin. The new ship would cost $600,000 and would be fully depreciated by the
straight-line method over 15 years. At the end of 15 years, the ship will have no value
and will be scuttled. Galveston Excursons’ cost of capital is 14 percent, and its marginal
tax rate is 35 percent.
Refer to Galveston Excursons Corporation. What is the present value of the
depreciation tax benefit of the new ship? (Round to the nearest dollar.) Present value
tables or a financial calculator are required.
A. $ 85,991
B. $159,697
C. $210,000
D. $245,688
Costs that are common to many different activities within an organization are known as
____ costs.
A. product- or process-level
B. organizational-level
C. batch-level
D. unit-level
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the four-variance approach, what is the volume
variance?
A. $3,125 F
B. $3,875 F
C. $6,063 U
D. $3,875 U
Painter Corporation
Painter Corporation has the following information for the current month:
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Painter Corporation. Assume that the costs per EUP for material and
conversion are $1.00 and $1.50, respectively. Assuming that weighted average is used,
what is the cost assigned to ending inventory?
A. $29,725
B. $37,163
C. $38,475
D. $36,250
Which of the following is a basic element of effective budgetary control?
A. cost behavior patterns
B. cost-volume-profit analysis
C. standard costing
D. all of the above
Which of the following would be an appropriate alternative to the use of ROI in
evaluating the performance of an investment center?
A. yes yes yes
B. no yes no
C. yes no no
D. yes no yes
Relating resource consumption and cost to alternative product and process designs can
be achieved through
A. kaizen costing.
B. reverse engineering.
C. computer simulation.
D. all of the above.
Wyman Enterprises
Refer to Wyman Enterprises. For March, conversion cost incurred was
A. $30,000.
B. $40,000.
C. $70,000.
D. $72,000.
Holding total production in units constant, as the proportion of defective units to total
units declines, all of the following measures will be affected, except
A. total unit sales.
B. throughput.
C. process quality yield.
D. process productivity.
When manufacturing overhead is applied to a job in process, the
______________________________ account is debited
A ____________________ costing system is appropriate where products manufactured
have different direct materials but similar processing techniques.
A cost that shifts upward or downward when activity changes by a certain interval is
referred to as a ____________________ cost.
Three methods of job-cost valuation are normal, standard, and
____________________.
What are some common problems encountered in determining ROI?
A company that manufactures custom bridal gowns will use a ____________________
costing system to track production costs
Consider the following data for a cooking department for the month of February:
*Direct material, 100% complete; conversion costs, 25% complete
~Direct material, 100% complete; conversion costs, 75% complete
Inspection occurs when production is 100 percent completed. Normal spoilage is 11
percent of good units completed and transferred out during the current period.
The following cost data are available:
The level of activity where a company’s total revenues equal total costs is referred to as
the ______________________________.