Expired costs are reflected on the balance sheet.
An organization’s strategy is the guiding force for its mission.
The first stage in the budgeting process is the preparation of a cash collections budget.
An organization’s strategy should reflect the organization’s core competencies.
Absorption costing conforms with generally accepted accounting principles.
When a CPA firm uses taped lectures rather than live presentations for continuing
education, it is engaging in a cost reduction strategy.
Wyatt Corporation
Wyatt Corporation has the following standard costs associated with the manufacture
and sale of one of its products:
Refer to Wyatt Corporation. Under absorption costing, the standard production cost per
unit for the current year was
A. $ 7.30.
B. $11.30.
C. $11.55.
D. $13.05.
Bradley Corporation
Bradley Corporation has three production departments A, B, and C. Bradley
Corporation also has two service departments, Administration and Personnel.
Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.
Refer to Bradley Corporation. Using the step method, what amount of Administration
costs is allocated to Personnel (round to the nearest dollar)?
A. $72,973
B. $291,892
C. $145,946
D. $389,189
Which of the following cost drivers is often disregarded in a traditional costing
system?
A. Pounds of direct material
B. Machine hours
C. Direct labor dollars
D. Variety of products manufactured
Denson Company manufactures computer stands. What is the beginning balance of
Finished Goods Inventory if Cost of Goods Sold is $107,000; the ending balance of
Finished Goods Inventory is $20,000; and Cost of Goods Manufactured is $50,000 less
than Cost of Goods Sold?
A. $70,000
B. $77,000
C. $157,000
D. $127,000
Fulton Company
Fulton Company is placing an ad in the local paper to advertise its products. The ad will
run for one week at a total cost of $5,500. Fulton Company has four categories of
products as follows:
Refer to Fulton Company. Assume that Fulton decides to allocate based on expected
sales value. What amount of advertising cost should be allocated to light fixtures (round
to the nearest dollar)?
A. $1,375
B. $589
C. $1,002
D. $2,534
For Raw Material B, a company maintains a safety stock of 5,000 pounds. Its average
inventory (taking into account the safety stock) is 8,000 pounds. What is the apparent
order quantity?
A. 16,000 lbs.
B. 6,000 lbs.
C. 10,000 lbs.
D. 21,000 lbs.
Which of the following statements is true?
A. All organizations have the same set of budgets.
B. All organizations are required to budget.
C. Budgets are a quantitative expression of an organization’s goals and objectives.
D. Budgets should never be used to evaluate performance.
Buxton Company is currently operating at a loss of $15,000. The sales manager has
received a special order for 5,000 units of product, which normally sells for $35 per
unit. Costs associated with the product are: direct material, $6; direct labor, $10;
variable overhead, $3; applied fixed overhead, $4; and variable selling expenses, $2.
The special order would allow the use of a slightly lower grade of direct material,
thereby lowering the price per unit by $1.50 and selling expenses would be decreased
by $1. If Buxton wants this special order to increase the total net income for the firm to
$10,000, what sales price must be quoted for each of the 5,000 units?
A. $23.50
B. $24.50
C. $27.50
D. $34.00
Which of the following is not a drawback of mass customization?
A. The choices are too numerous.
B. The potential for errors is great.
C. Only a small percentage of available choices is normally selected.
D. All of the above are drawbacks.
Saturn Corporation
Material A is added at the start of production, while Material B is added uniformly
throughout the process.
Refer to Saturn Corporation. Assuming a weighted average method of process costing,
compute EUP units for Materials A and B.
A. 2,700 and 2,280, respectively
B. 2,700 and 2,450, respectively
C. 2,000 and 2,240, respectively
D. 2,240 and 2,700, respectively
Kaizen means
A. doing it the Japanese way.
B. continuous improvement.
C. employee empowerment.
D. implementation of a centralized organizational structure.
Cibolo Company
Cibolo Company has the following information available for March when 4,200 units
were produced (round answers to the nearest dollar).
Refer to Cibolo Company. What is the labor efficiency variance?
A. $ 2,955 F
B. $ 2,955 U
C. $ 3,000 U
D. $ 3,000 F
Manufacturing cycle efficiency should be increased by employing which of the
following techniques?
A. yes yes yes
B. yes yes no
C. no no no
D. yes no yes
Landon Corporation wishes to develop a single predetermined overhead rate. The
company’s expected annual fixed overhead is $340,000 and its variable overhead cost
per machine hour is $2. The company’s relevant range is from 200,000 to 600,000
machine hours. Landon expects to operate at 425,000 machine hours for the coming
year. The plant’s theoretical capacity is 850,000. The predetermined overhead rate per
machine hour should be
A. $2.40.
B. $2.57.
C. $2.80.
D. $2.85.
Which of the following add customer value?
A. setup time
B. storage time
C. idle time
D. processing time
With two autonomous division managers, the price of goods transferred between the
divisions needs to be approved by
A. corporate management.
B. both divisional managers.
C. both divisional managers and corporate management.
D. corporate management and the manager of the buying division.
Smith Corporation
Smith Corporation is involved in the evaluation of a new computer-integrated
manufacturing system. The system has a projected initial cost of $1,000,000. It has an
expected life of six years, with no salvage value, and is expected to generate annual cost
savings of $250,000. Based on Smith Corporation’s analysis, the project has a net
present value of $57,625.
Refer to Smith Corporation. What discount rate did the company use to compute the net
present value? Present value tables or a financial calculator are required.
A. 10%
B. 11%
C. 12%
D. 13%
Jean Simmons Company
Below is an income statement for Jean Simmons Company:
Refer to Jean Simmons Company. What was the company’s margin of safety?
A. $50,000
B. $100,000
C. $150,000
D. $25,000
The potential rental value of space used for production activities
A. is a variable cost of production.
B. represents an opportunity cost of production.
C. is an unavoidable cost.
D. is a sunk cost of production.
Sloane Products has no Work in Process or Finished Goods inventories at the close of
business on December 31 of the current year. The balances of Sloane Products’ accounts
as of December 31 are as follows:
Pretax income for the current year is:
A. $484,000
B. $530,000
C. $576,000
D. $680,000
A performance measure that is short-run in nature and represents a firm’s anticipated
activity level for the upcoming period is ____________________ capacity.
What are two alternative calculations that can be used to either verify the number of
equivalent units or to obtain the number initially?
The process costing system that computes equivalent units only on work done in the
current period is known as a
__________________________________________________.
Costs that support an overall production or service process are referred to as
______________________________.
The balanced scorecard perspective that addresses concerns about organizational
growth is the ____________________ perspective.
When raw materials are placed into production, the
______________________________ account is debited
An activity that does not increase the value of a product for a customer is referred to as
a _________________________ activity.
