When multiple labor categories are used, the financial effect of using a different mix of
workers in a production process is referred to as a labor mix variance.
Favorable variances are represented by credit balances in the overhead account.
The Foreign Corrupt Practices Act of 1977 provides legal protection for individuals
who report illegal organizational activities to appropriate persons or agencies.
If production exceeds sales, absorption costing net income exceeds variable costing net
income.
When manufacturing overhead is charged to a job, the manufacturing overhead account
is debited.
Dividing total fixed costs by the contribution margin ratio yields break-even point in
sales dollars.
If a project’s internal rate of return is greater than or equal to an organization’s hurdle
rate, the project is considered to be an acceptable investment.
A short-run challenge for a business is maintaining a competitive position.
The internal business perspective of the balanced scorecard addresses stakeholder
concerns about profitability and organizational growth.
When a company is labor-intensive, the cost driver that is probably least significant
would be
A. direct labor hours.
B. direct labor dollars.
C. machine hours.
D. cost of materials used.
A rational and systematic allocation base for service department costs should reflect the
cost accountant’s consideration of all of the following except
A. the ability of revenue-producing departments to bear the allocated costs.
B. the benefits received by the revenue-producing department from the service
department.
C. a causal relationship between factors in the revenue-producing department and costs
incurred in the service department.
D. all of the above are considerations.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product C?
A. $3,495
B. $2,447
C. $1,748
D. $1,311
Moore Company.
Moore Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #6, #9, and #13.
Direct material was requisitioned as follows for each job respectively: 30 percent, 25
percent, and 25 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labor is $33,000.
Other actual overhead costs totaled $36,000.
Refer to Moore Company. What is the prime cost of Job #6?
A. $42,250
B. $57,250
C. $73,250
D. $82,750
If an investment has a positive net present value, the
A. internal rate of return is higher than the discount rate.
B. discount rate is higher than the hurdle rate of return.
C. internal rate of return is lower than the discount rate of return.
D. hurdle rate of return is higher than the discount rate.
The payback method measures
A. how quickly investment dollars may be recovered.
B. the cash flow from an investment.
C. the economic life of an investment.
D. the profitability of an investment.
Net cash flow could be used to measure performance in
A. cost centers and investment centers.
B. revenue centers and profit centers.
C. revenue centers and investment centers.
D. profit and investment centers.
If sales and expenses both rise by $100,000, profit margin will
A. decrease and asset turnover will decrease.
B. increase and asset turnover will decrease.
C. decrease and asset turnover will increase.
D. increase and asset turnover will increase.
Bridges Corporation
The following information has been taken from the cost records of Bridges Corporation
for the past year:
Refer to Bridges Company. Cost of Goods Manufactured was
A. $651
B. $736
C. $771
D. $796
A primary purpose of using a standard cost system is
A. to make things easier for managers in the production facility.
B. to provide a distinct measure of cost control.
C. to minimize the cost per unit of production.
D. b and c are correct.
Outsourcing and marketing worldwide enable firms to
A. develop new markets.
B. reduce input costs.
C. manage effects of peaks and valleys in local economies.
D. all of the above.
Which kind of costs could be eliminated by closing a sales office?
A. yes yes no
B. yes no yes
C. yes no no
D. no no yes
Crosson Corporation
Crosson Corporation operates its factory 300 days per year. Its annual consumption of
Material Y is 1,200,000 gallons. It carries a 10,000 gallon safety stock of Material Y
and its lead time is 12 business days.
Refer to Crosson Corporation. What is the order point for Material Y?
A. 10,000 gallons
B. 38,000 gallons
C. 48,000 gallons
D. 58,000 gallons
Improved effectiveness and efficiency of a product is considered a ____ performance
measurement?
A. subjective
B. financial
C. quantitative
D. qualitative
Which ethical standard is violated by an accountant who accepts a gift from a client
A. Credibility
B. Confidentiality
C. Competence
D. Integrity
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 variable costing, the standard production cost per
unit for the current year was
A. $11.30.
B. $7.30.
C. $7.55.
D. $11.55.
Riedel Company started 8,600 units in April. The company transferred out 6,400
finished units and ended the period with 3,200 units that were 40 percent complete as to
both material and conversion costs. Beginning Work in Process Inventory units were
A. 400.
B. 1,000.
C. 1,280.
D. 2,200.
U-shaped groupings of workers and machines that improve materials handling and
flow are known as
A. manufacturing cells.
B. efficiency stations.
C. multi-flow modules.
D. productivity islands.
Key variables that are identified in strategic planning are
A. normally controllable if they are internal.
B. seldom if ever controllable.
C. normally controllable if they occur in a domestic market.
D. normally uncontrollable if they are internal.
Richardson Company
The following information is available for Richardson Company for its first year of
operations:
Refer to Richardson Company. If Richardson Company were using variable costing,
what would it show as the value of ending inventory?
A. $120,000
B. $64,500
C. $27,000
D. $24,000
Lincoln Company
Lincoln Company applies overhead based on direct labor hours and has the following
available for the current month:
Refer to Lincoln Company. Compute all the appropriate variances using the
two-variance approach.
A cost that must be reviewed periodically to determine if it is still appropriate and
necessary is referred to as a __________________________________________.
Costs that result from defective units, product returns, and complaints are referred to as
____________________ costs.
Long-range planning carried out by top management is referred to as
______________________________.
The ___________________________________ restates an organization’s strategy into
clear and objective performance measures.
What is an opportunity cost and why is it a relevant cost?