1) Matthew Company uses a job cost system. The overhead account shows a $5,000
overallocated balance at the end of the year. Actual overhead incurred was $100,000.
Other balances are:
The entry to close manufacturing overhead would include a
A) debit to manufacturing overhead for $5,000
B) debit to work in process inventory for $5,000
C) debit to cost of goods sold for $5,000
D) credit to work in process for $5,000
2) The mixing department has 18,000 units and $50,000 in costs for which to account.
Of the 18,000 units, 12,000 were completed and transferred to the next department. The
6,000 remaining were 25% complete for conversion costs. Direct materials are added at
the beginning of the process, and the conversion costs are added evenly throughout the
process. The cost per equivalent unit is $2.25 for direct materials and $0.80 for
conversion costs. The total cost of ending WIP is
A) $14,700
B) $ 8,175
C) $18,300
D) $13,500
3) Crossroads Packaging Co. has budgeted the following amounts for its next fiscal
year:
To maintain the original breakeven sales in units if fixed expenses were to increase by
10%, the selling price per unit would have to be
A) increased by 2.00%
B) increased by 58.00%
C) decreased by 2.00%
D) decreased by 58.00%
4) Ryan’s Paints allocates overhead based on machine hours. Selected data for the most
recent year follow.
The estimates were made as of the beginning of the year, while the actual results were
for the entire year.
The manufacturing overhead for the year would have been
A) $10,000 overallocated
B) $10,000 underallocated
C) $40,000 overallocated
D) $40,000 underallocated
5) The Corn Flakes product line at Kellogg is most likely treated as a(n)
A) cost center
B) investment center
C) profit center
D) revenue center
6) Garfield Corporation is considering building a new plant in Canada. It predicts sales
at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated
expenses:
A Canadian firm was contracted to sell the product and will receive a commission of
10% of the sales price. No U.S. home office expenses will be allocated to the new
facility.
How much does the Canadian contractor expect to make in commissions?
A) $ 25,000
B) $ 75,000
C) $225,000
D) $ 5,000
7) What position is typically responsible for financial accounting, managerial
accounting, and tax reporting?
A) Controller
B) Treasurer
C) CFO
D) Audit committee
8) The Winner’s Circle sells two products, medals and trophies. The Winner’s Circle
predicts that it will sell 25,000 medals and 5,000 trophies in the next period. The unit
contribution margins for medals and trophies are $6.00 and $15.00, respectively. What
is the weighted-average unit contribution margin?
A) $15.00
B) $11.25
C) $7.50
D) $0.13
9) Tommy’s Toys produces two types of toys: trains and dolls. Tommy’s uses stainless
steel to manufacture the trains and plastic to manufacture the dolls. Information
regarding the usage of steel and plastic for the past year follows:
What is the direct materials flexible budget variance for steel used to manufacture the
trains?
A) $419 unfavorable
B) $419 favorable
C) $831 unfavorable
D) $831 favorable
10) All of the following would be done when calculating the change in cash from
operating activities under the indirect method except
A) deduct the purchase of equipment
B) add an increase in accrued interest payable
C) add a decrease in merchandise inventory
D) deduct a decrease in accounts payable
11) Which of the following costs could be found in work in process inventory for a
candy bar manufacturer?
A) Assembly worker wages
B) Utilities for administrative offices
C) Depreciation on sales office
D) Customer order forms
12) (Present value tables are required.) Mantua Motors is evaluating a capital
investment opportunity. This project would require an initial investment of $38,000 to
purchase equipment. The equipment will have a residual value at the end of its life of
$3,000. The useful life of the equipment is 5 years. The new project is expected to
generate additional net cash inflows of $12,000 per year for each of the five years.
Mantua Motors’ required rate of return is 14%. The net present value of this project is
closest to
A) ($1,994)
B) $4,753
C) $3,196
D) $28,386
13) Beginning WIP inventory is 15,500 units, 75% complete for materials. During the
month 90,000 units were started; 87,000 were finished; and ending WIP was 18,500
units that were 50% complete for materials. How many equivalent units should be used
to allocate costs for materials (assume as usual, that the weighted average method is
used, not FIFO)?
A) 98,625
B) 96,250
C) 99,250
D) 100,875
14) Walker Corporation’s current accounting system does not include an estimate of the
cost of lost sales resulting from poor environmental performance. This scenario is an
example of which type of EMA implementation challenge?
A) Historical orientation of accounting
B) Communication issue
C) Newness of EMA
D) Hidden Cost
15) All of the following are functions of the budget committee except
A) reviews submitted budgets
B) determines the bonuses awarded to those who achieve budget targets
C) approves the final budget
D) removes unwarranted slack
16) Which of the following positions typically manages the daily operations of a
company?
A) The controller
B) The CEO
C) The board of directors
D) The stockholders
17) Alexander Inc. uses activity-based costing. The company produces two products:
Snaps and Pops. The expected annual production of Snaps is 1,500 units, while the
expected annual production of Pops is 2,200 units. There are three activity cost pools:
Assembly, Testing, and Packing. The estimated costs and activities for each of these
three activity pools follows:
The cost pool activity rate for Testing would be
A) $21.43 per activity
B) $13.90 per activity
C) $39.56 per activity
D) $6.95 per activity
18) Managerial accounting would use which of the following types of information?
A) Forecasts of future earnings
B) Financial information
C) Nonfinancial information
D) All of the above
19) London Ceramics makes custom ceramic tiles. During March, the company started
and finished Job #266. Job #266 consists of 2,500 tiles; each tile sells for $12.00. The
company’s records show the following direct materials were requisitioned for Job #266.
Basic terra cotta tiles: 2,500 units at $4.00 per unit
Specialty paint: 5 quarts at $7.00 per quart
High gloss glaze: 4 quarts at $12.00 per quart
Labor time records show the following employees worked on Job #266:
Alice Cooper: 18 hours at $24 per hour
Matthew Kline: 20 hours at $13 per hour
Sierra Ceramics allocates manufacturing overhead at a rate of $27 per direct labor hour.
What is the gross profit per tile on Job #266?
A) $12.00
B) $7.28
C) $7.69
D) $11.59
20) If a company were to decrease its prevention costs by eliminating employee
training, the company’s external failure costs would most likely
A) increase
B) decrease
C) remain the same
D) Unable to predict
21) The cost of warranty work is an example of what type of cost?
A) Prevention cost
B) Appraisal cost
C) External failure cost
D) Internal failure cost
22) In deciding whether to outsource, managers must consider
A) relevant fixed and variable components
B) sunk costs
C) only variable costs
D) none of the above
23) Absorption costing is required to be used for
A) federal income tax reports
B) external financial reports, but not income taxes
C) neither external financial reports nor income tax reports
D) both external financial reports and income tax reports
24) Selected information regarding a company’s most recent quarter follows (all data in
thousands).
What was cost of goods sold?
A) $ 1,160
B) $ 610
C) $ 960
D) $ 840
25) Ready Company adds direct materials at the beginning of the process and adds
conversion costs throughout the process. Data for the finishing department follows:
What are the equivalent units for direct materials?
A) 67,000
B) 61,000
C) 51,000
D) 55,000
26) Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to current year net income before
income tax and income tax expense?
A) An increase of $125,112 from prior to current year
B) An increase of both net income before income tax and income tax of 22%
C) A decrease of $29,112 in net income before tax
D) Net income before tax of 21% and income tax of 2.00% of net sales revenue
27) State whether each company below would be more likely to use a job costing
system or a process costing system:
A)________soft drink bottler
B)________yacht builder
C)________hospital
D)________printing firm
E)________flour mill