For a construction contractor, the wages of carpenters would be classified as factory
overhead cost.
a. True
b. False
Answer:
Using measures to assess a business’s ability to pay its current liabilities is called
current position analysis.
a. True
b. False
Answer:
In process cost accounting, the costs of direct materials and direct labor are charged
directly to
a. service departments
b. processing departments
c. customer accounts receivable
d. job orders
Answer:
The excess of the cash flowing in from revenues over the cash flowing out for expenses
is termed net discounted cash flow.
a. True
b. False
Answer:
The ability of a business to pay its debts as they come due and to earn a reasonable net
income is
a. solvency and leverage
b. solvency and profitability
c. solvency and liquidity
d. solvency and equity
Answer:
The International Boot Company has income from operations of $80,000, invested
assets of $500,000, and sales of $1,525,000.
What is the investment turnover?
a. 16.0
b. 3.05
c. 0.33
d. 27.5
Answer:
Make-or-buy options often arise when a manufacturer has excess productive capacity in
the form of unused equipment, space, and labor.
a. True
b. False
Answer:
According to the just-in-time philosophy,
a. finished goods should always be available in case a customer wants something
b. employees should be expert at one function rather than be cross-trained for multiple
functions
c. movement of the product and material is reduced
d. the product moves from process to process until completion
Answer:
The cost of materials entering directly into the manufacturing process is classified as
factory overhead cost.
a. True
b. False
Answer:
A firm operated at 80% of capacity for the past year, during which fixed costs were
$330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating
profit (loss) was
a. $140,000
b. $(30,000)
c. $370,000
d. $670,000
Answer:
Costs of controlling quality include prevention costs and internal failure costs.
a. True
b. False
Answer:
All costs of the processes in a process costing system ultimately pass through the Cost
of Goods Sold account.
a. True
b. False
Answer:
Myers Corporation has the following data related to direct materials costs for
November: actual costs for 5,000 pounds of material, $4.50; And standard costs for
4,800 pounds of material at $5.10 per pound.
What is the direct materials price variance?
a. $3,000 favorable
b. $3,000 unfavorable
c. $2,880 favorable
d. $2,880 unfavorable
Answer:
Scrap material
Identify the following quality control activities as either value-added or
non-value-added.
a. Value-added
b. Non-value-added
Answer:
In determining cost of goods sold, two alternate costing concepts can be used:
absorption costing and variable costing.
a. True
b. False
Answer:
The Clydesdale Company has sales of $4,500,000. It also has invested assets of
$2,000,000 and operating expenses of $3,600,000. The company has established a
minimum rate of return of 7%.
What is Clydesdale Company’s investment turnover?
a. 1.80
b. 2.25
c. 1.25
d. 1.4
Answer:
Brock Company’s financial information is listed below. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
What is the current ratio?
a. 1.42
b. 0.78
c. 1.58
d. 0.67
Answer:
In variable costing, fixed costs do not become part of the cost of goods manufactured,
but are considered an expense of the period.
a. True
b. False
Answer:
The cost of goods sold for Michaels Manufacturing in the current year was $233,000.
The January 1 finished goods inventory balance was $31,600, and the December 31
finished goods inventory balance was $24,200. Cost of goods manufactured during the
period was
a. $233,000
b. $225,600
c. $288,800
d. $240,400
Answer:
Depreciation expense’”office
Match the items below for a bakery to the type of cost (a-d).
a. Direct materials
b. Direct labor
c. Factory overhead
d. Non-manufacturing cost
Answer:
Standard costs are used in companies for a variety of reasons. Which of the following is
not one of the benefits for using standard costs?
a. used to indicate where changes in technology and machinery need to be made
b. used to estimate cost of inventory
c. used to plan direct materials, direct labor, and variable factory overhead
d. used to control costs
Answer:
Standard costs are a useful management tool that can be used solely as a statistical
device apart from the ledger or they can be incorporated in the accounts.
a. True
b. False
Answer: