Sunk costs are irrelevant in deciding between two alternatives because they are incurred
in the past, not the future.
The most popular way to begin the budgeting process is the incremental approach.
A supply chain is a network of facilities that procure raw materials, transform them into
intermediate goods and then into final products, and deliver the final products to
customers through a distribution system.
As long as the sales revenue a customer generates exceeds the cost of goods sold, the
customer is profitable.
The difference between absorption and variable costing is the timing difference in the
expensing of variable overhead costs.
To estimate total cost using the high-low method, identify the highest and lowest level
of activity and compute the slope of the line.
Product costs are any costs that a company incurs to acquire raw materials and convert
them to finished goods ready for sale.
A firm ‘s code of conduct is based on a set of core values that are meant to guide
employees ‘ behavior.
The formula for calculating the contribution margin per constrained resource is
Contribution Margin Per Unit divided by Units Produced.
In a process costing system, all product costs for the period are accumulated and
divided evenly over all units produced during the period.
The Sarbanes Act of 1936 prohibits companies from engaging in price discrimination
-that is, offering the same item to different customers at different prices.
In a job order costing system, all product costs for the period are accumulated and
divided evenly over all units produced during the period.
Investing activities include
a. Purchases and sales of property and equipment
b. Loans made and collected
c. Purchase and sales of another company’s stock
d. All of these answer choices are correct
Variable costing is also referred to as
a. Absorption costing
b. Normal costing
c. Direct costing
d. Full costing
To increase both margin and asset turnover
a. Increase sales revenue.
b. Decrease expenses.
c. Both increase sales revenue and decrease expenses.
d. Neither increase sales revenue nor decrease expenses.
The flexible budget variance for materials has which of the following two components?
a. Direct material price variance and direct material quantity variance
b. Direct material price variance and indirect material price variance
c. Direct material quantity variance and indirect materials quantity variance
d. None of these answer choices are correct
Holly Industries manufactures artificial holiday wreaths. Its most popular wreath
requires 3 yards of artificial pine boughs and 15 sprigs of holly berries. In August, the
company purchased 4,000 yards of artificial pine bough, and 20,000 sprigs of holly
berries. Holly paid $2.65 per yard for the artificial pine bough, and purchased 4 boxes
of 5,000 sprigs of holly berries for $7,000 per box. The standard price for artificial pine
bough is $2.60 per yard, and the standard price per sprig of holly berry is $1.45. During
August, Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough
and 19,000 sprigs of holly berries. What is Holly’s direct materials quantity variance for
artificial pine boughs for August?
a. $200 favorable
b. $200 unfavorable
c. $325 favorable
d. $325 unfavorable
When using an activity-based costing system, which of the following is the formula for
allocating costs to products or services?
a. Activity rate x activity driver consumption
b. Activity rate x amount in activity pool
c. Predetermined manufacturing overhead rate x actual activity
d. None of these answer choices are correct.
Athletic Gen Inc. has determined the following unit costs for each of its products:
On May 31, Athletic Gen Inc.’s Work in Process Inventory consisted of the following
items:
During June, a total of $190,590 in direct materials and $76,200 in direct labor costs
were incurred. Units finished and sold during June were as follows:
Required
a. Given that Athletic Gen Inc. uses direct labor dollars as its application base, what is
the company’s predetermined overhead rate?
b. Calculate the total manufacturing cost for June.
c. Calculate the Cost of Goods Manufactured for June.
d. Calculate the Ending Work In Process Inventory balance on June 30.
e. Calculate Cost of Goods Sold for June.
A costing system where all product costs are recorded at standard cost while the
products are being made is referred to as
a. Normal costing
b. Variable costing
c. Full costing
d. Standard costing
The predetermined overhead rate is calculated as
a. Budgeted total manufacturing overhead divided by budgeted activity level of
application base.
b. Budgeted total manufacturing overhead divided by actual activity level of application
base.
c. Actual total manufacturing overhead divided by budgeted activity level of application
base.
d. Actual total manufacturing overhead divided by actual activity level of application
base.
A cost that a company incurs that is not a product cost is referred to as
a. Contribution cost.
b. Nonmanufacturing cost.
c. Manufacturing overhead.
d. None of these answer choices are correct.
A characteristic of irrelevant information is that
a. The information is the same among the alternatives.
b. Differences will occur in the future.
c. Differences among the alternatives must have occurred in the past and must occur in
the future.
d. None of these answer choices are correct.
A balanced scorecard should include five to seven measures in each of four
perspectives: Learning and growth, internal business processes, customer, and financial.
Required:
List six measures that relate to the learning and growth perspective.
Restate the following income statement in contribution margin format.
Explain how information about activities can be used to make decisions.
Nantucket, Inc. uses a standard cost system. Workers were paid a total of $48,000
during the month of December. The company’s standard wage rate was $10 per hour,
and the direct labor rate variance for the month was $1,200 unfavorable.
Required:
How many hours were worked during December?
Define managerial accounting and explain how managerial accounting information
helps managers do their jobs.