1) The journal entry for transfer from Department B to finished goods is:
Work in ProcessDepartment B
Finished Goods Control
2) The benefits of implementing a more-complex cost allocation system are relatively
easy to quantify for application of the cost-benefit approach.
3) The direct method is conceptually the most precise method because it considers the
mutual services provided among all support departments.
4) Even in the face of changing conditions, attaining the original budget is critical.
5) Managers rely on management accounting information to evaluate alternative
investment and R&D decisions.
6) Customer life-cycle costs do not influence the prices a company can charge for its
products.
7) Neocomfort Corporation manufactured 3,000 chairs during June. The following
variable overhead data relates to June:
What is the variable overhead flexible-budget variance?
A) $2,100 favorable
B) $1,380 favorable
C) $2,100 unfavorable
D) $1,380 unfavorable
8) Ruben intends to sell his customers a special round-trip airline ticket package. He is
able to purchase the package from the airline carrier for $150 each. The round-trip
tickets will be sold for $200 each and the airline intends to reimburse Ruben for any
unsold ticket packages. Fixed costs include $5,000 in advertising costs.
How many ticket packages will Ruben need to sell in order to achieve $60,000 of
operating income?
A) 367 packages
B) 434 packages
C) 1,100 packages
D) 1,300 packages
9) Cost accounting ________.
A) measures the costs of acquiring or using resources in an organization
B) helps managers to develop, communicate, and implement strategies
C) coordinates product design, production, and marketing decisions and evaluate a
company’s performance
D) communicates information to investors, banks, regulators, and other outside parties
10) It is important that the product costs reflect as much of the diversity and complexity
of the manufacturing process so that ________.
A) total costs reflect market price
B) value-added costs can be eliminated
C) there is high likelihood of cross-subsidizing of product costs
D) product-pricing errors are minimal
11) Flexible-budget variance = $200,000 (F); sales-volume variance = $350,000 (U);
sales-mix variance = $300,000 (F); calculate the static-budget variance.
A) $150,000 (U)
B) $300,000 (U)
C) $300,000 (F)
D) $250,000 (F)
12) A price variance reflects the difference between ________.
A) a standard input price in a company and its competitor
B) an actual input price used last period and current period
C) an actual input price used in a company and its competitor
D) an actual input price and a budgeted input price
13) High inventory levels increase the ________.
A) cost of carrying inventory, the costs of quality, and shrinkage costs
B) revenues and expected profits
C) cost of equity, cost of debt, and cost of short-term funds
D) cost of materials, the costs of overhead, and opportunity costs
14) To guide cost allocation decisions, the ability to bear criterion ________.
A) is the primary criterion used in activity-based costing
B) allocates cost among the beneficiaries in proportion to the benefits each receives.
C) results in subsidizing products that are not profitable
D) is used more frequently than any other criteria
15) Assembly department of Zahra Technologies had 100 units as work in process at the
beginning of the month. These units were 50% complete. It has 200 units which are
25% complete at the end of the month. During the month, it completed and transferred
500 units. Direct materials are added at the beginning of production. Conversion costs
are allocated evenly throughout production. Zahra uses weighted-average
process-costing method.
Calculate the total equivalent units in ending inventory for assignment of conversion
costs?
A) 25 units
B) 50 units
C) 150 units
D) 200 units
16) Managers find operation costing useful in cost management because it ________.
A) often results in profit maximization
B) results in cost minimization
C) focuses on control of physical processes of a given production system
D) uses job costing to account for the conversion costs and process costing for the
material and customizable components
17) The Maintenance Department has been servicing Gizmo Production for four years.
Beginning next year, the company is adding a Scrap-Processing Department to recycle
the materials from Gizmo Production. As a result, maintenance costs are expected to
increase from $480,000 per year to $500,000 per year. The Scrap-Processing
Department will use 25% of the maintenance efforts.
Required:
a.Using the stand-alone cost-allocation method, identify the amount of maintenance
cost that will be allocated to Gizmo Production and the Scrap-Processing Department
next year.
b.Using the incremental cost-allocation method, identify the amount of maintenance
cost that will be allocated to Gizmo Production and the Scrap-Processing Department
next year.
c.What is the difference between the two methods that would affect Scrap-Processing
Department?
18) The number of units in the sales budget and the production budget may differ
because of a change in ________.
A) finished goods inventory levels
B) overhead charges
C) direct material inventory levels
D) sales returns and allowances
19) Which of the following statements about a company’s supply chain is true?
A) A company’s supply chain is always internal to a firm.
B) A company’s supply chain is always external to a firm.
C) A company’s supply chain is the same thing as a company’s value chain.
D) Management accountants provide information to enhance a company’s supply chain.
20) Which of the following criteria has the presumption that the more-profitable
divisions have a greater ability to absorb corporate administration costs?
A) the fairness or equity criterion
B) the ability to bear criterion
C) the cause-and-effect criterion
D) the benefits-received criterion
21) Bismite Corporation purchases trees from Cheney lumber and processes them up to
the splitoff point where two products (paper and pencil casings) are obtained. The
products are then sold to an independent company that markets and distributes them to
retail outlets. The following information was collected for the month of October:
The cost of purchasing 250 trees and processing them up to the splitoff point to yield
180,000 sheets of paper and 180,000 pencil casings is $12,500.
Bismite’s accounting department reported no beginning inventory.
If the sales value at splitoff method is used, what are the approximate joint costs
assigned to ending inventory for paper?
A) $185.17
B) $57.87
C) $175.38
D) $57.78
22) The gross margin for July is:
A) $1,618,100
B) $699,300
C) $359,900
D) $534,600
23) In making the decision to buy the model 260 machine rather than the model 330
machine, the differential cost was:
A) $18,000
B) $56,000
C) $38,000
D) $40,000
24) Demand for refinements to the costing system has accelerated due to ________.
A) increase in direct costs
B) decrease in product diversity
C) decrease in indirect costs
D) competition in product markets