The difference between budgeted variable overhead for actual hours and standard
overhead is the variable overhead efficiency variance.
Postinvestment audits can provide feedback of the accuracy of original cash flow
estimates.
In a just-in-time (JIT) environment, quality is determined at quality control checkpoints
in the manufacturing process.
Dividing total fixed costs by the contribution margin ratio yields break-even point in
units.
In a just-in-time (JIT) environment, machines and workers are often rearranged into
manufacturing cells.
Depreciation on factory equipment is normally a relevant cost in product line
decisions.
In a service industry, direct materials are usually significant in amount and can be
easily traced to a cost object.
Project funding is a financing decision.
When multiple products are produced and sold, a change in the sales price of one
product may cause a change in the sales mix of the firm.
Virtual reality has been used increasingly in the product design stage.
The focus of business process reengineering is on the improvement of specific
processes.
The difference between budgeted variable overhead for actual hours and standard
overhead is the variable overhead spending variance.
When non-value added time is greater, manufacturing cycle efficiency is higher.
In computing a transfer price, the minimum price should be no lower than the
incremental costs associated with the goods plus the opportunity cost of the facilities
used.
Strategic benchmarking is industry specific in its approach.
McKenzie Corporation consumes 1,200,000 gallons of Material Y per year. Its order
quantity is 30,000 gallons. It maintains a safety stock of 10,000 gallons and its annual
carrying costs are $0.25 per gallon per year. If the ordering cost is $20 per order, what
are the total annual ordering costs?
A. $600
B. $800
C. $8,300
D. $1,200
Kaizen costing helps to
A. reduce product costs of products in the design and development stage.
B. keep the target cost as the primary focus after a product enters production.
C. keep profit margin relatively stable as product price declines over the product life
cycle.
D. reduce the cost of engineering change orders during each stage of the product life
cycle.
The difference between EUP calculated using FIFO and EUP calculated using
weighted average is the equivalent units
A. started and completed during the period.
B. residing in beginning Work in Process Inventory.
C. residing in ending Work in Process Inventory.
D. uncompleted in Work in Process Inventory.
Approximated net realizable value at split-off for joint products is computed as
A. selling price at split-off minus further processing and disposal costs.
B. final selling price minus further processing and disposal costs.
C. selling price at split-off minus allocated joint processing costs.
D. final selling price minus a normal profit margin.
Petrie Company manufactures chairs. If raw material used was $100,000 and Raw
Material Inventory at the beginning and end of the period, respectively, was $27,000
and $31,000, what was amount of raw material was purchased?
A. $ 96,000
B. $104,000
C. $158,000
D. $131,000
Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent. The company employs
both skilled and unskilled workers. To produce one 55-gallon drum of solvent requires
Materials A and B as well as skilled labor and unskilled labor. The standard and actual
material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon
drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company. What is the labor rate variance?
A. $0
B. $1,083 U
C. $2,583 U
D. $1,083 F
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 net realizable value at split-off, what amount of
joint processing cost is allocated to Product C?
A. $1,550
B. $1,017
C. $4,263
D. $2,170
When assessing performance, one way to compensate for differences among divisions
of a multinational organization would be for the parent company to
A. use different target rates of return to compute residual incomes.
B. modify the return on investment calculation so that foreign currency fluctuations are
removed from all financial statement figures.
C. classify all domestic divisions as investment centers and all foreign divisions as
profit centers.
D. use financial performance measures for units whose records are kept in the domestic
currency and non-financial measures for units whose records are kept in a foreign
currency.
Jenkins Manufacturing
The following information is available for Jenkins Manufacturing Company for the
month of June when the company produced 2,100 units:
Refer to Jenkins Manufacturing Company. What is the material price variance?
A. $638 U
B. $638 F
C. $630 U
D. $630 F
A firm’s discount rate is typically based on
A. the interest rates related to the firm’s bonds.
B. a project’s internal rate of return.
C. its cost of capital.
D. the corporate Aa bond yield.
An activity driver is used for which of the following reasons?
A. yes yes
B. yes no
C. no yes
D. no no
Which of the following statements istrue?
A. Management accounting is a subset of cost accounting.
B. Cost accounting is a subset of both management and financial accounting.
C. Management accounting is a subset of both cost and financial accounting.
D. Financial accounting is a subset of cost accounting.
Mansfield Company began business early in January using a standard costing for its
single product. With standard capacity set at 10,000 standard productive hours per
month, the following standard cost sheet was set up for one unit of product:
Fixed costs are incurred evenly throughout the year. The following unfavorable
variances from standard costs were recorded during the first month of operations:
Required: Determine the following: (a) fixed overhead budgeted for a year; (b) the
number of units completed during January assuming no work in process at January 31;
(c) debits made to the Work in Process account for direct material, direct labor, and
manufacturing overhead; (d) number of pieces of material issued during January; (e)
total of direct labor payroll recorded for January; (f) total of manufacturing overhead
recorded in January.
Consider the following three product costing alternatives: process costing, job order
costing, and standard costing. Which of these can be used in conjunction with
absorption costing?
A. job order costing
B. standard costing
C. process costing
D. all of the above
Fox Corporation
Fox Corporation. has the following information for August:
All material is added at the start of the process and all finished products are transferred
out.
Refer to Fox Corporation. Assume that FIFO process costing is used. What is the cost
per equivalent unit for conversion?
A. $3.44
B. $4.24
C. $5.71
D. $7.03
Grant Corporation
The following information is available for Grant Corporation for the current month:
All materials are added at the start of production and the inspection point is at the end
of the process.
Refer to Grant Corporation. What is cost per equivalent unit for material using weighted
average?
A. $1.49
B. $1.63
C. $1.56
D. $1.44
Define segment margin and explain why it is a relevant measure of a segment’s
contribution to overall organizational profitability.
All manufacturing costs other than direct materials are referred to as
_________________________.
List and explain the four perspective of the balanced scorecard (BSC).
A budget that is developed with little input from operating personnel is referred to as
a(n) ______________________________.
Why is depreciation expense irrelevant to most managerial decisions, even when it is
a future cost?