Real Products Company
Real Products Company produces and sells a single product. Information on its costs
follow:
Refer to Real Products Company. Assume Real Products Company produced and sold
5,000 units. At this level of activity, it produced a profit of $18,000. What was Real
Products Company’s sales price per unit?
A. $15.00
B. $11.40
C. $9.60
D. $10.00
Painter Corporation
Painter Corporation has the following information for the current month:
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Painter Corporation. What are equivalent units of production for conversion
costs, assuming FIFO?
A. 108,900
B. 103,900
C. 108,650
D. 106,525
Which of the following journal entries records the accrual of the cost of indirect labor
used in production?
A. debit Work in Process Inventory, credit Wages Payable
B. debit Work in Process Inventory, credit Manufacturing Overhead
C. debit Manufacturing Overhead, credit Work in Process Inventory
D. debit Manufacturing Overhead, credit Wages Payable
____ is a philosophy of increasing a firm’s performance by involving all workers.
A. Open-book management
B. Data mining
C. Diversity
D. Strategic alliance
Which of the following costing methods of valuation are acceptable in a job-order
costing system?
A. yes yes no yes
B. yes no yes no
C. no yes yes yes
D. yes yes yes yes
The internal business perspective of the balanced scorecard addresses how well the
organization is doing with regard to important customer criteria.
Managers should be paid
A. on a periodic basis.
B. based on results achieved.
C. using ESOPs.
D. on a piece rate basis.
Focus on cost control and assessing core competencies are part of which cost
management element?
A. motivational
B. informational
C. reporting
D. all of the above
Sunderland Wood Creations
Sunderland Wood Creations is considering a proposal to sell an existing lathe and
purchase a new computer-operated lathe. Information on the existing lathe and the
computer-operated lathe follow:
Refer to Sunderland Wood Creations. What is the payback period for the
computer-operated lathe?
A. 1.87 years
B. 2.00 years
C. 3.53 years
D. 3.29 years
EMS stands for
A. environmental manufacturing system.
B. employee management system.
C. emergency medical services.
D. environmental management system.
Delightful Candy Corporation has two processing departments, Cooking and
Packaging. Ingredients are placed into production at the beginning of the process in
Cooking, where they are formed into various shapes. When finished, they are
transferred into Packaging, where the candy is placed into heart and tuxedo boxes and
covered with foil. All material added in Packaging is considered as one material for
convenience. Since the boxes contain a variety of candies, they are considered partially
complete until filled with the appropriate assortment. The following information relates
to the two departments for the month of February:
a. Determine equivalent units of production for both departments using the weighted
average method.
b. Determine equivalent units of production for both departments using the FIFO
method.
When a manufacturing company has a highly automated manufacturing plant
producing many different products, which of the following is the more appropriate basis
of applying manufacturing overhead costs to work in process?
A. direct labor hours
B. direct labor dollars
C. machine hours
D. cost of materials used
The Hanks Company normally produces 150,000 units of Product AB per year. Due to
an economic downturn, the company has some idle capacity. Product AB sells for $15
per unit.
The firm’s production, marketing, and administration costs at its normal capacity are:
Required:
A cost is sunk if it
A. is not an incremental cost.
B. is unavoidable.
C. has already been incurred.
D. is irrelevant to the decision at hand.
Mapleton Company
Mapleton Company is considering an investment in a machine that would reduce
annual labor costs by $30,000. The machine has an expected life of 10 years with no
salvage value. The machine would be depreciated according to the straight-line method
over its useful life. The company’s marginal tax rate is 30 percent.
Refer to Mapleton Company. Assume that the company will invest in the machine if it
generates an internal rate of return of 16 percent. What is the maximum amount the
company can pay for the machine and still meet the internal rate of return criterion?
Present value tables or a financial calculator are required.
A. $144,990
B. $180,000
C. $187,500
D. $210,000
Daybreak Corporation
Daybreak Corporation manufactures and sells two products: A and B. The operating
results of the company are as follows:
In addition, the company incurred total fixed costs in the amount of $10,000.
Refer to Daybreak Corporation. If the company had sold a total of 10,500 units,
consistent with CVP assumptions, how many of those units would be Product B?
A. 5,250
B. 6,000
C. 7,000
D. 7,875
McCoy Corporation
McCoy Corporation sells a product for $21 per unit, and the standard cost card for the
product shows the following costs:
Refer to McCoy Corporation. Assume that McCoy has sufficient idle capacity to
produce the 1,200 units. If McCoy wants to increase its operating profit by $6,000,
what would it charge as a per-unit selling price?
A. $15.00
B. $17.00
C. $21.00
D. $23.00
An ending inventory valuation on an absorption costing balance sheet would
A. sometimes be less than the ending inventory valuation under variable costing.
B. always be less than the ending inventory valuation under variable costing.
C. always be the same as the ending inventory valuation under variable costing.
D. always be greater than or equal to the ending inventory valuation under variable
costing.
Product quality includes all of the following except
A. appeal.
B. performance.
C. durability.
D. price.
External factors considered in setting transfer prices in multinational firms typically do
not include
A. the corporate income tax rates in host countries of foreign subsidiaries.
B. foreign monetary exchange risks.
C. environmental policies of the host countries of foreign subsidiaries.
D. actions of competitors of foreign subsidiaries.