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The Blue Lake Water Company has two departments, Purifying and Bottling. The
Bottling Department received 76,000 liters from the Purifying Department. During the
period, the Bottling Department completed 74,000 liters, including 3,000 liters of work
in process at the beginning of the period. The ending work in process was 5,000 liters.
How many liters were started and completed during the period?
a. 74,000
b. 69,000
c. 73,000
d. 79,000
The Aleutian Company produces two products, Rings and Dings. They are
manufactured in two departments'”Fabrication and Assembly. Data for the products
and departments are listed below.
All of the machine hours take place in the Fabrication Department, which has an
estimated overhead of $90,000. All of the labor hours take place in the Assembly
Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department
uses machine hours for an allocation base, and the Assembly Department uses labor
hours.
What is the overhead cost per unit for Dings?
a. $65.25
b. $56.75
c. $23.25
d. $64.50
Push manufacturing (made-to-stock) is a traditional approach to manufacturing.
a. True
b. False
Which of the following is the formula to calculate the predetermined factory overhead
rate?
a. estimated total factory overhead costs divided by estimated activity base
b. actual total factory overhead costs divided by estimated activity base
c. estimated total factory overhead costs divided by actual activity base
d. actual total factory overhead costs divided by actual activity base
Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit
variable costs are $20. What is the break-even sale (units) if fixed costs are reduced by
$40,000?
a. 32,667 units
b. 14,000 units
c. 30,000 units
d. 24,500 units
If income from operations for a division is $6,000, invested assets are $25,000, and
sales are $30,000, the profit margin is 20%.
a. True
b. False
Which of the following is considered non-value-added lead time?
a. packing
b. moving from process to process
c. converting raw materials to finished product
d. all of the above
The job order costing system is not used by service organizations.
a. True
b. False
The relative distribution of sales among the various products sold by a business is the
a. business's basket of goods
b. contribution margin mix
c. sales mix
d. product portfolio
Factory overhead cost is sometimes referred to as factory burden.
a. True
b. False
Tony's Company has the following information for March:
Determine the March (a) manufacturing margin, (b) contribution margin, and (c)
income from operations for Tony's Company.
Adams Company is a manufacturing company that has worked on several production
jobs during the first quarter of the year. Below is a list of all the jobs for the quarter:
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of
$500 on each job.
What is the ending balance of Cost of Goods Sold for Adams Company at the end of the
first quarter?
a. $456
b. $2,685
c. $1,685
d. $685
Number of miles
An activity base is used to charge service department expenses. Match the following
activity bases with the appropriate department (a-h).
a. Purchasing
b. Payroll accounting
c. Human resources
d. Maintenance
e. Information systems
f. Marketing
g. President's Office
h. Transportation
Includes gross profit on the income statement.
Match each phrase that follows with the term (a-c) it describes.
a. Absorption costing only
b. Variable costing only
c. Both absorption and variable costing
The Lucy Corporation purchased and used 129,000 board feet of lumber in production,
at a total cost of $1,548,000. Original production had been budgeted for 22,000 units
with a standard material quantity of 5.7 board feet per unit and a standard price of $12
per board foot. Actual production was 23,500 units.
The materials price variance is
a. $0
b. $59,400 unfavorable
c. $59,400 favorable
d. $6,000 unfavorable
The budget procedure that requires all levels of management to start from zero in
estimating sales, production, and other operating data is called zero-based budgeting.
a. True
b. False
In an investment center, the manager has the responsibility for and the authority to
make decisions that affect
a. the assets invested in the center, but not costs and revenues
b. costs and assets invested in the center, but not revenues
c. both costs and revenues for the department or division
d. costs, revenues, and assets invested in the center
Indirect labor and indirect materials would be part of factory overhead.
a. True
b. False
