1) Factors to be considered in setting labor standards include all of the following
except:
A.Impact of negotiations with labor unions
B.The learning effect
C.Results of engineers time studies
D.The purchasing managers estimate of suppliers prices
2) Listed below are steps of procuring materials for production:
1> The receiving clerk checks the quantity and quality of incoming materials.
2> The purchasing agent issue the purchase order to the vendor.
3> The production floor supervisor issues a materials requisition.
4> The storeroom clerk issues a purchase requisition.
In which order would these events typically happen?
A.3, 2, 4, 1
B.3, 4, 2, 1
C.2, 1, 3, 4
D.4, 2, 1, 3
3) Fixed overhead cost includes all of the following except:
A.Electricity to heat and light the factory
B.Depreciation on machinery computed based on the units of production basis
C.The plant managers salary
D.The salary of the security guard at the front door
4) The form used to notify the purchasing agent that additional materials are needed is
known as a:
A.Purchase order
B.Vendor’s invoice
C.Receiving report
D.Purchase requisition
5) The Gaylord Company has sales of $800,000, variable costs of $400,000, and fixed
costs of $250,000.
Compute the following:
a. Contribution margin ratio
b. Break-even sales volume
c. Margin of safety ratio
d. Net income as a percentage of sales
6) The payroll summary for EVB Inc. for the period August 3 – 10 is as follows:
The entry to record payroll would be:
A.Payroll 105,000
FICA Payable 8,400
Employees Income Tax Payable 15,600
Union Dues Payable 400
Wages Payable 80,600
B.Work in Process 80,000
Factory Overhead 25,000
Payroll 105,000
C.Factory Overhead 80,000
Selling and Administrative Expense 25,000
FICA Payable 8,400
Employees Income Tax Payable 15,600
Union Dues Payable 400
Wages Payable 80,600
D.Payroll 105,000
7) An example of an indirect cost that could be traced directly to individual jobs by
examining invoices is:
A.Office rent
B.Telephone and fax charges
C.Depreciation expense on office machines
D.Office supplies
8) Which of the following is the best example of a financial performance measure for a
hotels balanced scorecard?
A.Number of frequent-customer points awarded
B.Time taken to register a guest
C.Number of employee suggestions
D.Revenue per guest night
9) The following information is available for the month of April from the Second
department of the Armque Corporation:
Materials are added at the end of the process in the Second department. Using the
average cost method, what are the equivalent units of production for materials and
conversion costs for the month of April?
A.304,000250,000
B.280,000295,000
C.340,000316,000
D.280,000304,000
10) A service firm, such as a law firm, would choose direct labor dollars over direct
labor hours as a cost driver for overhead because:
A.Overhead is more related to dollars charged than hours worked
B.Labor hours are harder to track
C.Labor rates change and thus overhead is automatically updated
D.Partners and managers incur overhead equally
11) Custom Cabinets Inc. manufactures goods on a job order basis. During the month of
November, three jobs were started. (There was no work in process at the beginning of
the month.) Jobs 401 and 402 were completed and sold for $14,500 and $19,000,
respectively, during the month; Job 403 was still in process at the end of November.
The following data are taken from the job cost sheets for each job. Factory overhead
charges include a total of $900 of indirect materials and $600 of indirect labor. One
work in process control account is used.
Prepare a journal entry to record each of the following:
a. Materials used
b. Factory wages and salaries earned
c. Factory Overhead transferred to Work in Process
d. Jobs completed
e. Jobs sold
12) The number of whole units that could have been completed during a period, using
the production costs incurred during that period is called:
A.Standard production
B.Equivalent production
C.Total units
D.Manufactured units
13) The following information pertains to Skandalis Company’s production of one unit
of its manufactured product during the month of June:
(a) The materials price variance is recognized when materials are purchased. Compute
materials price and quantity variances and labor rate and efficiency variances.
(b) Prepare the journal entries to record:
(1) the purchase of the materials,
(2) putting materials into production, and
(3) direct labor costs.
14) When performing input-output variance analysis in standard costing, ‘standard
hours allowed” is a means of measuring:
A.Standard output at standard hours
B.Actual output at standard hours
C.Standard output at actual hours
D.Actual output at actual hours
15) Expected annual usage of a particular raw material is 1,200,000 units, and standard
order size is 10,000 units. The invoice cost of each unit is $145, and the cost to place
one purchase order is $105. The estimated annual order cost is:
A.$12,000
B.$17,400
C.$12,600
D.$800,000
16) Each of the following would affect the break-even point except a change in the:
A.Variable cost per unit
B.Total fixed costs
C.Sales price per unit
D.Number of units sold
17) Examples of service businesses include:
A.Airlines, architects, and hair stylists
B.Department stores, poster shops, and wholesalers
C.Aircraft producers, home builders, and machine tool makers
D.None of these are correct
18) Factory overhead:
A.Can be a variable cost or a fixed cost
B.Is a prime cost
C.Can only be a fixed cost
D.Includes all factory labor
19) The method of analyzing the behavior of semivariable costs that relies heavily on
the ability of an observer to detect a pattern of cost behavior by reviewing past cost and
volume data is the:
A.High-low method
B.Method of least squares
C.Scattergraph method
D.Observation method
20) In a four-variance method analyzing factory overhead, the variable factory overhead
efficiency variance measures:
A.The effect of differences in the actual variable factory overhead rate and the standard
variable factory overhead rate
B.The difference in the actual hours incurred and standard hours allowed for a given
level of production
C.The difference between actual and applied variable factory overhead
D.The difference between actual variable factory overhead and budgeted variable
factory overhead
21) Using the average cost method of process costing, the computation of
manufacturing cost per equivalent unit considers:
A.Current costs only
B.Current costs plus cost of beginning work in process inventory
C.Current costs plus cost of ending work in process inventory
D.Current costs less cost of beginning work in process inventory
22) In order to compute equivalent units of production using the FIFO method of
process costing, work for the period must be broken down to units:
A.Completed from beginning inventory, started and completed during the month, and
units in ending inventory
B.Completed during the period and units in ending inventory
C.Started during the period and units transferred out during the period
D.Processed during the period and units completed during the period
23) The Sully Company uses an industrial chemical, XRG, in a manufacturing process.
Information as to balances on hand, purchases, and requisitions of XRG is given in the
following table.
If a perpetual inventory record of XRG is maintained on a FIFO basis, the March 16
issue will consist of:
A.300 kilograms @ $2.00 and 900 kilograms @ $2.25
B.1,000 kilograms @ $2.00 and 200 kilograms @ $2.25
C.1,200 kilograms @ $2.25
D.700 kilograms @ $2.00 and 500 kilograms @ $2.25
24) Thomas Lumber Company produces furniture grade lumber and building grade
lumber from a joint process. Sawdust, a by-product of the manufacturing process is sold
to a local toy manufacturer to stuff leather toys for $10 per ton. In February, the
company produced 3,000 tons of sawdust. What is the entry to reduce the cost of the
main products by the estimated sales value of the by-product?
A.By-product inventory $30,000
Work in process $30,000
B.Work in process $30,000
Other income $30,000
C.Cost of goods sold $30,000
By-product inventory $30,000
D.By-product inventory $30,000
25) Donellan Company has a standard and flexible budgeting system and uses a
two-variance analysis of factory overhead. Selected data for the February production
activity follows:
The flexible-budget variance for February is:
A.$5,000 favorable
B.$5,000 unfavorable
C.$2,000 favorable
D.$2,000 unfavorable
26) The following information is available from the Arugula Company:
Assuming that Arugula uses a three-variance analysis of overhead variances, what is the
production-volume variance?
A.$800 favorable
B.$800 unfavorable
C.$500 favorable
D.$500 unfavorable
27) If the total materials variance (actual cost of materials used compared with the
standard cost of the standard amount of materials required) for a given operation is
favorable, why must this variance be further evaluated as to price and usage?
A.There is no need to further evaluate the total materials variance if it is favorable
B.Generally accepted accounting principles require that all variances be analyzed in
three stages
C.All variances must appear in the annual report to equity owners for proper disclosure
D.It is done so that management can evaluate the efficiency of the purchasing and
production functions
28) The actual hourly rate paid above or below the standard hourly rate, multiplied by
the actual number of hours worked is the:
A.Labor rate variance
B.Labor efficiency variance
C.Labor usage variance
D.Labor direct variance
29) Under which of the following conditions will the first-in, first-out method of
process costing produce the same cost of goods manufactured amount as the average
cost method?
A.When goods produced are homogeneous in nature
B.When there is no beginning inventory
C.When there is no ending inventory
D.When beginning and ending inventories are each 50 percent complete
30) Nolan Company has two segments: Audio and Video. Sales for the Audio Segment
were $500,000, and variable costs were 40% of sales. The Video Segment also had sales
of $500,000, but variable costs were 60% of sales. Fixed costs directly traceable to the
Audio and Video segments were $150,000 and $120,000, respectively. Common fixed
costs of $200,000 were arbitrarily allocated equally to each segment.
What was the contribution margin of the Audio Segment.
A.$50,000
B.$300,000
C.$200,000
D.$150,000
31) The following data was taken from the general ledger and other records of Marwick
Manufacturing Co. at January31, the end of the first month of operations in the current
fiscal year:
32) In a professional services firm, the term overhead refers to:
A.Expenses other than professional labor that can be traced to specific jobs
B.Indirect labor costs
C.Indirect expenses incurred to support the activities of the firm
D.Indirect expenses incurred in the factory
33) Wolf Company has two departments, Mixing and Curing. The following
information is available for September:
The entry to record the transfer of inventory from the mixing to the curing department
is:
A.Work in process – Curing 18,000
Work in process – Mixing 18,000
B.Finished goods 18,000
Work in process – Mixing 18,000
C.Work in process – Mixing 5,600
Work in process – Curing 5,600
D.Work in process – Curing 18,000
34) Just-in-time production techniques:
A.Require inventory buffers between work centers
B.Were first utilized by U.S. manufacturers and later exported to Japan
C.Produce goods for inventory with the hope that demand for these goods will then be
created
D.Require a high degree of cooperation and coordination between supplier and
manufacturer
35) What are transferred-in costs as used in a process cost accounting system?
A.Labor that is transferred from another department within the same plant instead of
hiring temporary workers from the outside
B.Costs that have been incurred in a prior department on units that have been moved
into a subsequent department
C.Supervisory salaries that are transferred from an overhead cost center to a production
cost center
D.Ending work in process inventory of a previous process that will be used in a
succeeding process
36) An error was made in the computation of the stage of completion of the current
year’s ending work in process inventory. The error resulted in assigning a lower stage of
completion to each component of the inventory than actually was the case. What is the
resultant effect of this error upon:
A.UnderstateOverstateOverstate
B.UnderstateUnderstateOverstate
C.OverstateUnderstateUnderstate
D.OverstateOverstateUnderstate
37) Managers should consider all of the following in developing a sales budget except:
A.Customer demand
B.Development of new products
C.Present and future economic conditions
D.Executive salaries
38) At the end of the year, Jenkins Corporation had $120,000 in the Factory Overhead
account and applied factory overhead of $100,000. Mark Gibbs, the controller, has
decided that the difference is to large to close to Cost of Goods Sold. Work in process
inventories were $30,000, finished goods inventories were $60,000 and cost of goods
sold during the year was $210,000. How should the entry to dispose of the difference in
overhead incurred and overhead applied affect Cost of Goods Sold?
A.$14,000 credit
B.$14,000 debit
C.$6,000 credit
D.20,000 debit