Average rate of return equals average investment divided by estimated average annual
income.
a. True
b. False
Answer:
What type of analysis is indicated by the following?
Increase (Decrease)
Current Year Preceding Year Amount Percent
Current assets $ 430,000 $ 500,000 $ (70,000) (14%)
Fixed assets 1,740,000 1,500,000 240,000 16%
a. vertical analysis
b. horizontal analysis
c. liquidity analysis
d. common-size analysis
Answer:
Schedule of Activity Costs
From the above schedule of activity costs, determine the total activity cost.
a. $62,000
b. $179,000
c. $94,000
d. $241,000
Answer:
One reason not to depend solely on historical records to set standards is that there may
be inefficiencies contained in past costs.
a. True
b. False
Answer:
In the lean principles philosophy, unexpected downtime is the result of unreliable
processes.
a. True
b. False
Answer:
The first budget to be prepared is usually the cash budget.
a. True
b. False
Answer:
Once a static budget has been determined, it is changed regularly as the underlying
activity changes.
a. True
b. False
Answer:
factory depreciation
Match the costs that follow to the type of product cost (a-c) or designate as not a
product cost (d).
a. direct labor
b. direct materials
c. factory overhead
d. not a product cost
Answer:
Warranty work
Identity the following by their type of quality cost.
a. Preventive costs
b. Appraisal costs
c. Internal failure costs
d. External failure costs
Answer:
In a pull manufacturing system, raw materials are released to production based on
forecasted demand.
a. True
b. False
Answer:
Nonmanufacturing costs are generally classified into two categories: selling and
administrative.
a. True
b. False
Answer:
The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory
overhead and $2 for fixed factory overhead) based on 100% of normal capacity of
30,000 direct labor hours. The standard cost and the actual cost of factory overhead for
the production of 5,000 units during May were as follows:
What is the amount of the fixed factory overhead volume variance?
a. $12,500 favorable
b. $10,000 unfavorable
c. $12,500 unfavorable
d. $10,000 favorable
Answer:
The Clydesdale Company has sales of $4,500,000. It also has invested assets of
$2,000,000 and operating expenses of $3,600,000. The company has established a
minimum rate of return of 7%.
What is Clydesdale Company’s residual income?
a. $252,000
b. $900,000
c. $1,400,000
d. $760,000
Answer:
Interim financial statements for a manufacturing business would report over applied
factory overhead as a deferred item on the balance sheet.
a. True
b. False
Answer:
If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on
account will cause the ratio to decrease.
a. True
b. False
Answer:
The Bottling Department of Mountain Springs Water Company had 5,000 liters in
beginning work in process inventory (20% complete). During the period, 58,000 liters
were completed. The ending work in process inventory was 3,000 liters (90%
complete). What are the equivalent units for conversion costs under the FIFO method?
Answer:
Sally’s Chocolate Company makes gourmet cupcakes which are sold by the dozen.
Compute the standard cost for one dozen cupcakes, based on the following standards:
Answer:
Cash and accounts receivable for Ashfall Co. are provided below:
Based on this information, what is the amount and percentage of increase or decrease
that would be shown on a balance sheet with horizontal analysis?
Answer:
A project has estimated annual net cash flows of $60,000. It is estimated to cost
$240,000. Determine the cash payback period.
Answer:
Answer:
Gyro Company manufactures Products T and W and is operating at full capacity. To
manufacture Product W requires three times the number of machine hours required for
Product T. Market research indicates that 1,000 additional units of Product W could be
sold. The contribution margin by unit of product is as follows:
Calculate the increase or decrease in total contribution margin if 1,000 additional units
of Product W are produced and sold.
Answer: