Purchase requisitions for Purchasing and the number of payroll checks for Payroll
Accounting are examples of activity bases.
a. True
b. False
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
What will the income of the Micro Division be after all service department allocations?
a. $305,000
b. $650,000
c. $345,000
d. $610,000
Using the following partial table of present value of $1 at compound interest, the
present value of $15,000 to be received 3 years hence with earnings at the rate of 6% a
year is
a. $12,600
b. $11,880
c. $13,350
d. $11,265
The current year’s advertising costs are normally considered period costs.
a. True
b. False
The Winston Company estimates that the factory overhead for the following year will
be $1,250,000. The company has decided that the basis for applying factory overhead
should be machine hours, which is estimated to be 50,000 hours. The total machine
hours for the year was 54,300 hours. The actual factory overhead for the year was
$1,375,000.
a) Determine the total factory overhead amount applied.
b) Calculate the over- or under applied amount for the year.
c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold.
Which of the following is characteristic of the traditional cost system?
a. Many work in process account transactions.
b. Reliance on financial performance measures.
c. Many process control points.
d. All of the above.
Department G had 3,600 units 25% completed at the beginning of the period, 11,000
units were completed during the period; 3,000 units were 20% completed at the end of
the period, and the following manufacturing costs debited to the departmental work in
process account during the period:
All direct materials are placed in process at the beginning of production and the first-in,
first-out method of inventory costing is used. What is the total cost of the departmental
work in process inventory at the end of the period (round unit cost calculations to four
decimal places)?
a. $16,163
b. $21,432
c. $35,670
d. $28,935
The analysis of increases and decreases in the amount and percentage of comparative
financial statement items is referred to as horizontal analysis.
a. True
b. False
If direct materials cost per unit decreases, the amount of sales necessary to earn a
desired amount of profit will decrease.
a. True
b. False
Treats fixed manufacturing cost as a period cost.
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
Which of the following is not a commonly used approach to setting transfer prices?
a. market price approach
b. revenue price approach
c. negotiated price approach
d. cost price approach
The profit margin is the
a. ratio of income from operations to sales
b. ratio of income from operations to invested assets
c. ratio of assets to liabilities
d. ratio of sales to invested assets
The details concerning the costs incurred on each job order are accumulated in a work
in process account and supported by a
a. stock ledger
b. materials ledger
c. cost ledger
d. creditors ledger
The Turtle Company has total estimated factory overhead for the year of $1,200,000,
divided into four activities: fabrication, $600,000; assembly, $240,000; setup, $200,000;
and materials handling, $160,000. Turtle manufactures two products, Boogie Boards
and Surf Boards. The activity-base usage quantities for each product by each activity
are as follows:
Each product is budgeted for 10,000 units of production for the year. Determine (a) the
activity rates for each activity and (b) the factory overhead cost per unit for each
product using activity-based costing.
The budget procedures used by a large manufacturer of automobiles would probably not
differ from those used by a small manufacturer of paper products.
a. True
b. False
A business operated at 100% of capacity during its first month and incurred the
following costs:
If 1,000 units remain unsold at the end of the month and sales total $150,000 for the
month, what is the amount of the contribution margin that would be reported on the
variable costing income statement?
a. $51,400
b. $52,000
c. $54,000
d. $53,000
In a push manufacturing system, raw materials are released to production based on
actual customer orders.
a. True
b. False
Since the controllable variance measures the efficiency of using variable overhead
resources, if budgeted variable overhead exceeds actual results, the variance is
favorable.
a. True
b. False
Budgets are prepared in the Accounting Department and monitored by various
department managers.
a. True
b. False
The process of developing budget estimates by requiring all levels of management to
estimate sales, production, and other operating data as though operations were being
initiated for the first time is referred to as
a. flexible budgeting
b. continuous budgeting
c. zero-based budgeting
d. master budgeting
The time expected to pass before the net cash flows from an investment would return its
initial cost is called the amortization period.
a. True
b. False
Based on the following production and sales estimates for May, determine the number
of units expected to be manufactured in May.
a. 85,000
b. 80,000
c. 75,000
d. 105,000
Based on the following data for the current year, what is the number of days’ sales in
accounts receivable?
Sales on account during year $584,000
Cost of merchandise sold during year 300,000
Accounts receivable, beginning of year 45,000
Accounts receivable, end of year 35,000
Inventory, beginning of year 90,000
Inventory, end of year 110,000
a. 7.3
b. 2.5
c. 14.6
d. 25
Based on the above data, what is the quick ratio, rounded to one decimal point?
a. 2.7
b. 2.6
c. 1.7
d. 0.9
A project is estimated to cost $273,840 and provide annual net cash flows of $60,000
for 7 years. Determine the internal rate of return for this project, using the following
present value of an annuity table.
Explain the concept of equivalent units. Give an example to validate your explanation.
Why would you or why wouldn’t you compare an organization like Ford Motor
Company to the local car dealer ‘Johnson City Ford/Lincoln/Mercury’ in vertical and
horizontal analysis?
The Cavy Company estimates that the factory overhead for the following year will be
$1,470,000. The company has decided that the basis for applying factory overhead
should be machine hours, which is estimated to be 40,000 hours. The machine hours for
the month of April for all of the jobs was 4,780. Prepare the journal entry to apply
factory overhead.
Cash and accounts receivable for Adams Company are provided below:
What is the amount and percentage of increase or decrease that would be shown with
horizontal analysis?
Kid’s World Industries has projected sales of 67,000 machines for the current year. The
estimated January 1 inventory is 6,000 units, and the desired December 31 inventory is
15,000 units. What is the budgeted production (in units) for the year?
Gallant Company reported net income of $2,500,000. The income statement included a
$500,000 gain from condemnation of land and a $200,000 loss on discontinued
operations, both after applicable income tax. There were 100,000 shares of $10 par
common stock and 40,000 shares of 4% preferred stock of $100 par outstanding
throughout the current year.
Prepare the earnings per share section of Gallant Company’s income statement.
Blane Company has the following data:
What will operating income be if units sold double to 100,000 units?
Based upon the following data taken from the records of Bruce Inc., prepare a
contribution margin analysis report for the year ended December 31.
The Jase Company allocates overhead based on a predetermined overhead rate of $9.00
per direct labor hour. Job J904 required 8 tons of direct material at a cost of $600 per
ton and took employees who earn $21 per hour a total of 80 hours to complete. What is
the total cost of Job J904?