1) Comfort Corporation manufactures two models of office chairs, a standard and a
deluxe model. The following activity and cost information has been compiled:
Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount
of overhead costs assigned to the standard model?
A) $49,200
B) $45,600
C) $46,800
D) $47,400
2) Which of the following cost and cost allocation base have a strong cause and effect
relationship?
A) administration costs and cubic feet
B) setup costs and square feet
C) machine depreciation and output units
D) machine maintenance and setup hours
3) The cost-plus pricing approach is generally in the form ________.
A) Cost base + Markup component = Prospective selling price
B) Prospective selling price – Cost base = Markup component
C) Cost base + Gross margin = Prospective selling price
D) Variable cost + Fixed cost + Contribution margin = Prospective selling price
4) Comfort Corporation manufactures two models of office chairs, a standard and a
deluxe model. The following activity and cost information has been compiled:
Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount
of overhead costs assigned to the deluxe model?
A) $84,400
B) $83,200
C) $82,600
D) $80,800
5) Tom Magic Company manufactures various kinds of toys for different age groups.
The company’s flagship product is Rx. The company currently requires 8.50 labor hours
to manufacture per unit of Rx. The company believes that because of numerous small
improvements in the process, it will require 0.10 labor-hours less and hence will only
8.40 labor-hours in the next quarter. It will require 8.35 and 8.25 labor-hours in third
and fourth quarter. The company has adopted ________.
A) activity based budgeting
B) kaizen budgeting
C) zero-based budgeting
D) cost-based budgeting
6) Successful implementation of a product differentiation strategy will result in
________.
A) a large favorable growth and price-recovery components
B) a large favorable price-recovery and productivity components
C) a large favorable productivity and growth components
D) only a large favorable growth component
7) Comfort Corporation manufactures two models of office chairs, a standard and a
deluxe model. The following activity and cost information has been compiled:
Assume a traditional costing system applies the overhead costs based on direct labor
hours. What is the total amount of overhead costs assigned to the deluxe model?
A) $64,300
B) $63,700
C) $63,300
D) $63,600
8) To the nearest whole cent, what should be the average property tax per unit at a sales
volume of 40,300 units? (Assume that this sales volume is within the relevant range.)
A) $21.70
B) $20.22
C) $19.92
D) $20.81
9) Which of the following is a step in developing budgeted variable overhead rates?
A) identifying the fixed costs associated with direct manufacturing labor
B) estimating the budgeted denominator level based on expected utilization of available
capacity
C) selecting the cost-allocation base to use in allocating machine-handling costs
D) choosing the appropriate level of capacity or investment
10) Which of the following is an area that customers want to see improved levels of
performance?
A) higher sales margin
B) quality of the product
C) lower marginal costs
D) profit margins
11) In ________, fixed manufacturing costs are included as inventoriable costs.
A) variable costing
B) absorption costing
C) throughput costing
D) activity-based costing
12) Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its
costing system uses two cost categories, direct materials and conversion costs. Each
product must pass through the Assembly Department and the Testing Department.
Direct materials are added at the beginning of the production process. Conversion costs
are allocated evenly throughout production. Timekeeper Inc. uses weighted-average
costing.
Data for the Assembly Department for June 2015 are:
Costs for June 2015:
What are the equivalent units for direct materials and conversion costs, respectively, for
June?
A) 1,250 units; 1,210.64 units
B) 1,250 units; 1,212.5 units
C) 1,100 units; 1,100 units
D) 1012 units; 1040 units
13) Managers use management accounting information to ________.
A) help external users such as investors, banks, regulators, and suppliers
B) communicate, develop, and implement strategies
C) communicate a firm’s financial position to investors, banks, regulators, and other
outside parties
D) ensure that financial statements are consistent with the SEC rules
14) Which of the following is true of target pricing?
A) It is used for short-term pricing decisions.
B) It is one form of cost-based pricing.
C) Its estimates are based on customers’ perceived value of the product.
D) It is calculated by adding a markup component to the cost base.
15) There is no output-level variance for variable costing, when ________.
A) the inventory level decreases during the period
B) the inventory level increases during the period
C) fixed manufacturing overhead is allocated to work in process
D) fixed manufacturing overhead is not allocated to work in process
16) ________ is a measure of the balanced scorecard’s internal-business-process
perspective.
A) Market share
B) Manufacturing downtime
C) Return on investment
D) Number of customer complaints