MET MG 645 Quiz

subject Type Homework Help
subject Pages 8
subject Words 1334
subject Authors Charles T. Horngren, Madhav V. Rajan, Srikant M. Datar

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1) A learning curve measures the effect of learning on efficiency.
2) From the perspective of control, the direct materials price variance should be isolated
at the time of sales.
3) Budgeting based on cost for specific activities is a key building block of the master
budget for companies that use the Kaizen approach.
4) Using the fairness criterion, the costs are allocated among the beneficiaries in
proportion to the benefits each receives.
5) Historical costs are costs recognized in particular situations that are not usually
recognized by accrual accounting procedures.
6) The sales value at splitoff method presupposes the exact number of subsequent steps
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undertaken for further processing.
7) Practical capacity is the level of capacity that reduces theoretical capacity by
considering unavoidable operating interruptions, such as scheduled maintenance time
and shutdowns for holidays.
8) For any actual level of output, the efficiency variance is the difference between
actual quantity of input used and the budgeted quantity of input allowed to produce
actual output, multiplied by the budgeted price.
9) A full-cost formula for pricing does not require the management accountant to
perform a detailed analysis of cost-behavior patterns to separate product costs into
variable and fixed components.
10) Designing, marketing, customer services, research and development expenses are
operating costs.
11) In an EVA calculation, the measure of the invested capital for a division would be
that division's assets minus that division's long-term liabilities.
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12) In calculating the net initial investment cash flows, any increase in working capital
required for the project should be included.
13) Variable costs depend on the resources used.
14) Fluctuations in exchange rates between different countries' currencies affect costs
and pricing decisions of a company.
15) The cost allocation base ________.
A) is a grouping of individual indirect cost items
B) are costs related to a particular cost object that cannot be traced to that cost object in
an economically feasible way
C) is anything for which a measurement of costs is desired
D) is a systematic way to link an indirect cost or group of indirect costs to cost objects
16) Flify Manufacturing Inc., incurred total indirect manufacturing labor costs of
$500,000. The company is labor intensive. Total labor hours during the period were
5,000. Using qualitative analysis, the manager and the management accountant
determine that over the period the indirect manufacturing labor costs are mixed costs
with only one cost driverlabor-hours. They separated the total indirect manufacturing
labor costs into costs that are fixed ($110,000 based on 8,000 hours of labor) and costs
that are variable ($390,000) based on the number of labor-hours used. The company has
estimated 7,000 labor hours during the next period.
What will be the total variable cost for the estimated 7,000 hours?
A) $341,250
B) $546,000
C) $700,000
D) $437,500
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17) Which of the following is a stage of the capital budgeting process that forecasts all
potential cash flows attributable to the alternative projects?
A) identify projects stage
B) make decisions by choosing among alternatives stage
C) implement the decision, evaluate performance, and learn stage
D) make predictions stage
18) Which of the following is true of locked-in costs?
A) Locked-in costs are the same as sunk costs.
B) Locked-in costs are always fixed costs.
C) Locked-in costs are incurred costs.
D) Locked-in costs are also called designed-in costs.
19) Which of the following is an inventoriable cost?
A) manufacturing overhead cost
B) customer service costs
C) distribution costs
D) marketing costs
20) The department usually in the best position to identify customers' needs is the
________.
A) production department
B) sales and marketing department
C) design department
D) distribution department
21) Helmer Sporting Goods Company manufactured 100,000 units in 2015 and reported
the following costs:
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Required:
a.What is the amount of direct materials used during 2015?
b.What manufacturing costs were added to WIP during 2015?
c.What is cost of goods manufactured for 2015?
d.What is cost of goods sold for 2015?
22) Vision Company manufactures digital cameras. For May, there were no beginning
inventories of direct materials and no beginning or ending work-in -process.
Conversion costs is the only indirect manufacturing cost category currently used.
Journal entries are recorded when materials are purchased and when units are sold.
Conversion costs - May$ 100,625
Direct materials purchased - May$253,575
Units produced - May80,500 units
Units sold - May77,500 units
Selling price$20 each
Which of the following journal entries would be recorded when units are sold for the
month under backflush costing? ?
A) Cost of Goods Sold $341,000
Inventory: Raw and In-Process $341,000
B) Cost of Goods Sold $341,000
Inventory Control $244,125
Conversion Costs Allocated $96,875
C) Inventory Inventory Control $244,125
Conversion Costs Allocated $96,875
Cost of Goods Sold $341,000
D) Cost of Goods Sold $354,200
Inventory: Raw and In-Process $253,575
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Conversion Costs Allocated $96,875
23) Wayland Manufacturing uses a normal cost system and had the following data
available for 2010:
The ending balance of work-in-process inventory is ________.
A) $438,500
B) $146,500
C) $130,000
D) $422,000
24) Littrell Company produces chairs and has determined the following direct cost
categories and budgeted amounts:
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Actual performance for the company is shown below:
Required:
a.What is the combined total of the flexible-budget variances?
b.What is the price variance of the direct materials?
c.What is the price variance of the direct manufacturing labor and the direct marketing
labor, respectively?
d.What is the efficiency variance for direct materials?
e.What are the efficiency variances for direct manufacturing labor and direct marketing
labor, respectively?
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25) Which of the following is an advantage of a dual-rate method?
A) It is the most widely used method in practice.
B) It is less costly to implement.
C) It avoids the expensive analysis for categorizing costs as either fixed or variable.
D) It allocates fixed cost as per the budgeted usage that helps in short and long-run
planning.
26) A step variable-cost function ________.
A) is fixed over the long run but not over the short run
B) is often approximated with a continuous variable-cost function
C) remains the same over a wide range of activity
D) example includes adding additional warehouse space

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