1) When the goods are sold, their costs are transferred from Work in Process to Finished
Goods.
2) Standard costs are a useful management tool that can be used solely as a statistical
device apart from the ledger or they can be incorporated in the accounts.
3) Depreciation Expense is reported on the balance sheet as an addition to the related
asset.
4) A variable cost system is an accounting system where standards are set for each
manufacturing cost element.
5) Costs are transferred, along with the units, from one work in process inventory
account to the next in a process costing system.
6) In a process costing system, costs flow into finished goods inventory only from the
work in process inventory of the last manufacturing process.
7) Using measures to assess a business’s ability to pay its current liabilities is called
current position analysis.
8) In contribution margin analysis, the unit price or unit cost factor is computed as the
difference between the actual unit price or unit cost and the planned unit price or unit
cost, multiplied by the actual quantity sold.
9) A capitalized asset will appear on the balance sheet as a long term asset.
10) Regardless of the depreciation method, the amount that will be depreciated during
the life of the asset will be the same.
11) An extraordinary item must be either unusual in nature or infrequent in occurrence.
12) The amount of interest expense reported on the income statement will be more than
the interest paid to bondholders if the bonds were originally sold at a discount.
13) The calculation for annual depreciation using the straight-line depreciation method
is
A.initial cost / estimated useful life
B.depreciable cost / estimated useful life
C.depreciable cost * estimated useful life
D.initial cost * estimated useful life
14) Materials used by Jefferson Company in producing Division C’s product are
currently purchased from outside suppliers at a cost of $10 per unit. However, the same
materials are available from Division A. Division A has unused capacity and can
produce the materials needed by Division C at a variable cost of $8.50 per unit. A
transfer price of $9.50 per unit is negotiated and 25,000 units of material are
transferred, with no reduction in Division A’s current sales.
How much would Jefferson’s total income from operations increase?
A.$37,500
B.$100,000
C.$62,500
D.$150,000
15) Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit,
and fixed costs are $75,000. The contribution margin ratio and the unit contribution
margin are:
A.47% and $11 per unit
B.53% and $7 per unit
C.47% and $8 per unit
D.52% and $11 per unit
16) What term is used to describe the process of monitoring operating results and
comparing actual results with the expected results?
A.Improving
B.Controlling
C.Directing
D.Planning
17) Scott, Inc. issued $40,000 of capital stock. How would this transaction be entered in
the journal?
A.Cash 40,000
Capital Stock 40,000
Sold stock for cash
B.Cash 40,000
Inventory 40,000
Sold stock for cash
C.Capital Stock 40,000
Cash 40,000
Sold stock for cash
D.Capital Stock 40,000
Accounts Payable 40,000Sold stock for cash
18) The following data is given for the Bahia Company:
Overhead is applied on standard labor hours.
The factory overhead controllable variance is:
A.$65U
B.$65F
C.$540U
D.$540F
19) The cost of office supplies to be used in future periods is ordinarily shown on the
balance sheet as a(n)
A.expense
B.asset
C.contra asset
D.liability
20) The two methods of accounting for uncollectible receivables are the allowance
method and the
A.equity method
B.direct write-off method
C.interest method
D.cost method
21) A fixed asset’s estimated value at the time it is to be retired from service is called
A.book value
B.residual value
C.market value
D.carrying value
22) The Canine Company has total estimated factory overhead for the year of
$2,400,000, divided into four activities: Fabrication, $1,200,000; Assembly, $480,000;
Setup, $400,000; and Materials Handling $320,000. Canine manufactures two products:
Standard Crates and Deluxe Crates. The activity-base usage quantities for each product
by each activity are as follows:
Each product is budgeted for 20,000 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.
23) Sales to customers who use bank credit cards such as MasterCard and Visa are
usually recorded by a
A.debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales
B.debit to Cash and a credit to Sales
C.debit to Cash, credit to Credit Card Expense, and a credit to Sales
D.debit to Sales, debit to Credit Card Expense, and a credit to Cash
24) Under a perpetual inventory system, the amount of each type of merchandise on
hand is available in the
A.customer’s ledger
B.creditor’s ledger
C.inventory ledger
D.purchase ledger
25) If Department K had 2,000 units, 40% completed, in process at the beginning of the
period, 12,000 units were completed during the period, and 1,200 units were 25%
completed at the end of the period, what was the number of equivalent units of
production for conversion costs for the period if the first-in, first-out method is used to
cost inventories?
A.11,500
B.11,200
C.15,200
D.10,000
26) Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported
on the income statement as other expense. On the statement of cash flows, what amount
should be reported as an investing activity from the sale of land?
A.$50,000
B.$71,000
C.$121,000
D.$21,000
27) The Bacon Company acquired new machinery with a price of $15,200 by trading in
similar old machinery and paying $12,700. The old machinery originally cost $9,000
and had accumulated depreciation of $5,000. In recording this transaction, Bacon
Company should record
A.the new machinery at $16,700
B.the new machinery at $12,700
C.a gain of $1,500
D.a loss of $1,500
28) Which is the best example of a decentralized operation?
A.One owner who prepares plans and makes decisions for the entire company
B.Each unit is responsible for their own operations and decision making
C.In a major company, operating decisions are made by top management
D.None of the above. All are examples of a centralized management
29) Companies may report comprehensive income on each of the statements below
except
A.income statement
B.separate statement of comprehensive income
C.statement of cash flows
D.retained earnings statement
30) Moon Company uses the variable cost concept of applying the cost-plus approach
to product pricing. The costs and expenses of producing and selling 75,000 units of
Product T are as follows:
Moon desires a profit equal to a 18% rate of return on invested assets of $1,440,000.
(a) Determine the amount of desired profit from the production and sale of Product T.
(b) Determine the total variable costs for the production and sale of 75,000 units of
Product T.
(c) Determine the markup percentage for Product T.
(d) Determine the unit selling price of Product T.
Round your markup percentage to one decimal place and other intermediate
calculations and final answer to two decimal places.
31) Allen Marks is the sole stockholder of Great Marks Company. As at December 31,
2013, Great Marks Company has assets of $940,000 and liabilities of $300,000. During
2014, Allen Marks purchased an additional $73,000 of capital stock and received
$33,000 in cash dividends from the business. What is the amount of net income of
Great Marks Company during 2014, assuming that as of December 31, 2014, assets
were $995,000, and liabilities were $270,000?
A.$ 45,000
B.$ 50,000
C.$106,000
D.$370,000
32) In a job order cost accounting system, when goods that have been ordered are
received, the receiving department personnel count, inspect the goods, and complete a:
A.purchase order
B.sales invoice
C.receiving report
D.purchase requisition
33) The following are true regarding product costs except
A.product costs are found on the balance sheet until they are sold
B.product costs consist of direct labor, direct materials, and factory overhead
C.product costs can be found in three accounts in the balance sheet
D.product costs include sales and administrative expenses
34) An account is said to have a debit balance if
A.the amount of the debits exceeds the amount of the credits
B.there are more entries on the debit side than on the credit side
C.there are more entries on the credit side than on the debit side
D.the first entry of the accounting period was posted on the debit side
35) In a profit center, the manager has responsibility and authority for making decisions
that affect:
A.liabilities
B.assets
C.investments
D.costs
36) After all of the account balances have been extended to the Income Statement
columns of the work sheet, the totals of the debit and credit columns are $77,500 and
$83,900, respectively. What is the amount of the net income or net loss for the period?
A.$6,400 net income
B.$6,400 net loss
C.$83,900 net income
D.$77,500 net loss
37) Identify the following costs as a (a) product cost or (b) period cost for a cake
factory.
1> Frosting
2> Bakers wages
3> Advertising fees
4> Transportation out
38) Zeke Company is a manufacturing company that has worked on several production
jobs during the 1st quarter of the year. Below is a list of all the jobs for the quarter:
Job 356, 357, 358 & 359 were completed. Jobs 356 & 357 were sold at a profit of $500
on each job.
What is the ending balance of Finished Goods for Zeke Company as of the end of the
1st quarter?
A.$456
B.$1,067
C.$1,685
D.$2,752
39) Goods purchased on account for future use in the business, such as supplies, are
called
A.prepaid liabilities
B.revenues
C.prepaid expenses
D.liabilities
40) Using a plantwide factory overhead rate distorts product costs when:
A.products require different ratios of allocation-base usage in each production
department
B.significant differences exist in the factory overhead rates used across different
production departments
C.both A and B are true
D.neither A nor B are true
41) Match the following terms with their definitions.
1>Measures the quantity of output of production relative to the inputs. A. yield
2>Provides information for controlling and improving operations. B. cost of production
report
3>The portion of whole units that are complete with respect to materials or conversion
costs. C. just-in-time processing
4>Work centers for processing in a just in time system. D. equivalent units of
production
5>Focuses on reducing time, cost, and poor quality within the process E. manufacturing
cells
42) Significant changes in stockholders’ equity are reported in
A.income statement
B.retained earnings statement
C.statement of stockholders’ equity
D.statement of cash flows
43) A company is contemplating investing in a new piece of manufacturing machinery.
The amount to be invested is $100,000. The present value of the future cash flows at the
companys desired rate of return is $100,000. The IRR on the project is 12%. Which of
the following statements is true?
A.The project should not be accepted because the net present value is negative.
B.The desired rate of return used to calculate the present value of the future cash flows
is less than 12%.
C.The desired rate of return used to calculate the present value of the future cash flows
is more than 12%.
D.The desired rate of return used to calculate the present value of the future cash flows
is equal to 12%.
44) Which of the following entries records the payment of an account payable?
A.debit Cash; credit Accounts Payable
B.debit Accounts Receivable; credit Cash
C.debit Cash; credit Supplies Expense
D.debit Accounts Payable; credit Cash
45) Crow Manufacturers, Inc. projected sales of 75,000 bicycles for 2012. The
estimated January 1, 2012, inventory is 5,000 units, and the desired December 31, 2012,
inventory is 8,000 units. What is the budgeted production (in units) for 2012?
46) Townson Company had gross wages of $200,000 during the week ended December
10. The amount of wages subject to social security tax was $180,000, while the amount
of wages subject to federal and state unemployment taxes was $24,000. Tax rates are as
follows:
The total amount withheld from employee wages for federal taxes was $32,000.
Required:
47) Kamin Companys mixing department had a beginning inventory of 4,000 units
which had accumulated conversion costs of $55,000. During the period, the mixing
department accumulated conversion costs of $92,000 and started 8,000 new units.
Ending inventory was 2,500 units which were 40% complete with respect to conversion
costs. Kamin uses the average cost method to cost inventories.
Required:
Calculate the cost per equivalent unit for conversion costs in the mixing department.
48) Prepare a multiple-step income statement for Armour Co. from the following data
for the year ended December 31, 2014.
Sales, $790,000; cost of merchandise sold, $330,000; administrative expenses, $35,000;
interest expense, $20,000; rent revenue, $25,000; sales returns and allowances,
$35,000; selling expenses, $50,000.
49) The net income reported on an income statement for the current year was $63,000.
Depreciation recorded on fixed assets for the year was $24,000. Balances of the current
asset and current liability accounts at the end and beginning of the year are listed below.
Prepare the cash flows from operating activities section of a statement of cash flows
using the indirect method.
50) MZE Manufacturing Company has a normal plant capacity of 37,500 units per
month. Because of an extra large quantity of inventory on hand, it expects to produce
only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3 per unit
at normal plant capacity) and variable costs and expenses are $8.25 per unit. The
present selling price is $13.50 per unit. The company has an opportunity to sell 7,500
additional units at $9.90 per unit to an exporter who plans to market the product under
its own brand name in a foreign market. The additional business is therefore not
expected to affect the regular selling price or quantity of sales of MZE Manufacturing
Company.
Prepare a differential analysis report, dated April 21 of the current year, on the proposal
to sell at the special price.
51) Define solvency and profitability. How are they alike?
52) The Cash and Accounts Receivable for a company are provided below:
Based on this information, what is the amount and percentage of increase or decrease
that would be shown in a balance sheet with horizontal analysis?