Service firms can only have one activity base for analyzing changes in costs.
a. True
b. False
The Swan Company produces its product at a total cost of $43 per unit. Of this amount,
$8 per unit is selling and administrative costs. The total variable cost is $30 per unit and
the desired profit is $20 per unit.Determine the markup percentage on variable cost.
a. 100%
b. 110%
c. 80%
d. 46.5%
Incurring actual indirect factory wages in excess of budgeted amounts for actual
production results in a
a. quantity variance
b. controllable variance
c. volume variance
d. rate variance
The sales budget is derived from the production budget.
a. True
b. False
The cost price approach for transfer pricing is most often used between responsibility
centers organized as cost centers that are not concerned with the revenue.
a. True
b. False
Period costs are classified as either
a. selling expenses or production expenses
b. administrative expense or production expenses
c. selling expenses or administrative expenses
d. general expenses or selling expenses
Rylan Corporation received an offer from an exporter for 25,000 units of product at $16
per unit. The acceptance of the offer will not affect normal production or domestic sales
prices. The following data are available:
What is the differential cost from the acceptance of the offer?
a. $150,000
b. $275,000
c. $550,000
d. $125,000
The budgeted volume of production is normally computed as the sum of (1) the
expected sales volume and (2) the desired ending inventory.
a. True
b. False
Reducing wait time is not linked to reducing inventory.
a. True
b. False
A process cost accounting system records all actual factory overhead costs directly in
the Work in Process account.
a. True
b. False
Panamint Systems Corporation is estimating activity costs associated with producing
disk drives, tapes drives, and wire drives. The indirect labor can be traced to four
separate activity pools. The budgeted activity cost and activity base data by product are
provided below.
Determine the activity-based cost for each tape drive unit.
a. $97.73
b. $232.69
c. $394.12
d. $103.84
Which of the following ratios provides a solvency measure that shows the margin of
safety of bondholders and also gives an indication of the potential ability of the
business to borrow additional funds on a long-term basis?
a. ratio of fixed assets to long-term liabilities
b. ratio of net sales to assets
c. number of days’ sales in receivables
d. rate earned on stockholders’ equity
Under variable costing, which of the following costs would not be included in finished
goods inventory?
a. direct labor cost
b. direct materials cost
c. variable factory overhead cost
d. fixed factory overhead cost
Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for the year. The
estimated January 1 inventory is 6,500 units, and the desired December 31 inventory is
6,000 units. What is the budgeted production (in units) for the year?
a. 78,500
b. 70,000
c. 77,500
d. 70,500
Which of the following provisions of the Internal Revenue Code can be used to reduce
the amount of the income tax expense arising from capital investment projects?
a. deductions for individuals
b. depreciation deduction
c. minimum tax provision
d. charitable contributions
In order to choose the proper activity base for a cost, managerial accountants must be
familiar with the operations of the entity.
a. True
b. False
Changing tooling when preparing for a new product
Match the definitions that follow with the term (a’“e) it defines.
a. Engineering change order
b. Total cost concept
c. Variable cost concept
d. Normal selling price
e. Setup
A firm selling food should have higher inventory turnover rate than a firm selling office
furniture.
a. True
b. False
Which of the following is not one of the common types of responsibility centers?
a. cost center
b. profit center
c. investment center
d. revenue center