Sprinkles for decoration (indirect material)
The following are some of the costs incurred by Cupcake Company. Identify them as
either:
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
Which of the following manufacturing costs is an indirect cost of producing a product?
a. oil lubricants used for factory machinery
b. commissions for sales personnel
c. hourly wages of an assembly worker
d. memory chips for a microcomputer manufacturer
Peyton Company manufactures Phone X and Phone Y. Peyton can sell all it can make of
either. Based on the following data, assuming the number of hours is a constraint, which
statement is true?
a. X is more profitable than Y.
b. Y is more profitable than X.
c. Neither X nor Y is profitable.
d. X and Y are equally profitable.
The Camper’s Edge Factory produces two products’”canopies and tents. It has two
separate departments’”Cutting and Sewing. The budget is $350,000 for the Cutting
Department and $400,000 for the Sewing Department. Each canopy requires 2 hours of
cutting and 1 hour of sewing. Each tent requires 1 hour of cutting and 6 hours of
sewing. The budget estimates that 20,000 canopies and 10,000 tents will be
manufactured during the year. Determine (a) the total number of budgeted direct labor
hours for the year in each department, (b) the departmental factory overhead rates for
both departments, and (c) the factory overhead allocated per unit of each product using
the department factory overhead allocation rates using direct labor hours as the base.
What additional information is needed to calculate the rate of return on investment if
income from operations is known?
a. invested assets
b. residual income
c. direct expenses
d. sales
Managers depend on accurate factory overhead allocation to make decisions regarding
product mix and product price.
a. True
b. False
Carmelita Inc., has the following information available:
At the beginning of the period, there were 500 units in process that were 60% complete
as to conversion costs and 100% complete as to direct materials costs. During the
period, 4,500 units were started and completed. Ending inventory contained 340 units
that were 30% complete as to conversion costs and 100% complete as to materials
costs. Assume that the company uses the FIFO process cost method. Round cost per
unit figures to two cents, i.e., $2.22, when calculating total costs.
The total costs that will be transferred into Finished Goods for units started and
completed were
a. $161,775
b. $156,960
c. $162,855
d. $161,505
Companies prepare contribution margin reports by market segments and product
segments because products contribute to profitability in various ways.
a. True
b. False
In most business organizations, the chief management accountant is called the
a. chief accounting officer
b. controller
c. chairman of the board
d. chief executive officer
A separate account for each material is found in a
a. general ledger
b. materials ledger
c. receiving report
d. job cost sheet
Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. The records further indicate that direct materials, direct labor,
and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000,
respectively. In addition, work in process at the beginning of the period for Department
1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs into Department 2 during the period for
direct materials is
a. Work in Process’”Department 2 Materials 100,000
100,000
b. Work in Process’”Department 2 Materials 55,000
55,000
c. Work in Process’”Department 2 Materials 150,000
150,000
d. Materials Work in Process’”Department 2 55,000
55,000
A report analyzing how many products need to be sold to cover operating costs is not
typically a managerial accounting report.
a. True
b. False
a plan that shows the expected cash inflows and outflows during the budget period,
including receipts from loans needed to maintain a minimum cash balance and
repayments of such loans
Match each phrase that follows with the term (a-f) it describes..
a. budget
b. capital expenditures budget
c. sales budget
d. production budget
e. cash budget
f. budgeted balance sheet
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, what is the present value of $3,000 (rounded to the nearest
dollar) to be received at the end of each of the next 4 years, assuming an earnings rate
of 12%?
a. $10,815
b. $7,206
c. $9,111
d. $1,908
Match each description to the appropriate term (a-d).
a) direct materials
b) selling and administrative expense
c) factory overhead
d) direct labor
When a business sells more than one product at varying selling prices, the business’s
break-even point can be determined as long as the number of products does not exceed
a. two
b. three
c. fifteen
d. there is no limit
Management may use both absorption and variable costing methods for analyzing a
particular product.
a. True
b. False
In a service organization, the multiple department overhead rate method is the most
effective in providing information about the cost of services.
a. True
b. False