1) The accounting system used with JIT manufacturing is called:
A.Backflush costing
B.The push system
C.Perpetual inventory costing
D.First-in, first-out
2) If there is no beginning work in process inventory and the ending work in process
inventory is 90 percent complete, the number of equivalent units would be:
A.The same as the units placed in process
B.The same as the units completed
C.Less than the units placed in process
D.Less than the units completed
3) The format of the direct materials budget is similar to that of the:
A.Factory overhead budget
B.Sales budget
C.Production budget
D.Direct labor budget
4) Umberg Merchandise Companys cost of goods sold last month was $1,350,000. the
Merchandise Inventory at the beginning of the month was $250,000 and there was
$325,000 of Merchandise Inventory at the end of the month. Umbergs merchandise
purchases were:
A.$1,350,000
B.$1,275,000
C.$1,425,000
D.$1,675,000
5) Polk, Inc. produces 3,000 hammers each day. The average number of units in work in
process is 4,500, having an average cost of $10,000. The annual carrying costs relating
to inventory are 15%.
Consultants have determined that the work in process could be reduced by as much as a
third by rearranging the factory floor. What is the current throughput time?
A.Eight hours
B.Sixteen hours
C.One day
D.One and one half days
6) Factory overhead includes:
A.Indirect labor but not indirect materials
B.All manufacturing costs except direct materials and direct labor
C.All manufacturing costs
D.Indirect materials but not indirect labor
7) Boron Refiners had 50,000 gallons started in its process in June. At June 30, 35,000
gallons were completed and transferred to finished goods and 10,000 gallons were still
in process, one-fourth completed as to materials, labor and overhead. The remaining
5,000 units were lost to evaporation, a normal result of the process. Costs of production
during the month were $75,000, $50,000, and $25,000 for material, labor and overhead,
respectively. What is the cost per equivalent unit in June?
A.$4.00
B.$3.33
C.$3.53
D.$3.75
8) Denny Door Company has budgeted door sales as follows:
Finished goods inventory at February 28 will be 8,000 units, but the company is making
an effort to reduce inventory and its new policy is that inventory at the end of the month
should be 10% of the budgeted sales for the following month. How many units should
Denny Door Company produce in March?
A.52,000
B.62,000
C.51,000
D.48,000
9) Under a modified wage plan, Jim Phillips works an eight-hour day and earns $.50 for
each finished unit he produces in excess of 200 units. However, he is guaranteed $12.50
per hour as a minimum wage. His production this week was a follows:
What were Jims total earnings this week?
A.$500
B.$510
C.$495
D.$515
10) Inventory levels for firms using JIT inventory systems compared to firms not using
JIT will be:
A.Higher for both work in process and finished goods
B.Higher for work in process and finished goods but lower for raw materials
C.Lower for raw materials, work in process, and finished goods
D.Higher for finished goods but lower for raw materials and work in process
11) In creating a balanced scorecard, the return on investment would belong to which
category of performance measures?
A.Learning and Growth
B.Internal Business Processes
C.Customer
D.Financial
12) Tress Enterprises manufactures shampoo and conditioner. Last year, Tress sold
120,000 bottles of product. Unit sales of conditioner amounted to 60% of the number of
units of shampoo. This trend is expected to continue. The selling price for both products
is $12.00, however, the variable cost of a unit of shampoo is $6.00, while the variable
cost of a unit of conditioner is $8.00. Fixed costs are expected to be $420,000.
(a) Compute the number of each product sold.
(b) Compute the weighted-average contribution margin per unit.
(c) Compute the overall break-even point in units.
(d) Compute the unit sales of shampoo and conditioner at the break-even point.
(e) Compute the dollar sales of shampoo and conditioner at the break-even point.
13) The departmental responsibilities of the payroll function include all of the following
except:
A.Reviewing the labor hours on the time record for accuracy
B.Summarizing the periods payroll data
C.Keeping a record of earnings for each employee
D.Computing deductions and withholdings for each employee
14) Which of the following does not appear on an income statement prepared using
variable costing?
A.Gross margin/profit
B.Manufacturing margin
C.Fixed production costs
D.Variable production costs
15) Anderson Compounds produces two industrial chemical compounds, Gorp and
Gumm, from the same process, which last year, cost $240,000. Anderson produced
20,000 pounds of Gorp, which sells for $60 per gallon and 60,000 gallons of Gumm,
which sells for $30 per gallon. After the split-off point, Gorp required additional
processing costing $300,000 to make it salable. Using the adjusted sales method, how
much of the joint cost should be allocated to Gorp?
A.$60,000
B.$160,000
C.$80,000
D.$96,000
16) Participative budgeting:
A.Results in managers being less apt to meet or beat their budget projections
B.Motivates managers to meet budget numbers because they set them
C.Describes the budget meetings in which managers participate
D.Leaves room to blame top management in the event budget numbers are not met
17) Thomas and James, a law firm, has support staff for its attorneys. The two attorneys
work a total of 2,000 hours each and make $80,000 each per year. The total support
budget is $200,000, of which $160,000 is professional support, and $40,000 is general
office overhead. A job requiring 50 professional hours should be billed how much for
overhead if a simplified costing approach is used and labor cost is the cost driver?
A.$625
B.$2,000
C.$2,500
D.$1,000
18) Comfy Inc. uses five yards of wool in each blanket it produces. Comfys production
budget next year is 30,000 blankets. The anticipated wool inventory at January 1 is
40,000 yards, but the company desires to reduce the inventory to 20,000 yards by the
end of the year. Each yard of wool costs $10. How many yards of wool should Comfy
purchase?
A.190,000 yards
B.130,000 yards
C.170,000 yards
D.1,300,000 yards
19) The Benchley Company uses metal grates when assembling appliances. Information
as to balances on hand, purchases, and requisitions of the grates is given in the
following table.
If a perpetual inventory record of the metal grates is maintained on a FIFO basis, the
September 6 issue will consist of:
A.15 units @ $2.80, 120 units @ $3.10 and 30 units @ $3.24
B.75 units @ $2.80 and 90 units @ $3.10
C.165 units @ $3.10
D.75 units @ $3.10 and 90 units @ $3.24
20) Which of the following production operations would be most likely to employ a job
order system of cost accounting?
A.Candy manufacturing
B.Crude oil refining
C.Printing business cards
D.Flour milling
21) The business entity that converts purchased raw materials into finished goods by
using labor, technology, and facilities is a:
A.Manufacturer
B.Merchandiser
C.Service business
D.Not-for-profit service agency
22) A professional firms budgeted income statement would include all of the following
lines except:
A.Cost of Goods Sold
B.Overhead
C.Revenue
D.Labor
23) Methods for separating semivariable costs into their fixed and variable components
include all of the following except the:
A.High-low method
B.Allocation method
C.Scattergraph method
D.Observation method
24) The following information is available from the Arugula Company:
Assuming that Arugula uses a three-variance analysis of overhead variances, what is the
efficiency variance?
A.$500 unfavorable
B.$475 unfavorable
C.$975 unfavorable
D.$175 unfavorable
25) The basic assumption made in a variable costing system with respect to fixed costs
is that all fixed costs are:
A.Sunk costs
B.Product costs
C.Fixed as to the total cost
D.Period costs
26) A technique that uses the degrees of cost variability to measure the effect of changes
in volume on resulting profits is:
A.Standard costing
B.Variance analysis
C.Cost-volume-profit analysis
D.Segment profitability analysis
27) An example of a step-fixed cost would be:
A.the cost of factory insurance because the insurance company increased the premium
B.the cost of supervision since a second supervisor was added to oversee the new
second shift
C.depreciation of equipment because it is computed on the units of production method
D.utility costs because it costs more to heat the building in the winter
28) McLelland Fabricators has two departments, Machining and Assembly. When good
are completed in the Machining Department, they are transferred to the Assembly
Department, and when completely assembled, they are transferred to the finished goods
warehouse. There was no beginning or ending inventory in either department in
February.
Other information for February is as follows:
Prepare the journal entries for:
1> The issuance of direct materials to production and the recording of the materials
variances.
2> The use of direct labor in production and the recording of the labor variances.
3> The entries to record actual and applied factory overhead (use Various Credits if
necessary.)
4> The entries to transfer the production cost from the Machining Department to the
Assembly Department and from the Assembly Department to finished goods.
29) The November monthly factory overhead cost budget for Brass Ltd. at normal
capacity of 10,000 or 5,000 direct labor hours follows:
(1) Prepare a flexible budget for 80%, 100% and 120% of normal capacity.
(2) Determine the rate for application of factory overhead to work in process at each
level of volume in relation to both units and direct labor hours.
