1) Zephyr Apparels is a clothing retailer. Unit costs associated with one of its products,
Product DCT121, are as follows:
What are the direct variable manufacturing costs per unit associated with Product
DCT121?
A) $142
B) $90
C) $105
D) $110
2) A company using responsibility accounting system decides to exclude all
uncontrollable costs from a manager’s performance report. Jenson is the machine
supervisor. Which of the following costs will impact Jenson’s performance report?
A) rent and taxes paid on by the company
B) cost of materials used in manufacture
C) machine maintenance cost
D) cost of power consumed by the plant
3) Which of the following is common for reporting product cost under financial
reporting and product cost
for reimbursement under government contracts?
A) marketing cost
B) distribution costs
C) customer service
D) research and development costs
4) On occasion, the FIFO and the weighted-average methods of process costing will
result in the same dollar amount of costs being transferred to the next department.
Which of the following scenarios would have that result?
A) when the beginning and ending inventories are equal in terms of unit numbers
B) when the beginning and ending inventories are equal in terms of the percentage of
completion for both direct materials, and conversion costs
C) when there is no ending inventory
D) when there is no beginning inventory
5) Which of the following statements is true of absorption costing?
A) Absorption costing allocates fixed manufacturing overhead to actual units produced
during the period.
B) Absorption costing carries over nonmanufacturing costs to the future periods.
C) Absorption costing shows the same level of profit as variable costing irrespective of
the level of inventories.
D) Absorption costing allocates total manufacturing cost using the budgeted level of
production for a particular year.
6) The sales forecast should be primarily based on ________.
A) statistical analysis
B) input from sales managers and sales representatives
C) production capacity
D) input from the board of directors
7) Which of the following methods of capital budgeting divides the average annual
accrual accounting income of a project by a measure of the investment in it?
A) net present value
B) internal rate of return
C) payback method
D) accrual accounting rate of return
8) Which of the following statements best define joint products?
A) When one product has a high total sales value compared with the total sales value of
other products of the process, that product is called a joint product.
B) Product of a joint production process that have the same sales value compared with
the total sales value of the by products is called a joint product.
C) When one product has a low total sales value compared with the total sales value of
other products of the process, that product is called a joint product.
D) When a joint production process yields two or more products with high total sales
values relative to the total sales values of other products, those products are called joint
products.
9) The East Company manufactures several different products. Unit costs associated
with Product ORD210 are as follows:
What is the percentage of the total variable costs per unit associated with Product
ORD105 with respect to total cost?
A) 72%
B) 68%
C) 75%
D) 70%
10) When analyzing the change in operating income, the strategy component of
price-recovery will increase when ________.
A) capacity is reduced
B) market share is increased
C) selling prices are increased
D) more units are sold
11) Judith Vending Company has invested $800,000 in a plant to make vending
machines. The target operating income desired from the plant is $120,000 annually. The
company plans annual sales of 1,200 vending machines at a selling price of $1,000
each.
What is the markup percentage as a percentage of cost for Judith Vending Company?
A) 10.00%
B) 11.11%
C) 12.68%
D) 13.62%
12) The benefits-received criteria for allocating joint costs indicate market-based
measures are preferred because ________.
A) physical measures such as quantity are clear bases for allocating cost than other
measures
B) physical measures are more difficult to calculate
C) revenues are usually the best indicators of the benefits received
D) revenues always remain consistent over short-run
13) A costing system that omits recording some or all of the journal entries relating to
the cycle from purchase of direct materials to the sale of finished goods is called
________.
A) dependent costing
B) synchronous costing
C) sequential costing
D) backflush costing
14) Which cost estimation method analyzes accounts in the subsidiary ledger as
variable, fixed, or mixed using qualitative methods?
A) the account analysis method
B) the conference method
C) the marginal costing method
D) the incremental costing method
15) Which of the following is a factor while choosing the period of a budget?
A) the frequency of interim financial statements
B) the estimated period required to achieve budget targets
C) the general economic trend
D) the motive for creating the budget
16) Jean Peck’s Furniture’s manufactures tables for hospitality sector. It takes only bulk
orders and each table is sold for $300 after negotiations. In the month of January, it
manufactures 3,000 tables and sells 2,250 tables. Actual fixed costs are the same as the
amount fixed costs budgeted for the month.
The following information is provided for the month of January:
At the end of the month Jean Peck’s Furniture’s has an ending inventory of finished
goods of 750 units. The company also incurs a sales commission of $10 per unit.
What is the operating income when using absorption costing?
A) $337,500
B) $312,500
C) $290,000
D) $260,500
17) Coldbrook Company has two sources of funds: long-term debt with a market and
book value of $15 million issued at an interest rate of 10%, and equity capital that has a
market value of $9 million (book value of $5 million). Coldbrook Company has profit
centers in the following locations with the following operating incomes, total assets,
and current liabilities. The cost of equity capital is 15%, while the tax rate is 30%.
What is the for Brooksville?
A) $476,250
B) $428,000
C) $415,525
D) $390,000