Archives: Quiz

You have been provided with the following information regarding the VLCD Manufacturing Company: This information is based on forecasted sales of 33,000 units. Required: (a) What are the expected operating profits for the upcoming year? (b) What is the break-even […]

Underapplied overhead occurs when the balance in the Manufacturing Overhead Control account is: A. greater than the balance in the Applied Manufacturing Overhead account. B. equal to the balance in the Applied Manufacturing Overhead account. C. less than the balance […]

The Shapely Company uses the high-low method to determine its cost equation. The following information was gathered for the past year: If Shapely expects to use 10,000 machine hours next month, what are the estimated direct labor costs? A. $160,000 […]

The Clapton Company manufactures two products: Alpha and Beta. The costs and revenues are as follows: Total demand for Alpha is 10,000 units and for Beta is 6,000 units. Machine time is a scarce resource. During the year, 50,000 machine […]

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget. Actual sales were 7,000 basic models and 2,800 deluxe models. The actual sales prices were the same as the budgeted sales prices for […]

Fenway Telcom has three divisions, commercial, retail and consumer, that share the common costs of the company’s computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: What is […]

A debit balance in the labor-efficiency variance account indicates that A. standard hours exceed actual hours. B. actual hours exceed standard hours. C. standard rate and standard hours exceed actual rate and actual hours. D. actual rate and actual hours […]

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products? A. Direct materials B. Variable overhead C. Direct labor D. Fixed overhead E. Freight-out Answer: Which […]

The coefficient of correlation is A. the range of values over which the probability may be estimated based upon the regression equation results. B. the proportion of the total variance in the dependent variable explained by the independent variable. C. […]

Partial productivity measures are most closely related to what type of variances? A. price variances B. sales mix variances C. efficiency variances D. production volume variances Answer: Pardee Company makes 30% of its sales for cash and 70% on account. […]

Which of the following sales variances is further analyzed into the market size and industry volume variances? A. Quantity B. Efficiency C. Mix D. Activity Answer: The labor mix variance is actual total hours at A. actual mix times actual […]

A division earning a profit will increase its return on investment (ROI) if it increases operating expenses and A. sales by the same dollar amount. B. sales by the same percentage. C. investment by the same dollar amount. D. investment […]

Overestimating a period’s allocation base will understate the predetermined overhead rate. Answer: Unused resource capacity plus the amount of the resources used is equal to the amount of resources supplied. Answer: TRUE Unused + Used = total available Service organizations, […]

In a sell-or-process-further decision, the additional costs incurred after the split-off point are irrelevant. Answer: The basic difference between a first-stage cost allocation and a second-stage cost allocation is that cost pools are not used in first-stage cost allocations. Answer: […]

In a weighted-average process costing system, the costs in the beginning Work-in-Process Inventory are not used to compute the costs transferred-out. Answer: One of the most common decisions facing managers is determining the price at which to sell one of […]

Administrative functions are not included in the value chain because they are implicitly included in every business function. Answer: The predetermined overhead rate is computed by dividing the estimated activity of the allocation base into the estimated manufacturing overhead costs. […]

Traditional product costing systems (e.g., job and process costing) are designed primarily to accumulate cost information for financial reporting. Answer: In general, and holding all other things constant, an unfavorable variance decreases operating profits. Answer: TRUE A favorable variance increases […]

In deciding whether to outsource a service department or not, the cost of the service department should be estimated using the step method of allocation. Answer: One potential disadvantage of the reciprocal method is it could overstate the cost of […]

One disadvantage of the high-low method is the highest and lowest points may not be representative of normal operating activities. Answer: One advantage of the step method is that all reciprocal services are recognized between service departments. Answer: FALSE Only […]

Managers face ethical situations on a daily basis, while accountants face them infrequently. Answer: The budget (or spending) variance for fixed production costs is the difference between the actual fixed costs and the budgeted fixed costs on the master budget. […]

Activity-based costing (ABC) techniques used to evaluate customer profitability can also be applied to evaluating suppliers. Answer: If a company has three cost pools, it should have three different cost allocation bases. Answer: TRUE If the same driver could be […]

A cost driver is a variable that causes costs. Answer: The production mix variance measures the impact of substituting one material for another material during the production process. Answer: TRUE The production mix can be either materials or labor. Customer […]

Cost of goods sold includes the actual costs of the goods sold and the cost of selling them to the customer. Answer: Continuous improvement involves the search for and implementation of the best way to do something as practiced by […]

Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected. A.Increase Assets (Cash) and increase Liabilities (Accounts Payable) B.Increase Assets (Cash) […]

Purchased $400,000 of ABC Co. 5% bonds at 100 plus accrued interest of $4,500. Sold $250,000 of bonds at 97. The journal entry for the purchase would include: A.a credit to Interest Receivable for $4,500 B.a credit to Interest Revenue […]

Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed costs are $75,000. Determine the (a) break-even point in sales units, and (b) break-even point in sales units if the selling price […]

Cash paid for preferred stock dividends should be shown on the statement of cash flows under A.investing activities B.financing activities C.noncash investing and financing activities D.operating activities Answer: Listed below are selected transactions completed by Ridge Company during March of […]

The following data relate to direct labor costs for February: What is the direct labor rate variance? A.$14,000 favorable B.$14,000 unfavorable C.$15,400 favorable D.$15,400 unfavorable Answer: Which of the following activity bases would be the most appropriate for gasoline costs […]

Which of the following expressions is termed the investment turnover factor as used in determining the rate of return on investment? A.Invested Assets/Sales B.Income From Operations/Invested Assets C.Income From Operations/Sales D.Sales/Invested Assets Answer: The finished goods account is the controlling […]

Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to utilize a Cash Receipts Journal in its operation. If the company is to record the cash sale of food for $18 which is the correct […]

Use the following information to answer the following questions. Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 – 31, 20xx. Salaries Payable would be recorded […]

The budgetary unit of an organization which is led by a manager who has both the authority over and responsibility for the unit’s performance is known as a: A.control center B.budgetary area C.responsibility center D.managerial department Answer: In the manufacture […]

If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are A.consigned B.n/30 C.FOB shipping point D.FOB destination Answer: Mandy Corporation sells a single product. Budgeted sales for the year are […]

A company sells goods for $150,000 that cost $60,000 to manufacture. Which statement(s) are true? A.The company will recognize sales on the balance sheet of $150,000. B.The company will recognize $90,000 gross profit on the balance sheet. C.The company will […]

Managerial accountants would most likely prepare all of the following reports except: A.A performance report identifying amounts of scrap. B.A control report comparing direct material usage over time. C.A sales report targeting monthly sales and potential bonuses. D.An annual report […]

When a borrower receives the face amount of a discounted note less discount, this amount is known as: A.the note proceeds B.the note discount C.the note deferred interest D.the note principal Answer: Earnings per share A.is the net income per […]

At the end of April, Cavy Company had completed Job 766 and 765. According to the individual job cost sheets the information is as follows: Job 765 produced 152 units, and Job 766 consisted of 250 units. Assuming that the […]

The methods of evaluating capital investment proposals can be separated into two general groups–present value methods and: A.past value methods B.straight-line methods C.reducing value methods D.methods that ignore present value Answer: Zach Company owns 45% of the voting stock of […]

Closing entries are dated in the journal as of A.the date they are actually journalized, although they are generally prepared after the end of the accounting period B.the last day of the accounting period, although they are actually journalized after […]

Production and sales estimates for June are as follows: The number of units expected to be manufactured in June is: A.15,500 B.17,500 C.16,500 D.13,500 Answer: If the buyer is to pay the freight costs of delivering merchandise, delivery terms are […]

On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation, prepare the journal entry to […]

Which of the following is not considered as a complicating factor in capital investment decisions? A.Income tax B.Lease versus capital investment C.Equal proposed lives D.Qualitative considerations Answer: Stockholders’ equity A.is usually equal to cash on hand B.includes paid-in capital and […]

The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet A.is the amount of net income or loss B.indicates there is an error on the work sheet C.is the […]

Indicate how the following transactions affect the accounting equation: (a) The purchase of supplies on account. (b) The purchase of supplies for cash. (c) A withdraw by the owner to pay personal expenses. (d) Revenues received in cash. (e) Revenues […]

Use the following worksheet to answer the following questions. Based on the preceding trial balance, the entry to close income summary would be: A.debit C. Finley, Capital $50,000; credit Income Summary $50,000 B.debit Income Summary $155,000; credit C. Finley, Capital […]

Project A requires an original investment of $50,000. The project will yield cash flows of $15,000 per year for seven years. Project B has a calculated net present value of $13,500 over a four year life. Project A could be […]

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $260,000, $375,000, and $400,000, respectively, for September, October, and November. The company expects to sell 30% of its […]

Horizontal analysis of comparative financial statements includes the A.development of common size statements. B.calculation of liquidity ratios. C.calculation of dollar amount changes and percentage changes from the previous to the current year. D.the evaluation of each component in a financial […]

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method A.uses a percentage of sales method to estimate uncollectible accounts. B.is used primarily by large companies […]

The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine […]