Archives: Quiz

If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500. a. True b. False Answer: Two […]

The numerator in calculating the accounts receivable turnover is a. total assets b. sales c. accounts receivable at year-end d. average accounts receivable Answer: Periods in time that experience increasing price levels are known as periods of a. inflation b. […]

Number of payroll checks An activity base is used to charge service department expenses. Match the following activity bases with the appropriate department (a-h). a. Purchasing b. Payroll accounting c. Human resources d. Maintenance e. Information systems f. Marketing g. […]

Set up time is disregarded as an improvement priority under the manufacturing concept. a. traditional b. lean c. total quality management d. product cost Answer: Ruby Company produces a chair that requires 5 yards of material per unit. The standard […]

The controller’s staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting. a. True b. False Answer: The Darwin Company reports the following information: Period costs are a. $24,500 b. $30,300 c. $29,200 […]

Sets the price according to demand Match the definitions that follow with the term (a’“e) it defines. a. Demand-based concept b. Competition-based concept c. Product cost concept d. Target costing e. Production bottleneck requires a restatement of prior-period financial statements […]

The dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost. a. True b. False The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company’s […]

compares actual performance against budgeted goals Match each phrase that follows with the term (a-e) it describes. a. planning b. directing c. controlling d. budget slack e. goal conflict Cash payback method Match the methods that follow with the correct […]

Given the following cost and activity observations for Bounty Company’s utilities, use the highÂlow method to calculate Bounty’ variable utilities costs per machine hour. Round your answer to the nearest cent. a. $10.00 b. $0.67 c. $0.63 d. $0.11 Reporting […]

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities. a. True b. False Smith Company reports the following information: Factory overhead is 75% […]

Nonfinancial accounting information is used more often for long-term operating decisions than is financial information. a. True b. False Tippi Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. Production of […]

(Actual direct hours ‘“ Standard direct hours) × Standard rate per hour Match the following formulas or descriptions with the term (a-e) it defines. a. Direct materials price variance b. Direct labor rate variance c. Direct labor time variance d. […]

The excess of divisional income from operations over a minimum acceptable income from operations is termed the residual income. a. True b. False Differentiate between: a) direct materials versus indirect materials b) direct labor versus indirect labor Answer: a) Direct […]

The unfavorable volume variance may be due to all of the following factors except a. failure to maintain an even flow of work b. machine breakdowns c. unexpected increases in the cost of utilities d. failure to obtain enough sales […]

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization. a. True b. False Contractors who sell to government agencies would be most likely to use which of the following cost […]

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company’s desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is […]

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/under applied overhead into Cost of Goods Sold would cause net income to a. increase by $1,700,000 b. decrease by $1,700,000 c. increase by $3,400,000 […]

Connor Company’s fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15. What is the break-even sale (units) if the variable costs are increased by $2? a. 50,000 units b. 30,770 units c. […]

The basis for recording direct and indirect labor costs incurred is a summary of the period’s a. job order cost sheets b. time tickets c. employees’ earnings records d. clock cards In an effort to simplify the multiple production department […]

Given the following cost and activity observations for George Company’s utilities, use the highÂlow method to calculate George’s variable utilities costs per machine hour. a. $100.00 b. $1.00 c. $10.00 d. $0.10 The sales, income from operations, and invested assets […]

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)? a. $2,125,000 b. $340,000 c. $3,400,000 d. $1,416,666 On the balance sheet for a manufacturing business, the cost of direct materials, direct […]

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 […]

The fixed cost per unit varies with changes in the level of activity. a. True b. False ABC Corporation has three service departments with the following costs and activity base: ABC has three operating divisions, Micro, Macro and Super. Their […]

Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation. a. True b. False Conversion costs are the combination of direct labor, direct material, and factory overhead costs. Answer: The […]

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets. a. True b. False Ford’s Expedition sport utility vehicle is its most profitable model. Therefore, Ford […]

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3. a. True b. False In a vertical analysis, the base for cost of goods sold is a. total […]

Normally, standard costs should be revised when labor rates change to incorporate new union contracts. a. True b. False Department J had no work in process at the beginning of the period; 18,000 units were completed during the period; and […]

Number of work orders An activity base is used to charge service department expenses. Match the following activity bases with the appropriate department (a-h). a. Purchasing b. Payroll accounting c. Human resources d. Maintenance e. Information systems f. Marketing g. […]

Sales mix is generally defined as the relative distribution of sales among the various products sold. a. True b. False Which of the following are present value methods of analyzing capital investment proposals? a. internal rate of return and average […]

If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system. a. True b. False Budgets are normally used only by profit-making businesses. a. True b. […]

In contribution margin analysis, the unit price or unit cost factor is computed as: a. the difference between the actual unit price or unit cost and the planned unit price or cost, multiplied by the planned quantity sold b. the […]

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization. a. True b. False Tulip Company produces two products, T and U. The indirect labor costs include the following two items: The […]

If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit? a. 25,000 units b. 10,000 units c. 400,000 units d. 20,000 units In determining […]

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 standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory […]

Dotterel Corporation uses the variable cost concept of product pricing. Below is cost information for the production and sale of 35,000 units of its sole product. Dotterel desires a profit equal to an 11.2% rate of return on invested assets […]

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Liabilities and Stockholders’ Equity Income Statement What is the dividend yield for […]

A backflush accounting system uses work in process inventories as control points between each process step. a. True b. False The difference between the standard cost of a product and its actual cost is called a variance. a. True b. […]

The direct labor time variance measures the efficiency of the direct labor force. a. True b. False Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a […]

actual cost > standard cost at actual volumes Match the following descriptions with the term (a-e) it describes: a. Ideal standard b. Nonfinancial performance measure c. Currently attainable standard d. Unfavorable cost variance e. Favorable cost variance Discontinuing a segment […]

Income from operations of the Pierce Automobile Division is $2,225,000. If income from operations before service department charges is $3,250,000, a. operating expenses are $1,025,000 b. total service department charges are $1,025,000 c. noncontrollable charges are $1,025,000 d. direct manufacturing […]

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce […]

prime costs Match each phrase that follows with the term (a-h) it describes. a. direct labor and factory overhead b. direct labor and direct materials c. transferred in costs d. equivalent units e. process costing f. job order costing g. […]

The Blue Lake Water Company has two departments, Purifying and Bottling. The Bottling Department received 76,000 liters from the Purifying Department. During the period, the Bottling Department completed 74,000 liters, including 3,000 liters of work in process at the beginning […]

Which of the following is not a reason a service firm would use a job order costing system? a. to help control costs b. to determine client billing c. to determine department costs within the firm d. to determine profit […]

On the variable costing income statement, all of the fixed costs are deducted from the contribution margin. a. True b. False Below is budgeted production and sales information for Flushing Company for the month of December: The unit selling price […]

Customer service calls Identify the following quality control activities as either value-added or non-value-added. a. Value-added b. Non-value-added In the contribution margin analysis, the effect of a change in the number of units sold, assuming no change in unit sales […]

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low […]

The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to Nooks. a. $300,000 b. $400,000 c. $488,000 d. $600,000 The direct labor and […]

A plant manager’s salary is a. a direct cost and an indirect cost b. a direct cost c. an indirect cost d. a period cost The period costs of a textbook printer would include a. wages of a press operator […]