Archives: Quiz

Athmer Corporation Athmer Corporation sells a product for $18 per unit, and the standard cost card for the product shows the following costs: Refer to Athmer Corporation. Athmer received a special order for 1,000 units of the product. The only […]

The net realizable value approach mandates that the NRV of the by-products/scrap be treated as A. an increase in joint costs. B. a sunk cost. C. a reduction of joint costs. D. a cost that can be ignored totally. If […]

Which of the following statements is true about the values statement of an organization? A. It is used to formulate the mission statement. B. It reflects the organization’s culture by identifying beliefs about what is important to the organization. C. […]

Budget slack is a condition in which A. demand is low at various times of the year. B. excess machine capacity exists in some areas of the plant. C. there is an intentional overestimate of expenses or an underestimate of […]

Applied overhead consists of which of the following? A. actual activity times predetermined overhead rate B. estimated activity times predetermined overhead rate C. actual activity times actual overhead rate D. estimated activity times actual overhead rate A company has a […]

When a scarce resource, such as space, exists in an organization, the criterion that should be used to determine production is A. contribution margin per unit. B. selling price per unit. C. contribution margin per unit of scarce resource. D. […]

A cost accumulation system should most likely be reevaluated when a company has A. automated one or more production processes. B. introduced new products to its customers. C. had its industry deregulated. D. all of the above. Terrell and Associates, […]

Costs of decentralization include all of the following except A. more elaborate accounting control systems. B. potential costs of poor decisions. C. additional training costs. D. slow response time to changes in local conditions. Willborn Builders in the building construction […]

A firm has fixed costs of $200,000 and variable costs per unit of $6. It plans on selling 40,000 units in the coming year. To realize a profit of $20,000, the firm must have a sales price per unit of […]

Saturn Corporation Material A is added at the start of production, while Material B is added uniformly throughout the process. Refer to Saturn Corporation Assuming a weighted average method of process costing, compute the average cost per unit for Material […]

Real Products Company Real Products Company produces and sells a single product. Information on its costs follow: Refer to Real Products Company. Assume Real Products Company produced and sold 5,000 units. At this level of activity, it produced a profit […]

The most useful information derived from a cost-volume-profit chart is the A. amount of sales revenue needed to cover enterprise variable costs. B. amount of sales revenue needed to cover enterprise fixed costs. C. relationship among revenues, variable costs, and […]

Production overhead does not include the costs of A. factory depreciation and supplies. B. factory employees’ cafeteria departments. C. production line labor. D. the maintenance department for the factory. The variable costing format is often more useful to managers than […]

Grant Corporation The following information is available for Grant Corporation for the current month: All materials are added at the start of production and the inspection point is at the end of the process. Refer to Grant Corporation. What is […]

The master budget is a static budget because it A. is geared to only one level of production and sales. B. never changes from one year to the next. C. covers a preset period of time. D. always contains the […]

Stillwater Corporation The following information is available for Stillwater Corporation for the current year: All materials are added at the start of production. Refer to Stillwater Corporation. What is the cost per equivalent unit for conversion costs using weighted average? […]

Recalls are fairly common events for automobile manufacturers. The costs of recalling and repairing a car create A. yes yes no B. yes yes yes C. no yes no D. yes no yes Moore Company. Moore Company uses a job-order […]

A decrease in the lead time would reduce the A. order point. B. safety stock. C. economic order quantity. D. ordering costs. Another name for variable costing is A. full costing. B. direct costing. C. standard costing. D. adjustable costing. […]

Under variable costing, which of the following are costs that can be inventoried? A. variable selling and administrative expense B. variable manufacturing overhead C. fixed manufacturing overhead D. fixed selling and administrative expense A master budget contains which of the […]

Ultimate Vision Corporation Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year: Refer to Ultimate Vision Corporation. If the company uses total direct […]

Nelson Corporation Nelson Corporation has the following information available for May of the current year: All material is added at the start of production and all products completed are transferred out. Refer to Nelson Corporation. Prepare an equivalent units schedule […]

Clooney Company has the following expected pattern of collections on credit sales: 70 percent collected in the month of sale, 15 percent in the month after the month of sale, and 14 percent in the second month after the month […]

In a production environment that manufactures goods to customer specifications, a job-order costing system A. can be used only if standard costs are used for materials and labor. B. will provide reasonable product cost information only when all jobs utilize […]

Savannah Motors Savannah Motors is trying to decide whether it should keep its existing car washing machine or purchase a new one that has technological advantages (which translate into cost savings) over the existing machine. Information on each machine follows: […]

A large labor efficiency variance is prorated to which of the following at year-end? A. no no no B. no yes yes C. yes no no D. yes yes yes Material is added at the beginning of a process in […]

Which of the following would typically be viewed as non-value-added activities? A. yes yes yes no B. no no no yes C. no yes no yes D. yes yes no yes Epplin Company The following information is provided for Epplin […]

The weighted average method is thought by some accountants to be inferior to the FIFO method because it A. is more difficult to apply. B. only considers the last units worked on. C. ignores work performed in subsequent periods. D. […]

Wright Company Wright Company adds material at the start of production. The following production information is available for September: Refer to Wright Company. What is the cost of all units transferred out using the FIFO method? A. $204,624 B. $191,289 […]

Ultimate Vision Corporation Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year: Refer to Ultimate Vision Corporation. If the company uses number of […]

The amount of time between the development and the production of a product is A. the product life cycle. B. lead time. C. production time. D. value-added time. The weighted average cost of capital approach to decision making is not […]

Process costing techniques should be used in assigning costs to products A. if a product is manufactured on the basis of each order received. B. when production is only partially completed during the accounting period. C. if a product is […]

The payback period is the A. length of time over which the investment will provide cash inflows. B. length of time over which the initial investment is recovered. C. shortest length of time over which an investment may be depreciated. […]

Capital budgeting uses financial criteria exclusively when evaluating projects. In accounting for JIT operations, the Raw Material Inventory account A. is used to record price variances for raw materials purchased. B. can be expected to have a larger balance than […]

On a CVP graph, the total cost line intersects the y-axis at zero. When multiple labor categories are used, the financial effect of using a different mix of workers in a production process is referred to as a labor yield […]

A variable cost remains constant on a per-unit basis as production increases. Unfavorable variances are represented by debit balances in the overhead account. Answer: TRUE When using the risk-adjusted discount rate method, a manager increases the rate used for discounting […]

Expected standards tend to yield unfavorable variances. Value refers to a product meeting the highest number of a customer’s needs at the lowest possible cost. Answer: TRUE Segment margin measures a segment’s contribution to the coverage of indirect expenses. Answer: […]

Activity-based costing systems generally use volume-based cost drivers. In a normal cost system, actual production overhead costs are typically accumulated in an Overhead Control account and assigned to Work in Process at the end of the period. Answer: FALSE When […]

Expatriate workers should receive a compensation package that reflects cost of living factors and currency fluctuations. When multiple labor categories are used, the monetary impact of using a higher or lower number of hours than a standard allows is referred […]

Standards can be used in a job-order costing system if the products manufactured are similar in nature. It is necessary for an organization to define its processes before attempting to establish relationships among company activities. Answer: TRUE Both accountants and […]

An organization’s values statement identifies fundamental beliefs about what is important to the organization. Machine setup is normally considered a batch-level cost Answer: TRUE The manager of a revenue center has the authority to establish selling prices of product. Answer: […]

Downsizing has no effect on materials and labor inputs used to produce outputs. Practical standards are the most effective standards for controlling and motivating workers. Answer: TRUE The total variance does not provide useful information about the source of cost […]

Budgetary slack is an effective motivator for employees, because it reduces employee frustration when goals cannot be achieved. The segment margin of a profit or investment center does not include allocated common costs. Answer: TRUE A company should strive to […]

Testing and adjusting manufacturing equipment is an appraisal cost. Productivity is measured by the quantity of good output generated from a specific amount of input during a time period. Answer: TRUE A company that manufactures small quantities of identifiable products […]

An organization’s hurdle rate should be at least equal to the organization’s cost of capital. The difference between actual and budgeted fixed factory overhead is referred to as a fixed overhead spending variance. Answer: TRUE When using a negotiated transfer […]

In a mutually inclusive project situation, if one project is chosen, all related projects are also chosen. A company that manufactures custom bridal gowns will use a process costing system to track costs. Answer: FALSE The total variance can provide […]

Specifications for materials are compiled on a purchase requisition. The amount of raw materials that must be purchased can be computed by the following formula: Ending inventory + Materials required – Beginning inventory. Answer: TRUE When considering risk, a manager […]

In a standard job-order costing system, factory overhead is applied using predetermined rates times actual input. In a multi-product environment, CVP analysis makes the assumption that a company’s sales mix is constant. Answer: TRUE Activity-based costing is appropriate for a […]

Strategic alliances can result in improved operating efficiencies for multiple organizations. Reinvestment assumptions are different under each method of ranking capital projects. Answer: TRUE Abnormal continuous losses are absorbed by all units in ending inventory and transferred out on a […]

When management by exception is employed, both favorable and unfavorable variances should be investigated. When using the risk-adjusted discount rate method, a manager increases the rate used for discounting future cash outflows. Answer: FALSE A responsibility accounting system should include […]

A variable cost will be an effective cost driver. The payback period typically ignores the time value of money. Answer: TRUE Information that has a bearing on future events is relevant in the decision-making process. Answer: TRUE In a standard […]