Archives: Quiz

1) Gabat Inc. is a merchandising company. Last month the company’s merchandise purchases totaled $67,000. The company’s beginning merchandise inventory was $19,000 and its ending merchandise inventory was $22,000. What was the company’s cost of goods sold for the month? […]

1) What account should Chelm debit when the production manager has earned her salary? A.Direct Labor B.Work in Process C.Manufacturing Overhead D.Salaries and Wages Receivable E.Salaries and Wages Expense 2) If management decides to buy part P42 from the outside […]

1) How much Maintenance Department cost should be allocated to the Stains Division at the end of the year? A.$900,532 B.$924,994 C.$858,220 D.$882,420 2) The unit product cost of product R21V under the company’s traditional costing system is closest to: […]

1) How many units of product L06K should be produced each month? A.975 B.500 C.0 D.175 2) Goldsmith Corporation has provided the following data: The company’s net income in Year 2 was $24,400. The company’s book value per share at […]

1) The contribution margin for April was: A) $1,017,600 B) $1,465,600 C) $600,400 D) $3,512,400 2) The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: […]

1) The company is considering launching a new product that would have a variable cost of $168.00 per unit and no avoidable fixed costs. It would require 9 minutes of the constrained resource. The absolute minimum acceptable selling price for […]

1) Reetz Corporation would like to determine the relative profitability of the company’s products for purposes of making volume trade-off decisions. For illustration, the company has provided the following data for product A25H: What is the profitability index for product […]

1) The inventory turnover for Year 2 is closest to: A.3.75 B.1.20 C.4.09 D.0.83 2) Departmental overhead rates are generally preferred to plant-wide overhead rates when: A.the activities of the various departments in the plant are not homogeneous. B.the activities […]

1) Which of the following would be classified as an appraisal cost on a quality cost report? A.Quality circles. B.Downtime caused by quality problems. C.Supplies used in testing and inspection. D.Quality engineering. 2) Dilbert Farm Supply is located in a […]

1) Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be: A.$110,000 B.$55,000 C.$150,000 D.$130,000 2) Florea Corporation has provided the following data concerning its most important […]

1) The manufacturing overhead that would be applied to a unit of product C43S under the activity-based costing system is closest to: Koszyk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using […]

1) Which of the following would be classified as an external failure cost on a quality cost report? A.Net cost of scrap. B.Product recalls. C.Rework labor and overhead. D.Downtime caused by quality problems. 2) Holding all other things constant, an […]

1) The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $450,000, all for cash. Merchandise inventory on October 31 was $200,000. The cash balance November 1 was $18,000. Selling and […]

1) Cabal Products is a division of a major corporation. Last year the division had total sales of $10,040,000, net operating income of $582,320, and average operating assets of $4,000,000. The company’s minimum required rate of return is 14%. The […]

1) Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-visits. The clinic has provided the following data concerning the formulas used in its […]

In capital budgeting computations, discounted cash flow methods: 1) A.automatically provide for recovery of initial investment. B.can’t be used unless cash flows are uniform from year to year. C.assume that all cash flows occur at the beginning of a period. […]

1) A company has several service departments that provide differing amounts of service to each other and to the company’s operating departments. Which of the following statements is true? A.The direct method and the step-down method will result in the […]

1) Keyton Corporation’s net operating income in Year 2 was $43,714, net income before taxes was $30,714, and the net income was $21,500. Total common stock was $200,000 at the end of both Year 2 and Year 1. The par […]

1) Aaker Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under variable costing? A.$66 per unit B.$93 C.$87 D.$60 2) Larance […]

1) Ohme Framing’s cost formula for its supplies cost is $1,620 per month plus $13 per frame. For the month of April, the company planned for activity of 882 frames, but the actual level of activity was 878 frames. The […]

1) A sunk cost is: A) a cost which may be saved by not adopting an alternative. B) a cost which may be shifted to the future with little or no effect on current operations. C) a cost which cannot […]

1) Data from Keniston Corporation’s most recent balance sheet and income statement appear below: The average collection period for this year is closest to: A.39.1 days B.45.1 days C.54.3 days D.57.5 days 2) The company’s accounts receivable turnover for Year […]

1) Nash Corporation manufactures and sells custom snowmobiles. From the time an order is placed till the time the snowmobile reaches the customer averages 50 days. This 50 days is spent as follows: What is Nash’s manufacturing cycle efficiency (MCE) […]

1) Home Corporation will open a new store on January 1. Based on experience from its other retail outlets, Home Corporation is making the following sales projections: Home Corporation estimates that 70% of the credit sales will be collected in […]

1) The prime cost for September was: A) $114,000 B) $100,000 C) $103,000 D) $47,000 2) Shelby Boat Wash’s cost formula for its cleaning equipment and supplies is $2,200 per month plus $34 per boat. For the month of September, […]

1) Consider the following production and cost data for two products, L and C: The company can only perform 65,000 machine set-ups each period due to limited skilled labor and there is unlimited demand for each product. What is the […]

1) Nantua Corporation has two divisions, Southern and Northern. The following information was taken from last year’s income statement segmented by division: Net operating income last year for Nantua Corporation was $400,000. If the Northern Division’s sales last year were […]

1) Galla Corporation makes a product with the following standard costs: The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to […]

1) If the Tudor Retailing Company uses the high-low method of analysis, the total selling and administrative expense if Tudor Retailing Company sells 6,500 units during a month would be estimated to be: A) $37,000 B) $44,850 C) $38,250 D) […]

1) A manufacturer of premium wire strippers has supplied the following data: The company’s margin of safety in units is closest to: A.135,429 units B.16,923 units C.223,333 units D.320,317 units 2) LFM Corporation makes and sells a product called Product […]

1) The following data have been provided by Mathews Corporation: Lubricants and supplies are both elements of variable manufacturing overhead. The variable overhead rate variance for lubricants is closest to: A.$1,376 F B.$516 U C.$860 F D.$1,376 U 2) The […]

1) What would be the effect on the company’s overall net operating income if product I11S were dropped? A.Overall net operating income would decrease by $46,000. B.Overall net operating income would increase by $93,000. C.Overall net operating income would increase […]

1) The Portland Division’s operating data for the past two years is as follows: The Portland Division’s margin in Year 2 was 150% of the margin for Year 1. The turnover for Year 1 was: A.10.00 B.2.00 C.1.50 D.3.20 2) […]

1) The times interest earned for Year 2 is closest to: A.2.22 B.4.17 C.3.17 D.5.95 2) If Madison has a limit of 15,000 machine hours but no limit on direct labor hours, then the ranking of the products from the […]

1) Gandrud Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During June, the kennel budgeted for 2,600 tenant-days, but its actual level of activity was 2,580 […]

1) When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n): A.combined price and quantity variance. B.efficiency variance. C.price or rate variance. D.quantity variance. 2) Milano Corporation is working on its direct […]

1) The markup percentage on the new product would be closest to: A.15.0% B.46.6% C.31.6% D.50.0% 2) Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for […]

1) The salvage value of new equipment should be considered when using the internal rate of return method to evaluate a project. 2) Assuming the LIFO inventory flow assumption, if production equals sales for the period, absorption costing and variable […]

1) A fixed cost cannot be a differential cost. 2) In a special order situation, any fixed cost that could be avoided if the special order were not accepted would be irrelevant. Answer: TRUE 3) The price-earnings ratio is determined […]

1) The project profitability index is used to compare the net present values of two investments that require different amounts of investment funds. 2) Commissions paid to salespersons are a variable selling expense. Answer: T 3) Any difference in the […]

1) When discounted cash flow methods of capital budgeting are used, the working capital required for a project is ordinarily counted as a cash inflow at the beginning of the project and as a cash outflow at the end of […]

1) The order in which the costs of service departments are allocated will affect the amounts allocated to an operating department when the step-down method is used. 2) Joint products are products that are sold to customers as a set […]

1) A static planning budget is suitable for planning but is inappropriate for evaluating how well costs are controlled. 2) Residual income should not be used to evaluate a profit center. Answer: TRUE 3) In traditional costing, some manufacturing costs […]

1) If all four of Argo Corporation’s overhead variances are favorable, Argo’s overhead will be underapplied. 2) When the predetermined overhead rate is based on the level of activity at capacity, underapplied manufacturing overhead may be called the Cost of […]

1) The split-off point in a process that produces joint products is the point in the manufacturing process at which the joint products are sent to separate customers. 2) All other things the same, purchasing merchandise inventory would have no […]

1) A cost that can be avoided by choosing one alternative over another is not relevant for decision purposes. 2) Pricing decisions are most difficult in those situations in which a company makes a product that is in competition with […]

1) A flexible budget cannot be used to estimate what costs should have been at a given level of activity. 2) Negative free cash flow suggests that the company generated enough cash flow from its operating activities to fund its […]

1) Depreciation on office equipment would be included in product costs. 2) The equivalent units of production will be the same under the weighted-average and the FIFO method if there is no ending work in process inventory. Answer: FALSE 3) […]

1) All other things the same, when a company increases its inventories in anticipation of later higher sales, the accounts receivable turnover ratio for the current period increases. 2) The step-down method allocates less total cost to operating departments than […]

1) A cost that is traceable to a segment through activity-based costing may or may not be an avoidable cost for decision making. 2) ISO 9000 certification is relatively easy to achieve because little documentation on quality control procedures is […]