Archives: Quiz

1) The amounts charged for goods and services exchanged between two divisions are known as: A.opportunity costs B.transfer prices C.standard variable costs D.residual prices E.target prices 2) The internal rate of return: A.ignores the time value of money B.equates a […]

1) Draco, Inc. has the following overhead standards: Variable overhead: 4 hours at $8 per hour Fixed overhead: 4 hours at $10 per hour The standards were based on a planned activity of 20,000 machine hours when 5,000 units were […]

1) Manufacturing overhead is applied to production. A. Describe several situations that may give rise to underapplied overhead. B. Assume that underapplied manufacturing overhead is treated as an adjustment to Cost of Goods Sold. Explain why an underapplication of overhead […]

1) Which of the following is not an issue in the collection of data for cost estimation? A.Outliers B.Missing data C.Mismatched time periods D.Inflation E.All of the other answers are issues in data collection 2) Around Town, Inc. operates a […]

1) Which of the following conditions would cause absorption-costing income to be lower than variable-costing income? A.Units sold exceeded units produced B.Units sold equaled units produced C.Units sold were less than units produced D.Sales prices decreased E.Selling expenses increased 2) […]

1) At the end of the accounting period, most companies close variance accounts to: A.Raw-Material Inventory B.Work-in-Process Inventory C.Finished-Goods Inventory D.Cost of Goods Sold E.Income Summary 2) Assume that a capital project is being analyzed by a discounted-cash-flow approach, and […]

1) Which of the following is not a type of quality cost? A.External failure costs B.Internal failure costs C.All of the answers are correct D.Prevention costs E.Appraisal costs 2) Johnstone Company makes two products: Carpet Kleen and Floor Deodorizer. Operating […]

1) Operation costing is a popular type of accounting system, one that combines selected features of job-order and process-cost accounting. Required: A. Briefly discuss the basic features that are associated with an operation-costing system. B. Explain why a sweater manufacturer […]

1) Mahler, Inc., applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 120,000; however, a lengthy strike resulted in actual machine hours being worked of only 90,000. […]

1) Pumpkin Enterprises began operations on January 1, 20×1, with all of its activities conducted from a single facility. The company’s accountant concluded that the year’s building depreciation should be allocated as follows: selling activities, 20%; administrative activities, 35%; and […]

1) Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed overhead, $250,000. If Wooster now revises its anticipated production slightly upward, it would expect: A.total fixed overhead of $250,000 and a […]

1) Which of the following methods of cost estimation relies on only two data points? A.Least-squares regression B.The high-low method C.The visual-fit method D.Account analysis E.Multiple regression 2) Which of the following is not a function of the treasurer? A.Safeguarding […]

1) Western Kentucky State College has two service departments, the Library and Computing Services, that assist the School of Business and the School of Health. Budgeted costs of the Library and Computing Services are $800,000 and $1,800,000, respectively. Usage of […]

1) Pretty Lady is an upscale boutique that operates various stores throughout Florida. The company, which has three divisions (Miami, Naples, and Tampa), reported the following information for the year just ended (in thousands): Pretty Lady also reported $600 of […]

1) The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses: A.over the short run B.over the long run C.over both the short run and the long run D.in periods of sustained profits E.in periods […]

1) Delicious Treats (DT) anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 92,000 hours were actually worked. One of the company’s cost functions is expressed as follows: Y = $16PH + $640,000 […]

1) Which of the following statements about financial planning models (FPMs) is (are) false? A.FPMs express a company’s financial and operating relationships in mathematical terms B.FPMs allow a user to explore the impact of changes in variables C.FPMs are commonly […]

1) What type of cost exhibits the behavior shown below? A.Variable cost B.Fixed cost C.Semivariable cost D.Step-variable cost E.Mixed cost 2) Lido manufactures A and B from a joint process (cost = $80,000). Five thousand pounds of A can be […]

1) Signature Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division’s variable manufacturing cost is $2, shipping cost is $0.10, and the […]

1) Prime costs are comprised of: A.direct materials and manufacturing overhead B.direct labor and manufacturing overhead C.direct materials, direct labor, and manufacturing overhead D.direct materials and direct labor E.direct materials and indirect materials 2) Xin Co., had 3,000 units of […]

1) Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000 copies and paid a total of $360 in March; in […]

1) The following selected costs were extracted from the accounting records of Louisiana Machining (LAM): 1> Direct materials used in production 2> Wages of machine operators 3> Factory utilities 4> Sales commissions 5> Salary of LAM’s president 6> Factory depreciation […]

1) Lone Star has computed the following unit costs for the year just ended: Under absorption costing, each unit of the company’s inventory would be carried at: A.$35 B.$55 C.$65 D.$84 E.None of the other answers are correct 2) If […]

1) Telfair & Company had 3,000 units in finished-goods inventory on December 31 . The following data are available for the upcoming year: The number of units the company expects to sell in January is: A.6,900 B.8,900 C.9,400 D.9,900 E.11,900 […]

1) Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target […]

1) Aloha Hotels owns numerous hotels on each of the Hawaiian Islands. The company’s performance reporting system is structured around the firm’s organizational structure, with information flowing from operating departments at a particular property and later respectively grouped by individual […]

1) Which of the following situations would cause variable-costing income to be higher than absorption-costing income? A.Units sold equaled 39,000 and units produced equaled 42,000 B.Units sold and units produced were both 42,000 C.Units sold equaled 55,000 and units produced […]

1) Operating leverage is an important concept for many companies. Required: A. Define operating leverage. B. Assume that a firm pays no income taxes and is planning to increase its selling price. If sales volume in units does not change, […]

1) The budget variance arises from a comparison of: A.budgeted fixed overhead expenditures with budgeted fixed overhead costs B.actual fixed overhead costs with budgeted fixed overhead costs C.actual variable overhead expenditures with budgeted variable overhead costs D.variable overhead costs with […]

1) Which variance is commonly associated with measuring the cost of under- or over-utilization of plant capacity? A.The variable-overhead spending variance B.The variable-overhead efficiency variance C.The fixed-overhead budget variance D.The fixed-overhead volume variance E.The total fixed-overhead variance 2) Bentson Corporation, […]

1) The point in a joint production process where each individual product becomes separately identifiable is commonly called the: A.decision point B.separation point C.individual product point D.split-off point E.joint product point 2) At the Nassau Advertising Agency, partner and staff […]

1) Which of the following would not be considered a direct cost with respect to the service department of a new car dealership? A.Wages of repair technicians B.Property taxes paid by the dealership C.Repair parts consumed D.Salary of the department […]

1) Barrey, Inc. is subject to a 40% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Barrey sell to earn an after-tax profit of […]

1) The Gingham Company’s budgeted income statement reflects the following amounts: Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible […]

1) Which of the following would have a low likelihood of being organized as a profit center? A.A movie theater of a company that operates a chain of theaters B.A maintenance department that charges users for its services C.The billing […]

1) Lester Corporation had 8,200 units of work in process on November 1 . During November, 26,800 units were started and as of November 30, 7,900 units remained in production. How many units were completed during November? A.16,100 B.26,500 C.27,100 […]

1) Which of the following statements best describes the relationship between the sales-forecasting process and the master-budgeting process? A.The sales forecast is typically completed after completion of the master budget B.The sales forecast is typically completed approximately halfway through the […]

1) Which of the following statements about materials is false? A.Acquisitions of materials are normally charged to the Purchases account B.The use of direct materials gives rise to a debit to Work-in-Process Inventory C.The use of indirect materials gives rise […]

1) Operation costing: A.tends to parallel job-order costing with respect to the treatment of conversion cost B.tends to parallel process costing with respect to the treatment of conversion cost C.tends to parallel process costing with respect to the treatment of […]

1) The variable-overhead spending and efficiency variances are: A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E 2) Cartwright Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100-sheet packages at a […]

1) Your Uncle Otto has struck it rich by investing in racehorses and desires to share some of his newfound wealth with you. Assume that you must choose from among the following three options: Receive a lump sum of $400,000 […]

1) Bowman, Inc., has only variable costs and fixed costs. A review of the company’s records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11. On the basis […]

1) If the cost of goods manufactured for the year was $385,000, what was the cost of goods sold for the year? A.$395,400 B.$385,000 C.$390,200 D.$400,600 E.None of the other answers are correct 2) Which of the following activity cost […]

1) Barry Chemical Company manufactures X-111, X-112, and X-113 from a joint process. The following information is available for the period just ended: Required: A. Does Barry allocate joint costs by using the physical-units method? Explain. B. Assume that Barry […]

1) Assume that the company computes variances at the earliest point in time. The standard hours allowed for the work performed are: A.5 B.5.14 C.39,000 D.40,100 E.none of the other answers are correct 2) Ohio, Inc., which uses a process-cost […]

1) Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process […]

1) Which of the following outcomes is (are) sometimes associated with participative budgeting? A.Employees make little effort to achieve budgetary goals B.Budget preparation time can be somewhat lengthy C.The problem of budget padding may arise D.Financial modeling becomes much more […]

1) Consider the following statements about depreciation tax shields: I. A depreciation tax shield provides distinct benefits to a business. II. A depreciation tax shield should be ignored when doing a net-present-value analysis. III. A depreciation tax shield can occur […]

1) Dover Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company’s actual payroll cost amounted to $158,200. If the standard labor cost […]

1) That employees make little effort to achieve budgetary goals is an outcome sometimes associated with participative budgeting. 2) CFF, Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory. This overstatement caused […]