Archives: Quiz

Which of the following is required to arrive at the budgeted units to be produced in a year? A) estimated direct materials inventory required at the end of the year B) estimated finished goods inventory required at the end of […]

After conducting a market research study, Magnificent Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $240. The annual […]

A local accounting firm employs 24 full-time professionals. The budgeted annual compensation per employee is $45,000. The average chargeable time is 420 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated […]

Chief Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and […]

Woodruff Flowering Plants provides the following information for the month of May: What is the budgeted contribution margin per composite unit for the actual mix? (Round any intermediary calculations two decimal places.) A) $21.22 B) $21.00 C) $20.50 D) $20.20 […]

Advocates of throughput costing argue that ________. A) fixed manufacturing costs must be included as inventoriable costs and provide less incentive than absorption costing to build-up inventory to increase profits B) direct manufacturing labor is relatively fixed and therefore should […]

Which of the following is a measure of the balanced scorecard’s customer perspective? A) Number of client complaints B) Defect rates C) Number of process improvements D) Revenue growth Which of the following is an internal-business-process measure to study the […]

First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019: On the 2019 […]

The following information pertains to the Ruby Corp: What is cost of goods sold? A) $1,210,000 B) $1,165,000 C) $1,157,000 D) $1,239,000 The variable overhead flexible-budget variance can be further explained by calculating the: A) price variance and the efficiency […]

Which of the following is the correct mathematical expression to calculate the fixed overhead spending variance? A) Static-budget amount — Flexible-budget amount B) Actual costs incurred — Flexible-budget amount C) Static-budget amount — Fixed overhead allocated for actual output D) […]

Which f the following methods focuses on reducing costs during the manufacturing stage? A) Target costing B) Kaizen costing C) Cost-plus pricing D) Life-cycle costing Which of the following is a component of operating budgets? A) production budget B) budgeted […]

Expert Manufacturing reported the following: What is Expert’s operating income? A) $346,400 B) $218,200 C) $204,200 D) $200,200 Which of the following is another term for required rate of return? A) hurdle rate B) total cost rate C) variance rate […]

In cost allocation, R&D costs are used to ________. A) provide information for economic decisions B) report to external parties when using generally accepted accounting principles C) calculate costs of a government contract D) calculate prime cost of a product […]

Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply: Model X Model Y Model Z Selling price $50 $66 $80 Direct materials […]

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the […]

Wilde Corporation budgeted the following costs for the production of its one and only product for the next fiscal year: Wilde has an annual target operating income of $920,000. The markup percentage for setting prices as a percentage of variable […]

Mendel Company makes the following journal entry: Which of the following statements is true of the given journal entry? A) A variable manufacturing overhead cost of $179,000 is written-off. B) An unfavorable spending variance of $57,000 is recorded. C) A […]

Casey Corporation produces a special line of basketball hoops. Casey Corporation produces the hoops in batches. To manufacture a batch of the basketball hoops, Casey Corporation must set up the machines and molds. Setup costs are batch-level costs because they […]

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of […]

The fundamental cost objects of ABC are ________. A) activities B) cost drivers C) products D) services Which of the following is a direct manufacturing cost? A) plant maintenance B) plant rent C) fringe benefits paid to machine operators D) […]

Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply: Model X Model Y Model Z Selling price $55 $69 $78 Direct materials […]

Following a strategy of product differentiation, Izzy’s Limited Company makes a high-end Appliance, XT15. Izzy’s Limited presents the following data for the years 2017 and 2018: Izzy’s Limited produces no defective units but it wants to reduce direct materials usage […]

Lean accounting is much simpler than traditional product costing because ________. A) it compares value stream costs against costs that include costs of all purchased materials B) it computes the cost of individual products C) calculating actual product costs by […]

ABC systems help managers to ________. A) value ending inventory more accurately B) identify new designs to reduce costs C) evaluate direct material costs more efficiently D) improve the inventory turnaround time In a perfectly competitive market, which of the […]

In comparing the three basic approaches to transfer pricing, which of the following statements would be true? A) A cost-based approach preserves subunit autonomy while negotiated transfer prices do not. B) Market-based transfer pricing motivates managers but negotiated prices do […]

Which of the following are true regarding long-run pricing decisions? A) they result in maximizing return on investment B) they include adjusting product mix in a competitive environment C) the price needs to be sufficient enough to break-even D) use […]

Carriage Incorporated manufactures horse carriages. The company has two divisions, Wheels and Assembly. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2018: ASSETS INCOME The company is […]

The top management at Amore Corp, a manufacturer of computer games, is attempting to recover from a flood that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged: What were […]

Feedback regarding previous actions may affect ________. A) future predictions B) implementation of the decision C) the decision model D) All of these answers are correct. The preparation of all the budgets in the master budget forces managers to think […]

Which of the following statements is true of an abnormal spoilage? A) It is a spoilage which is inherent in a particular production process. B) It arises even when the process is carried out in an efficient manner. C) It […]

Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The following information relates to the company’s manufacturing overhead data: What is the amount of the budgeted variable manufacturing overhead cost per unit? (Do not […]

All of the following are factors affecting direct versus indirect cost classification except: A) materiality of the cost B) cost accuracy C) information technology’s ability to trace costs in an economically feasible way D) design of operations Which of the […]

Which of the following true of nonfinancial measures of quality? A) They direct attention to financial processes that help managers identify the precise problem areas that need improvement. B) They focus managers’ attention on how poor quality affects operating income. […]

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the […]

The Big Tool Company has budgeted sales of $300,000 with the following budgeted costs: Compute the average markup percentage for setting prices as a percentage of: a. The full cost of the product b. The variable cost of the product […]

Henry Chapman Manufacturing Inc. incurred the following expenses during 2017: What will be the breakeven point in units if absorption costing is used? (Round your final answer up to the next whole unit.) A) 997 units B) 934 units C) […]

Which of the following statements is true of contribution-margin format of the income statement? A) It is used for absorption costing. B) It distinguishes between variable and fixed costs in its format. C) It distinguishes manufacturing costs from nonmanufacturing costs. […]

Activity based costing system differs from traditional costing systems in the treatment of ________. A) direct labor costs B) direct material costs C) prime costs D) indirect costs Budgeted production equals ________. A) beginning finished goods inventory + budgeted unit […]

The amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period is the unused capacity. The constant gross-margin percentage NRV method makes the simplifying assumption of treating the joint products […]

The weighted-average method merges unit costs from different accounting periods, obscuring period-to-period comparisons. When the dollar amount of scrap is immaterial, the simplest accounting is to record the physical quantity of scrap returned to the storeroom and to regard scrap […]

In the graph method of CVP analysis, the horizontal line above the x-axis represents the total cost line. The key to a company’s success is always to be the low cost producer in a particular industry. FALSE Explanation: The low […]

For short-run product-mix decisions, maximizing contribution margin will also result in maximizing operating income. A “push-through” system, often described as a materials requirement planning system, focuses first on the forecasted amount and timing of finished goods and then determines the […]

The accrual accounting rate-of-return method has a significant weakness for use in making capital budgeting decisions because it does NOT track cash flows and it ignores the time value of money. Under the proration approach, the sum of the amounts […]

Manufacturing Cycle Efficiency (MCE) = Value-added Manufacturing Time divided by Manufacturing Cycle Time. Practical capacity is the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays. TRUE Using […]

Units spoiled due to machine breakdowns and operator errors are normal spoilage. The two broad strategies that companies follow are cost leadership strategy and product differentiation strategy. TRUE U.S. tax reporting requires end-of-period reconciliation between actual and applied indirect costs […]

A direct cost of one cost object cannot be an indirect cost of another cost object. The net realizable value (NRV) method allocates joint costs to joint products produced during the accounting period on the basis of their relative NRV—final […]

Increasing the capacity of a bottleneck resource increases manufacturing cycle times and delays. Costs of abnormal spoilage are NOT considered to be inventoriable costs and are written off as costs of the accounting period in which the abnormal spoilage is […]

Joint costs are incurred beyond the split-off point and are assignable to individual products. IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. TRUE The constant gross-margin percentage NRV method is the only method of allocating joint costs under […]

Price dumping occurs when a domestic company is trying to get rid of out-of-style products at a substantially reduced price. The choice of the capacity level used to allocate budgeted fixed manufacturing costs to products can greatly affect the product-cost […]

A responsibility center is a part, segment, or subunit of an organization whose manager is accountable for a specified set of activities. Negotiated transfer prices are often employed when market prices are stable. FALSE Explanation: Negotiated transfer prices are often […]