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. first-in, first-out method
h. cost of production report
The standard costs and actual costs for direct materials for the manufacture of 3,000
actual units of product are
The amount of direct materials price variance is
a. $2,750 unfavorable variance
b. $2,750 favorable variance
c. $1,500 favorable variance
d. $1,500 unfavorable variance
ratio of liabilities to stockholders’ equity
Match each ratio that follows to its use (items a’“h). Items may be used more than
once.
a. assess the profitability of the assets
b. assess the effectiveness in the use of assets
c. indicate the ability to meet currently maturing obligations
d. indicate the margin of safety to creditors
e. indicate instant debt-paying ability
f. assess the profitability of the investment by common stockholders
g. indicate future earnings prospects
h. indicate the extent to which earnings are being distributed to common stockholders
Direct labor and direct materials are
a. product costs and expensed when the goods are sold
b. product costs and expensed when incurred
c. period costs and expensed when incurred
d. period costs and expensed when the goods are sold
Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of
Arks and 56,000 units of Bins. Related data are:
What was Carter Co.’s variable cost of E?
a. $140
b. $70
c. $64
d. $60
A cost can be a payment of cash for the purpose of generating revenues.
a. True
b. False
In the absorption costing income statement, deduction of the cost of goods sold from
sales yields gross profit.
a. True
b. False
measure of the work done during a production period, expressed in terms of fully
complete units of output
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. first-in, first-out method
h. cost of production report
Miramar Industries manufactures two products: A and B. The manufacturing operation
involves three overhead activities’”production setup, material handling, and general
factory activities. Miramar uses activityÂbased costing to allocate overhead to
products. An activity analysis of the overhead revealed the following estimated costs
and activity bases for these activities:
Each product’s total activity in each of the three areas are as follows:
What is the overhead allocated to Product B using activity-based costing?
a. $135,000
b. $175,000
c. $292,500
d. $285,500
Vertical analysis refers to comparing the financial statements of a single company over
several years.
a. True
b. False
The selection of the factory overhead allocation method is important because the
method selected determines the accuracy of the product cost.
a. True
b. False
Zang Co. manufacturers its products in a continuous process involving two
departments, Machining and Assembly. Prepare journal entries to record the following
transactions related to production during June:
(a) Materials purchased on account, $180,000
(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials;
Assembly, $4,900 indirect materials
(c) Direct labor used by Machining, $23,000; Assembly, $47,000
(d) Depreciation expenses: Machining, $4,500; Assembly, $7,800
(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300
(f) Machining Department transferred $98,300 to Assembly Department; Assembly
Department transferred $83,400 to finished goods
(g) Sold goods on account, $100,000; cost of goods sold, $68,000
Nuthatch Corporation began its operations on September 1 of the current year.
Budgeted sales for the first three months of business are $260,000, $375,000, and
$400,000, respectively, for September, October, and November. The company expects
to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be
collected in the month of the sale and 20% in the month following the sale.
The cash collections expected in November from accounts receivable are projected to
be
a. $280,000
b. $316,400
c. $295,200
d. $296,250
The costs of materials and labor that do not enter directly into the finished product are
classified as factory overhead.
a. True
b. False
A document that initiates a product or process change
Match the definitions that follow with the term (a’“e) it defines.
a. Engineering change order
b. Total cost concept
c. Variable cost concept
d. Normal selling price
e. Setup
Income from operations divided by invested assets
Match the definition that follows with the term (a-e) it defines.
a. Controllable revenues
b. Profit margin
c. Investment turnover
d. Rate of return on investments
e. Residual income
Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The
variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run
of 5,000 units per month. Falcon received a request for a special order that would not
interfere with normal sales. The order was for 1,500 units with a special price of $20.00
per unit. Falcon has the capacity to handle the special order, and for this order, a
variable selling cost of $1.00 per unit would be eliminated.
If the order is accepted, what would be the impact on net income?
a. decrease of $750
b. decrease of $4,500
c. increase of $3,000
d. increase of $1,500
The amount of time spent by an employee on an individual job are recorded on
a. pay stubs
b. in-and-out cards
c. time tickets
d. employees’ earnings records