The variance from standard for factory overhead resulting from incurring a total amount
of factory overhead cost that is greater or less than the amount budgeted for the level of
operations achieved is termed controllable variance.
a. True
b. False
Answer:
The following data are taken from the management accounting reports of Dulcimer Co.:
If an incentive bonus is paid to the manager who achieved the highest income from
operations before service department charges, it follows that
a. Division A’s manager is given the bonus
b. Division B’s manager is given the bonus
c. Division C’s manager is given the bonus
d. Divisions B and C’s managers divide the bonus
Answer:
Lean manufacturing favors organizing work around processes rather than around
products.
a. True
b. False
Answer:
Based on the following data, what is the accounts receivable turnover?
Sales on account during year $700,000
Cost of merchandise sold during year 270,000
Accounts receivable, beginning of year 45,000
Accounts receivable, end of year 35,000
Inventory, beginning of year 90,000
Inventory, end of year
a. 17.5 110,000
b. 2.6
c. 20.0
d. 15.5
Answer:
For Years 1’“5, a proposed expenditure of $250,000 for a fixed asset with a 5-year life
has expected net income of $40,000, $35,000, $25,000, $25,000, and $25,000,
respectively, and net cash flows of $90,000, $85,000, $75,000, $75,000, and $75,000,
respectively. The cash payback period is 3 years.
a. True
b. False
Answer:
A negative fixed overhead volume variance can be caused due to the following except
a. sales orders at a low level
b. machine breakdowns
c. employee inexperience
d. increase in utility costs
Answer:
The management of River Corporation is considering the purchase of a new machine
costing $380,000. The company’s desired rate of return is 6%. The present value factor
for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing
information, use the following data in determining the acceptability of this investment:
The net present value for this investment is
a. $20,140
b. $(20,140)
c. $19,875
d. $(19,875)
Answer:
Which of the following results in fewer transactions in lean accounting?
a. all manufacturing costs are combined in one account called Raw and In Process
Inventory.
b. the distinction between direct and indirect costs is eliminated.
c. there is less movement of inventory between departments.
d. All of the above.
Answer:
In variable costing, the cost of products manufactured is composed of only those
manufacturing costs that increase or decrease as the volume of production rises or falls.
a. True
b. False
Answer:
Make-or-buy decisions should be made only with related parties.
a. True
b. False
Answer:
The following production data were taken from the records of the finishing department
for June:
Determine the number of equivalent units of production in the June 30, finishing
department inventory, assuming that the first-in, first-out method is used to cost
inventories. The completion percentage of 25% applies to both direct materials and
conversion costs.
a. 575 units
b. 200 units
c. 1,000 units
d. 300 units
Answer:
Everest Co. uses a plantwide factory overhead rate based on direct labor hours.
Overhead costs would be overcharged to which of the following departments?
a. A labor-intensive department
b. A capital-intensive department
c. A materials-intensive department
d. All of the above
Answer:
On November 2, Newsprint Manufacturing purchases 5 rolls of paper on account at
$125 per roll for use within the production process. On November 5, 4 rolls of this
paper are issued to Job 157A in the Printing Department. The Printing Department
records $675 in direct labor and $1,150 of factory overhead to Job 157A. On November
8, Printing transfers Job 157A to the Folding Department. The Folding Department
applies $450 in direct labor and
$655 in factory overhead to Job 157A. Job 157A is transferred to Finished Goods
inventory on November 9.
(a) Journalize the purchase of the paper.
(b) Journalize the transfer of raw materials to work in process, the application of direct
labor, and the application of manufacturing overhead to Job 157A while in the Printing
Department.
(c) Journalize the transfer of Job 157A to the Folding Department at actual cost.
(d) Journalize the application of direct labor and the application of manufacturing
overhead to Job 157A while in the Folding Department.
(e) Journalize the transfer of Job 157A to Finished Goods Inventory at actual cost.
Answer:
Rowan Quinn Company manufactures kitchen appliances. Currently, it is
manufacturing one of its components at a variable cost of $40 and fixed costs of $15
per unit. An outside provider of this component has offered to sell Rowan Quinn the
component for $45. Determine the best plan and calculate the savings.
a. $5 savings per unit if manufactured
b. $5 savings per unit if purchased
c. $10 savings per unit if manufactured
d. $15 savings per unit if purchased
Answer:
The following financial information was summarized from the accounting records of
Train Corporation for the current year ended December 31:
The income from operations for the Rails Division is
a. $60,800
b. $33,600
c. $8,700
d. $21,150
Answer:
Conversion costs consist of product costs and period costs.
a. True
b. False
Answer:
Conan Electronics Corporation manufactures and assembles electronic motor drives for
video cameras. The company assembles the motor drives for several accounts. The
process consists of a lean cell for each customer. The following information relates only
to one customer’s lean cell. For the year, planned labor and overhead was $80,000,000;
materials costs, $25 per unit. Planned production included 9,600 hours to produce
76,800 motor drives. Actual production for the month of August was 5,200 units, and
motor drives shipped amounted to 5,040 units. From the foregoing information,
determine the budgeted cell conversion cost per hour.
a. $8,025
b. $800
c. $7,200
d. $8,333
Answer:
In a cost-volume-profit chart, the
a. total cost line begins at zero
b. slope of the total cost line is dependent on the fixed cost per unit
c. total cost line begins at the total fixed cost value on the vertical axis
d. total cost line normally ends at the highest sales value
Answer:
Carrolton, Inc. currently sells widgets for $80 per unit. The variable cost is $30 per unit
and total fixed costs equal $240,000 per year. Sales are currently 20,000 units annually.
The company is considering a 20% drop in selling price that it believes will raise units
sold by 20%. Assuming all costs stay the same, what is the impact on income if this
change is made?
Answer:
The Mountain Springs Water Company has two departments, Purifying and Bottling.
The Bottling Department received 67,000 liters from the Purifying Department. During
the period, the Bottling Department completed 65,000 liters, including 3,000 liters of
work in process at the beginning of the period. The ending work in process was 5,000
liters. How many liters were started and completed during the period?
Answer:
Compute the standard cost for one hat, based on the following standards for each hat:
Answer:
Magnus Industries has the following data:
Calculate the cost of raw materials used.
Answer:
A project is estimated to cost $248,400 and provide annual cash flows of $50,000 for 8
years. Determine the internal rate of return for this project, using the following present
value of an annuity table.
Answer:
A company reports the following income statement and balance sheet information for
the current year:
Determine the rate earned on total assets. Round your answer to one decimal place.
Answer:
Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub
cap is $4.75 and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month
of $3,120. Compute the contribution margin per unit and break-even sales in units and
in dollars for the month.
Answer:
What is capital investment analysis? Why are capital investment analysis decisions
often difficult and risky?
Answer: