Equivalent units are the sum of direct materials used and direct labor incurred.
a. True
b. False
Answer:
The job order costing system is used by service firms to determine revenues, expenses,
and ultimately profit.
a. True
b. False
Answer:
Cost-volume-profit analysis cannot be used if which of the following occurs?
a. Costs cannot be properly classified into fixed and variable costs.
b. The total fixed costs change.
c. The per-unit variable costs change.
d. Per-unit sales prices change.
Answer:
Standard costs are divided into which of the following components?
a. variance standard and quantity standard
b. materials standard and labor standard
c. quality standard and quantity standard
d. price standard and quantity standard
Answer:
Which of the following budgets provides the starting point for the preparation of the
direct labor cost budget?
a. direct materials purchases budget
b. cash budget
c. production budget
d. sales budget
Answer:
For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales
manager’s salary is $96,000; advertising expenses are $90,000; shipping expenses total
2% of sales; and miscellaneous selling expenses are $2,500 plus 1/2 of 1% of sales.
Total selling expenses for the month of February are
a. $161,000
b. $237,500
c. $235,000
d. $241,000
Answer:
Department S had no work in process at the beginning of the period. It added 12,000
units of direct materials during the period at a cost of $84,000; 9,000 units were
completed during the period; and 3,000 units were 30% completed as to labor and
overhead at the end of the period. All materials are added at the beginning of the
process. Direct labor was $49,500 and factory overhead was $9,900.
The total conversion costs for the period were a. $59,400
b. $49,500
c. $143,400
d. $9,900
Answer:
The following financial information was summarized from the accounting records of
Buddy Corporation for the current year ended December 31:
Calculate:
(a) The gross profit for the Dalmatian Division.
(b) The income from operations from the Dalmatian Division.
(c) The gross profit for the Beagle Division.
(d) The income from operations from the Beagle Division.
(e) The net income for the Buddy Corporation.
Answer:
The following data are taken from the financial statements:
Determine for the current year the (a) rate earned on total assets, (b) rate earned on
stockholders’ equity, (c) rate e common stockholders’ equity, (d) earnings per share on
common stock, (e) price-earnings ratio on common stock, and yield on common stock.
The current market price per share of common stock is $25.
Round percentage values to one decimal place, dollar values to two decimal places, and
other ratios to one decimal
Answer:
Jay Company uses the total cost concept of applying the cost-plus approach to product
pricing. The costs and expenses of producing and selling 38,400 units of Product E are
as follows:
Jay desires a profit equal to a 14% rate of return on invested assets of $640,000.
(a) Determine the amount of desired profit from the production and sale of Product E.
(b) Determine the total costs and the cost amount per unit for the production and sale of
38,400 units of Product E.
(c) Determine the markup percentage for Product E.
(d) Determine the selling price of Product E.
Answer:
Hummingbird Company uses the product cost concept of applying the cost-plus
approach to product pricing. The costs and expenses of producing 25,000 units of
Product K are as follows:
Hummingbird desires a profit equal to a 5% rate of return on invested assets of
$642,500.
(a) Determine the amount of desired profit from the production and sale of Product K.
(b) Determine the total manufacturing costs and the cost amount per unit for the
production of 25,000 units of Product K.
(c) Determine the markup percentage for Product K.
(d) Determine the selling price of Product K.
Round your markup percentage to one decimal place, and other intermediate
calculations and final answer to two decimal places.
Answer:
In contribution margin analysis, the effect of a difference in the number of units sold,
assuming no change in unit sales price or cost, is termed the unit price or unit cost
factor.
a. True
b. False
Answer:
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 unit contribution margin of E?
a. $24
b. $60
c. $92
d. $20
Answer:
A manufacturing company applies factory overhead based on direct labor hours. At the
beginning of the year, it estimated that factory overhead costs would be $360,000 and
direct labor hours would be 30,000. Actual factory overhead costs incurred were
$377,200, and actual direct labor hours were 36,000. What is the amount of over
applied or under applied manufacturing overhead at the end of the year?
a. $6,000 over applied
b. $6,000 under applied
c. $54,800 over applied
d. $54,800 under applied
Answer:
Which of the following is not a factory overhead cost?
a. materials used directly in the manufacturing process of the product
b. insurance on factory equipment
c. salaries of production supervisors
d. property tax on factory building
Answer:
The Clydesdale Company has sales of $4,500,000. It also has invested assets of
$2,000,000 and operating expenses of $3,600,000. The company has established a
minimum rate of return of 7%.
What is Clydesdale Company’s rate of return on investment?
a. 56%
b. 20%
c. 45%
d. 25%
Answer:
The primary advantages of the average rate of return method are its ease of computation
and the fact that
a. it is especially useful to managers whose primary concern is liquidity
b. there is less possibility of loss from changes in economic conditions and
obsolescence when the commitment is short-term
c. it emphasizes the amount of income earned over the life of the proposal
d. rankings of proposals are necessary
Answer:
Inventory reduction is a principle.
a. lean
b. traditional processing
c. economic
d. wait time
Answer:
If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each)
and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40
each), the effect of the unit cost factor on the change in contribution margin is:
a. $6,400 decrease
b. $6,400 increase
c. $7,200 increase
d. $7,200 decrease
Answer:
If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each)
and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40
each), the effect of the quantity factor on the change in contribution margin is:
a. $10,800 decrease
b. $10,800 increase
c. $10,000 increase
d. $10,000 decrease
Answer:
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 September from accounts receivable are estimated to
be
a. $223,600
b. $145,600
c. $182,000
d. $168,000
Answer:
The cost of wages paid to employees directly involved in the manufacturing process in
converting materials into finished products is classified as
a. factory overhead cost
b. direct labor cost
c. miscellaneous costs
d. direct materials cost
Answer:
Both process and job order cost systems maintain perpetual inventory accounts with
subsidiary ledgers.
a. True
b. False
Answer:
On May 15, the stamping department accepted Job 051507A to make 1,000 funnels.
Materials requisitioned was 1,100 sheets at $1.20 per sheet and 1,150 grommets at
$0.15 per set. The cost driver used by stamping department is the drop-forge strokes
indicated by a machine mounted counter. Overhead is applied at $2.25 for each
drop-forge stroke. Additionally, $375.00 of overhead is applied to each job due to setup
and tear down. Direct labor is applied at $22.50 per hour for the machine operator and
$11.10 for the machine loader. The job required 6.5 hours of labor.
Upon completion, the job was transferred to Finished Goods Inventory. Journalize all
events as of May 15.
Answer:
Given the following information:
Variable cost per unit = $5.00 July fixed cost per unit = $7.00
Units sold and produced in July = 28,000
What is total estimated cost for August if 30,000 units are projected to be produced and
sold?
Answer:
Titus Company produced 8,900 units of a product that required 3.25 standard hours per
unit. The standard fixed overhead cost per unit is $1.20 per hour at 29,000 hours, which
is 100% of normal capacity.
Determine the fixed factory overhead volume variance.
Answer:
Oak Company produces a chair that requires 6 yards of material per unit. The standard
price of one yard of material is $7.50. During the month, 8,500 chairs were
manufactured, using 48,875 yards.
Journalize the entry to record the standard direct materials used in production.
Answer:
A 6-year project is estimated to cost $350,000 and have no residual value. If the
straight-line depreciation method is used and the average rate of return is 12%,
determine the estimated annual net income.
Answer: