If income from operations for a division is $120,000, sales are $975,000, and invested
assets are $750,000, the investment turnover is 1.3.
a. True
b. False
Which of the following would not be considered an internal centralized service
department?
a. Payroll Accounting Department
b. Manufacturing Department
c. Information Systems Department
d. Purchasing Department
The purpose of an audit is to
a. determine whether or not a company is a good investment
b. render an opinion on the fairness of the statements
c. determine whether or not a company complies with corporate social responsibility
d. determine whether or not a company is a good credit risk
In the manufacture of 8,000 units of a product, direct materials cost incurred was
$154,600, direct labor cost incurred was $84,000, and applied factory overhead was
$45,500. What is the total conversion cost?
a. $129,500
b. $154,600
c. $284,100
d. $238,600
Timmer Corporation just started business in January. There were no beginning
inventories. During the year, it manufactured 12,000 units of product, and sold 10,000
units. The selling price of each unit was $20. Variable manufacturing costs were $4 per
unit, and variable selling and administrative costs were $2 per unit. Fixed
manufacturing costs were $24,000, and fixed selling and administrative costs were
$6,000.
What would be the difference in Timmer’s net income for the year if it used variable
costing instead of absorption costing?
a. no difference
b. $2,000 greater
c. $4,000 less
d. $6,000 less
Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe
bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600
and has variable costs of $200.
Required
(a) If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in
order for the company to break even?
(b) How many of these bikes will be Deluxe bikes and how many will be the Standard
bikes?
Use of a plantwide factory overhead rate assumes that the activities causing overhead
costs are different across different departments and products.
a. True
b. False
The following selected data were taken from the financial statements of the Winter
Group for the three most recent years of operations:
The Year 3 net income was $242,000 and the Year 2 net income was $308,000. No
dividends on common stock were declared during the 3 years.
(a) Determine the rate earned on assets, the rate earned on stockholders’ equity, and the
rate earned on common stockholders’ equity for Years 2 and 3. Round to one decimal
place.
(b) What conclusion can be drawn from these data as to the company’s profitability?
If income from operations for a division is $6,000, invested assets are $25,000, and
sales are $30,000, the investment turnover is 5.
a. True
b. False
Developing and retaining quality managers are advantages of decentralization.
a. True
b. False
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 activity rate for general overhead?
a. $4.00 per direct labor hour
b. $60.00 per direct labor hour
c. $6.67 per direct labor hour
d. $10.00 per direct labor hour
Which of the following is not a reason for a direct materials quantity variance?
a. malfunctioning equipment
b. purchasing of inferior raw materials
c. increased material cost per unit
d. spoilage of materials
ABC is used to allocate selling and administrative expenses to each product based on
the product’s individual differences in consuming these activities.
a. True
b. False
Revenue and expense data for Bluestem Company are as follows:
(a) Prepare a comparative income statement, with vertical analysis, stating each item for
both years as a percent of sales.
(b) Comment upon significant changes disclosed by the comparative income statement.
Round percentages to one decimal place.
Insurance expense incurred on a factory building would be treated as a
a. direct cost
b. period cost
c. product cost
d. selling cost
Push manufacturing is also referred to as make-to-order processing.
a. True
b. False