The direct labor time variance measures the efficiency of the direct labor force.
a. True
b. False
Adams Company is a manufacturing company that has worked on several production
jobs during the first quarter of the year. Below is a list of all the jobs for the quarter:
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of
$500 on each job.
What is the ending balance of Finished Goods for Adams Company at the end of the
first quarter?
a. $456
b. $1,067
c. $1,685
d. $2,752
For a period during which the quantity of product manufactured was less than the
quantity sold, income from operations reported under absorption costing will be smaller
than income from operations reported under variable costing.
a. True
b. False
Income from operations for Division L is $250,000, total service department charges
are $400,000 and operating expenses are $2,750,000. What are the revenues for
Division L?
a. $650,000
b. $3,000,000
c. $3,400,000
d. $2,750,000
A company is contemplating investing in a new piece of manufacturing machinery. The
amount to be invested is $210,000. The present value of the future cash flows is
$225,000. The company’s desired rate of return used in the present value calculations
was 12%. Which of the following statements is true?
a. The project should not be accepted because the net present value is negative.
b. The internal rate of return on the project is less than 12%.
c. The internal rate of return on the project is more than 12%.
d. The internal rate of return on the project is equal to 12%.
The capital expenditures budget is part of the planned investing activities of a company.
a. True
b. False
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the
break-even point in units if variable costs are decreased by $0.50 a unit?
a. 66,000
b. 70,125
c. 74,800
d. 60,000
The budgeted direct materials purchases is based on the sum of (1) the materials needed
for production and (2) the desired ending materials inventory, less (3) the estimated
beginning materials inventory.
a. True
b. False
The cash budget is affected by the sales budget, the various budgets for manufacturing
costs and operating expenses, and the capital expenditures budget.
a. True
b. False
The underlying principle of allocating direct operating expenses to departments is to
assign to each department an amount of expense proportional to the revenues of that
department.
a. True
b. False
A nonfinancial measure is operating information that has not been translated into
dollars.
a. True
b. False
Each document in the cost ledger is called a
a. finished goods sheet
b. stock record
c. materials requisition
d. job cost sheet
All of the following are factors that may complicate capital investment analysis except
a. possible leasing alternatives
b. changes in price levels
c. sunk costs
d. federal income tax ramifications
The following data are for Trendy Fashion Apparel:
Determine the contribution margin for (a) Skirts and (b) the South Region.
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
What will the income of the Macro Division be after all service department allocations?
a. $780,000
b. $375,000
c. $575,000
d. $435,000
Lean manufacturing favors organizing work around products rather than around
processes.
a. True
b. False
Period (nonmanufacturing) costs are classified into two categories: selling and
administrative.
a. True
b. False
The formula for the rate of return on investment is
a. Invested assets/Income from operations
b. Sales/Invested assets
c. Income from operations/Sales
d. Income from operations/Invested assets
Lean manufacturing is also called make-to-order manufacturing.
a. True
b. False