Grant Corporation
The following information is available for Grant Corporation for the current month:
All materials are added at the start of production and the inspection point is at the end
of the process.
Refer to Grant Corporation. What is the total cost assigned to goods transferred out
using weighted average?
A. $435,080
B. $429,824
C. $428,656
D. $423,400
All other things being equal, as the time period for receiving an annuity lengthens,
A. the related present value factors increase.
B. the related present value factors decrease.
C. the related present value factors remain constant.
D. it is impossible to tell what happens to present value factors from the information
given.
Austin, Brown, and Freeman Companies
Below are income statements that apply to three companies: Austin, Brown, and
Freeman:
Refer to Austin, Brown, and Freeman Companies. Within the relevant range, if sales go
up by $1 for each firm, which firm will experience the greatest increase in profit?
A. Austin Company
B. Brown Company
C. Freeman Company
D. can’t be determined from the information given
Jenkins Manufacturing
The following information is available for Jenkins Manufacturing Company for the
month of June when the company produced 2,100 units:
Refer to Jenkins Manufacturing Company. What is the labor efficiency variance?
A. $731 F
B. $731 U
C. $750 F
D. none of the answers are correct
Donald Hughes has an opportunity to invest in a project that will yield four annual
payments of $12,000 with no salvage. The first payment will be received in exactly one
year. On low-risk projects of this type, Hughes requires a return of 6 percent. Based on
this requirement, the project generates a profitability index of 1.03953.
Present value tables or a financial calculator are required.
Commodore Company
Commodore Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
September when Commodore produced 5,000 units:
Refer to Commodore Company. Using the four-variance approach, what is the fixed
overhead spending variance?
A. $ 250 U
B. $ 250 F
C. $1,000 U
D. $2,250 F
Residual income is determined as
A. income times the asset turnover rate.
B. income times the inventory turnover rate.
C. income minus (asset base times target rate of return).
D. sales minus (asset base times target rate of return).
Under an acceptable method of costing by-products, inventory costs of the by-product
are based on the portion of the joint production cost allocated to the by-product
A. but any subsequent processing cost is debited to the cost of the main product.
B. but any subsequent processing cost is debited to revenue of the main product.
C. plus any subsequent processing cost.
D. minus any subsequent processing cost.
CVP analysis relies on the assumptions that costs are either strictly fixed or strictly
variable. Consistent with these assumptions, as volume decreases total
A. fixed costs decrease.
B. variable costs remain constant.
C. costs decrease.
D. costs remain constant.
Parker Company
Below is an income statement for Parker Company:
Refer to Parker Company. What was Parker’s margin of safety?
A. $200,000
B. $75,000
C. $100,000
D. $109,091
Joint cost allocation is useful for
A. decision making.
B. product costing.
C. control.
D. evaluating managers’ performance.
Broncho Industries is considering the purchase of a $100,000 machine that is expected
to result in a decrease of $15,000 per year in cash expenses. This machine, which has
no residual value, has an estimated useful life of 10 years and will be depreciated on a
straight-line basis. For this machine, the accounting rate of return would be
A. 10 percent.
B. 15 percent.
C. 30 percent.
D. 35 percent.
Both the budgeted quantity of material to be purchased and the budgeted quantity of
material to be consumed can be found in the
A. material purchases budget.
B. production budget.
C. pro forma income statement.
D. cash budget.
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the three-variance approach, what is the
efficiency variance?
A. $9,937 F
B. $2,187 F
C. $2,187 U
D. $2,937 F
If a firm uses absorption costing, fixed manufacturing overhead will be included
A. only on the balance sheet.
B. only on the income statement.
C. on both the balance sheet and income statement.
D. on neither the balance sheet nor income statement.
Activity-based costing and generally accepted accounting principles differ in that ABC
A. does not define product costs in the same manner as GAAP.
B. cannot be used to compute an income statement, but GAAP can.
C. is concerned only with costs generated from automated processes, but GAAP is
concerned with costs generated from both manual and automated processes.
D. information is useful only to managers, while GAAP information is useful to all
organizational stakeholders.
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the three-variance approach, what is the volume
variance?
A. $3,125 F
B. $3,875 F
C. $3,875 U
D. $6,062 U