Department G had 3,600 units, 40% completed at the beginning of the period, 12,000
units were completed during the period, 2,000 units were 20% completed at the end of
the period, and the following manufacturing costs were debited to the departmental
work in process account during the period:
Assuming that all direct materials are placed in process at the beginning of production
and that the first-in, first-out method of inventory costing is used, what is the material
and conversion cost per unit (to the nearest penny), respectively.
a. $5.94 and $5.86
b. $5.94 and $6.38
c. $8.00 and $8.68
d. $9.84 and $9.58
Answer:
The following data relate to direct materials costs for February:
Materials cost per yard: standard, $2.00; actual, $2.10
Standard yards per unit: standard, 4.5 yards; actual, 4.75 yards
Units of production: 9,500
Calculate the direct materials price variance.
a. $1,795.50 favorable
b. $378.00 favorable
c. $4,512.50 unfavorable
d. $378.00 unfavorable
Answer:
Which of the following would not be found in the accounting system of a service
provider?
a. cost ledger
b. finished goods ledger
c. deferred revenue account
d. job cost sheets
Answer:
Number of advertising campaigns
An activity base is used to charge service department expenses. Match the following
activity bases with the appropriate department (a-h).
a. Purchasing
b. Payroll accounting
c. Human resources
d. Maintenance
e. Information systems
f. Marketing
g. President’s Office
h. Transportation
Answer:
The condensed income statement for a Fletcher Inc. for the past year is as follows:
Management is considering the discontinuance of the manufacture and sale of Product
G at the beginning of the current year. The discontinuance would have no effect on the
total fixed costs and expenses or on the sales of Products F and H. What is the amount
of change in net income for the current year that will result from the discontinuance of
Product G?
a. $20,000 increase
b. $30,000 increase
c. $20,000 decrease
d. $30,000 decrease
Answer:
If the standard to produce a given amount of product is 1,000 units of direct materials at
$11 and the actual was 800 units at $12, the direct materials quantity variance was
$1,000 unfavorable.
a. True
b. False
Answer:
The Ramapo Company produces two products, Blinks and Dinks. They are
manufactured in two departments, Fabrication and Assembly. Data for the products
and departments are listed below.
All of the machine hours take place in the Fabrication department, which has an
estimated overhead of $84,000. All of the labor hours take place in the Assembly
department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on
labor hours. What is the overhead cost per unit for Blinks?
a. $78.00
b. $19.50
c. $37.45
d. $56.00
Answer:
Frosting
The following are some of the costs incurred by Cupcake Company. Identify them as
either:
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
Answer:
*Actual hours are equal to standard hours for units produced.
The variable factory overhead controllable variance is
a. $8,981.75 favorable
b. $7,280.75 unfavorable
c. $8,981.75 unfavorable
d. $7,280.75 favorable
Answer:
Under variable costing, which of the following costs would be included in finished
goods inventory?
a. salary of salesperson
b. salary of vice-president of finance
c. wages of carpenters in a furniture factory
d. straight-line depreciation on factory equipment
Answer:
In calculating the net present value of an investment in equipment, the required
investment and its residual value should be subtracted from the present value of all
future cash inflows.
a. True
b. False
Answer:
Costs that vary in total in direct proportion to changes in an activity level are called
a. fixed costs
b. sunk costs
c. variable costs
d. differential costs
Answer:
Blackwelder Factory produces two similar products’”small lamps and desk lamps. The
total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is
further estimated that small lamp production will require 275,000 direct labor hours and
desk lamp production will need 125,000 direct labor hours.
Using the single plantwide factory overhead rate with an allocation base of direct labor
hours, how much factory overhead will Blackwelder Factory allocate to desk lamp
production if actual direct hours for the period is 118,000?
a. $118,000
b. $200,000
c. $188,800
d. $125,000
Answer:
If the standard to produce a given amount of product is 600 direct labor hours at $17
and the actual was 500 hours at $15, the time variance was $1,500 unfavorable.
a. True
b. False
Answer:
occurs when budgets are too loose
Match each phrase that follows with the term (a-e) it describes.
a. planning
b. directing
c. controlling
d. budget slack
e. goal conflict
Answer:
Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated
to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending
inventory is 90,000 units. The quantities of direct materials expected to be used for each
unit of finished product are given below.
Material A 0.50 lb. per unit @ $0.70 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of material A used in production during the year is
a. $217,700
b. $528,700
c. $311,000
d. $224,600
Answer:
If the costs for direct materials, direct labor, and factory overhead were $60,000,
$35,000, and $25,000, respectively, for 20,000 equivalent units of production, the
conversion cost per equivalent unit was $6.
a. True
b. False
Answer:
Miller and Sons’ static budget for 10,000 units of production includes $50,000 for direct
materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries
of $24,000. A flexible budget for 12,000 units of production would show
a. the same cost structure in total
b. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and
supervisor salaries of $29,000
c. total variable costs of $148,000
d. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and
supervisor salaries of $24,000
Answer:
the portion of whole units that are complete with respect to materials or conversion
costs
Match each phrase that follows with the term (a-e) it describes.
a. cost of production report
b. equivalent units of production
c. manufacturing cells
d. yield
e. just-in-time processing
Answer:
The following information pertains to Diane Company. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What is the rate earned on common stockholders’ equity for Diane Company?
a. 6.75%
b. 14.8%
c. 7.4%
d. 13.5%
Answer:
Contribution margin divided by income from operations
Match the following terms (a-e) with their definitions.
a. Profit-volume chart
b. Cost-volume-profit chart
c. Sales mix
d. Operating leverage
e. Margin of safety
Answer:
The standard costs and actual costs for direct labor for the manufacture of 2,500 actual
units of product are as follows:
The direct labor rate variance is
a. $2,960 unfavorable
b. $4,500 favorable
c. $2,960 favorable
d. $4,500 unfavorable
Answer:
The cost of a manufactured product generally consists of which of the following costs?
a. direct materials cost and factory overhead cost only
b. direct labor cost and factory overhead cost only
c. direct labor cost, direct materials cost, and factory overhead cost
d. direct materials cost and direct labor cost only
Answer:
The four steps necessary to complete a cost of production report in a process cost
system are
Answer:
Sienna Company has the following information for January:
Calculate the cost of goods manufactured.
Answer:
If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000,
break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of
sales, what is the margin of safety expressed as a percentage of sales?
Answer:
A formal means of analyzing long-range investment decisions
Match the definition that follows with the term (a’“f) it defines.
s. Capital rationing
t. Annuity
u. Capital investment analysis
v. Internal rate of return method
w. Payback period
x. Accounting rate of return
Answer:
The cost per equivalent units of direct materials and conversion in the Bottling
Department of Beverages on Jolt Company is $0.47 and $0.15, respectively. The
equivalent units to be assigned costs are as follows.
The beginning work in process inventory had a cost of $3,500. Determine the cost of
completed and transferred out production, and the ending work in process inventory.
Answer:
Future Technologies projected sales of 35,000 computers for this year. The estimated
January 1 inventory is 3,000 units, and the desired December 31 inventory is 9,000
units. What is the budgeted production (in units) for the year?
Answer:
