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 four-variance approach, what is the variable
overhead spending variance?
a. $4,375 U
b. $4,375 F
c. $8,750 U
d. $6,562 U
Michigan Company
Ann Arbor Division of the Michigan Company has the following statistics for its most
recent operations:
Refer to Michigan Company. If Michigan Company evaluates its managers on the basis
of return on investment, the manager of Ann Arbor Division would invest in a project
costing $100,000 only if it increased net segment income by at least
a. $10,000.
b. $15,000.
c. $20,000.
d. $25,000.
In a process costing system using the weighted average method, cost per equivalent unit
for a given cost component is found by dividing which of the following by EUP?
a. only current period cost
b. current period cost plus the cost of beginning inventory
c. current period cost less the cost of beginning inventory
d. current period cost plus the cost of ending inventory
The potential rental value of space used for production activities
a. is a variable cost of production.
b. represents an opportunity cost of production.
c. is an unavoidable cost.
d. is a sunk cost of production.
For a project such as plant investment, the return that should leave the market price of
the firm’s stock unchanged is known as the
a. cost of capital.
b. net present value.
c. payback rate.
d. internal rate of return.
According to JIT philosophy,
a. inventories of finished goods always should be available to meet customer demand.
b. push-through manufacturing flows are the most efficient.
c. maintaining inventories wastes resources and frequently covers up poor work or other
problems.
d. long production runs and large production lot sizes take advantage of economies of
scale.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product G?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
Atlantic Princess Corporation
Atlantic Princess Corporation is considering the purchase of a new ocean-going vessel
that could potentially reduce labor costs of its operation by a considerable margin. The
new ship would cost $500,000 and would be fully depreciated by the straight-line
method over 10 years. At the end of 10 years, the ship will have no value and will be
scuttled. Atlantic Princess’s cost of capital is 12 percent, and its marginal tax rate is 40
percent.
Refer to Atlantic Princess Corporation. What is the present value of the depreciation tax
benefit of the new ship? (Round to the nearest dollar.) Present value tables or a
financial calculator are required.
a. $113,004
b. $282,510
c. $169,506
d. $200,000
The journal entry to apply overhead to production includes a credit to Manufacturing
Overhead control and a debit to
a. Finished Goods Inventory.
b. Work in Process Inventory.
c. Cost of Goods Sold.
d. Raw Material Inventory.
An activity driver is used for which of the following reasons?
a. yes yes
b. yes no
c. no yes
d. no no
Expatriate employees
a. should be paid a base comparable to what he/she was earning domestically.
b. will be paid more than corresponding managers in their home country.
c. will always pay taxes in the country in which they are based.
d. should receive retirement benefits based on local currencies.
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Which products would be processed further?
a. only Product X
b. only Product Z
c. both Products X and Z
d. neither Product X or Z
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product X (round to the nearest dollar)?
a. $5,500
b. $2,500
c. $4,000
d. $3,243
Garfield Company had beginning Work in Process Inventory of 5,000 units that were 40
percent complete as to conversion costs. Garfield Company started and completed
42,000 units this period and had ending Work in Process Inventory of 12,000 units.
How many units were started this period?
a. 42,000
b. 47,000
c. 54,000
d. 59,000
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 material price variance?
a. $638 U
b. $638 F
c. $630 U
d. $630 F
Fixed costs per unit vary inversely with levels of production.
An analysis tool employing statistical techniques to answer business-related questions
is referred to as _________________________.
Cost based transfer prices are most appropriate for low cost and low volume services.
Bottlenecks in a production process will cause other parts of the process to experience
idle time.
Cost structure is related to an organization’s proportions of fixed and variable costs.
What is the difference between a product cost and a period cost? Give three examples
of each. What is the difference between a direct cost and indirect cost? Give two
examples of each.
The segment margin of a profit or investment center does not include allocated
common costs.
_________________________ refers to the number of products made.
Absorption costing is commonly used for internal reporting.
Sales revenue at split-off less disposal costs equals
______________________________.
When a relationship between several independent variables and one dependent variable
is analyzed, the regression is referred to as ____________________.
Why have many managers in recent years moved toward emphasizing employee
participation in the budgeting process rather than simply imposing the budget on the
employees?
Ideal standards do not allow for normal operating delays or human limitations.
An organizational unit whose manager is solely responsible for generating revenues is
referred to as a ______________________________.
Financial measures are lagging indicators.
Costs of monitoring and compensating for mistakes noteliminated through prevention
activities are referred to as ______________________________.
Thompson Enterprises owns two luxury automobiles that are used by employees on
company business. Mileage and expenses, excluding depreciation, by quarters for the
most recent year are presented below:
Required:Determine the variable cost per mile (nearest tenth of a cent) and the fixed
costs per quarter, using the method of least squares.
In an ERP system, data is decentralized among an organization’s divisions.