Which of the following is subtracted from weighted average EUP to derive FIFO EUP?
a. beginning WIP EUP completed in current period
b. beginning WIP EUP produced in prior period
c. ending WIP EUP not completed
d. ending WIP EUP completed
An advantage of downsizing is
a. decreased costs in the long run.
b. layoffs.
c. one-time losses.
d. reduced communication.
Bradley Corporation
Bradley Corporation has three production departments A, B, and C. Bradley
Corporation also has two service departments, Administration and Personnel.
Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.
Refer to Bradley Corporation. Using the step method, what amount of Administration
costs is allocated to Personnel (round to the nearest dollar)?
a. $72,973
b. $291,892
c. $145,946
d. $389,189
Riley Company
Riley Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.
Refer to Riley Company. Which products would be processed further?
a. only Product A
b. only Product C
c. both Products A and C
d. neither Product A or C
A responsibility accounting system provides information to top management about the
a. organizational responsibilities of each subunit manager.
b. performance of each organizational subunit and its manager.
c. ability of each subunit manager to ensure a satisfactory cost to revenue relationship.
d. all of the above.
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. What are the equivalent units for material using the FIFO
method?
a. 111,800
b. 120,000
c. 125,500
d. 130,000
Under activity-based costing, benchmarks for product cost should contain an allowance
for
a. idle time.
b. idle time and scrap materials.
c. spoilage.
d. None of the responses are correct.
The material price variance (computed at point of purchase) is
a. the difference between the actual cost of material purchased and the standard cost of
material purchased.
b. the difference between the actual cost of material purchased and the standard cost of
material used.
c. primarily the responsibility of the production manager.
d. both a and c.
If a cost is irrelevant to a decision, the cost could not be
a. a sunk cost.
b. a future cost.
c. a variable cost.
d. an incremental cost.
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 fixed
overhead spending variance?
a. $7,000 U
b. $3,125 F
c. $ 750 U
d. $ 750 F
Painter Corporation
Painter Corporation has the following information for the current month:
Refer to Painter Corporation. Assume that the costs per EUP for material and
conversion are $1.00 and $1.50, respectively. Assuming that weighted average is used,
what is the cost assigned to ending inventory?
a. $29,725
b. $37,163
c. $38,475
d. $36,250
A firm’s break-even point in dollars can be found in one calculation using which of the
following formulas?
a. FC/CM per unit
b. VC/CM
c. FC/CM ratio
d. VC/CM ratio
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 one unit for each firm, which firm will experience the greatest increase in net
income?
a. Austin Company
b. Brown Company
c. Freeman Company
d. can’t be determined from the information given
McDonald Industries is considering the purchase of a $180,000 machine that is
expected to result in a decrease of $20,000 per year in cash expenses. This machine,
which has no residual value, has an estimated useful life of 15 years and will be
depreciated on a straight-line basis. For this machine, the accounting rate of return
would be
a. 4.4 percent
b. 8.9 percent
c. 11.1 percent
d. 22.2 percent
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
Jackson Company transferred 6,000 units to Finished Goods Inventory during August.
On August 1, the company had 400 units on hand (35 percent complete as to both
material and conversion costs). On August 31, the company had 750 units (20 percent
complete as to material and 30 percent complete as to conversion costs). The number of
units started and completed during August was:
a. 5,600
b. 5,860
c. 6,000
d. 6,750
Cibolo Company
Cibolo Company has the following information available for March when 4,200 units
were produced (round answers to the nearest dollar).
Refer to Cibolo Company. What is the material quantity variance?
a. $ 510 F
b. $ 525 U
c. $ 525 F
d. $3,675 U
Lubbock Company has made the following information available for its production
facility for the current month. Fixed overhead was estimated at 22,000 machine hours
for the production cycle. Actual machine hours for the period were 22,500; 4,200 units
were produced.
Lubbock Company’s standard costs are as follows:
Determine the following items:
a. material purchase price variance
b. standard quantity allowed for material
c. total standard cost of material allowed
d. actual quantity of material used
e. labor rate variance
f. standard hours allowed for labor
g. total standard cost of labor allowed
h. labor efficiency variance
i. actual variable overhead incurred
j. standard machine hours allowed
k. variable overhead efficiency variance
l. budgeted fixed overhead
m. applied fixed overhead
n. fixed overhead spending variance
o. volume variance
p. total overhead variance
Which of the following costs would be considered overhead in the production of
chocolate chip cookies?
a. flour
b. chocolate chips
c. sugar
d. oven electricity
Which of the following is not a method for allocating service department costs?
a. step method
b. indirect method
c. direct method
d. algebraic method
If a division generates a positive residual income then the division’s
a. asset turnover was very high.
b. profitability was greater than that of other divisions in the company.
c. performance was above expectations.
d. actual return on investment exceeds the division’s target return.
The payback period is the
a. length of time over which the investment will provide cash inflows.
b. length of time over which the initial investment is recovered.
c. shortest length of time over which an investment may be depreciated.
d. shortest length of time over which the net present value will be positive.
In activity-based costing, final cost allocations assign costs to
a. departments.
b. processes.
c. products.
d. activities.
Robertson Company.
Robertson Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #8, #12, and #15.
Direct material was requisitioned as follows for each job respectively: 25 percent, 30
percent, and 30 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000.
Other actual overhead costs totaled $50,000.
Refer to Robertson Company. What is the total amount of actual overhead?
a. $ 45,000
b. $ 95,000
c. $114,500
d. $119,938
A key element of Japan’s success in world markets is
a. the elimination of waste in all operations.
b. automation of the billing function.
c. inefficient labor forces in competing countries.
d. the verification procedures incorporated into computer programs.
Which of the following is a basic element of effective budgetary control?
a. cost behavior patterns
b. cost-volume-profit analysis
c. standard costing
d. all of the above
Seminole Corporation has been manufacturing 5,000 units of Part 10541, which is used
in the manufacture of one of its products. At this level of production, the cost per unit of
manufacturing Part 10541 is as follows:
Luther Company has offered to sell Seminole 5,000 units of Part 10541 for $19 a unit.
Seminole has determined that it could use the facilities currently used to manufacture
Part 10541 to manufacture Part RAC and generate an operating profit of $4,000.
Seminole has also determined that two-thirds of the fixed overhead applied will
continue even if Part 10541 is purchased from Luther. To determine whether to accept
Luther’s offer, the net relevant costs to make are
a. $70,000.
b. $84,000.
c. $90,000.
d. $95,000.
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 cost assigned to abnormal spoilage using
FIFO?
a. $1,350
b. $3,906
c. $5,256
d. $6,424
Kelley Corporation, began operations on October 1. It employs a job-order costing
system. Overhead is charged at a normal rate of $2.50 per direct labor hour. The actual
operations for the month of October are summarized as follows:
Required:Compute the following balances on October 31:
Normal spoilage units resulting from a continuous process
a. are extended to the EUP schedule.
b. result in a higher unit cost for the good units produced.
c. result in a loss being incurred.
d. cause estimated overhead to increase.
Bradley Corporation
Bradley Corporation has three production departments A, B, and C. Bradley
Corporation also has two service departments, Administration and Personnel.
Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.
Refer to Bradley Corporation. Using the direct method, what amount of Administration
costs is allocated to C (round to the nearest dollar)?
a. $576,000
b. $ 54,000
c. $108,000
d. $150,000
Beauty Tools Corporation makes and sells brushes and combs. It can sell all of either
product it can make. The following data are pertinent to each respective product:
Total fixed overhead is $380,000.
The company has 40,000 machine hours available for production. What sales mix will
maximize profits?
a. 320,000 brushes and 0 combs
b. 0 brushes and 800,000 combs
c. 160,000 brushes and 600,000 combs
d. 252,630 brushes and 252,630 combs
What are three characteristics of relevant information?
If sales exceed production, absorption costing net income exceeds variable costing net
income.
The following information is for the Bayway Manufacturing Company for November.
Prepare in good form a Statement of Cost of Goods Manufactured and Statement of
Cost of Goods Sold.
Discuss the four primary components of a control system.
Strategic benchmarking is industry specific in its approach.
An organization’s profitability is an example of a lag indicator.
When multiple labor categories are used, the monetary impact of using a higher or
lower number of hours than a standard allows is referred to as a labor mix variance.
The regression equation y = a+ bX assumes that the function is curvilinear in nature.
A loss that occurs at a specific point in a production process is referred to as a
____________ loss.
Coolidge Company has the following collection pattern for its accounts receivable:
40 percent in the month of sale
50 percent in the month following the sale
8 percent in the second month following the sale
2 percent uncollectible
The company has recent credit sales as follows:
How much should the company expect to collect on its receivables in June?
Internal performance measures focus on the efficiency and effectiveness of an
organization’s production process.
Compare and contrast results benchmarking and process benchmarking.
The rate of return specified as the lowest acceptable return on an investment is referred
to as the ________________________________.
The number of good units or quantity of services that are produced and sold by an
organization within a specified time is referred to as ____________________.
Non-financial measures are generally more indicative of productive activity than are
financial performance measures.
Roberts Company
Roberts Company has the following information available for the current year:
Refer to Roberts Company. Compute the labor rate and efficiency variances.