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1. Putnam Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if Cost of Goods Sold is $107,000; the ending balance of Finished Goods Inventory is $20,000; and Cost of Goods Manufactured is $50,000 less than Cost of Goods Sold? (Points: 4) $70,000 $77,000 $157,000 $127,000
2. Birmingham Machine Works had the following data regarding monthly power costs: Month Machine hours Power cost Jun 300 $680 Jul 600 720 Aug 400 695 Sept 200 640 Assume that management expects 500 machine hours in October. Using the high-low method, calculate October?s power cost using machine hours as the basis for prediction. (Points: 4) $700 $705 $710 $1,320
3. Gary Corporation has developed the following flexible budget formula for monthly overhead: For output of less than 200,000 units: $36,600 + $.80(units) For output of 200,000 units or more: $43,000 + $.80(units) How much overhead should Gary expect if the firm plans to produce 200,000 units? (Points: 4) $52,600 $59,000 $196,600 $203,000
4. Brown Corporation manufactures products on a job order basis. The job cost sheet for Job #656 shows the following for March: Direct material $5,000 Direct labor (100 hours @ $7.25) $725 Machine hours incurred 40 Predetermined overhead rate per machine hour $26 At the end of March, what total cost appears on the job cost sheet for Job #656? (Points: 4) $5,725 $5,765 $6,765 $8,325
5. Virginia Company applies overhead to jobs at the rate of 40 percent of direct labor cost. Direct material of $1,250 and direct labor of $1,400 were expended on Job #145 during June. On May 31, the balance of Job #145 was $2,800. The balance on June 30 is _______. (Points: 4) $3,210 $4,760 $5,450 $6,010
6. At the end of the last fiscal year, Roberts Company had the following account balances: Overapplied overhead $ 6,000 Cost of Goods Sold $980,000 Work in Process Inventory $ 38,000 Finished Goods Inventory $ 82,000 If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is _______. (Points: 4) $974,000 $974,660 $985,340 $986,000
7. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours were allowed for actual production, applied fixed overhead is _______. (Points: 4) $33,300 $34,000 $34,500 not determinable without knowing the actual number of units produced
8. Western Company uses a standard cost accounting system. The following overhead costs and production data are available for August: Standard fixed OH rate per DLH $1 Standard variable OH rate per DLH $4 Budgeted monthly DLHs 40,000 Actual DLHs worked 39,500 Standard DLHs allowed for actual production 39,000 Overall OH variance-favorable $2,000 The total applied manufacturing overhead for August should be _______. (Points: 4) $195,000 $197,000 $197,500 $199,500
9. Information concerning Averie Corporation's Product A follows: Sales $300,000 Variable costs 240,000 Fixed costs 40,000 Assuming that Averie increased sales of Product A by 20 percent, what should the profit from Product A be? (Points: 4) $20,000 $24,000 $32,000 $80,000
10. Atkins Corporation consumes 1,200,000 gallons of Material Y per year. Its order quantity is 30,000 gallons. It maintains a safety stock of 10,000 gallons and its annual carrying costs are $0.25 per gallon per year. If the ordering cost is $20 per order, what are the total annual ordering costs? (Points: 4) $600 $800 $8,300 $1,200
11. Cost accounting is directed toward the needs of _______. (Points: 4) regulatory agencies external users internal users stockholders
12. The process of ____ causes the need for cost accounting. (Points: 4) conversion sales controlling allocating
13. Financial accounting and cost accounting are both highly concerned with _______. (Points: 4) preparing budgets determining product cost providing managers with information necessary for control purposes determining performance standards
14. Cost and management accounting _______. (Points: 4) require an entirely separate group of accounts than financial accounting uses focus solely on determining how much it costs to manufacture a product or provide a service provide product/service cost information as well as information for internal decision making are required for business recordkeeping as are financial and tax accounting
15. The set of processes that convert inputs into services and products that consumers use is called ______. (Points: 4) a core competency an operational plan the value chain the product life cycle
16. The world has essentially become smaller because of _______. (Points: 4) improved technology trade agreements better communications systems all of the above
17. The value chain _______. (Points: 4) reflects the production of goods within an organizational context is concerned with upstream suppliers, but not downstream customers results when all non-value-added activities are eliminated from a production process is the foundation of strategic resource management
18. A managerial accountant who communicates information objectively is exercising which of the following standards? (Points: 4) objectivity integrity competence confidentiality
19. Weaknesses of the high-low method include all of the following except ______. (Points: 4) only two observations are used to develop the cost function the high and low activity levels may not be representative the method does not detect if the cost behavior is nonlinear the mathematical calculations are relatively complex
20. If there is no "a" value in a linear cost equation, this is an indication that the cost is ______. (Points: 4) fixed mixed variable either fixed or mixed
21. All other things being equal, if actual cost per unit is greater than budgeted cost per unit, variable overhead will be _______. (Points: 4) overapplied the same as fixed overhead underapplied applied to Finished Goods
22. Overapplied overhead will result if _______. (Points: 4) the plant is operated at less than expected capacity overhead costs incurred were greater than estimated overhead costs overhead costs incurred were less than overhead costs charged to production overhead costs incurred were greater than overhead charged to production
23. A short-run measure of activity that represents a firm?s anticipated activity level for an upcoming period based upon expected demand is referred to as _______. (Points: 4) theoretical capacity practical capacity normal capacity expected capacity
24. An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a _______. (Points: 4) mixed cost predictor direct cost cost driver
25. Which of the following could not be used in job order costing? (Points: 4) standards an average cost per unit for all jobs normal costing overhead allocation based on the job's direct labor hours
26. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals _______. (Points: 4) cost of goods manufactured in the year ending Work in Process Inventory total manufacturing costs to account for cost of goods available for sale
27. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory. The explanation for this would be that _______. (Points: 4) indirect material was placed into production raw material was purchased on account direct material was placed into production direct labor was used for production
28. A material requisition form should show all of the following information except _______. (Points: 4) job number quantity required unit cost purchase order number
29. The source document that records the amount of time an employee worked on a job and his/her pay rate is the ______. (Points: 4) job order cost sheet employee time sheet interoffice memo labor requisition form
30. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to _______. (Points: 4) Finished Goods Inventory Work in Process Inventory Cost of Goods Sold Raw Material Inventory
31. The weighted average method is thought by some accountants to be inferior to the FIFO method because it _______. (Points: 4) is more difficult to apply only considers the last units worked on ignores work performed in subsequent periods commingles costs of two periods
32. The first step in determining the cost per EUP per cost component under the weighted average method is to _______. (Points: 4) add the beginning Work in Process Inventory cost to the current period's production cost divide the current period's production cost by the equivalent units subtract the beginning Work in Process Inventory cost from the current period's production cost divide the current period's production cost into the EUP
33. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a _______. (Points: 4) debit Work in Process Inventory #2, credit Finished Goods Inventory debit Finished Goods Inventory, credit Work in Process Inventory #1 debit Finished Goods Inventory, credit Work in Process Inventory #2 debit Cost of Goods Sold, credit Work in Process Inventory #2
34. When standard costs are used in process costing, _______. (Points: 4) variances can be measured during the production period total costs rather than current production and current costs are used process costing calculations are made simpler the weighted average method of calculating EUPs makes computing transferred-out costs easier
35. The cost of abnormal continuous losses is _______. (Points: 4) considered a product cost absorbed by all units in ending inventory and transferred out on an equivalent unit basis written off as a loss on an equivalent unit basis absorbed by all units past the inspection point
36. A primary purpose of using a standard cost system is _______. (Points: 4) to make things easier for managers in the production facility to provide a distinct measure of cost control to minimize the cost per unit of production b and c are correct
37. Which of the following statements regarding standard cost systems is true? (Points: 4) Favorable variances are not necessarily good variances. Managers will investigate all variances from standard. The production supervisor is generally responsible for material price variances. Standard costs cannot be used for planning purposes since costs normally change in the future.
38. Standard costs may be used for _______. (Points: 4) product costing planning controlling all of the above
39. At the end of a period, a significant material quantity variance should be _______. (Points: 4) closed to Cost of Goods Sold allocated among Raw Material, Work in Process, Finished Goods, and Cost of Goods Sold allocated among Work in Process, Finished Goods, and Cost of Goods Sold carried forward as a balance sheet account to the next period
40. A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if _______. (Points: 4) the mix of workers used in the production process was more experienced than the normal mix the mix of workers used in the production process was less experienced than the normal mix workers from another part of the plant were used due to an extra heavy production schedule the purchasing agent acquired very high quality material that resulted in less spoilage
41. Joint costs are allocated to joint products to _______. (Points: 4) obtain a cost per unit for financial statement purposes provide accurate management information on production costs of each type of product compute variances from expected costs for each joint product allow the use of high-low analysis by the company
42. Which of the following statements is true regarding by-products or scrap? (Points: 4) Process costing is the only method that should result in by-products or scrap Job order costing systems will never have by-products or scrap Job order costing systems may have instances where by-products or scrap result from the production process Process costing will never have by-products or scrap from the production process
43. Which of the following is a false statement about scrap and by-products? (Points: 4) Both by-products and scrap are salable A by-product has a higher sales value than does scrap By-products and scrap are the primary reason that management undertakes the joint process Both scrap and by-products are incidental outputs to the joint process
44. The definition of a sunk cost is _______. (Points: 4) a cost that cannot be recovered regardless of what happens a cost that relates to money poured into the ground considered the original cost of an item also known as an opportunity cost
45. In CVP analysis, linear functions are assumed for _______. (Points: 4) contribution margin per unit fixed cost per unit total costs per unit all of the above
46. Break-even analysis assumes over the relevant range that _______. (Points: 4) total variable costs are linear fixed costs per unit are constant total variable costs are nonlinear total revenue is nonlinear
47. To compute the break-even point in units, which of the following formulas is used? (Points: 4) FC/CM per unit FC/CM ratio CM/CM ratio (FC+VC)/CM ratio
48. A firm's break-even point in dollars can be found in one calculation using which of the following formulas? (Points: 4) FC/CM per unit VC/CM FC/CM ratio VC/CM ratio
49. A fixed cost is relevant if it is _______. (Points: 4) a future cost avoidable sunk a product cost
50. Which of the following is the least likely to be a relevant item in deciding whether to replace an old machine? (Points: 4) acquisition cost of the old machine outlay to be made for the new machine annual savings to be enjoyed on the new machine life of the new machine
51. Most ____ are relevant to decisions to acquire capacity, but not to short-run decisions involving the use of that capacity. (Points: 4) sunk costs incremental costs fixed costs prime costs
52. The ____ prohibits companies from pricing products at different amounts unless these differences reflect differences in the cost to manufacture, sell, or distribute the products. (Points: 4) Internal Revenue Service Governmental Accounting Office Sherman Antitrust Act Robinson-Patman Act
53. Measuring the firm's performance against established objectives is part of which of the following functions? (Points: 4) Planning Controlling Organizing Staffing
54. A budget is ______. (Points: 4) a planning tool a control tool a means of communicating goals to the firm's divisions all of the above
55. Key variables that are identified in strategic planning are _______. (Points: 4) normally controllable if they are internal seldom if ever controllable normally controllable if they occur in a domestic market normally uncontrollable if they are internal
56. The master budget is a static budget because it _______. (Points: 4) is geared to only one level of production and sales never changes from one year to the next covers a preset period of time always contains the same operating and financial budgets.
57. If the chief accountant of a firm has to prepare an operating budget for the coming year, the first budget to be prepared is the _______. (Points: 4) sales budget cash budget purchases budget capital budget
58. Depreciation on the production equipment would appear in which of the following budgets? (Points: 4) cash budget production budget selling and administrative expense budget manufacturing overhead budget
59. The budgeted amount of selling and administrative expense for a period can be found in the ______. (Points: 4) sales budget cash budget pro forma income statement pro forma balance sheet
60. Which of the following is not an ordering cost? (Points: 4) cost of receiving inventory cost of preparing the order cost of the merchandise ordered cost of storing the inventory
61. JIT is a philosophy concerned with ______. (Points: 4) when to do something how to do something where to do something how much of something should be done
62. When JIT is implemented, which of the following changes in the accounting system would not be expected? (Points: 4) fewer cost allocations elimination of standard costs combining labor and overhead into one product cost category combing raw material and materials in work-in-process into one product cost category
63. Striving for flexibility in the number of products that can be produced in a short period of time is characteristic of _______. (Points: 4) EOQ systems push systems in general JIT pull systems in general
64. Just-in-time (JIT) inventory systems _______. (Points: 4) result in a greater number of suppliers for each production process focus on a "push" type of production system can only be used with automated production processes result in inventories being either greatly reduced or eliminated
65. In a JIT manufacturing environment, product costing information is least important for use in ______. (Points: 4) work in process inventory valuation pricing decisions product profitability analysis make-or-buy decisions
66. The JIT environment has caused a reassessment of product costing techniques. Which of the following statements is true with respect to this reassessment? (Points: 4) Traditional cost allocations based on direct labor are being questioned and criticized. The federal government, through the SEC, is responsible for the reassessment. The reassessment is caused by the replacement of machine hours with labor hours. None of the above is true.
67. Accounting for product costs in a JIT environment _______. (Points: 4) uses a job order costing system classifies processing costs as raw (or direct) material, direct labor, and overhead is more complex than in other types of manufacturing environments follows process costing procedures whereby costs are accumulated by the process (cell) and attached to units processed for the period
68. ____ may involve relocation or plant modernization by a vendor. (Points: 4) Focused factory arrangements Economic order quantity Multiprocess handling Activity-based management
69. Which of the following responsibility centers may be evaluated on the basis of residual income? (Points: 4) investment center revenue center profit center cost center
70. A pay plan that does not encourage the overall company good is _______. (Points: 4) profit sharing an employee stock option plan contingent pay monthly salary
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