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ACCT 321 - COST ACCOUNTINGREVIEW QUESTIONS
CHAPTERS 1, 2, 3, 4, 6, 7, 8, 9, 10, 14, 15, 17SUMMER 2001
1. Hawkeye Company used $50,000 in manufacturing overhead costs ($13,300 was variable) during April 19x1. Budgeted manufacturing overhead was $45,900, of which $15,000 was variable. Which of the following entries for manufacturing overhead should have been recorded?a. Accounts Receivable $15,000
Work-in-process Control $15,000b. Variable Manufacturing Overhead Allocated $15,000
Accounts Payable and other accounts $15,000c. Work-in-process Control $13,300
Accounts Payable and other accounts $13,300d. Variable Manufacturing Overhead Control $13,300
Accounts Payable and other accounts $13,300
Use the information below to answer the following questions.
The following data for the Popular Pottery Company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per pound of clay. Total actual cost: $11,200. Standard cost allowed for units produced was $12,000. Materials efficiency variance was $240 unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 pots per hour at $24.00 per hour. Actual cost per hour was $24.50. Labor efficiency variance was $672 favorable.
2. What is standard direct material amount per pot?a. 1.00 poundb. 1.88 poundsc. 3.00 poundsd. 4.00 pounds
The following information is for Davis Company:
Total fixed costs $313,500 Variable costs per unit 99 Selling price per unit 154
3. If management has a targeted net income of $46,200 (ignore income taxes), then the number of units which must be sold is:a. 2,036 units.b. 2,336 units.c. 5,700 units.d. 6,540 units.
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4. If the contribution-margin ratio is 0.30, targeted net income is $76,800, and targeted sales volume in dollars is $480,000, then total fixed costs area. $23,000.b. $44,160.c. $67,200.d. $144,000.
5. All of the following statements about the restated allocation rate approach are correct, EXCEPTa. an actual indirect-cost rate must be computed at the end of each
period.b. every cost object is recomputed.c. end-of-period closing entries are made.d. each cost record, finally, represents only actual manufacturing
overhead cost incurred.
Use the information below to answer the following questions.
Favre and Carter Law Office employs 12 full-time attorneys and 10 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $29,000 per paraprofessional. For 19x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional.
Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
6. How much should the client be billed in a budgeting costing system if 500 professional labor-hours were used?a. $18,700b. $16,000c. $17,400d. $12,400
7. The direct materials usage budget is based ona. the units to be produced during a period.b. budgeted sales dollars.c. the predetermined factory overhead rate.d. the amount of labor hours worked.
8. In variance analysis, fixed manufacturing overhead will NEVER havea. an efficiency variance.b. a flexible-budget variance.c. a spending variance.d. a sales-volume variance.
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Use the information below to answer the following questions:
Tom Blanchard is going to sell christmas tree lights for $20 a box. The lights cost Tom $5 a unit. He is planning to rent a booth at the upcoming Happy Holidays Convention. He has three options for attending the show:
1. paying a fixed fee of $1,500, 2. paying a $500 fee plus 10% of his revenue made at the convention, or 3. paying 25% of his revenue made at the convention.
9. What would the indifference point be between option 1 and option 2?a. 500 unitsb. 400 unitsc. 300 unitsd. 200 units
Use the information below to answer the following questions:
Kobe Jones intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $300 each. The airline intends to reimburse Kobe for any unsold ticket packages. The round-trip tickets will be sold for $400 each.
10. What would be the break-even point in packages assuming Kobe incurred $22,500 in fixed expenses?a. 225 packagesb. 300 packagesc. 75 packagesd. 56.25 packages
11. The total of the costs designated for a particular commodity is called itsa. direct costs.b. inventoriable costs.c. marketing costs.d. product costs.
12. Customers are demanding improved performance related toa. reduced costs.b. both reduced costs and increased quality.c. lower costs, improved quality, and improved customer service.d. lower costs, improved quality, improved customer service, and
innovative products and services.
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13. A good budgeting system forces managers to examine the business as they plan, so they cana. detect over-budgeted areas from the last period.b. detect inefficiencies that might go unnoticed.c. complete the budgeting task on time.d. get promoted for doing a good job.
14. Jermaine Corporation has budgeted sales of 18,000 units, target ending finished good inventory of 3,000 units, and a beginning finished goods inventory of 900 units. How many units should be produced?a. 21,900 unitsb. 20,100 unitsc. 15,900 unitsd. 14,100 units
Use the information below to answer the following questions.
Jim's Computer Products manufactures keyboards for computers. In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labor hours in Department 2. The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the two departments were as follows:
Department 1 Department 2
Direct materials purchased on account $66,000 $106,500Direct materials used 19,500 8,100Direct manufacturing labor 31,500 32,100Indirect manufacturing labor 6,600 5,400Indirect materials used 4,500 2,850Lease on equipment 9,750 2,250Utilities 600 750
Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labor hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production.
15. What is the total cost of Job 501?a. $27,600b. $91,200c. $96,900d. $123,900
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Use the information below to answer the following questions.
Sports, Inc. manufactures uniforms for athletic events. It expects to sell 30,000 uniforms in 19x1. The company has enough beginning inventory of direct materials to produce 12,000 units. Beginning work-in-process inventory totals 3,000 units and is 100 percent complete as to material and 50 percent complete as to labor and overhead. Beginning finished units total 6,000 with a target ending finished inventory of 4,500 units. The uniforms sell for $80. There is no ending work-in-process inventory. Direct materials costs for each uniform total $20, while direct labor is $8. Manufacturing overhead is $6 per uniform.
16. What will be the amount of cost of goods sold?a. $1,224,000b. $1,020,000c. $969,000d. $918,000
17. Lois Lane Company manufactures word processing equipment. The following information pertains to the company's manufacturing overhead data.
Budgeted output units 15,000 units Budgeted machine-hours 5,000 hours Budgeted variable manufacturing overhead costs for 15,000 units $161,250
Actual output units produced 22,000 units Actual machine-hours used 5,000 Actual variable manufacturing overhead costs $242,000
What is the variable manufacturing overhead flexible-budget variance?a. $5,500 favorableb. $5,500 unfavorablec. $4,725 favorabled. $4,725 unfavorable
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Use the information below to answer the following questions.
Wagner Company had the following information:
Selling price per unit $30
Variable costs per unit: Manufacturing $15 Selling and administrative 3
Fixed costs per month: Manufacturing $20,000 Selling and administrative 10,000
18. What is the total manufacturing cost for 15,000 units?a. $30,000b. $245,000c. $225,000d. $270,000
19. The person(s) directly responsible for the attainment of organizational objectives is/area. staff management.b. line management.c. both staff and line management.d. the chief financial officer.
20. Accounting is a major means of helping managers:a. to administer each of the activity or functional areas for which they
are responsible.b. to coordinate those activities or functions within the framework of
the organization as a whole.c. both a and b.d. none of the above.
21. Which of the following statements related to manufacturing overhead is TRUE?a. Credits to subsidiary manufacturing overhead records occur at the
time the manufacturing overhead costs are incurred.b. Both debits and credits to subsidiary manufacturing overhead records
occur at the time manufacturing overhead costs are incurred.c. Credits to Manufacturing Overhead Allocated occur as the allocation
base is consumed.d. Manufacturing overhead costs incurred are dependent upon the
allocation method used.
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Use the information below to answer the following questions.
Fiscal Company has the following sales budget for the last six months of 19x1:
July $100,000 October $90,000 August 80,000 November 100,000 September 110,000 December 94,000
Historically, the cash collection of sales has been as follows:
65 percent of sales collected in month of sale, 25 percent of sales collected in month following sale, 8 percent of sales collected in second month following sale, and 2 percent of sales is uncollectible.
22. What is the ending balance of accounts receivable for September, assuming uncollectible balances are written off after the second month?a. $99,500b. $48,500c. $44,900d. $46,500
23. What are the appropriate period costs if variable costing is used?a. $165,000b. $181,500c. $275,000d. $291,500
24. Actual costs are defined asa. costs incurred.b. direct costs.c. indirect costs.d. predicted costs.
25. Professional labor costs in a CPA firm are traced directly to the cost object of a given job. Generally, other operating costs area. first traced to a cost pool and then allocated to the final cost
object, the given job.b. allocated directly to the final cost object, the given job.c. allocated to an intermediate cost object, assigned to a given
auditor, and then traced to a cost pool which is then allocated to the final cost object, the given job.
d. indirect costs that are allocated to a given job via an allocation base.
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26. Which of the following statements is FALSE?a. The difference between the static budget and the flexible budget is
the sales-volume variance.b. The difference between allocated and budgeted overhead is the
production volume variance.c. The production volume variance arises for both fixed and variable
costs.d. The amount allocated always equals the flexible budget amount.
27. How many units would have to be sold to yield a target income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000, and the unit selling price is $20?a. 4,800 unitsb. 4,400 unitsc. 4,000 unitsd. 3,600 units
Use the information below to answer the following questions.
Republican Company used the following data to evaluate their current operating system. The company sells 1 banner for $20. The $20 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 1,000,000 990,000 Variable Costs $6,000,000 $5,000,000 Fixed Costs $3,600,000 $3,700,000
28. What is the total static budget variance for Republican Company?a. $700,000 favorableb. $780,000 unfavorablec. $900,000 favorabled. $1,300,000 unfavorable
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Use the information below to answer the following questions.
Clark Company had the following activities during 19x1:
Direct materials: Beginning inventory $25,000 Purchases 77,000 Ending inventory 13,000 Direct manufacturing labor 20,000 Manufacturing overhead 15,000 Ending work-in-process inventory 5,000 Beginning work-in-process inventory 1,000 Ending finished goods inventory 20,000 Beginning finished goods inventory 30,000
29. What is Clark's cost of goods manufactured during 19x1?a. $134,000b. $124,000c. $120,000d. $119,000
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
30. What is the unit cost for the plant leasing costs for 19x1, assuming plant leasing costs are for the production of 507,000 units?a. $0.476b. $0.473c. $0.440d. $3.600
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31. Which of the following statements about income tax effects on CVP analysis is FALSE?a. Target net income equals operating income times one minus the tax
rate.b. The break-even point will remain the same, regardless of taxes.c. Operating income at the break-even point will increase if taxes have
to be paid.d. No income taxes will be paid if operating income equals zero.
32. As the continuous improvement theme stresses improving performance, managers working in such an environment can use variance analysisa. instead of cost-benefit analysis.b. as part of an external focus.c. to assess whether continuous improvement is, in fact, occurring in
the organization.d. as a type of management by benchmarking.
Use the information below to answer the following questions.
Sports, Inc. manufactures uniforms for athletic events. It expects to sell 30,000 uniforms in 19x1. The company has enough beginning inventory of direct materials to produce 12,000 units. Beginning work-in-process inventory totals 3,000 units and is 100 percent complete as to material and 50 percent complete as to labor and overhead. Beginning finished units total 6,000 with a target ending finished inventory of 4,500 units. The uniforms sell for $80. There is no ending work-in-process inventory. Direct materials costs for each uniform total $20, while direct labor is $8. Manufacturing overhead is $6 per uniform.
33. How many uniforms will be produced in 19x1?a. 34,500 uniformsb. 31,500 uniformsc. 30,000 uniformsd. 28,500 uniforms
34. The objective of activity-based budgeting isa. to allow multiple activities to be used as cost drivers rather than
just one item, such as direct labor hours.b. to compute the cost of performing activities.c. to refine the budgeting process by assigning indirect costs into
activity cost pools.d. to classify costs by functional area and assign them to related
activities.
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Use the information below to answer the following questions.
American Company produces flags. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $12.50 Direct Labor 0.70 9.50 Direct Marketing 0.27 5.50
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 3,000 Direct Materials: Materials costs $89,700 Input purchased and used 11,500 Actual price per input $13.00 Direct Manufacturing Labor: Labor costs $28,500 Labor-hours of input 4,750 Actual price per hour $10.00 Direct Marketing Labor: Labor costs $12,000 Labor-hours of input 2,500 Actual price per hour $8.00
35. What is the combined total of the flexible budget variances?a. $30,795.00 unfavorableb. $29,700.00 unfavorablec. $23,550.00 unfavorabled. $22,545.00 favorable
36. Amity Company used $500,000 in manufacturing overhead costs ($133,000 was variable) during March 19x1. Budgeted manufacturing overhead was $459,000, of which $150,000 was variable. Which of the following entries for manufacturing overhead should have been recorded?a. Accounts Receivable $150,000
Work-in-process Control $150,000b. Variable Manufacturing Overhead Allocated $150,000
Accounts Payable and other accounts $150,000c. Work-in-process Control $133,000
Accounts Payable and other accounts $133,000d. Variable Manufacturing Overhead Control $133,000
Accounts Payable and other accounts $133,000
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Use the information below to answer the following questions.
Grinnell Manufacturing Company has the following information:
Month Budgeted Sales
January $76,000 February 85,000 March 92,000 April 79,000
Budgeted Expenses per Month
Wages $15,000 Advertising 12,000 Depreciation 3,000 Other 4 percent of sales
Note: All cash expenses are paid as incurred.
37. What is the expected total cash disbursements for expenses in January?a. $30,000b. $30,040c. $33,040d. $28,200
38. The difference between the actual amount of variable overhead incurred and the budgeted amount allowed for actual output achieved isa. the flexible budget variance.b. the variable overhead spending variance.c. the price variance.d. the sales-volume variance.
39. The primary reason that accountants would benefit from the use of a database, or "data warehouse," is thata. data could be entered at numerous input terminals within the
organization.b. the accountants would not be completely responsible for the
information that is entered into the database system.c. the accountants could combine or adjust these data to answer the
questions from particular internal and external users.d. managers could generate their own reports.
40. Big Company had a static budgeted operating income of $9.2 million; however, actual income was $6.0 million. What is the static budget variance of operating income?a. $2,000,000 favorableb. $2,000,000 unfavorablec. $3,200,000 favorabled. $3,200,000 unfavorable
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Use the information below to answer the following questions:
The following information is for Bishop Corporation:
Product X: Revenue $10.00 Variable Cost $2.50
Product Y: Revenue $15.00 Variable Cost $5.00
Total fixed costs are $50,000.
41. What is the break-even point, assuming the sales mix consists of two units of Product X and one unit of Product Y?a. 1,000 units of Y and 2,000 units of Xb. 1,012.5 units of Y and 2,025 units of Xc. 2,012.5 units of Y and 4,025 units of Xd. 2,000 units of Y and 4,000 units of X
42. The contribution margin method of determining the break-even point is valid for all of the following EXCEPTa. unit variable costs must be known.b. there must be an output-related cost driver.c. unit fixed cost must be known.d. total variable cost must be known.
43. Which of the following statements about sensitivity analysis is FALSE?a. It is a technique which is used to answer "what if" questions.b. It can be used in CVP to show changes in operating income if variable
costs per unit change.c. It examines the relationship between a change in assumptions and the
related result.d. It shows the impact of a manager's behavior.
44. For next year, Barrymore, Inc., has budgeted sales of 60,000 units, target ending finished goods inventory of 3,000 units, and a beginning finished goods inventory of 1,800 units. All other inventories are zero. How many units should be produced?a. 58,800 unitsb. 60,000 unitsc. 61,200 unitsd. 64,200 units
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Use the information below to answer the following questions:
State University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:
1. Donor Country Club a. Fixed rental cost of $1,200. b. $11.25 per person for food.
2. Bunker Country Club a. Fixed rental cost of $2,160. b. A caterer who charges $9.00 per person for food.
State University has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band, which will cost another $800. Tickets are expected to be $30 per person. Any other items required for the event will be donated by its local business supporters.
45. What is the "operating income," assuming 250 people attend and option two is chosen?a. $7,500.00b. $887.50c. $5,250.00d. $490.00
46. A budget is defined asa. the qualitative expression of a plan.b. an aid in controlling income.c. the quantitative expression of a plan of action and an aid to the
coordination and implementation of that plan.d. the quantitative expression of a plan and an aid in controlling
income.
47. Which of the following statements about net income (NI) is TRUE?a. NI = operating income plus income taxes.b. NI = operating income plus operating costs.c. NI = operating income less income taxes.d. NI = the absolute (positive) value of income taxes less operating
income.
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48. The following information pertains to Brighton Company:
Beginning finished goods, 1/1/19x1 $90,000 Ending finished goods, 12/31/19x1 57,000 Cost of goods sold 336,000 Sales 675,000 Operating expenses 150,000
What is the cost of goods manufactured for 19x1?a. $339,000b. $189,000c. $303,000d. $369,000
49. Which of the following formulas would determine costs of goods sold in a merchandising entity?a. Purchases - Ending inventory = Cost of goods soldb. Beginning inventory + Purchases - Ending inventory = Costs of goods
soldc. Beginning inventory - Purchases + Ending inventory = Cost of goods
soldd. Beginning inventory - Ending inventory - Purchases = Cost of goods
sold
Use the information below to answer the following questions.
Rainey Company currently produces hats in an automated process. Expected production per month is 20,000 units. The required direct materials costs $1.35 per unit. Manufacturing overhead costs are $54,000 per month. Manufacturing overhead is allocated based on units of production.
50. What is the flexible budget for 20,000 and 10,000 units, respectively?a. $58,500; $45,000b. $90,000; $76,500c. $81,000; $67,500d. $99,000; $85,500
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Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
51. What is the cost of goods sold for RM Company for 19x1?a. $4,644,000b. $3,844,000c. $3,424,000d. $3,004,000
52. If there is a change in the level of the cost driver,a. fixed and variable costs per unit will change.b. fixed and variable costs per unit will be the same.c. fixed costs per unit will be the same and variable costs per unit
will change.d. variable costs per unit will be the same and fixed costs per unit
will change.
Use the information below to answer the following questions.
Murray Company uses a single cost pool for fixed manufacturing overhead. The amount for July 19x1 was budgeted at $250,000; however, the actual amount was $350,000. Actual production for July was 25,000 units, and actual machine-hours were 20,000. Budgeted production included 35,500 units and 24,750 machine-hours.
53. What is the budgeted fixed overhead rate per output unit (rounded to the nearest cent)?a. $7.04 per unitb. $9.86 per unitc. $10.10 per unitd. $14.14 per unit
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54. The process of assigning costs to a particular product or service is best calleda. a job costing system.b. a cost assigned system.c. a cost allocation system.d. a process costing system.
Use the information below to answer the following questions.
Billiard, Inc. manufactures pool cues. It expects to sell 20,000 cues in 19x1. The company had enough beginning inventory of direct materials to produce 24,000 cues. Beginning inventory of finished cues totaled 2,000 with a targeted ending inventory of 2,500 cues. The cues sell for $12.00 and the company keeps no work-in-process inventory. Direct materials costs for each cue total $2.00, while direct labor is $4.00. Factory overhead is $0.80 per cue.
55. What will be the amount of cost of goods sold?a. $122,400b. $136,000c. $139,400d. $149,600
56. The flexible-budget variance measuresa. what the costs and revenues should have been for the budgeted number
of outputs.b. the difference between budgeted expenditures and actual expenditures
for the budgeted number of outputs.c. the difference between budgeted and actual variable costs.d. the difference between expected expenditures for the actual number of
outputs and the actual expenditures for the actual number of outputs.
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Use the information below to answer the following questions.
Fannati Corporation had sales in June of $2,800,000 for its four stores in Chicago. The beginning merchandise inventory for June was $500,000 and for July it was $400,000. Purchases totaled $1,900,000 during June. All sales are on account (terms 2/10, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken, for a total of $26,500. May sales totaled $2,500,000 while June sales were $3,000,000.
June Supplies used $100,000 Salaries and benefits 150,000 Maintenance 4,500 Depreciation 900 Utilities 3,500 Principal payment on maturing bonds 200,000
57. What is the net income in June?a. $2,000,000b. $773,500c. $514,600d. $258,900
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Koppal Company manufacturers tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
ãÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍá ºAnalysis ³ Actual ³ Flexible ³ Flexible ³ Sales Volume³ Staticº º ³ Results ³ Variances ³ Budget ³ Variances ³ Budgetº ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºUnits Sold ³ 225,000 ³ ³ 225,000 ³ ³ 206,250º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºRevenues ³ $84,160 ³ $2,000 F ³ (1) ³ $2,800 U ³ (2) º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºVariable ³ ³ ³ ³ ³ º º Costs ³ (C) ³ $400 U ³ $31,720 ³ $4,680 F ³ $36,400º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºFixed ³ ³ ³ ³ ³ º º Costs ³ $16,560 ³ $1,720 F ³ $18,280 ³ ³ $18,280º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºOperating ³ ³ ³ ³ ³ º º Inc. ³ $35,480 ³ (D) ³ $32,160 ³ (E) ³ $30,280º àÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍê
58. What are the respective flexible budget (1) and static budget (2) revenues?a. $82,160; $79,360b. $82,160; $84,960c. $84,960; $88,960d. $84,960; $83,360
59. John Elway employs 25 professional cleaners. Budgeted costs total $900,000, of which $375,000 is indirect costs and the budgeted professional labor-hours are 500,000. Actual indirect costs were $396,900 and actual hours were 504,000. What are the budgeted direct costs and actual indirect-cost allocation rates, respectively?a. $1.80 per hour and $0.75 per hourb. $1.7857 per hour and $0.7938 per hourc. $0.75 per hour and $0.7875 per hourd. $1.05 per hour and $0.7875 per hour
60. Proration of manufacturing overhead based on the total ending balance yields different results than proration based on allocated manufacturing overhead embedded in the ending balance for all of the following reasons EXCEPTa. jobs still in progress have disproportionately high direct materials.b. proration to work-in-process arises from the high levels of direct
materials.c. too much overhead may have been allocated to work-in-process.d. direct labor is allocated to work-in-process before any other costs.
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61. A factor used to systematically link an indirect cost to a cost object is calleda. a cost allocation base.b. a cost pool.c. cost assignment.d. cost tracing.
62. Assigning direct costs to the chosen cost object is calleda. cost allocation.b. costs assignment.c. cost pool.d. cost tracing.
Use the information below to answer the following questions.
Osborne Enterprises is developing its budgets for 19x5 and, for the first time, will use the Kaizen approach. The initial 19x5 income statement, based on static data from 19x4, is as follows:
Sales (84,000 units) $504,000 Less: cost of goods sold 336,000
Gross margin $168,000 Operating expenses (includes $33,600 of depreciation) 134,400
Net income $33,600 ÍÍÍÍÍÍÍ
Selling prices for 19x5 are expected to increase by 8 percent, and sales volume in units will decrease by 10 percent. The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit. Other than depreciation, all other operating costs are expected to decline by 5 percent.
63. What is the budgeted net income for 19x5?a. $217,728b. $168,000c. $33,600d. $88,368
64. Which one of the following items is typically an example of an indirect cost of a cost object?a. courier charges for shipment deliveryb. manufacturing plant electricityc. direct manufacturing labord. wood used for furniture manufacture
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65. Which of the following is NOT a step in developing budgeted variable overhead rates?a. identify costs included in the variable overhead cost poolsb. estimate the budgeted denominator levelc. choose the cost allocation base that will be usedd. estimate the budgeted variable overhead rate
66. All the following statements about cost management are true EXCEPTa. it occurs when managers actively strive to reduce costs.b. it focuses on value added activities.c. changes in a cost driver don't necessarily change total costs.d. it is not affected by the organization's customers.
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
67. What is the unit cost for the direct materials for 19x1, assuming 1,000,000 units are produced (direct materials costs are $4.00 per unit when 507,000 units are produced)?a. $3.20b. $3.80c. $4.00d. $4.32
68. What is the manufacturing cost incurred in 19x1?a. $2,176,000b. $4,194,000c. $4,204,000d. $4,704,000
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Harrison Ford Company uses a job-order cost system and had the following data available for 1998.
Direct materials purchased on account $74,000 Direct materials requisitioned 41,000 Direct-labor cost incurred 65,000 Factory overhead incurred 73,000 Cost of goods completed 146,000 Cost of goods sold 128,000 Beginning direct-materials inventory 13,000 Beginning WIP inventory 32,000 Beginning finished goods inventory 29,000 Overhead application rate 125 percent (as a percent of direct-labor cost)
69. The ending inventory of direct materials isa. $46,000.b. $87,000.c. $41,000.d. $54,000.
70. The steps to follow when preparing the operating budget area. revenue budget, production budget, and direct materials usage budget.b. costs of goods sold budget, production budget, and cash budget.c. revenue budget, overhead budget, and production budget.d. revenue budget, cash inflows, and production expenditures.
71. Costs that are subject to short-run fluctuations for given jobs area. actual costs.b. budgeted costs.c. budgeted indirect costing.d. normal budgeted costs.
72. If Franklin Company uses standard costing, the overhead allocated to work-in-processa. increases Manufacturing Overhead Allocated and decreases Work-in-
process.b. increases Work-in-process and increases Manufacturing Overhead
Allocated.c. increases Manufacturing Overhead Allocated and decreases
Manufacturing Overhead Control.d. increases Manufacturing Overhead Control and increases Manufacturing
Overhead Allocated.
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73. All of the following are cost objects EXCEPTa. activities or processes.b. customers.c. outputs of processes.d. cost assignments.
Use the information below to answer the following questions.
Ecco Company produces Plastic balls. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $6.25 Direct Labor 0.70 4.75 Direct Marketing 0.27 2.75
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 5,000 Direct Materials: Materials costs $74,750 Input purchased and used 11,500 Actual price per input $6.50 Direct Manufacturing Labor: Labor costs $23,750 Labor-hours of input 4,750 Actual price per hour $5.00 Direct Marketing Labor: Labor costs $10,000 Labor-hours of input 2,500 Actual price per hour $4.00
74. What are the efficiency variances for direct manufacturing labor and direct marketing labor, respectively?a. $9,593.75 unfavorable; $1,837.50 favorableb. $5,937.50 favorable; $3,162.50 unfavorablec. $6,474.50 unfavorable; $3,783.25 unfavorabled. $5,937.50 unfavorable; $3,162.50 unfavorable
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Use the information below to answer the following questions.
The total traceable fixed and variable costs of the account billing activity center is $490,000. Cost behavior analysis indicates that fixed costs are $150,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
75. What would be the total flexible budget if the number of lines increased to 2,600,000?a. $353,600b. $490,000c. $503,600d. cannot be determined
Use the information below to answer the following questions.
Rainey Company currently produces hats in an automated process. Expected production per month is 20,000 units. The required direct materials costs $1.35 per unit. Manufacturing overhead costs are $54,000 per month. Manufacturing overhead is allocated based on units of production.
76. What is the budgeted manufacturing overhead rate?a. $4.50 per unitb. $2.70 per unitc. $3.48 per unitd. $1.35 per unit
77. Barriers, Inc. fulfilled their production goal by 85%. The 85% may be called the company'sa. effectiveness rate.b. efficiency rate.c. goal achievement rate.d. standard production rate.
78. All of the following statements about benchmarks are true EXCEPTa. they may be financial or nonfinancial.b. they may or may not be reported in an accounting system.c. they are not used to compute a variance.d. they are used to compute a performance gap.
79. __________ is (1) deciding on and taking actions that implement the planning decisions, and (2) deciding on performance evaluation and the related feedback that will help future decision making.a. Management accountingb. Financial accountingc. Planningd. Control
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Harrison Ford Company uses a job-order cost system and had the following data available for 1998.
Direct materials purchased on account $74,000 Direct materials requisitioned 41,000 Direct-labor cost incurred 65,000 Factory overhead incurred 73,000 Cost of goods completed 146,000 Cost of goods sold 128,000 Beginning direct-materials inventory 13,000 Beginning WIP inventory 32,000 Beginning finished goods inventory 29,000 Overhead application rate 125 percent (as a percent of direct-labor cost)
80. The ending inventory of work in process isa. $219,250.b. $73,250.c. $65,000.d. $211,000.
Use the information below to answer the following questions.
Duffy Company had the following activities during 19x1:
Direct materials: Beginning inventory $50,000 Purchases 154,000 Ending inventory 26,000 Direct manufacturing labor 40,000 Manufacturing overhead 30,000 Ending work-in-process inventory 10,000 Beginning work-in-process inventory 2,000 Ending finished goods inventory 40,000 Beginning finished goods inventory 60,000
81. What is Duffy's cost of goods sold during 19x1?a. $260,000b. $232,000c. $220,000d. $200,000
82. Generally, costs which are initially recorded as an asset and, subsequently, become an expense are calleda. capitalized costs.b. non-manufacturing costs.c. manufacturing costs.d. non-capitalized costs.
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83. Many organizations now have management accountants whose responsibilities concentrate ona. financing the purchase of fixed assets.b. internal auditing of multi-divisional units.c. external reporting.d. only the attention-directing or the problem-solving function.
Use the information below to answer the following questions.
Knicks Corporation used the following data to evaluate their current operating system. The company sells everything for $10 each. The $10 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 500,000 495,000 Variable Costs $1,500,000 $1,250,000 Fixed Costs $900,000 $925,000
84. What is the actual operating income for Knicks Corporation using the actual results?a. $2,985,000b. $2,775,000c. $2,600,000d. $2,375,000
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Use the information below to answer the following questions.
Michael Nurse Company had the following information:
Budgeted variable factory overhead $44,000 Budgeted fixed factory overhead $31,000 Actual variable factory overhead $45,000 Actual fixed factory overhead $35,000 Budgeted cost driver activity levels: Direct-labor hours 20,000 Direct-labor costs $100,000 Machine hours 40,000 Production setups 10,000 Actual cost driver activity levels: Direct-labor hours 21,000 Direct-labor costs $110,400 Machine hours 37,460 Production setups 9,520
85. If Job 400 used 5,116 machine hours, the overhead applied using machine hours as the cost driver should bea. $10,245.b. $10,232.c. $10,923.d. $9,593.
86. Which of the following statements about using the equation method to determine the break-even point is FALSE?a. Operating income is equal to zero.b. Operating income is determined by adding variable costs to fixed
costs and subtracting that total from revenues.c. Revenues plus fixed costs less variable costs equals operating
income.d. It is an easy method to use with multiple products.
Use the information below to answer the following questions.
The following information pertains to Swingline Company:
Manufacturing costs $3,000,000 Units manufactured 25,000 Beginning inventory 0 units
24,875 units are sold during the year for $216 per unit.
87. What is the amount of ending finished goods inventory?a. $298,500b. $15,000c. $24,000d. $1,500
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88. Local Hospital uses a job cost system for all patients who have surgery. In February, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 1,000 nursing hours and 500 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $28,000 and $22,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $200,000 and 2,500 nursing hours for the month. For patient Larry Jones, actual hours incurred were six and eight hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 5 days (120 hours). Other costs related to Jones were:
PRE-OP OR In-room Costs Costs Costs
Patient medicine $ 200 $ 500 $2,400 Direct nursing time 1,200 1,750 2,700
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
Determine the budgeted overhead rate for the hospital floor for surgery.a. $28.00b. $44.00c. $80.00d. $45.75
89. Which of the following variances is NOT equal to (the budgeted price of inputs) multiplied by (the total of the actual quantity of inputs used less the budgeted quantity of inputs allowed for actual output units)?a. efficiency varianceb. price variancec. quantity varianced. usage variance
90. Which of the following lists a scorekeeping activity first, followed by an attention directing activity, followed by a problem-solving activity?a. recording sales to customers, customer returns, and accounts
receivable.b. recording sales, comparing the financial advantages of leasing a
fleet of vehicles, and highlighting rapidly growing markets where the company may be underfunding its investment.
c. recording sales to customers, explaining ways to avoid cost overruns, and recording purchases from vendors.
d. recording sales, highlighting rapidly growing markets where the company may be underfunding its investment, and comparing the financial advantages of leasing a fleet of vehicles.
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Use the information below to answer the following questions.
The total traceable fixed and variable costs of the account billing activity center is $735,000. Cost behavior analysis indicates that fixed costs are $225,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
91. What would be the total flexible budget if the number of lines increased to 2,600,000?a. $530,400b. $755,400c. $735,000d. cannot be determined
92. Changing conditions call for changes in plans. Therefore, budgets shoulda. be flexible.b. be administered rigidly.c. be developed for very short periods of time.d. be required for every organization.
93. Which of the following is a fixed cost in an automobile manufacturing plant?a. administrative salariesb. machine electricity for each assembly linec. sales commissionsd. windows for each car produced
Use the information below to answer the following questions:
Tom Blanchard is going to sell christmas tree lights for $20 a box. The lights cost Tom $5 a unit. He is planning to rent a booth at the upcoming Happy Holidays Convention. He has three options for attending the show:
1. paying a fixed fee of $1,500, 2. paying a $500 fee plus 10% of his revenue made at the convention, or 3. paying 25% of his revenue made at the convention.
94. In the short run, the majority of costs are considered fixed. Which of the following statements is FALSE?a. Variable costs are considered to be minute.b. The majority of total costs are considered to be of a fixed nature.c. Total costs tend to be affected more in the short run than in the
long run.d. Large changes in output levels would affect total costs.
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95. Professional ethics for a certified management accountant in the United States were established bya. the AICPA.b. the FASB.c. the CIMA.d. the IMA.
Use the information below to answer the following questions.
Billiard, Inc. manufactures pool cues. It expects to sell 20,000 cues in 19x1. The company had enough beginning inventory of direct materials to produce 24,000 cues. Beginning inventory of finished cues totaled 2,000 with a targeted ending inventory of 2,500 cues. The cues sell for $12.00 and the company keeps no work-in-process inventory. Direct materials costs for each cue total $2.00, while direct labor is $4.00. Factory overhead is $0.80 per cue.
96. What would be the amount of sales in the budgeted income statement?a. $216,000b. $240,000c. $312,000d. $318,000
97. What would be the appropriate journal entry if the following labor wages were incurred in a furniture manufacturing company?
Assembly workers 30,000 Janitors 20,000 Cafeteria workers 10,000a. Materials Control 60,000
Wages Payable Control 60,000b. Work-in-process Control 30,000
Manufacturing Overhead Control 30,000 Wages Payable Control 60,000
c. Manufacturing Overhead Control 60,000 Wages Payable Control 60,000
d. Wages Payable Control 60,000 Work-in-process Control 60,000
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Use the information below to answer the following questions.
Knicks Corporation used the following data to evaluate their current operating system. The company sells everything for $10 each. The $10 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 500,000 495,000 Variable Costs $1,500,000 $1,250,000 Fixed Costs $900,000 $925,000
98. What is the total static budget variance for Knicks Corporation?a. $175,000 favorableb. $195,000 unfavorablec. $225,000 favorabled. $325,000 unfavorable
99. Assuming a constant mix of 3 units of Small for every 1 unit of Large, a selling price of $21.60 for Small and $28.80 for Large, variable costs per unit of $14.40 for Small and $16.80 for Large, and total fixed costs of $53,760, the break-even point in units would bea. 4,800 units of Small and 1,600 units of Large.b. 1,200 units of Small and 400 units of Large.c. 1,600 units of Small and 4,800 units of Large.d. 40,320 units of Small and 13,440 units of Large.
100. In a journal entry for a standard costing system that records favorable variances, the variance accounta. causes a credit to Cost of Goods Sold.b. increases the Operating Income Account.c. is debited.d. is credited.
101. Planning the performance of the organization, providing a frame of reference, and investigating variances from plans are part of thea. budgetary cycle.b. cash budget.c. financing budget.d. master budget.
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Use the information below to answer the following questions.
Furniture, Inc. manufactures mattresses. The estimated number of mattresses for the first three months of 19x1 is as follows:
Month Sales
January 5,000 February 7,000 March 6,500
Finished goods inventory at the end of December is 1,500 units. Ending finished goods are equal to 30 percent of next month's sales. April 19x1 sales are expected to total 8,000 units.
102. What will be the number of mattresses produced in January 19x1?a. 4,400 mattressesb. 5,600 mattressesc. 6,500 mattressesd. 7,100 mattresses
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Use the information below to answer the following questions.
American Company produces flags. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $12.50 Direct Labor 0.70 9.50 Direct Marketing 0.27 5.50
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 3,000 Direct Materials: Materials costs $89,700 Input purchased and used 11,500 Actual price per input $13.00 Direct Manufacturing Labor: Labor costs $28,500 Labor-hours of input 4,750 Actual price per hour $10.00 Direct Marketing Labor: Labor costs $12,000 Labor-hours of input 2,500 Actual price per hour $8.00
103. What is the price variance of the direct materials?a. $5,087.50 unfavorableb. $5,750.00 unfavorablec. $7,606.50 favorabled. $8,437.50 favorable
104. The distinction between absorption costing and variable costing is most important for which type of industry?a. Manufacturingb. Marketingc. Retaild. Service
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105. Two of the primary ways to manage variable-overhead costs includea. eliminating non-value-added costs and reducing the consumption of
cost drivers.b. eliminating non-value-added costs and increasing fixed overhead
expenses.c. reducing the consumption of cost drivers and increasing variable
costs.d. using more energy-efficient equipment and planning for appropriate
capacity levels.
Use the information below to answer the following questions.
The following information pertains to Gordon's Model Company:
Manufacturing costs $1,500,000 Units manufactured 50,000 Beginning inventory 0 units
49,750 units are sold during the year for $54 per unit.
106. What is the amount of ending finished goods inventory?a. $149,250b. $12,000c. $7,500d. $750
107. "Cost management" describesa. the activities of managers in short-run and long-run planning and
control of costs.b. the identification of excessive costs in the production process.c. the satisfaction of customers' needs.d. actions by managers to satisfy customers while maintaining current
cost levels.
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Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
108. What is the fixed spending variance using 4-variance analysis?a. $5,000 favorableb. $5,000 unfavorablec. $6,750 unfavorabled. $6,750 favorable
Harrison Ford Company uses a job-order cost system and had the following data available for 1998.
Direct materials purchased on account $74,000 Direct materials requisitioned 41,000 Direct-labor cost incurred 65,000 Factory overhead incurred 73,000 Cost of goods completed 146,000 Cost of goods sold 128,000 Beginning direct-materials inventory 13,000 Beginning WIP inventory 32,000 Beginning finished goods inventory 29,000 Overhead application rate 125 percent (as a percent of direct-labor cost)
109. The ending inventory of finished goods isa. $29,000.b. $18,000.c. $47,000.d. $146,000.
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110. Budgeted outputs for Becker Company were 10,000 units during August 19x1. Budgeted fixed overhead per output unit was $3.75, and 15,000 units were actually produced. Actual fixed overhead was allocated at $4.50 per unit. What is the production-volume overhead variance?a. $18,750 favorableb. $18,750 unfavorablec. $22,250 favorabled. $22,250 unfavorable
Use the information below to answer the following questions.
General Hospital uses a job cost system for all patients who have surgery. In January, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 2,000 nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $84,000 and $66,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours for the month. For patient Jim Carter, actual hours incurred were eight and four hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 4 days (96 hours). Other costs related to Carter were:
PRE-OP OR In-room Costs Costs Costs
Patient medicine $100 $250 $1,200 Direct nursing time 2,400 3,500 5,400
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
111. Determine the budgeted nursing overhead rate for PRE-OP Cost.a. $42.00b. $66.00c. $80.00d. $43.25
112. The process by which a company's products or services are measured relative to the best possible levels of performance is known asa. benchmarking.b. measuring the performance gap.c. standard measurement.d. variance measurement.
113. A well-conceived plan allows managers to have the ability toa. stay with the pre-existing plan when things start to change for the
better.b. leave the system and let the plan continue on its own.c. underestimate the costs so that actual operating results will be
favorable when comparisons are made.d. take advantage of unforeseen opportunities.
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114. Managers plan and control with the help of all of the following EXCEPTa. budgets.b. government tax officials.c. historical records.d. personal observations.
115. When making decisions, it is best to usea. average costs.b. fixed costs that would be incurred.c. total cost, rather than unit cost.d. variable costs that would be incurred.
116. __________ assumes customers are pivotal to success of an organization.a. Customer focusb. Key success factorsc. Continuous improvementd. Supply chain
117. Financial accounting is concerned PRIMARILY witha. external reporting to investors, government authorities, etc.b. cost planning and cost controls.c. profitability analysis.d. providing information for strategic and tactical decisions.
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Use the information below to answer the following questions.
General Hospital uses a job cost system for all patients who have surgery. In January, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 2,000 nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $84,000 and $66,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours for the month. For patient Jim Carter, actual hours incurred were eight and four hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 4 days (96 hours). Other costs related to Carter were:
PRE-OP OR In-room Costs Costs Costs
Patient medicine $100 $250 $1,200 Direct nursing time 2,400 3,500 5,400
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
118. What is the total cost of the stay of patient Jim Carter?a. $1,550b. $11,300c. $8,280d. $21,130
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Use the information below to answer the following questions.
Ecco Company produces Plastic balls. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $6.25 Direct Labor 0.70 4.75 Direct Marketing 0.27 2.75
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 5,000 Direct Materials: Materials costs $74,750 Input purchased and used 11,500 Actual price per input $6.50 Direct Manufacturing Labor: Labor costs $23,750 Labor-hours of input 4,750 Actual price per hour $5.00 Direct Marketing Labor: Labor costs $10,000 Labor-hours of input 2,500 Actual price per hour $4.00
119. What is the price variance of the direct materials?a. $2,543.75 unfavorableb. $2,875.00 unfavorablec. $3,803.25 favorabled. $4,218.75 favorable
120. In flexible budgets, costs that remain the same regardless of the output levels within the relevant range area. allocated costs.b. budgeted costs.c. fixed costs.d. variable costs.
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121. In order to properly record a fixed manufacturing overhead spending variance of $60,000 unfavorable and a production volume overhead variance of $40,000 favorable, what would the appropriate journal entry be if actual fixed overhead is $1,000,000?a. Fixed Overhead Allocated $1,000,000
Accounts Payable $1,000,000b. Work-in-process Control $880,000
Fixed Overhead Allocated $880,000c. Fixed Overhead Allocated $1,140,000
Fixed Overhead Spending Variance $60,000 Fixed Overhead Production Volume Variance 40,000 Fixed Overhead Control 1,040,000
d. Fixed Overhead Allocated $980,000 Fixed Overhead Spending Variance 60,000 Fixed Overhead Production Volume Variance $40,000 Fixed Overhead Control 1,000,000
Use the information below to answer the following questions:
Bridal Shoppe sells wedding dresses. Each dress's cost may be separated as follows: selling price of $1,000 and variable costs of $400. Fixed costs are $90,000.
122. How many dresses must Bridal Shoppe sell in order to yield after-tax net income of $18,000, assuming the tax rate is 40%?a. 200 dressesb. 170 dressesc. 150 dressesd. 145 dresses
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Use the information below to answer the following questions.
Fannati Corporation had sales in June of $2,800,000 for its four stores in Chicago. The beginning merchandise inventory for June was $500,000 and for July it was $400,000. Purchases totaled $1,900,000 during June. All sales are on account (terms 2/10, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken, for a total of $26,500. May sales totaled $2,500,000 while June sales were $3,000,000.
June Supplies used $100,000 Salaries and benefits 150,000 Maintenance 4,500 Depreciation 900 Utilities 3,500 Principal payment on maturing bonds 200,000
123. What is the gross margin in June?a. $873,000b. $773,500c. $673,500d. $2,000,000
Use the information below to answer the following questions.
Billiard, Inc. manufactures pool cues. It expects to sell 20,000 cues in 19x1. The company had enough beginning inventory of direct materials to produce 24,000 cues. Beginning inventory of finished cues totaled 2,000 with a targeted ending inventory of 2,500 cues. The cues sell for $12.00 and the company keeps no work-in-process inventory. Direct materials costs for each cue total $2.00, while direct labor is $4.00. Factory overhead is $0.80 per cue.
124. How many cues will be produced in 19x1?a. 24,000 cuesb. 22,000 cuesc. 20,500 cuesd. 19,500 cues
125. The difference between budgeted fixed manufacturing overhead and the fixed manufacturing overhead allocated to actual output units achieved is calleda. an efficiency variance.b. a flexible-budget variance.c. a manufacturing overhead flexible-budget variance.d. a production-volume overhead variance.
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126. During an accounting period, job costs are computed on an ongoing basis by the use ofa. actual allocation rates.b. budgeted indirect-cost rates.c. overallocated indirect-cost rates.d. underallocated indirect-cost rates.
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
127. What is the unit cost for the direct materials for 19x1, assuming direct materials cost is for the production of 507,000 units?a. $3.20b. $3.80c. $4.00d. $4.32
128. __________ is the generation of, and experimentation with, ideas related to new products, services, or processes.a. Research and developmentb. Design of products, services, or processesc. Productiond. Marketing
129. A production budget expressed in units is equal toa. budgeted sales plus beginning finished goods inventory plus targeted
ending finished goods inventory.b. budgeted sales less beginning finished goods inventory less targeted
ending finished goods inventory.c. budgeted sales less beginning finished goods inventory plus targeted
ending finished goods inventory.d. budgeted sales plus beginning finished goods inventory less targeted
ending finished goods inventory.
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Use the information below to answer the following questions.
Sports, Inc. manufactures uniforms for athletic events. It expects to sell 30,000 uniforms in 19x1. The company has enough beginning inventory of direct materials to produce 12,000 units. Beginning work-in-process inventory totals 3,000 units and is 100 percent complete as to material and 50 percent complete as to labor and overhead. Beginning finished units total 6,000 with a target ending finished inventory of 4,500 units. The uniforms sell for $80. There is no ending work-in-process inventory. Direct materials costs for each uniform total $20, while direct labor is $8. Manufacturing overhead is $6 per uniform.
130. What will be the total costs of direct materials used in 19x1?a. $510,000b. $570,000c. $540,000d. $480,000
131. Budgeted cost rates are preferred over actual cost rates for all of the following reasons EXCEPTa. budgeted costs allow managers to have cost information on a timely
basis.b. budgeted costs may be subject to short-run fluctuations.c. budgeted indirect-cost rates are known prior to the inception of a
new job.d. actual indirect-cost rates are affected by work done on other jobs.
132. The major types of responsibility centers area. profit, nonprofit, and governmental.b. profit, sales, and direct cost.c. revenue, profit, income, and cost.d. revenue, profit, cost, and investment.
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Use the information below to answer the following questions.
Fannati Corporation had sales in June of $2,800,000 for its four stores in Chicago. The beginning merchandise inventory for June was $500,000 and for July it was $400,000. Purchases totaled $1,900,000 during June. All sales are on account (terms 2/10, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken, for a total of $26,500. May sales totaled $2,500,000 while June sales were $3,000,000.
June Supplies used $100,000 Salaries and benefits 150,000 Maintenance 4,500 Depreciation 900 Utilities 3,500 Principal payment on maturing bonds 200,000
133. What is the cost of goods sold in June?a. $2,000,000b. $1,900,000c. $2,100,000d. $773,500
134. Goods available for sale that are not in ending inventorya. are included in goods available for sale at the end of the year.b. are included in the work-in-process inventory at the end of the year.c. are not accounted for until the next year.d. are incorporated in the cost of goods sold amount.
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Use the information below to answer the following questions.
Osborne Enterprises is developing its budgets for 19x5 and, for the first time, will use the Kaizen approach. The initial 19x5 income statement, based on static data from 19x4, is as follows:
Sales (84,000 units) $504,000 Less: cost of goods sold 336,000
Gross margin $168,000 Operating expenses (includes $33,600 of depreciation) 134,400
Net income $33,600 ÍÍÍÍÍÍÍ
Selling prices for 19x5 are expected to increase by 8 percent, and sales volume in units will decrease by 10 percent. The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit. Other than depreciation, all other operating costs are expected to decline by 5 percent.
135. What is the budgeted gross margin for 19x5?a. $217,728b. $168,000c. $33,600d. $88,368
136. What is the appropriate journal entry if direct materials of $50,000 and indirect materials of $3,000 were sent to the manufacturing plant floor?a. Work-in-process Control 50,000
Materials Control 50,000b. Work-in-process Control 53,000
Materials Control 53,000c. Manufacturing Overhead Control 3,000
Materials Control 50,000 Work-in-process Control 53,000
d. Work-in-process Control 50,000 Manufacturing Overhead Control 3,000 Materials Control 53,000
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Use the information below to answer the following questions.
Michael Nurse Company had the following information:
Budgeted variable factory overhead $44,000 Budgeted fixed factory overhead $31,000 Actual variable factory overhead $45,000 Actual fixed factory overhead $35,000 Budgeted cost driver activity levels: Direct-labor hours 20,000 Direct-labor costs $100,000 Machine hours 40,000 Production setups 10,000 Actual cost driver activity levels: Direct-labor hours 21,000 Direct-labor costs $110,400 Machine hours 37,460 Production setups 9,520
137. If Job 200 used 1,676 direct-labor hours, the overhead applied using direct-labor hours as the cost driver should bea. $5,986.b. $6,285.c. $6,704.d. $6,385.
Use the information below to answer the following questions.
Jaworski Company currently has 20 full-time professionals on staff. Each professional is allotted the following number of hours per year:
Budgeted billable time for clients: 2,000 hours Budgeted vacation time: 200 hours Budgeted professional development: 150 hours Budgeted unbillable time due to lack of demand: 50 hours Budgeted sick leave: 100 hours
Consumer demand for the company's services is at 100 percent of time available. Each professional receives a salary of $40,000 per year and fringe benefits of $10,000 per year.
138. What is the total budgeted direct-cost rate if management believes that clients should be charged for the employees' benefits that Jaworski Company has to pay?a. $22.50b. $20.00c. $25.00d. $16.00
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Use the information below to answer the following questions.
Tonka Cars produces and sells an auto part for $30.00 per unit. Direct materials are $12 per unit, while direct manufacturing labor averages $2.25 per unit. Variable overhead is $0.75 per unit and fixed overhead is $375,000 per year. Administrative expenses, all fixed, run $135,000 per year, with sales commissions of $3 per part. Production is 100,000 parts per year. In 19x1, 75,000 units were sold.
139. What is the inventoriable cost per unit using absorption costing?a. $14.25b. $15.00c. $18.75d. $21.75
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
140. What is the unit cost for the plant leasing cost for 19x1, assuming 1,000,000 units are produced (plant leasing costs are $0.473 per unit when 507,000 units are produced)?a. 1.40b. 0.72c. 0.48d. 0.24
141. Unit sales of Product X are currently 30,000, while unit sales of Product Y are double those of Product X. What will the company's sales forecast be, assuming sales of Product X increase by 10 percent and those of Product Y go up by 12,000 units?a. 33,000 and 72,000 units, respectivelyb. 33,000 and 66,000 units, respectivelyc. 30,000 and 60,000 units, respectivelyd. 105,000 units
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142. If Jordan Company makes the following journal entry:
Variable Overhead Allocated $100,000 Variable Overhead Efficiency Variance 30,000 Variable Overhead Control $125,000 Variable Overhead Spending Variance 5,000
It may be inferred thata. Jordan over-allocated variable manufacturing overhead.b. the net variance is a $10,000 favorable spending variance.c. Work-in-Process, Finished Goods, and Cost of Goods Sold balances are
understated.d. the journal entry accounts are incorrect.
143. A variance is considered to bea. the gap between an actual result and a benchmark amount.b. the required number of inputs for one standard output.c. the difference between an actual result and a budgeted amount.d. the difference between a budgeted amount and a standard amount.
144. Events, as distinguished from actions, would includea. personnel policy options.b. decisions on time schedules.c. decisions on direct material vendors.d. a financial recession.
145. Some financial variances show increases in operating income relative to a budgeted or allocated amount, and others show decreases in operating income. Respectively, these variances area. budgeted, standard.b. favorable, unfavorable.c. standard, budgeted.d. unfavorable, favorable.
Page 49
Use the information below to answer the following questions.
Jim's Computer Products manufactures keyboards for computers. In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labor hours in Department 2. The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the two departments were as follows:
Department 1 Department 2
Direct materials purchased on account $66,000 $106,500Direct materials used 19,500 8,100Direct manufacturing labor 31,500 32,100Indirect manufacturing labor 6,600 5,400Indirect materials used 4,500 2,850Lease on equipment 9,750 2,250Utilities 600 750
Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labor hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production.
146. What is the budgeted manufacturing overhead rate for Department 1?a. $3.45 per hourb. $3.75 per hourc. $6.90 per hourd. $7.50 per hour
147. If targeted sales volume in units is 62,300, total fixed costs are $31,200, and contribution margin per unit is $1.20, then the targeted net income isa. $31,200.b. $43,560.c. $37,440.d. $74,760.
148. The value chain is thea. sequence of business functions in which value is deducted from the
products or services of an organization.b. sequence of business functions in which value is proportionately
added to the products or services of an organization.c. process by which products and services are critiqued for their value.d. sequence of business functions in which utility (usefulness) is added
to the products or services of an organization.
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149. A primary consideration in tracing a cost in responsibility accounting isa. whether it is fixed or variable.b. whether it is production or administrative.c. who or what caused the cost to be incurred.d. where in the organizational structure the cost occurred.
Use the information below to answer the following questions:
Harry Hartman, MD performs a certain outpatient procedure for $1,000.00. His fixed costs are $20,000, while his variable costs are $500.00 per procedure.
150. What is the budgeted operating income for the month assuming that Dr. Hartman plans to perform the procedure 200 times?a. $200,000b. $100,000c. $80,000d. $40,000
Page 51
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
151. Which of the following journal entries is correct with respect to actual variable costs?a. Variable Manufacturing Overhead Allocated $400,000
Variable Spending Variance $5,000 Variable Efficiency Variance 20,000 Variable Manufacturing Overhead Control 375,000
b. Work-in-process Control $295,000 Variable Manufacturing Overhead Allocated $295,000
c. Variable Manufacturing Overhead $120,000 Variable Manufacturing Overhead Control $120,000
d. Variable Manufacturing Overhead Control $170,000 Accounts Payable and other accounts $170,000
152. Computer-based financial planning models often use the master budget as theira. budget formula.b. probability source.c. structural base.d. target budget model.
153. Under variable costing, which of the following expenses are NOT inventoriable?a. direct materials and variable manufacturing overheadb. direct manufacturing labor and variable manufacturing overheadc. variable marketing and direct manufacturing labord. variable and administrative
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154. Controllability and variable costs are different in thata. managers have more influence over variable costs than over
controllable costs.b. variable costs may be with production or administrative, whereas
controllable costs are only production-related costs.c. managers have controllability over more than just variable costs.d. variable costs are only short-run costs.
Use the information below to answer the following questions.
The Lamp Shade Company makes table lamps, for which the following standards have been developed:
Standard Inputs Standard Price Expected for Each Expected per Unit of Output Unit of Output
Direct materials 20 pounds $2 per pound Direct labor 6 hours $8 per hour
During January, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00.
155. The direct-labor efficiency variance for the month of January isa. $560 favorable.b. $560 unfavorable.c. $630 favorable.d. $630 unfavorable.
156. Manufacturing overhead costs are also known as all of the following EXCEPTa. indirect manufacturing costs.b. factory overhead costs.c. factory burden costs.d. conversion costs.
157. __________ are operational factors that directly affect the economic viability of the organization.a. Customer focusb. Key success factorsc. Continuous improvementd. Supply chain
Page 53
Use the information below to answer the following questions.
The total traceable fixed and variable costs of the account billing activity center is $735,000. Cost behavior analysis indicates that fixed costs are $225,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
158. What is the cost function?a. Costs = $225,000 + $0.294(Lines)b. Costs = $735,000 + $0.204(Lines)c. Costs = $225,000 + $0.204(Lines)d. cannot be determined
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
159. What is the variable spending variance using 4-variance analysis?a. $15,000 unfavorableb. $14,250 favorablec. $10,000 unfavorabled. $8,000 favorable
160. The rate that personnel receive in compensation at the payment date is calleda. an actual budgeted cost rate.b. an actual labor cost rate.c. a budgeted labor cost rate.d. a direct labor cost rate.
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161. The method of costing that includes all direct product costs and overhead costs is known asa. absorption costing.b. fixed overhead costing.c. manufacturing overhead costing.d. variable costing.
Use the information below to answer the following questions.
The following data for the Trooper Company pertain to the production of 1,000 units during October.
Variable overhead:
Standard variable overhead cost: $9.00 per pound of materials. Total actual variable overhead cost: $8,400. Standard variable overhead cost allowed for units produced was $9,000. Variable overhead efficiency variance was $180 unfavorable.
162. What is the variable overhead rate variance?a. $420 unfavorableb. $600 favorablec. $600 unfavorabled. $780 favorable
163. Pinker Company has a production schedule of 27,000 units and a budgeted sales volume of 30,000 units for the current year. In addition, 6,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?a. 30,000 unitsb. 21,000 unitsc. 9,000 unitsd. 3,000 units
164. The primary reason for implementing a new budgeting system for an organization isa. managers' need for more information in making better purchasing
decisions.b. managers' need for more information for variance analysis.c. the expected benefits exceed the costs of the old system.d. the relative expected benefits of the new system exceed its costs.
165. __________ is the acquisition, coordination and assembly of resources to produce a product or deliver a service.a. Distributionb. Customer servicec. Productiond. Marketing
Page 55
Use the information below to answer the following questions:
The following information is for Bishop Corporation:
Product X: Revenue $10.00 Variable Cost $2.50
Product Y: Revenue $15.00 Variable Cost $5.00
Total fixed costs are $50,000.
166. What is the operating income, assuming actual sales are 150,000 units, and the sales mix is one unit of Product X and two units of Product Y?a. $125,000b. $1,300,000c. $1,325,000d. $1,375,000
167. Using information obtained for a cost object, a manager may be able to determine all of the following EXCEPTa. the direct manufacturing labor costs of a job.b. the direct manufacturing labor of a work station.c. which customers should be denied discounts.d. which customers' accounts require the most effort to maintain.
168. Compute the total standard cost per book for Publisher's Company using the following information: Direct Materials: 1 ream of paper allowed per output unit manufactured, at $5.00 per ream.
Direct Mfg. Labor: 0.35 labor-hours of input allowed per output unit finished, at $17.50 standard cost per hour.
Variable Manufacturing: assigned on the basis of 0.25 per hour at $25 standard cost per hour.a. $11.13 per output unitb. $14.63 per output unitc. $17.38 per output unitd. $47.50 per output unit
Page 56
Use the information below to answer the following questions.
The following data for the Trooper Company pertain to the production of 1,000 units during October.
Variable overhead:
Standard variable overhead cost: $9.00 per pound of materials. Total actual variable overhead cost: $8,400. Standard variable overhead cost allowed for units produced was $9,000. Variable overhead efficiency variance was $180 unfavorable.
169. What is standard direct material amount per unit?a. 1.00 poundb. 1.88 poundsc. 3.00 poundsd. 4.00 pounds
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
170. What are the respective spending, efficiency, and production volume variances using 3-variance analysis?a. $5,000 unfavorable, $40,000 favorable, $100,000 unfavorableb. $5,000 unfavorable, $40,000 unfavorable, $100,000 favorablec. $2,500 favorable, $12,500 unfavorable, $0d. $2,500 unfavorable, $12,500 favorable, $0
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171. If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the total cost for hoses isa. considered to be a direct fixed cost.b. considered to be a direct variable cost.c. considered to be an indirect fixed cost.d. considered to be an indirect variable cost.
172. The spending and efficiency variances are subcomponents ofa. a flexible-budget variance.b. a manufacturing overhead flexible-budget variance.c. a production volume variance.d. a variable overhead volume variance.
173. Managers and accountants collect most of the cost information that goes into their systems througha. an information databank.b. computer programs.c. source documents.d. time surveys.
174. The financial budget is that part of the master budget that includesa. the capital budget and the cash budget.b. the capital budget and the budgeted balance sheet.c. the capital budget, the cash budget, and the budgeted statement of
cash flows.d. the cash budget, the budgeted statement of cash flows, and the
retained earnings budget.
Page 58
Use the information below to answer the following questions.
General Hospital uses a job cost system for all patients who have surgery. In January, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 2,000 nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $84,000 and $66,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours for the month. For patient Jim Carter, actual hours incurred were eight and four hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 4 days (96 hours). Other costs related to Carter were:
PRE-OP OR In-room Costs Costs Costs
Patient medicine $100 $250 $1,200 Direct nursing time 2,400 3,500 5,400
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
175. Determine the budgeted overhead rate for the hospital floor for surgery.a. $42.00b. $66.00c. $80.00d. $45.75
Use the information below to answer the following questions.
The Phil Company currently produces boxes in an automated process. Expected production per month is 40,000 units. The required direct materials costs $1.20 per unit. Manufacturing fixed overhead costs are $192,000 per month. Manufacturing overhead is allocated based on units of production.
176. What is the flexible budget for 40,000 and 20,000 units, respectively?a. $48,000; $24,000b. $240,000; $216,000c. $244,000; $220,000d. $248,000; $224,000
Page 59
Use the information below to answer the following questions:
Kevin Hobbs has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are:
Option 1: $1,000 fixed fee Option 2: $750 fixed fee + 5% of all revenues generated at the fair Option 3: 20% of all revenues generated at the fair.
The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each.
177. How many actions and events will the diagram contain, assuming Kevin prepares a decision table?a. 1 action and 3 eventsb. 1 action and 6 eventsc. 2 actions and 3 eventsd. 3 actions and 6 events
178. Cost-volume profit analysis examinesa. the behavior of some costs and revenues as changes occur in the
output level.b. the behavior of total costs, total revenues, and operating income as
changes occur in the output level.c. a single revenue driver and multiple cost drivers in special case
CVP.d. multiple revenue drivers and a single cost driver in special case
CVP.
179. The production volume overhead variance may be calculated bya. dividing the actual output units achieved by the budgeted fixed
overhead rate per output unit.b. subtracting the allocated fixed overhead according to budgeted inputs
allowed for each unit produced from the budgeted fixed overhead.c. dividing the budgeted fixed overhead rate per output unit by the
actual output units achieved.d. subtracting the budgeted fixed overhead from the actual overhead
incurred.
Page 60
Use the information below to answer the following questions:
Bob Blackmann makes scented candles and sells them wholesale by the case. There are 24 candles per case. Blackmann sells a case of candles for $50 a case. His variable costs are $30 per case. He has fixed costs of $500.
180. What is the contribution margin per case?a. $50b. $30c. $20d. $80
Use the information below to answer the following questions.
Favre and Carter Law Office employs 12 full-time attorneys and 10 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $29,000 per paraprofessional. For 19x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional.
Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
181. How much should the client be billed in a normal costing system when 1,000 professional labor-hours were used?a. $34,800b. $37,400c. $32,000d. $27,000
182. When goods are completed,a. the Work-in-process Control is increased.b. the total cost of each job will consist of actual direct materials
and actual indirect manufacturing labor.c. the total cost of each job is computed in the general ledger.d. actual direct materials, actual direct manufacturing labor, and
budgeted manufacturing overhead will comprise the total cost of each job.
Page 61
Use the information below to answer the following questions.
The following data for the Popular Pottery Company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per pound of clay. Total actual cost: $11,200. Standard cost allowed for units produced was $12,000. Materials efficiency variance was $240 unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 pots per hour at $24.00 per hour. Actual cost per hour was $24.50. Labor efficiency variance was $672 favorable.
183. What is the direct materials price variance?a. $560 unfavorableb. $800 favorablec. $800 unfavorabled. $1,040 favorable
184. What is the inventory cost per unit under absorption costing?a. $44.00b. $36.00c. $28.00d. $24.00
Use the information below to answer the following questions.
Favre and Carter Law Office employs 12 full-time attorneys and 10 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $29,000 per paraprofessional. For 19x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional.
Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
185. What are the budgeted direct-cost rate and the budgeted indirect cost rate, respectively, if a client used 4,000 professional labor-hours?a. $27.00; $4.17b. $29.80; $5.00c. $32.40; $5.00d. $27.00; $5.00
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Use the information below to answer the following questions.
Presented below is information from the records of Turkey Corporation for October: Sales $7,200,000 Salaries and Benefits: Selling and administrative 800,000 Direct manufacturing labor 1,200,000 Rent* 800,000 Utilities* 240,000 Advertising 140,000 Purchases: Direct materials 1,800,000 Indirect materials 40,000 Office supplies 84,000
Inventories: October 1 October 31 Indirect materials $100,000 $120,000 Office supplies 30,000 36,000 Direct materials 880,000 320,000 Finished goods 4,800,000 3,200,000
* Of these costs, 60 percent are assigned to manufacturing and 40 percent to selling and administration.
186. What is the cos of direct materials used?a. $2,360,000b. $1,800,000c. $2,920,000d. $880,000
187. What is the cost of goods manufactured?a. $2,360,000b. $4,204,000c. $3,644,000d. $4,764,000
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Use the information below to answer the following questions.
Clark Company had the following activities during 19x1:
Direct materials: Beginning inventory $25,000 Purchases 77,000 Ending inventory 13,000 Direct manufacturing labor 20,000 Manufacturing overhead 15,000 Ending work-in-process inventory 5,000 Beginning work-in-process inventory 1,000 Ending finished goods inventory 20,000 Beginning finished goods inventory 30,000
188. What is Clark's cost of direct materials used during 19x1?a. $102,000b. $89,000c. $64,000d. $12,000
Use the information below to answer the following questions.
Bear Company has the following information:
Month Budgeted Purchases
January $26,800 February 29,000 March 30,520 April 29,480 May 27,680
Purchases are paid for in the following manner:
10 percent in the month of purchase 50 percent in the month after purchase 40 percent two months after purchase
189. What is the expected Accounts Payable balance as of May 31?a. $11,792b. $24,912c. $36,704d. $2,948
Page 64
Use the information below to answer the following questions.
The Phil Company currently produces boxes in an automated process. Expected production per month is 40,000 units. The required direct materials costs $1.20 per unit. Manufacturing fixed overhead costs are $192,000 per month. Manufacturing overhead is allocated based on units of production.
190. What is the budgeted manufacturing fixed overhead rate?a. $4.00 per unitb. $6.00 per unitc. $4.80 per unitd. $2.40 per unit
191. Direct material purchases equala. usage plus production needs.b. production needs plus target ending inventories.c. beginning inventories plus production needs.d. usage plus target ending inventories less beginning inventories.
192. _______ is the term used to identify both the tracing of accumulated costs and the allocation of those costs to a cost object.a. Cost accumulationb. Cost assignmentc. Cost tracingd. Supervisory costing
193. Service organizations in our economya. have a finished goods inventory account.b. have a working-in-process inventory account.c. do not have a supply inventory account.d. do not have a direct materials inventory account.
Page 65
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
194. What is the variable efficiency variance using 4-variance analysis?a. $40,000 favorableb. $40,000 unfavorablec. $50,600 favorabled. $50,600 unfavorable
195. What is the break-even point in units, assuming a product's selling price is $100, its fixed costs are $8,000, its unit variable costs are $20, and its operating income is $32,000?a. 100 unitsb. 300 unitsc. 400 unitsd. 500 units
Page 66
Use the information below to answer the following questions.
Fiscal Company has the following sales budget for the last six months of 19x1:
July $100,000 October $90,000 August 80,000 November 100,000 September 110,000 December 94,000
Historically, the cash collection of sales has been as follows:
65 percent of sales collected in month of sale, 25 percent of sales collected in month following sale, 8 percent of sales collected in second month following sale, and 2 percent of sales is uncollectible.
196. Cash collections for October area. $58,500.b. $92,400.c. $99,500.d. $88,200.
197. When only direct manufacturing costs and variable manufacturing overhead costs are included as inventoriable costs, the method being used isa. absorption costing.b. fixed overhead costing.c. manufacturing overhead costing.d. variable costing.
Page 67
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
198. What is the variable production volume variance using 4-variance analysis?a. $6,750 unfavorableb. $3,000 unfavorablec. $0d. There is never a variable production volume variance.
199. Doc Company used 15,000 machine hours during March. It takes 0.45 machine-hours to produce one unit; 30,000 units were produced during the month. Budgeted production included 24,000 units, using 10,800 machine hours. Budgeted variable manufacturing overhead costs per output unit is $11.25. What is the variable overhead efficiency variance for Doc?a. $16,875 unfavorableb. $16,875 favorablec. $37,500 favorabled. $37,500 unfavorable
Page 68
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
200. What are the fixed efficiency and the fixed production volume variances, respectively, using 4-variance analysis?a. no efficiency variance, $100,000 favorableb. $0, $100,000 unfavorablec. $25,250 favorable, $99,999 unfavorabled. $25,250 unfavorable, $99,999 favorable
Use the information below to answer the following questions.
Murray Company uses a single cost pool for fixed manufacturing overhead. The amount for July 19x1 was budgeted at $250,000; however, the actual amount was $350,000. Actual production for July was 25,000 units, and actual machine-hours were 20,000. Budgeted production included 35,500 units and 24,750 machine-hours.
201. What is the budgeted fixed overhead rate per input unit?a. $7.04 per unitb. $9.86 per unitc. $10.10 per unitd. $14.14 per unit
Page 69
202. The following information pertains to the Gibson Corporation:
Beginning finished goods inventory $180,000 Cost of goods manufactured 1,230,000 Ending finished goods inventory 102,000
What is the cost of goods sold?a. $1,308,000b. $1,152,000c. $1,128,000d. $948,000
203. __________ by competitors creates a never-ending search for higher levels of performance within many organizations.a. Customer focusb. Key success factorsc. Continuous improvementd. Supply chain
Use the information below to answer the following questions.
ABC Desk Company manufactures desks. The estimated number of sales for the last quarter of 19x1 is as follows:
Month Sales
October 10,000 November 12,500 December 15,000
Beginning finished goods should be equal to 30 percent of each month's sales during October through December 10 percent of each month's sales in other months. January 19x2 sales are anticipated to be 30,000 desks. The cost to produce a desk is $250.
204. How many desks will be produced in the three months?a. 35,250 desksb. 37,500 desksc. 41,250 desksd. 45,000 desks
205. Kaizen budgeting, adapted from the Japanese, provides thata. activity costs are budgeted based on current practices, methods, and
costs.b. continuous budgeting methods are employed.c. target pricing is key to budget preparation.d. current activities (either manufacturing or service) are analyzed to
identify potential product improvements.
Page 70
Use the information below to answer the following questions:
State University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:
1. Donor Country Club a. Fixed rental cost of $1,200. b. $11.25 per person for food.
2. Bunker Country Club a. Fixed rental cost of $2,160. b. A caterer who charges $9.00 per person for food.
State University has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band, which will cost another $800. Tickets are expected to be $30 per person. Any other items required for the event will be donated by its local business supporters.
206. What is the "operating income," assuming 250 people attend and option one is chosen?a. $7,500.00b. $887.50c. $4,687.50d. $490.00
Use the information below to answer the following questions:
Harry Hartman, MD performs a certain outpatient procedure for $1,000.00. His fixed costs are $20,000, while his variable costs are $500.00 per procedure.
207. What is the budgeted revenue for the month assuming that Dr. Hartman plans to perform this procedure 200 times?a. $100,000b. $200,000c. $300,000d. $400,000
208. Management accountants must satisfy their users; therefore, they should do all the following EXCEPTa. provide specialized information that specific managers can use.b. provide them with high quality information.c. focus on preparing information for external financial reporting.d. continuously strive to provide better quality information faster, and
at a lower cost.
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209. _______________ is the process of getting a company's objectives understood and accepted by all departments and functions.a. Communicationb. Compilationc. Continuityd. Coordination
210. Expected monetary value may be defined asa. the weighted average of all possible outcomes.b. the probability that each outcome will not occur.c. the weighted average of the outcomes with the probability of each
outcome serving as the weight.d. the average of all possible outcomes.
211. The type of budget that remains the same without respect to any operational or financial changes is calleda. a balanced budget.b. a cost budget.c. a flexible budget.d. a static budget.
212. The input standard cost per completed unit may be calculated bya. multiplying the budgeted number of outputs for one input by the
budgeted price per output.b. multiplying the budgeted price per input by the budgeted number of
inputs for one output.c. dividing the variable price per input by the budgeted number of
inputs for one output.d. dividing the budgeted number of outputs for one input by the budgeted
price per output.
213. The following information pertains to Mim's Production Company:
Beginning finished goods, 1/1/19x1 $60,000 Ending finished goods, 12/31/19x1 38,000 Cost of goods sold 224,000 Sales 450,000 Operating expenses 100,000
What is the cost of goods manufactured for 19x1?a. $226,000b. $126,000c. $202,000d. $246,000
Page 72
Use the information below to answer the following questions:
Bridal Shoppe sells wedding dresses. Each dress's cost may be separated as follows: selling price of $1,000 and variable costs of $400. Fixed costs are $90,000.
214. How many dresses are sold if the operating income is zero?a. 225 dressesb. 150 dressesc. 100 dressesd. 90 dresses
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
215. What is the amount of direct materials used for the year 19x1?a. $1,720,000b. $1,788,000c. $1,892,000d. $2,028,000
Page 73
Koppal Company manufacturers tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
ãÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍá ºAnalysis ³ Actual ³ Flexible ³ Flexible ³ Sales Volume³ Staticº º ³ Results ³ Variances ³ Budget ³ Variances ³ Budgetº ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºUnits Sold ³ 225,000 ³ ³ 225,000 ³ ³ 206,250º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºRevenues ³ $84,160 ³ $2,000 F ³ (1) ³ $2,800 U ³ (2) º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºVariable ³ ³ ³ ³ ³ º º Costs ³ (C) ³ $400 U ³ $31,720 ³ $4,680 F ³ $36,400º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºFixed ³ ³ ³ ³ ³ º º Costs ³ $16,560 ³ $1,720 F ³ $18,280 ³ ³ $18,280º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºOperating ³ ³ ³ ³ ³ º º Inc. ³ $35,480 ³ (D) ³ $32,160 ³ (E) ³ $30,280º àÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍê
216. What is the total sales-volume variance (E)?a. $7,480 unfavorableb. $2,800 unfavorablec. $1,880 favorabled. $7,480 favorable
217. Herman Company manufactures baskets. It expects to sell 30,000 baskets in 19x1. The company had enough beginning inventory of direct materials to produce 36,000 baskets. Beginning inventory of finished baskets totaled 3,000 with a target ending inventory of 3,750 baskets. The baskets sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each basket total $2.00, while direct labor is $1.00. Factory overhead is $0.40 per basket.What would be the amount of sales in the budgeted income statement?a. $162,000b. $180,000c. $117,000
d. $119,250
Page 74
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
218. Which of the following journal entries is correct, with respect to isolating fixed costs per accounting period (month of April)?a. Fixed Manufacturing Overhead Control $170,000
Accounts Payable and other accounts $170,000b. Fixed Manufacturing Overhead Allocated $400,000
Fixed Spending Variance $5,000 Fixed Production Volume Variance 100,000 Fixed Manufacturing Overhead Control 295,000
c. Work-in-process Control $295,000 Fixed Manufacturing Overhead Allocated $295,000
d. Fixed Manufacturing Overhead Allocated $400,000 Fixed Spending Variance $5,000 Fixed Efficiency Variance 20,000 Fixed Manufacturing Overhead Control 375,000
Page 75
Koppal Company manufacturers tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
ãÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍá ºAnalysis ³ Actual ³ Flexible ³ Flexible ³ Sales Volume³ Staticº º ³ Results ³ Variances ³ Budget ³ Variances ³ Budgetº ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºUnits Sold ³ 225,000 ³ ³ 225,000 ³ ³ 206,250º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºRevenues ³ $84,160 ³ $2,000 F ³ (1) ³ $2,800 U ³ (2) º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºVariable ³ ³ ³ ³ ³ º º Costs ³ (C) ³ $400 U ³ $31,720 ³ $4,680 F ³ $36,400º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºFixed ³ ³ ³ ³ ³ º º Costs ³ $16,560 ³ $1,720 F ³ $18,280 ³ ³ $18,280º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºOperating ³ ³ ³ ³ ³ º º Inc. ³ $35,480 ³ (D) ³ $32,160 ³ (E) ³ $30,280º àÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍê
219. What are the actual variable costs (C)?a. $36,400b. $32,720c. $31,320d. $27,040
220. Which of the following formulas would determine cost of goods sold in a manufacturing entity?a. Beginning inventory + Ending inventory - Cost of goods manufactured =
Cost of goods soldb. Cost of goods manufactured + Ending inventory + Beginning inventory =
Cost of goods soldc. Beginning inventory - Ending inventory - Cost of goods manufactured =
Cost of goods soldd. Cost of goods manufactured - Ending inventory + Beginning inventory =
Cost of goods sold
221. Which of the following statements related to manufacturing overhead allocated is FALSE?a. It is comprised of all manufacturing costs that cannot be directly
traced to a product or service.b. The costs can be grouped in either a single indirect-cost pool or
multiple indirect-cost pools.c. These costs are allocated because the products could be made without
them.d. The costs are debited to a work-in-process account.
Page 76
222. Which of the following is NOT part of the step-by-step approach to computing the budgeted indirect cost allocation rate?a. Identify the costs that are not part of the direct-cost pool.b. Identify costs associated with the direct-cost pool.c. Estimate the cost items for the budgeted period.d. Select the cost allocation base.
223. Which one of the following examples could be classified as a direct cost?a. The costs of an entire factory's electricity related to a product;
the product line is the cost object.b. The printing costs incurred for payroll check processing; the payroll
check processing is the cost object.c. The salary of a maintenance supervisor in the manufacturing plant;
Product A is the cost object.d. The costs incurred for electricity in the office; Accounting
department is the cost object.
224. l, the diffhe planning of variopriateneraeing woulives wheinennmoutsvery intdecarkcturinng wouliThe opriorpmoutnces. is ods tradshrmation es.LaweAdances?Sna. capitalization method.b. contribution margin method.c. gross margin method.d. inventoriable method.
225. All of the following items are debited to the Work-in-process account EXCEPTa. allocated manufacturing overhead.b. completed goods being transferred out of the plant.c. direct labor consumed.d. direct materials consumed.
226. A clerk prepares a monthly report comparing the actual phone bill with the expected phone costs. This activity would be classified asa. problem-solving.b. scorekeeping.c. planning.d. attention-directing.
Page 77
Use the information below to answer the following questions.
American Company produces flags. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $12.50 Direct Labor 0.70 9.50 Direct Marketing 0.27 5.50
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 3,000 Direct Materials: Materials costs $89,700 Input purchased and used 11,500 Actual price per input $13.00 Direct Manufacturing Labor: Labor costs $28,500 Labor-hours of input 4,750 Actual price per hour $10.00 Direct Marketing Labor: Labor costs $12,000 Labor-hours of input 2,500 Actual price per hour $8.00
227. What is the price variance of the direct manufacturing labor and the direct marketing labor, respectively?a. $2,375.00 unfavorable; $6,250.00 unfavorableb. $2,931.50 unfavorable; $5,196.50 favorablec. $3,317.50 favorable; $5,337.50 unfavorabled. $4,171.50 unfavorable; $5,031.50 favorable
228. The budgeting process generally concludes with the preparation of thea. cash budget.b. selling expense budget.c. research and development budget.d. budgeted income statements.
Page 78
Use the information below to answer the following questions.
Franklin Enterprises, a wholesaler, has a sales budget for next month of $900,000. Cost of units sold is expected to be 40 percent of sales. All units are paid for in the month following purchase. The beginning inventory of units is $30,000, and an ending amount of $36,000 is desired. Beginning accounts payable is $228,000.
229. The ending balance in accounts payable for next month will bea. $366,000.b. $360,000.c. $354,000.d. $234,000.
Use the information below to answer the following questions.
The following data for the Helmet Company pertain to the production of 1,500 helmets during June.
Variable overhead:
Standard variable overhead cost: $12.00 per pound of plastic. Total actual variable overhead cost: $16,800. Standard variable overhead cost allowed for units produced was $18,000. Variable overhead efficiency variance was $360 unfavorable.
230. What is the variable overhead flexible-budget variance?a. $1,200 favorableb. $360 unfavorablec. $1,920 favorabled. $1,200 unfavorable
231. Over-allocated manufacturing costs arise for two reasons: (1) when budgeted manufacturing overhead exceeds actual manufacturing overhead and (2)a. when the actual quantity of the allocation base equals the budgeted
quantity.b. when the actual quantity of the allocation base is deducted from the
budgeted quantity.c. when the actual quantity of the allocation base is multiplied by the
budgeted quantity.d. when the budgeted quantity of the allocation base consumed is less
than the actual quantity on which overhead is assigned.
Page 79
232. A company had the following information pertaining to two different cases: Case A Case B
Budgeted fixed overhead $130,000 $230,000 Variable factory overhead per direct-labor hour $24 $14 Standard direct-labor hours 11,000 6,000 Flexible-budget variance $10,000 F $20,000 U Production-volume variance $6,000 U $8,000 F
The total overhead variance in Case B wasa. $242,000 unfavorable.b. $12,000 unfavorable.c. $28,000 unfavorable.d. $218,000 favorable.
Use the information below to answer the following questions.
Billiard, Inc. manufactures pool cues. It expects to sell 20,000 cues in 19x1. The company had enough beginning inventory of direct materials to produce 24,000 cues. Beginning inventory of finished cues totaled 2,000 with a targeted ending inventory of 2,500 cues. The cues sell for $12.00 and the company keeps no work-in-process inventory. Direct materials costs for each cue total $2.00, while direct labor is $4.00. Factory overhead is $0.80 per cue.
233. What will be the total costs incurred for direct materials, direct manufacturing labor, and manufacturing overhead, respectively, for 19x1?a. $0; $40,000; $16,000b. $0; $41,000; $16,000c. $80,000; $40,000; $16,000d. $41,000; $82,000; $16,400
234. Gross margin is considered to bea. the same as the contribution margin.b. all revenues less costs which do not change with respect to an
output-related driver.c. all revenues less cost of goods sold.d. all revenues plus costs which change with respect to an output-
related driver.
Page 80
Use the information below to answer the following questions.
Michael Nurse Company had the following information:
Budgeted variable factory overhead $44,000 Budgeted fixed factory overhead $31,000 Actual variable factory overhead $45,000 Actual fixed factory overhead $35,000 Budgeted cost driver activity levels: Direct-labor hours 20,000 Direct-labor costs $100,000 Machine hours 40,000 Production setups 10,000 Actual cost driver activity levels: Direct-labor hours 21,000 Direct-labor costs $110,400 Machine hours 37,460 Production setups 9,520
235. If Job 300 used $17,472 of direct labor cost, the overhead applied using direct-labor cost as the cost driver should bea. $13,104.b. $11,881.c. $13,978.d. $12,667.
236. Competition places an increased emphasis on cost reductions. For an organization to reduce costs, it must focus ona. maximizing the cost allocation system.b. reporting non-value added costs separately from value added costs.c. efficiently managing the use of the cost drivers in those value added
activities.d. the cost allocation process.
237. Which of the following statements is FALSE?a. Product costs and inventoriable costs are the same.b. Inventoriable costs are important for GAAP.c. Inventoriable costs are a special case of product costs.d. "Product costs" refers to the particular costs allocated to a product
for the purpose at hand.
Page 81
Use the information below to answer the following questions.
Michael Nurse Company had the following information:
Budgeted variable factory overhead $44,000 Budgeted fixed factory overhead $31,000 Actual variable factory overhead $45,000 Actual fixed factory overhead $35,000 Budgeted cost driver activity levels: Direct-labor hours 20,000 Direct-labor costs $100,000 Machine hours 40,000 Production setups 10,000 Actual cost driver activity levels: Direct-labor hours 21,000 Direct-labor costs $110,400 Machine hours 37,460 Production setups 9,520
238. If Job 500 used 460 production setups, the overhead applied using production setups as the cost driver should bea. $3,450.b. $3,624.c. $3,680.d. $3,865.
239. The break-even point in CVP analysis is defined asa. the point where output units equal input units.b. the point where unit contribution margin equals fixed costs divided
by number of break-even units.c. where revenues less variable costs equal operating income.d. where the unit contribution margin equals the selling price less the
unit variable cost.
Use the information below to answer the following questions.
Tonka Cars produces and sells an auto part for $30.00 per unit. Direct materials are $12 per unit, while direct manufacturing labor averages $2.25 per unit. Variable overhead is $0.75 per unit and fixed overhead is $375,000 per year. Administrative expenses, all fixed, run $135,000 per year, with sales commissions of $3 per part. Production is 100,000 parts per year. In 19x1, 75,000 units were sold.
240. What is the inventory cost per unit using variable costing?a. $14.25b. $15.00c. $18.75d. $21.75
Page 82
Use the information below to answer the following questions.
Olsen, Inc. is in the process of evaluating its manufacturing overhead costs. The results for June are as follows, and Olsen uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis.
B. Budgeted amounts for June 19x1 are: Direct labor-hours: 0.30 /Unit Variable labor-hour overhead rate: $10.00 /DLH Fixed manufacturing overhead: $300,000 Budgeted output (denominator level output): 30,000 Units
C. Actual amounts for June 19x1 are: Variable manufacturing overhead: $170,000 Fixed manufacturing overhead: $295,000 Direct labor-hours: 16,000 Actual output: 40,000
241. The total flexible-budget variance is:a. $45,000 favorableb. $45,000 unfavorablec. $40,000 unfavorabled. $40,000 favorable
Page 83
Use the information below to answer the following questions.
Gordon, Inc. produces a special line of plastic toy racing cars. Gordon, Inc. produces the cars in batches. To manufacture a batch of the cars, Gordon Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2001. Static-budget Actual Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup hours per batch 5 5.25 Variable overhead cost per setup hour $40 $38 Total fixed setup overhead costs $14,400 $14,000
242. Calculate the production-volume variance for fixed setup overhead costs.a. $3,200 unfavorableb. $400 unfavorablec. $3,600 unfavorabled. $400 favorable
243. What is the appropriate journal entry if $100,000 of materials was purchased on account for the month of August?a. Materials Control 100,000
Accounts Payable Control 100,000b. Materials Record 100,000
Accounts Payable Control 100,000c. Manufacturing Overhead Control 100,000
Materials Control 100,000d. Materials Overhead Control 100,000
Accounts Payable Control 100,000
244. Which of the following is NOT one of the main alternatives for disposing underallocated manufacturing overhead?a. current accounting period write-offb. proration based on the allocated overhead amountc. proration based on the budgeted overhead amountd. proration based on total ending balances in work-in-process, finished
goods, and cost of goods sold
Page 84
245. If a purchasing agent is able to negotiate a price lower than that set by the current budget by purchasing poor quality direct materials,a. a reduction in customer service costs will result.b. the effect on the direct materials efficiency variance will be
favorable.c. the effect on the direct-labor efficiency variance will be favorable.d. the effect on the purchase price variance will be favorable.
Use the information below to answer the following questions.
Furniture, Inc. manufactures mattresses. The estimated number of mattresses for the first three months of 19x1 is as follows:
Month Sales
January 5,000 February 7,000 March 6,500
Finished goods inventory at the end of December is 1,500 units. Ending finished goods are equal to 30 percent of next month's sales. April 19x1 sales are expected to total 8,000 units.
246. How many mattresses will be produced in the first quarter of 19x1?a. 18,500 mattressesb. 19,400 mattressesc. 20,900 mattressesd. 22,400 mattresses
247. __________ focuses on reporting to external parties.a. Management accountingb. Financial accountingc. Planningd. Control
Page 85
Use the information below to answer the following questions.
Sim's Fabricating Company is a new company that needs to make a decision about the method to use in adjusting cost of goods sold. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated ($200,000) was different from the actual amount incurred ($225,000).
Ending balances in the relevant accounts were: Work-in-process $10,000 Finished Goods 20,000 Cost of Goods Sold 170,000
248. What is the correct journal entry to write off the difference between allocated and actual overhead directly to cost of goods sold?a. Manufacturing Overhead Allocated 200,000
Cost of Goods Sold 25,000 Manufacturing Overhead Control 225,000
b. Manufacturing Overhead Control 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Allocated 225,000
c. Manufacturing Overhead Allocated 200,000 Cost of Goods Sold 170,000 Manufacturing Overhead Control 370,000
d. Manufacturing Overhead Allocated 200,000 Work-in-process 25,000 Manufacturing Overhead Control 225,000
Page 86
Koppal Company manufacturers tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
ãÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍá ºAnalysis ³ Actual ³ Flexible ³ Flexible ³ Sales Volume³ Staticº º ³ Results ³ Variances ³ Budget ³ Variances ³ Budgetº ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºUnits Sold ³ 225,000 ³ ³ 225,000 ³ ³ 206,250º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºRevenues ³ $84,160 ³ $2,000 F ³ (1) ³ $2,800 U ³ (2) º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºVariable ³ ³ ³ ³ ³ º º Costs ³ (C) ³ $400 U ³ $31,720 ³ $4,680 F ³ $36,400º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºFixed ³ ³ ³ ³ ³ º º Costs ³ $16,560 ³ $1,720 F ³ $18,280 ³ ³ $18,280º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºOperating ³ ³ ³ ³ ³ º º Inc. ³ $35,480 ³ (D) ³ $32,160 ³ (E) ³ $30,280º àÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍê
249. What is the total static-budget variance?a. $5,200 favorableb. $3,320 favorablec. $1,880 unfavorabled. $1,880 favorable
250. _______________ is a carefully predetermined amount usually expressed on a per-unit basis.a. Variable marketing overheadb. A benchmarkc. A standardd. Fixed factory overhead
251. Anything for which a separate measurement of costs is desired is aa. cost item.b. cost object.c. fixed cost item.
d. variable cost object.
252. Robert wants to identify the total cost for computing the personal tax return he prepared for his client. Labor is the only direct cost at $75 per hour. Indirect costs are $40 per labor hour. What is the total direct cost, indirect cost, and job cost, respectively, if 10 hours are spent preparing the tax return?a. $700, $500, $1,200b. $400, $750, $1,150c. $750, $400, $1,150d. $800, $750, $1,550
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253. The master budget embraces the impact ofa. operating and managerial decisions.b. operating and financing decisions.c. financing and managerial decisions.d. operating, managerial, and financing decisions.
254. As teamwork has become more prominent in the last few years, the differences between staff and line managementa. have increased.b. have become more important relative to promotions.c. have diminished.d. have only been evident in the employee reward system.
255. Which one of the following is a variable cost in an insurance company?a. rentb. president's salaryc. sales commissionsd. property taxes
256. The CFO is also called thea. finance directorb. CAOc. chief accounting officerd. president
257. __________ is the after-sale support activities provided to customers.a. Distributionb. Customer servicec. Productiond. Marketing
258. The cash budget is a schedule of expected cash receipts and disbursements thata. requires an aging of accounts receivable and accounts payable.b. is a self-liquidating cycle.c. is prepared immediately after the sales forecast.d. predicts the effect on the cash position at given levels of
operations.
Page 88
Use the information below to answer the following questions.
ABC Desk Company manufactures desks. The estimated number of sales for the last quarter of 19x1 is as follows:
Month Sales
October 10,000 November 12,500 December 15,000
Beginning finished goods should be equal to 30 percent of each month's sales during October through December 10 percent of each month's sales in other months. January 19x2 sales are anticipated to be 30,000 desks. The cost to produce a desk is $250.
259. What will be the cost of goods manufactured for December?a. $3,937,500b. $3,750,000c. $3,375,000d. $2,625,000
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Use the information below to answer the following questions.
Ecco Company produces Plastic balls. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $6.25 Direct Labor 0.70 4.75 Direct Marketing 0.27 2.75
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 5,000 Direct Materials: Materials costs $74,750 Input purchased and used 11,500 Actual price per input $6.50 Direct Manufacturing Labor: Labor costs $23,750 Labor-hours of input 4,750 Actual price per hour $5.00 Direct Marketing Labor: Labor costs $10,000 Labor-hours of input 2,500 Actual price per hour $4.00
260. What is the price variance of the direct manufacturing labor and the direct marketing labor, respectively?a. $1,187.50 unfavorable; $3,125.00 unfavorableb. $1,465.75 unfavorable; $2,598.25 favorablec. $1,658.75 favorable; $2,668.75 unfavorabled. $2,085.75 unfavorable; $2,515.75 favorable
Page 90
Use the information below to answer the following questions.
Duffy Company had the following activities during 19x1:
Direct materials: Beginning inventory $50,000 Purchases 154,000 Ending inventory 26,000 Direct manufacturing labor 40,000 Manufacturing overhead 30,000 Ending work-in-process inventory 10,000 Beginning work-in-process inventory 2,000 Ending finished goods inventory 40,000 Beginning finished goods inventory 60,000
261. What is Duffy's cost of goods manufactured during 19x1?a. $268,000b. $298,000c. $240,000d. $238,000
262. The primary criterion for choosing among alternative accounting systems isa. cost minimization.b. reduction in the amount of time required to perform a particular job.c. achievement of organizational goals.d. how well they help achieve organizational goals in relation to the
costs incurred for these systems.
263. All of the following are considered to be steps in the preparation of a flexible budget EXCEPTa. determining the budgeted variable cost per output unit.b. determining the actual quantity of output units.c. determining the actual selling price per unit.d. determining the budgeted fixed costs.
264. Once a plan is implemented, the control processa. forces managers to follow the pre-existing plan.b. should allow the originating manager(s) to keep lower-level managers
from making changes.c. should be flexible.d. should be followed rigidly.
265. Variable costing regards fixed manufacturing overhead asa. an unexpired cost.b. an inventoriable cost.c. a charge against sales.d. a product cost.
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266. The following information pertains to the Lupta Corporation:
Beginning finished goods inventory $36,000 Cost of goods manufactured 246,000 Ending finished goods inventory 20,400
What is the cost of goods sold?a. $261,600b. $230,400c. $225,600d. $189,600
267. All of the following statements about operating costs are true EXCEPTa. operating costs are recorded as an expense of the period in question.b. operating costs do not include noncapitalized costs.c. operating costs include costs that are an immediate expense when
incurred.d. capitalized costs are initially recorded as operating costs.
268. Cost tracing isa. the assignment of direct costs to the chosen cost object.b. a function of cost allocation.c. the process of tracking both direct and indirect costs associated
with a cost object.d. the process of determining the actual cost of the cost object.
Page 92
Use the information below to answer the following questions.
Gordon, Inc. produces a special line of plastic toy racing cars. Gordon, Inc. produces the cars in batches. To manufacture a batch of the cars, Gordon Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2001. Static-budget Actual Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup hours per batch 5 5.25 Variable overhead cost per setup hour $40 $38 Total fixed setup overhead costs $14,400 $14,000
269. Calculate the spending variance for fixed setup overhead costs.a. $3,200 unfavorableb. $400 unfavorablec. $3,600 unfavorabled. $400 favorable
270. The breakdown of the flexible-budget variance into its subcomponents is primarily important fora. standard cost pricing.b. cost accountants.c. separating variable and fixed costs.d. responsibility center managers.
Page 93
Use the information below to answer the following questions.
The following data for the Popular Pottery Company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per pound of clay. Total actual cost: $11,200. Standard cost allowed for units produced was $12,000. Materials efficiency variance was $240 unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 pots per hour at $24.00 per hour. Actual cost per hour was $24.50. Labor efficiency variance was $672 favorable.
271. What is the total actual costs of direct manufacturing labor?a. $23,200b. $23,814c. $24,000d. $24,672
Page 94
Koppal Company manufacturers tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
ãÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍá ºAnalysis ³ Actual ³ Flexible ³ Flexible ³ Sales Volume³ Staticº º ³ Results ³ Variances ³ Budget ³ Variances ³ Budgetº ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºUnits Sold ³ 225,000 ³ ³ 225,000 ³ ³ 206,250º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºRevenues ³ $84,160 ³ $2,000 F ³ (1) ³ $2,800 U ³ (2) º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºVariable ³ ³ ³ ³ ³ º º Costs ³ (C) ³ $400 U ³ $31,720 ³ $4,680 F ³ $36,400º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºFixed ³ ³ ³ ³ ³ º º Costs ³ $16,560 ³ $1,720 F ³ $18,280 ³ ³ $18,280º ºÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄÄÄÄÄÄÄâÄÄÄÄÄÄÄĺ ºOperating ³ ³ ³ ³ ³ º º Inc. ³ $35,480 ³ (D) ³ $32,160 ³ (E) ³ $30,280º àÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍê
272. What is the total flexible-budget variance (D)?a. $120 unfavorableb. $0c. $680 favorabled. $3,320 favorable
Use the information below to answer the following questions:
Assume the following cost information for Jackson Company:
Selling price per unit $144 Variable costs per unit 80 Total fixed costs 80,000 Tax rate 40%
273. What is the number of units that must be sold to earn an after-tax net income of $40,800?
a. 3,700 unitsb. 2,313 unitsc. 1,594 unitsd. 1,063 units
274. Financial accounting provides a historical perspective, whereas management accountinga. emphasizes the future in addition to historical reports.b. only enables managers to make decisions.c. emphasizes a current perspective.d. emphasizes reports to shareholders.
Page 95
Use the information below to answer the following questions.
Jim's Computer Products manufactures keyboards for computers. In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labor hours in Department 2. The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the two departments were as follows:
Department 1 Department 2
Direct materials purchased on account $66,000 $106,500Direct materials used 19,500 8,100Direct manufacturing labor 31,500 32,100Indirect manufacturing labor 6,600 5,400Indirect materials used 4,500 2,850Lease on equipment 9,750 2,250Utilities 600 750
Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labor hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production.
275. What is the budgeted manufacturing overhead rate for Department 2?a. $3.45b. $3.75c. $4.60d. $7.50
276. __________ measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.a. Management accountingb. Financial accountingc. Planningd. Control
277. r at is the a. $40.00b. $36.00c. $28.00d. $24.00
278. __________ is the manner by which companies promote and sell their products or services to customers or perspective customers.a. Distributionb. Customer servicec. Productiond. Marketing
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279. Standards represent the best expected level of performance. They are usually developed from a careful study and are expresseda. on a per unit basis.b. by a management team.c. through the organization's goals.d. through an organization's policies and procedures.
280. The actual price of inputs less the budgeted price of inputs is multiplied by the actual quantity of inputs to provide which variance?a. budgetb. costc. rated. usage
Use the information below to answer the following questions.
Billie Company has the following data:
Month Budgeted Sales
January $120,000 February 108,000 March 132,000 April 144,000
The gross profit rate is 40 percent, and the inventory at the end of December was $21,600. Desired inventory levels are 30 percent of next month's sales at cost.
281. What is the expected total purchases budgeted for February?a. $69,120b. $64,800c. $88,560d. $43,200
282. Which of the following statements is TRUE according to the textbook?a. IMA is the common certification of management accountants.b. CPA is the common certification of management accountants.c. Ethical issues do not affect management accountants.d. Accountants consistently rank high in public opinion.
283. There are two reasons why the production-volume variance is NOT a good measure of the lost production opportunity: (1) plant capacity output may be more than budgeted output, and (2)a. revenue factors are considered in the analysis.b. the costs of unused capacity reflects only cost factors.c. the material costs incurred due to unused capacity are included in
the analysis.d. the costs of not fully using a capacity should reflect both spending
and efficiency factors.
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284. hances?Sn's ng would beThe operatingbpÐeAll isacy aen Febrsacy,. us octuvoly,t than budperiod costs if vad?Whaabocosting is us foa. $72,000 and $96,800b. $(180,000) and $(142,000)c. $(176,000) and $(135,200)d. $(168,000) and $(143,200)
Use the information below to answer the following questions:
Kevin Hobbs has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are:
Option 1: $1,000 fixed fee Option 2: $750 fixed fee + 5% of all revenues generated at the fair Option 3: 20% of all revenues generated at the fair.
The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each.
285. Which option should Kevin choose in order to maximize income, assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold?a. Option one with expected income of $300b. Option two with expected income of $452.50c. Option three with expected income of $910.00d. Option three with expected income of $1,015.00
286. _______________ is responsible for accumulating and reporting reliable results to all levels of management.a. An accounting systemb. Scorekeepingc. Management accountingd. Attention directing
287. The agency supervisor of a nonprofit organization wants to know how many individuals may receive financial assistance during the year. The organization has fixed costs of $240,000. It aids the unemployed by supplementing their incomes by $3,200 annually, while they seek new employment skills. The budgeted appropriation for the year is $800,000.a. 175 peopleb. 130 peoplec. 100 peopled. 75 people
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288. Which of the following statements about normal costing is TRUE?a. Direct costs and indirect costs are allocated using an actual rate.b. Direct costs and indirect costs are traced using budgeted rates.c. Direct costs are traced using a budgeted rate, and indirect costs are
allocated using an actual rate.d. Direct costs are traced using an actual rate, and indirect costs are
allocated using a budgeted rate.
289. Which of the following would help reduce indirect costs?a. increase the complexity of the production and distribution processesb. replace workers with an automated processc. increase the information gathering processingd. increase the number of products produced
Use the information below to answer the following questions:
Bridal Shoppe sells wedding dresses. Each dress's cost may be separated as follows: selling price of $1,000 and variable costs of $400. Fixed costs are $90,000.
290. What is the Bridal Shoppe's operating income when 200 dresses are sold?a. $30,000b. $80,000c. $200,000d. $100,000
291. One of the primary differences between overhead costs in non-manufacturing settings and manufacturing settings isa. that variable and fixed manufacturing costs are not inventoriable for
financial reporting.b. GAAP requires the same treatment of manufacturing costs for both
manufacturing and non-manufacturing companies.c. only non-manufacturing companies must include overhead costs as
inventoriable costs for financial reporting.d. only manufacturing companies are required to include overhead costs
in their inventoriable costs for financial reporting.
Page 99
Use the information below to answer the following questions.
Knicks Corporation used the following data to evaluate their current operating system. The company sells everything for $10 each. The $10 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 500,000 495,000 Variable Costs $1,500,000 $1,250,000 Fixed Costs $900,000 $925,000
292. What is the budgeted operating income for Knicks Corporation?a. $2,985,000b. $2,775,000c. $2,600,000d. $2,375,000
Use the information below to answer the following questions.
Clinton Corporation currently produces cardboard boxes in an automated process. Expected production per month is 20,000 units. The required direct materials costs $0.45 per unit. Manufacturing overhead costs are $18,000 per month. Manufacturing overhead is allocated based on units of production.
293. What is the flexible budget for 20,000 and 10,000 units, respectively?a. $19,500; $15,000b. $27,000; $22,500c. $30,000; $25,500d. $33,000; $28,500
294. If unit outputs exceed the break-even point when using the graph method,a. there is a loss because the total cost line exceeds the total revenue
line.b. total sales exceed total costs.c. there is a profit because the total cost line exceeds the total
revenue line.d. expenses are extremely high relative to revenues.
295. Which of the following costing systems is used for tax purposes?a. only absorption costingb. only flexible costingc. only variable costingd. absorption costing with some variable costing
Page 100
Use the information below to answer the following questions.
Jaworski Company currently has 20 full-time professionals on staff. Each professional is allotted the following number of hours per year:
Budgeted billable time for clients: 2,000 hours Budgeted vacation time: 200 hours Budgeted professional development: 150 hours Budgeted unbillable time due to lack of demand: 50 hours Budgeted sick leave: 100 hours
Consumer demand for the company's services is at 100 percent of time available. Each professional receives a salary of $40,000 per year and fringe benefits of $10,000 per year.
296. What is the budgeted direct-cost rate if the company does not want to charge clients directly for employee vacation, sick leave, downtime, and professional development?a. $22.50b. $20.00c. $25.00d. $16.00
297. Before an organization chooses to use variable costing, management should determinea. the time span required to implement the new system.b.c. the types of reports that could be generated for management's use.d. which method is required for tax purposes.
298. The determination of a cost as being either direct or indirect depends upona. the accounting system.b. the allocation system.c. the cost tracing system.d. the cost object chosen to determine its individual costs.
299. _______________ is the aspect of accounting that quantifies the likely results of possible courses of action and often recommends the best course to follow.a. Scorekeepingb. Attention-directingc. Problem-solvingd. None of the above
300. Which of the following statements is TRUE?a. A favorable variance always benefits a company.b. Managers attempt to maintain unfavorable variances.c. Favorable variances are typically not preferred by management.d. A favorable variance is not always beneficial for an organization.
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301. A budget that is often changed at the end of a reporting period is calleda. a balanced budget.b. a cost budget.c. a flexible budget.d. a trial balance budget.
302. The Standards of Ethical Conduct for management accountants includes concepts related toa. competence, performance, integrity, and reporting.b. competence, confidentiality, integrity, and objectivity.c. integrity, experience, reporting, and objectivity.d. confidentiality, reporting, competence, and objectivity.
303. Whose perceptions of the company's products or services are the most important to the manager?a. board of directors' perceptionb. customers' perceptionc. president's perceptiond. stockholders' perception
304. A favorable variable manufacturing overhead efficiency variance may be interpreted as meaning which of the following?a. Employees used too much electricity during production.b. Less maintenance was required than expected.c. Excess supplies were used.d. Too much of the cost driver was used.
Page 102
Use the information below to answer the following questions.
Gordon, Inc. produces a special line of plastic toy racing cars. Gordon, Inc. produces the cars in batches. To manufacture a batch of the cars, Gordon Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2001. Static-budget Actual Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup hours per batch 5 5.25 Variable overhead cost per setup hour $40 $38 Total fixed setup overhead costs $14,400 $14,000
305. Calculate the spending variance for variable setup overhead costs.a. $1,500 unfavorableb. $525 favorablec. $975 unfavorabled. $1,500 favorable
Use the information below to answer the following questions:
State University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:
1. Donor Country Club a. Fixed rental cost of $1,200. b. $11.25 per person for food.
2. Bunker Country Club a. Fixed rental cost of $2,160. b. A caterer who charges $9.00 per person for food.
State University has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band, which will cost another $800. Tickets are expected to be $30 per person. Any other items required for the event will be donated by its local business supporters.
306. What is the break-even point in tickets sold for option one?a. 227 ticketsb. 103 ticketsc. 64 ticketsd. 203 tickets
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307. When a journal entry is made in a standard cost system to record the liability for direct manufacturing labor costs, the difference between the debits to the labor accounts and the credits to the payroll payables isa. only the efficiency variance.b. only the price variance.c. the difference between the actual costs incurred and the budgeted
costs.d. the price and the efficiency labor variances.
308. Which of the following is NOT an assumption of CVP analysis?a. Total costs can be divided into a fixed component and a component
that is variable with respect to the level of output.b. When graphed, total costs is all variable.c. The unit-selling price is known and constant.d. All revenues and costs can be added and compared without taking into
account the time value of money.
309. __________ is the delivery of products or services to the customer.a. Distributionb. Customer servicec. Productiond. Marketing
310. Which of the following is part of the service sector of our economy?a. a bankb. a shoe storec. a shoe producerd. a florist
311. Which of the following statements would be INCORRECT in a manufacturing plant?a. Completed goods are included in the finished goods inventory.b. Partially completed goods are part of the work-in-process category.c. Work-in-process may also be called "goods in process."d. Materials put into production are included in the direct materials
category.
312. What is the professional designation for management accountants?a. certified public accountantb. certified management accountantc. certified internal auditord. certified financial executive
Page 104
Use the information below to answer the following questions.
Clinton Corporation currently produces cardboard boxes in an automated process. Expected production per month is 20,000 units. The required direct materials costs $0.45 per unit. Manufacturing overhead costs are $18,000 per month. Manufacturing overhead is allocated based on units of production.
313. What is the budgeted manufacturing overhead rate?a. $1.50 per unitb. $1.16 per unitc. $0.90 per unitd. $0.45 per unit
Use the information below to answer the following questions.
Favre and Carter Law Office employs 12 full-time attorneys and 10 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $29,000 per paraprofessional. For 19x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional.
Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
314. What is the actual direct-cost rate and the actual indirect-cost rate, respectively, if a client used 5,000 professional labor-hours?a. $27.00; $4.17b. $29.80; $5.00c. $32.40; $5.00d. $27.00; $5.00
Use the information below to answer the following questions.
The following information pertains to Swingline Company:
Manufacturing costs $3,000,000 Units manufactured 25,000 Beginning inventory 0 units
24,875 units are sold during the year for $216 per unit.
315. What is the amount of gross profit?a. $2,985,000b. $3,000,000c. $5,373,000d. $2,388,000
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316. Which of the following is the financial executive primarily responsible for both management and financial accounting?a. treasurerb. controllerc. chief financial officerd. auditor
317. Management accounting may be deemed most successful if ita. helps creditors evaluate the company's performance.b. helps managers improve their decisions.c. is accurate.d. is easily understood by the user.
318. Typically, managers have more control over which of the two variances listed? (The one over which they have more control is listed first.)a. standard cost over budgeted costb. rate over productionc. efficiency over priced. production over rate
Use the information below to answer the following questions.
Sports, Inc. manufactures uniforms for athletic events. It expects to sell 30,000 uniforms in 19x1. The company has enough beginning inventory of direct materials to produce 12,000 units. Beginning work-in-process inventory totals 3,000 units and is 100 percent complete as to material and 50 percent complete as to labor and overhead. Beginning finished units total 6,000 with a target ending finished inventory of 4,500 units. The uniforms sell for $80. There is no ending work-in-process inventory. Direct materials costs for each uniform total $20, while direct labor is $8. Manufacturing overhead is $6 per uniform.
319. What will be the amount of total sales for 19x1?a. $2,760,000b. $2,640,000c. $2,400,000d. $2,280,000
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Use the information below to answer the following questions.
Bret Corporation uses a single cost pool for fixed manufacturing overhead. The amount for March 19x1 was budgeted at $750,000; however, the actual amount was $1,050,000. Actual production for March was 37,500 units, and actual machine-hours were 30,000. Budgeted production included 53,250 units and 37,125 machine-hours.
320. What is the budgeted fixed overhead rate per output unit?a. $14.08 per unitb. $19.72 per unitc. $20.20 per unitd. $28.28 per unit
321. Responsibility accounting is a system that measures the plans and actions of responsibility centers. As such, ita. affects human behavior.b. requires subdividing all management levels.c. is most appropriate at the top levels of the organization.d. is closely tied to the master budget.
322. Which of the following formulas is used to determine the break-even point when using the contribution margin method?a. Unit contribution margin times the break-even number of units equals
fixed costs.b. Revenues less operating income equals variable costs plus fixed
costs.c. Total fixed costs equals total revenues.d. Selling price less unit fixed costs equals contribution margin.
323. The risks of putting too much emphasis on responsibility accounting and controllability includea. higher operating costs, inefficiencies in production, and budgetary
slack.b. lower motivation of managers and higher manager turnover.c. poor budget preparation, poor adherence to budget, and high
variances.d. inadequate performance reports and erratic human behavior from
managers.
324. __________ is the detailed planning and engineering or products, services, or processes.a. Distributionb. Design of products, services, or processesc. Productiond. Marketing
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325. The primary differences between the merchandising sector and the manufacturing sector involving both the contribution margin and the gross margin include all of the following EXCEPTa. Cost of goods sold is primarily a variable cost in the merchandising
sector.b. Merchandising fixed costs are not considered to be part of the cost
of goods sold.c. In the manufacturing sector, variable nonmanufacturing expenses are
subtracted to determine the contribution margin.d. In the manufacturing sector, fixed overhead costs are subtracted to
get the contribution margin.
Use the information below to answer the following questions.
Yogi Company currently produces plastic cups in an automated process. Expected production per month is 80,000 units. The required direct materials costs $0.10 per unit. Manufacturing fixed overhead costs are $8,000 per month. Manufacturing overhead is allocated based on units of production.
326. What is the budgeted manufacturing fixed overhead rate?a. $0.17 per unitb. $0.12 per unitc. $0.10 per unitd. $0.05 per unit
327. Which of the following individuals focuses on reporting and interpreting relevant financial information used to manage the company?a. chief financial officerb. controllerc. line managementd. treasurer
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Use the information below to answer the following questions.
Grinnell Manufacturing Company has the following information:
Month Budgeted Sales
January $76,000 February 85,000 March 92,000 April 79,000
Budgeted Expenses per Month
Wages $15,000 Advertising 12,000 Depreciation 3,000 Other 4 percent of sales
Note: All cash expenses are paid as incurred.
328. What is the expected total cash disbursements for expenses in March?a. $30,680b. $27,000c. $30,400d. $30,040
Use the information below to answer the following questions.
Bear Company has the following information:
Month Budgeted Purchases
January $26,800 February 29,000 March 30,520 April 29,480 May 27,680
Purchases are paid for in the following manner:
10 percent in the month of purchase 50 percent in the month after purchase 40 percent two months after purchase
329. What is the expected balance in Accounts Payable as of April 30?a. $26,532b. $38,740c. $12,208d. $17,688
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330. Fixed costs remain constant at $200,000 per month. During high-output months variable costs are $160,000, and during low-output months variable costs are $40,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 8,000 for high-output months and 2,000 for low-output months?a. $45.00 per hour, $120.00 per hourb. $45.00 per hour, $45.00 per hourc. $25.00 per hour, $120.00 per hourd. $56.20 per hour, $120.00 per hour
331. One of the biggest reasons variable costing is controversial involvesa. external financial statements.b. corporate goals and mission statements.c. internal management control reports.d. internal management reports.
332. 's ofiolperiod costs in actu$51ween tfiolpt is the a. $38.80 and $40.80b. $39.20 and $49.00c. $40.80 and $8.20d. $40.80 and $38.80
Use the information below to answer the following questions.
Yogi Company currently produces plastic cups in an automated process. Expected production per month is 80,000 units. The required direct materials costs $0.10 per unit. Manufacturing fixed overhead costs are $8,000 per month. Manufacturing overhead is allocated based on units of production.
333. What is the flexible budget for 80,000 and 40,000 units, respectively?a. $8,000; $4,000b. $16,000; $12,000c. $18,000; $14,000d. $20,000; $16,000
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Use the information below to answer the following questions.
The following information pertains to Swingline Company:
Manufacturing costs $3,000,000 Units manufactured 25,000 Beginning inventory 0 units
24,875 units are sold during the year for $216 per unit.
334. What is the manufacturing cost per unit?a. $120.00b. $120.60c. $1,200.00d. $216.00
Use the information below to answer the following questions:
Harry Hartman, MD performs a certain outpatient procedure for $1,000.00. His fixed costs are $20,000, while his variable costs are $500.00 per procedure.
335. What is the break-even point for the month assuming that Dr. Hartman plans to perform the procedure 200 times?a. 40 timesb. 30 timesc. 20 timesd. 10 times
336. Budgets are advantageous because theya. compel planning that includes the implementation of plans, provide
performance criteria, and promote goodwill.b. provide performance criteria, promote goodwill, and save money.c. compel planning that includes the implementation of plans, provide
performance criteria, and promote communication and coordination within the organization.
d. compel planning that includes the implementation of plans, require organizing, and ensure controlling.
337. Variances should be investigated EXCEPT whena. better decisions are required by the organization.b. costs incurred must be reduced.c. expected costs of investigation exceed expected benefits.d. the cost-benefit test is met relative to the investigation.
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Use the information below to answer the following questions.
A local accounting firm employs 20 full-time professionals. The budgeted compensation per employee is $40,500. The annual maximum chargeable time to each client is 500 hours. Clients always receive their full amount of time. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.
Any other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.
338. What is the direct labor cost rate per hour?a. $18.00 per hourb. $17.50 per hourc. $4.05 per hourd. $2,000 per hour
Use the information below to answer the following questions.
ABC Desk Company manufactures desks. The estimated number of sales for the last quarter of 19x1 is as follows:
Month Sales
October 10,000 November 12,500 December 15,000
Beginning finished goods should be equal to 30 percent of each month's sales during October through December 10 percent of each month's sales in other months. January 19x2 sales are anticipated to be 30,000 desks. The cost to produce a desk is $250.
339. What will be the number of desks produced in November?a. 17,000 desksb. 16,250 desksc. 13,250 desksd. 12,500 desks
340. In a low-leveraged companya. fixed costs are high and variable costs are low.b. large changes in sales volume result in larger changes in net income.c. there is a higher possibility of net income or net loss and therefore
more risk than a highly leveraged firm.d. There is a smaller possibility of net income or net loss and
therefore less risk than a highly leveraged firm.
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341. In order for the product costs to better reflect resource consumption, the allocation base used to develop a budgeted variable overhead rate should, ideally, bea. multiple cost drivers.b. a non-value-added cost driver.c. a single cost driver.d. a value-added cost driver.
Harrison Ford Company uses a job-order cost system and had the following data available for 1998.
Direct materials purchased on account $74,000 Direct materials requisitioned 41,000 Direct-labor cost incurred 65,000 Factory overhead incurred 73,000 Cost of goods completed 146,000 Cost of goods sold 128,000 Beginning direct-materials inventory 13,000 Beginning WIP inventory 32,000 Beginning finished goods inventory 29,000 Overhead application rate 125 percent (as a percent of direct-labor cost)
342. The journal entry to record the materials placed into production would include aa. credit to Direct-Materials Inventory for $41,000.b. debit to Direct-Materials Inventory for $74,000.c. credit to WIP Inventory for $41,000.d. debit to WIP Inventory for $74,000.
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Use the information below to answer the following questions.
Billie Company has the following data:
Month Budgeted Sales
January $120,000 February 108,000 March 132,000 April 144,000
The gross profit rate is 40 percent, and the inventory at the end of December was $21,600. Desired inventory levels are 30 percent of next month's sales at cost.
343. What is the expected total purchases budgeted for March?a. $81,360b. $79,200c. $105,120d. $52,800
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Use the information below to answer the following questions.
Ecco Company produces Plastic balls. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $6.25 Direct Labor 0.70 4.75 Direct Marketing 0.27 2.75
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 5,000 Direct Materials: Materials costs $74,750 Input purchased and used 11,500 Actual price per input $6.50 Direct Manufacturing Labor: Labor costs $23,750 Labor-hours of input 4,750 Actual price per hour $5.00 Direct Marketing Labor: Labor costs $10,000 Labor-hours of input 2,500 Actual price per hour $4.00
344. What is the efficiency variance for direct materials?a. $5,937.50 unfavorableb. $9,750.00 unfavorablec. $9,375.00 unfavorabled. $11,837.50 favorable
345. Absorption costing is also known as all of the following EXCEPTa. variable costing.b. full costing.c. traditional approach.d. functional approach.
346. Performance gaps are best viewed asa. attention directors.b. attention directors and problem solvers.c. problem solvers.d. performance variances.
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347. "Uncertainty" may be defined asa. the possibility that an actual amount will be the same as an expected
amount.b. the possibility that an actual amount will be either higher or lower
than the expected amount.c. the possibility that a budgeted amount will be the same as an
estimated amount.d. the possibility that the budgeted amount will be lower than the
estimated amount.
348. Assume that variable manufacturing overhead is allocated according to machine-hours. Clark Company expects to produce 400 cases of Product x using 400 machine-hours. Each machine hour is expected to take 10 KWH of electricity, which costs $6 per KWH. What is the maximum amount the company would be willing to pay for the new machine, based solely on spending and efficiency variances, if a new energy-efficient machine only used 8 KWH per machine-hour?a. $120b. $4,680c. $4,920d. $4,800
Use the information below to answer the following questions:
Tom Blanchard is going to sell christmas tree lights for $20 a box. The lights cost Tom $5 a unit. He is planning to rent a booth at the upcoming Happy Holidays Convention. He has three options for attending the show:
1. paying a fixed fee of $1,500, 2. paying a $500 fee plus 10% of his revenue made at the convention, or 3. paying 25% of his revenue made at the convention.
349. What would the indifference point be between option 1 and option 3?a. 500 unitsb. 150 unitsc. 300 unitsd. 62.5 units
350. Operating costs isa. the difference between operating revenues and operating income.b. the difference between operating income and income taxes.c. the difference between revenues and sales expenses.d. variable with respect to a revenue driver.
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351. If George Company has a $6,000 unfavorable variable-overhead efficiency variance, which of the following statements would be TRUE?a. George did not use the variable overhead components efficiently.b. George did not use the variable overhead components effectively.c. George made efficient use of the cost driver.d. George did not use the cost driver efficiently.
Use the information below to answer the following questions.
General Hospital uses a job cost system for all patients who have surgery. In January, the pre-operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 2,000 nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $84,000 and $66,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours for the month. For patient Jim Carter, actual hours incurred were eight and four hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 4 days (96 hours). Other costs related to Carter were:
PRE-OP OR In-room Costs Costs Costs
Patient medicine $100 $250 $1,200 Direct nursing time 2,400 3,500 5,400
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
352. Determine the budgeted nursing overhead rate for OR Cost.a. $42.00b. $66.00c. $80.00d. $69.75
The following information is for Davis Company:
Total fixed costs $313,500 Variable costs per unit 99 Selling price per unit 154
353. If management has a targeted net income of $59,400 (ignore income taxes), then sales revenue should be:a. $580,067.b. $1,044,120.c. $239,721.d. $671,220.
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Use the information below to answer the following questions.
Republican Company used the following data to evaluate their current operating system. The company sells 1 banner for $20. The $20 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 1,000,000 990,000 Variable Costs $6,000,000 $5,000,000 Fixed Costs $3,600,000 $3,700,000
354. What is the actual operating income for Republican Company using the actual results?a. $11,940,000b. $11,100,000c. $10,400,000d. $9,500,000
355. Respectively, the sales-volume variance and the flexible-budget variance typically measurea. efficiency, price.b. usage, price.c. effectiveness, efficiency.d. marketing efforts, operating efficiency.
356. By using feedback controls within an organization's production planning system, the managers coulda. improve past performances.b. predict future successes and failures.c. change goals, search for alternative ways of reaching goals, predict
future events, and change the reward system.d. determine that the planning process is inefficient and eliminate the
feedback controls.
357. Which of the following is NOT an assumption of CVP analysis?a. Costs may be separated into separate fixed and variable components.b. Total revenues and total costs are linear in relation to output
units.c. The unit selling price, unit variable costs, and fixed costs are
known.d. There will be a change between beginning and ending levels of
inventory.
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Use the information below to answer the following questions.
The following data for the Helmet Company pertain to the production of 1,500 helmets during June.
Variable overhead:
Standard variable overhead cost: $12.00 per pound of plastic. Total actual variable overhead cost: $16,800. Standard variable overhead cost allowed for units produced was $18,000. Variable overhead efficiency variance was $360 unfavorable.
358. What is standard direct material amount per helmet?a. 1.00 poundb. 1.88 poundsc. 3.00 poundsd. 4.00 pounds
359. Actual overhead is $350,000, while budgeted overhead is $299,000. What is the fixed overhead static-budget variance if 250,000 units are produced and 225,000 are budgeted?a. $50,000 favorableb. $50,000 unfavorablec. $51,000 favorabled. $51,000 unfavorable
360. Turner Company predicted that the fixed overhead would be $100,000 in June 19x1. Actual production included 25,000 units. Each unit takes approximately 0.20 machine-hours to produce. The actual overhead costs per machine-hour is $25. What is the production-volume overhead variance?a. $25,000 unfavorableb. $25,000 favorablec. $75,000 unfavorabled. $75,000 favorable
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Use the information below to answer the following questions.
Fiscal Company has the following sales budget for the last six months of 19x1:
July $100,000 October $90,000 August 80,000 November 100,000 September 110,000 December 94,000
Historically, the cash collection of sales has been as follows:
65 percent of sales collected in month of sale, 25 percent of sales collected in month following sale, 8 percent of sales collected in second month following sale, and 2 percent of sales is uncollectible.
361. Cash collections for September area. $71,500.b. $86,700.c. $99,500.d. $102,000.
Use the information below to answer the following questions.
A local accounting firm employs 20 full-time professionals. The budgeted compensation per employee is $40,500. The annual maximum chargeable time to each client is 500 hours. Clients always receive their full amount of time. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.
Any other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.
362. What is the indirect-cost rate per hour?a. $1,575.00 per hourb. $78.75 per hourc. $18.00 per hourd. $17.50 per hour
363. If budgeted machine-hours allowed per actual output unit are 2.0 hours, and budgeted variable manufacturing overhead per machine-hour is $400, what is the budgeted variable manufacturing overhead rate per output unit?a. $200b. $400c. $600d. $800
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364. The development of a budget is an iterative process. As such, each drafta. leads to another draft until everyone in line management has had an
opportunity to have input into the budget process.b. must be approved at every level of the organization that has input
into the budget process.c. must be changed to include the new information that has been gathered
since the last draft.d. generally leads to consideration of choices and decisions that prompt
further revisions before a final budget is chosen.
Use the information below to answer the following questions.
The following information pertains to Gordon's Model Company:
Manufacturing costs $1,500,000 Units manufactured 50,000 Beginning inventory 0 units
49,750 units are sold during the year for $54 per unit.
365. What is the amount of gross profit?a. $1,492,500b. $1,500,000c. $2,686,500d. $1,194,000
366. Manufacturing overhead costs for the budget include all types of factory expenses EXCEPTa. those that cannot be estimated.b. direct materials and supervision.c. fixed items such as depreciation.d. direct labor and direct materials.
367. What is the a. $53b. $50c. $33d. $30
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Use the information below to answer the following questions.
Republican Company used the following data to evaluate their current operating system. The company sells 1 banner for $20. The $20 selling price is also the budgeted selling price.
Budgeted Actual
Units Sold 1,000,000 990,000 Variable Costs $6,000,000 $5,000,000 Fixed Costs $3,600,000 $3,700,000
368. What is the budgeted operating income for Republican Company?a. $11,940,000b. $11,100,000c. $10,400,000d. $9,500,000
369. _______________ means reporting and interpreting information that helps managers to focus on operating problems, imperfections, inefficiencies, and opportunities.a. Scorekeepingb. Attention-directingc. Problem-solvingd. None of the above
370. _______________ is the difference between the selling price and variable cost per unit.a. Contribution marginb. Gross marginc. Margin of safetyd. Contribution margin per unit
371. Gordon Company sells its only product for $18 per unit. Gordon's variable production costs are $6 per unit, while its selling and administrative costs are $3 per unit. Finally, the fixed costs to produce 10,000 units were $10,000. What is the contribution ratio?a. 33.3 percentb. 66.7 percentc. 50.0 percentd. 44.4 percent
372. __________ describes the flow of goods, services, and information from cradle to grave, regardless of whether those activities occur in the same organization or other organizations.a. Supply chainb. Key success factorsc. Continuous improvementd. Customer focus
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373. To be successful, a company should bea. customer driven.b. "driven" by the board of directors.c. employee driven.d. management driven.
374. If there is a change in the level of the cost driver,a. total fixed costs and total variable costs will change.b. total fixed costs and total variable costs will be the same.c. total fixed costs will be the same and total variable costs will
change.d. total variable costs will be the same and total fixed costs will
change.
Use the information below to answer the following questions:
Bob Blackmann makes scented candles and sells them wholesale by the case. There are 24 candles per case. Blackmann sells a case of candles for $50 a case. His variable costs are $30 per case. He has fixed costs of $500.
375. What is the break-even point in cases?a. 6.25 casesb. 10 casesc. 16.67 casesd. 25 cases
376. The cost classification system used by some manufacturing cost accounting systems include all of the following EXCEPTa. direct materials costs and conversion costs.b. direct materials costs, direct manufacturing labor costs, and
manufacturing overhead costs.c. indirect materials costs, indirect manufacturing labor costs, and
manufacturing overhead costs.d. prime costs and manufacturing overhead costs.
377. Which of the following will increase a company's break-even point?a. increasing variable cost per unit.b. increasing contribution margin per unit.c. reducing its total fixed costs.d. increasing the selling price per unit.
378. When a journal entry is made to record the direct materials used, a debit to the Direct Materials Efficiency Variancea. indicates the variance is unfavorable.b. indicates the variance is favorable.c. is the difference between the actual Costs of Goods Sold and the
budgeted Materials Control accounts.d. is the difference between the debits and credits of all materials'
related entries.
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379. Changes in the way managers run their departments often forces them to re-evaluate the design and operation of thea. financial accounting system.b. current decision-making process.c. management accounting system.d. performance appraisal system.
380. The _______________ is also called the chief financial officer.a. finance directorb. controllerc. internal auditord. treasurer
381. What would be target operating income when fixed costs equal $12,000, unit contribution margin equals $20.00, and the number of units equals 1,600?a. $12,000b. $20,000c. $32,000d. $40,000
Use the information below to answer the following questions.
Favre and Carter Law Office employs 12 full-time attorneys and 10 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $29,000 per paraprofessional. For 19x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional.
Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
382. How much should the client be billed in an actual costing system if 200 professional labor-hours were used?a. $5,000b. $6,960c. $7,480d. $6,400
383. All of the following statements are correct EXCEPTa. costs may be indirect and variable.b. costs may not be indirect and fixed.c. costs may be direct and variable.d. costs may be direct and fixed.
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Use the information below to answer the following questions:
State University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:
1. Donor Country Club a. Fixed rental cost of $1,200. b. $11.25 per person for food.
2. Bunker Country Club a. Fixed rental cost of $2,160. b. A caterer who charges $9.00 per person for food.
State University has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band, which will cost another $800. Tickets are expected to be $30 per person. Any other items required for the event will be donated by its local business supporters.
384. What is the break-even point in tickets sold for option two?a. 227 ticketsb. 103 ticketsc. 203 ticketsd. 64 tickets
Use the information below to answer the following questions.
The following data for the Helmet Company pertain to the production of 1,500 helmets during June.
Variable overhead:
Standard variable overhead cost: $12.00 per pound of plastic. Total actual variable overhead cost: $16,800. Standard variable overhead cost allowed for units produced was $18,000. Variable overhead efficiency variance was $360 unfavorable.
385. What is the variable overhead rate variance?a. $840 unfavorableb. $1,200 favorablec. $1,200 unfavorabled. $1,560 favorable
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Use the information below to answer the following questions.
A local accounting firm employs 20 full-time professionals. The budgeted compensation per employee is $40,500. The annual maximum chargeable time to each client is 500 hours. Clients always receive their full amount of time. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.
Any other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.
386. What will be the direct labor cost rate per hour if ten clients are lost and workforce stays at 20 employees?a. $18.00 per hourb. $20.25 per hourc. $19.69 per hourd. $17.50 per hour
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Use the information below to answer the following questions.
Sim's Fabricating Company is a new company that needs to make a decision about the method to use in adjusting cost of goods sold. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated ($200,000) was different from the actual amount incurred ($225,000).
Ending balances in the relevant accounts were: Work-in-process $10,000 Finished Goods 20,000 Cost of Goods Sold 170,000
387. What is the correct journal entry to prorate the write off of the difference between allocated and actual overhead using the ending balance approach?a. Manufacturing Overhead Allocated 200,000
Work-in-process 10,000 Finished Goods 20,000 Manufacturing Overhead Control 230,000
b. Manufacturing Overhead Allocated 225,000 Work-in-process 1,250 Finished Goods 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Control 200,000
c. Manufacturing Overhead Control 225,000 Work-in-process 1,250 Finished Goods 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Allocated 200,000
d. Manufacturing Overhead Allocated 200,000 Work-in-process 1,250 Finished Goods 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Control 225,000
388. The most common certifications of internal accountants isa. CIA.b. CPA.c. CMA.d. IMA.
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Use the information below to answer the following questions:
State University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:
1. Donor Country Club a. Fixed rental cost of $1,200. b. $11.25 per person for food.
2. Bunker Country Club a. Fixed rental cost of $2,160. b. A caterer who charges $9.00 per person for food.
State University has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band, which will cost another $800. Tickets are expected to be $30 per person. Any other items required for the event will be donated by its local business supporters.
389. How many people must purchase tickets, assuming option two is chosen and State University expects to raise $5,005 for the athletic fund? Assume no one pays more than the cost of his/her ticket.a. 465 peopleb. 470 peoplec. 238 peopled. 227 people
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Use the information below to answer the following questions.
Gordon, Inc. produces a special line of plastic toy racing cars. Gordon, Inc. produces the cars in batches. To manufacture a batch of the cars, Gordon Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2001. Static-budget Actual Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup hours per batch 5 5.25 Variable overhead cost per setup hour $40 $38 Total fixed setup overhead costs $14,400 $14,000
390. Calculate the flexible-budget variance for variable setup overhead costs.a. $1,500 unfavorableb. $525 favorablec. $975 unfavorabled. $1,500 favorable
391. __________ is deciding on organization goals, predicting results under various alternative ways of achieving those goals, and then deciding how to attain the designed goals.a. Management accountingb. Financial accountingc. Planningd. Control
Use the information below to answer the following questions.
The total traceable fixed and variable costs of the account billing activity center is $490,000. Cost behavior analysis indicates that fixed costs are $150,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
392. What is the cost function?a. Costs = $150,000 + $0.196(Lines)b. Costs = $150,000 + $0.136(Lines)c. Costs = $490,000 + $0.136(Lines)d. cannot be determined
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Use the information below to answer the following questions:
Assume the following cost information for Jackson Company:
Selling price per unit $144 Variable costs per unit 80 Total fixed costs 80,000 Tax rate 40%
393. What volume of sales dollars is required to earn an after-tax net income of $24,000?a. $216,000b. $252,000c. $270,000d. $315,000
Use the information below to answer the following questions.
The following information pertains to Gordon's Model Company:
Manufacturing costs $1,500,000 Units manufactured 50,000 Beginning inventory 0 units
49,750 units are sold during the year for $54 per unit.
394. What is the manufacturing cost per unit?a. $30.00b. $30.15c. $300.00d. $54.00
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Use the information below to answer the following questions.
Wagner Company had the following information:
Selling price per unit $30
Variable costs per unit: Manufacturing $15 Selling and administrative 3
Fixed costs per month: Manufacturing $20,000 Selling and administrative 10,000
395. What is the total manufacturing cost for 10,000 units?a. $150,000b. $20,000c. $170,000d. $180,000
396. Which of the following includes both traced direct costs and allocated indirect costs?a. cost tracingb. cost poolsc. costs assignedd. cost allocation
397. The spreading of underallocated or overallocated overhead among ending Work-in-process, Finished Goods, and Cost of Goods Sold is calleda. budgeted indirect allocation.b. budgeted direct allocation.c. proration.d. proration with direct-cost allocation.
Use the information below to answer the following questions.
Franklin Enterprises, a wholesaler, has a sales budget for next month of $900,000. Cost of units sold is expected to be 40 percent of sales. All units are paid for in the month following purchase. The beginning inventory of units is $30,000, and an ending amount of $36,000 is desired. Beginning accounts payable is $228,000.
398. Cash used to pay accounts payable for the month totaleda. $366,000.b. $360,000.c. $234,000.d. $228,000.
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399. The cost of goods sold for next month is expected to bea. $540,000.b. $396,000.c. $366,000.d. $360,000.
400. Wages paid to machine operators on an assembly line are an example of which type of cost?a. direct manufacturing labor costsb. direct manufacturing overhead costsc. direct materials costsd. indirect manufacturing overhead costs
401. The process of assigning costs to groups of similar products or services by using an average basis is calleda. a cost allocation system.b. a cost assigned system.c. a job costing system.d. a process costing system.
402. Activity-based budgeting includes all the following steps EXCEPTa. determining demand for activities from sales and production targets.b. computing the cost of performing activities.c. determining the budgetary slack for the activity being measured.d. describing the budget as costs of activities rather than costs of
functions.
403. The cost of electricity used in the production of stuffed toys would be considereda. an administrative cost.b. a non-value-added cost.c. a value-added cost.d. a period cost.
Page 132
Use the information below to answer the following questions.
Grinnell Manufacturing Company has the following information:
Month Budgeted Sales
January $76,000 February 85,000 March 92,000 April 79,000
Budgeted Expenses per Month
Wages $15,000 Advertising 12,000 Depreciation 3,000 Other 4 percent of sales
Note: All cash expenses are paid as incurred.
404. What is the expected total cash disbursements for expenses in February?a. $34,400b. $30,000c. none of the aboved. $30,400
405. Which of the following is NOT one of the steps used in assigning costs to individual jobs?a. Identify the job that is the chosen cost object.b. Identify the indirect-cost pools associated with the job.c. Identify the direct-cost pools associated with the job.d. Develop the rate per unit of the cost allocation base used to
allocate indirect costs to the job.
Page 133
Use the information below to answer the following questions.
Bear Company has the following information:
Month Budgeted Purchases
January $26,800 February 29,000 March 30,520 April 29,480 May 27,680
Purchases are paid for in the following manner:
10 percent in the month of purchase 50 percent in the month after purchase 40 percent two months after purchase
406. What is the expected balance in Accounts Payable as of March 31?a. $39,068b. $18,312c. $2,900d. $30,520
407. Which statement about conversion costs is CORRECT using the two-part classification of costs?a. They include only direct manufacturing labor costs.b. They include manufacturing overhead costs.c. They include both direct manufacturing labor costs and manufacturing
overhead costs.d. They include indirect manufacturing labor costs but not manufacturing
overhead costs.
Page 134
Use the information below to answer the following questions.
The Lamp Shade Company makes table lamps, for which the following standards have been developed:
Standard Inputs Standard Price Expected for Each Expected per Unit of Output Unit of Output
Direct materials 20 pounds $2 per pound Direct labor 6 hours $8 per hour
During January, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00.
408. The direct-material price variance for January isa. $420 unfavorable.b. $420 favorable.c. $400 favorable.d. $400 unfavorable.
409. In a manufacturing area of an organization, poor product design, problems with the quality of materials, and scheduling conflicts will, more than likely, result ina. a favorable materials efficiency variance.b. an unfavorable materials efficiency variance.c. a favorable materials effectiveness variance.d. an unfavorable materials effectiveness variance.
Page 135
Use the information below to answer the following questions:
Tom Blanchard is going to sell christmas tree lights for $20 a box. The lights cost Tom $5 a unit. He is planning to rent a booth at the upcoming Happy Holidays Convention. He has three options for attending the show:
1. paying a fixed fee of $1,500, 2. paying a $500 fee plus 10% of his revenue made at the convention, or 3. paying 25% of his revenue made at the convention.
410. Which of the following statements is FALSE?a. His decision will determine the risk he faces.b. The contribution to operating income will vary, depending upon the
option chosen.c. One of the options will allow Tom Blanchard to break even, even if he
doesn't sell any lights, assuming he can return any unsold lights for a full refund.
d. Fixed costs are inherent in all of the options.
Use the information below to answer the following questions.
Consider the following data of the RM Company for the year 19x1:
Sandpaper $20,000 Leasing costs - plant $240,000 Materials handling 200,000 Depreciation - equip. 140,000 Coolants & lubricants 14,000 Property taxes - equip. 20,000 Indirect mfg. labor 172,000 Fire insurance - equip. 10,000 Direct mfg. labor 1,360,000 Direct mat. pur. 1,960,000 Direct mat., 1/1/x1 240,000 Direct mat. 12/31/x1 172,000 Finished goods, 1/1/x1 420,000 Sales 8,000,000 Finished goods, 12/31/x1 800,000 Sales commissions 400,000 WIP, 1/1/x1 60,000 Sales salaries 360,000 WIP, 12/31/x1 40,000 Advertising costs 300,000 Administration costs 500,000
411. What is the cost of goods manufactured in 19x1?a. $4,264,000b. $4,224,000c. $4,204,000d. $4,164,000
412. In going from the sales budget to the production budget, adjustments to the sales budget need to be made fora. finished goods inventories.b. overhead charges.c. direct materials inventories.d. sales returns and allowances.
Page 136
Use the information below to answer the following questions.
The following data for the Popular Pottery Company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per pound of clay. Total actual cost: $11,200. Standard cost allowed for units produced was $12,000. Materials efficiency variance was $240 unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 pots per hour at $24.00 per hour. Actual cost per hour was $24.50. Labor efficiency variance was $672 favorable.
413. What is the labor price variance for direct manufacturing labor?a. $186 favorableb. $486 unfavorablec. $486 favorabled. $672 unfavorable
Use the information below to answer the following questions.
Clark Company had the following activities during 19x1:
Direct materials: Beginning inventory $25,000 Purchases 77,000 Ending inventory 13,000 Direct manufacturing labor 20,000 Manufacturing overhead 15,000 Ending work-in-process inventory 5,000 Beginning work-in-process inventory 1,000 Ending finished goods inventory 20,000 Beginning finished goods inventory 30,000
414. What is Clark's cost of goods sold during 19x1?a. $130,000b. $116,000c. $110,000d. $100,000
Page 137
Use the information below to answer the following questions.
Gordon, Inc. produces a special line of plastic toy racing cars. Gordon, Inc. produces the cars in batches. To manufacture a batch of the cars, Gordon Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2001. Static-budget Actual Amounts Amounts Units produced and sold 15,000 11,250 Batch size (number of units per batch) 250 225 Setup hours per batch 5 5.25 Variable overhead cost per setup hour $40 $38 Total fixed setup overhead costs $14,400 $14,000
415. Calculate the efficiency variance for variable setup overhead costs.a. $1,500 unfavorableb. $525 favorablec. $975 unfavorabled. $1,500 favorable
Page 138
Use the information below to answer the following questions.
Ecco Company produces Plastic balls. The company uses the following direct cost categories:
Category Standard Inputs Std. Cost for 1 output per input
Direct Materials 2.00 $6.25 Direct Labor 0.70 4.75 Direct Marketing 0.27 2.75
Actual performance and budgeted performance for the company is shown below:
ACTUAL
Actual output: (in units) 5,000 Direct Materials: Materials costs $74,750 Input purchased and used 11,500 Actual price per input $6.50 Direct Manufacturing Labor: Labor costs $23,750 Labor-hours of input 4,750 Actual price per hour $5.00 Direct Marketing Labor: Labor costs $10,000 Labor-hours of input 2,500 Actual price per hour $4.00
416. What is the combined total of the flexible budget variances?a. $25,662.50 unfavorableb. $24,750.00 unfavorablec. $19,625.00 unfavorabled. $18,787.50 favorable
417. Manufacturing overhead costs incurred for the month were $50,000. Utilities were $15,000, and depreciation on the equipment was $25,000. Repairs were $10,000. Which is the correct journal entry assuming utilities and repairs were on account?a. Manufacturing Overhead Control 50,000
Accounts Payable Control 25,000 Accumulated Depreciation Control 25,000
b. Manufacturing Overhead Control 50,000 Accounts Payable Control 50,000
c. Manufacturing Overhead Control 25,000 Accumulated Depreciation Control 25,000
d. Accumulated Depreciation Control 25,000 Accounts Payable Control 25,000 Manufacturing Overhead Control 50,000
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418. Helping Hands is a nonprofit organization that supplies fans during the summer for individuals in need. Fixed costs are $200,000. The fans cost $20.00 each. The organization has a budgeted appropriation of $480,000. How many people can receive a fan during the summer?a. 12,000 peopleb. 14,000 peoplec. 24,000 peopled. 34,000 people
Use the information below to answer the following questions.
Bret Corporation uses a single cost pool for fixed manufacturing overhead. The amount for March 19x1 was budgeted at $750,000; however, the actual amount was $1,050,000. Actual production for March was 37,500 units, and actual machine-hours were 30,000. Budgeted production included 53,250 units and 37,125 machine-hours.
419. What is the budgeted fixed overhead rate per input unit?a. $14.08 per unitb. $19.72 per unitc. $20.20 per unitd. $28.28 per unit
420. A revenue driver is defined asa. any factor that affects costs and revenues.b. any factor that affects revenues.c. any factor that could cause a change in the costs of a related
revenue object.d. any factor that does not affect costs associated with a revenue.
Use the information below to answer the following questions.
The following data for the Trooper Company pertain to the production of 1,000 units during October.
Variable overhead:
Standard variable overhead cost: $9.00 per pound of materials. Total actual variable overhead cost: $8,400. Standard variable overhead cost allowed for units produced was $9,000. Variable overhead efficiency variance was $180 unfavorable.
421. What is the variable overhead flexible-budget variance?a. $600 favorableb. $180 unfavorablec. $960 favorabled. $600 unfavorable
Page 140
Use the information below to answer the following questions:
Harry Hartman, MD performs a certain outpatient procedure for $1,000.00. His fixed costs are $20,000, while his variable costs are $500.00 per procedure.
422. What is the margin of safety for Dr. Hartman assuming that 100 procedures are performed?a. $40,000 or 40 timesb. $50,000 or 50 timesc. $60,000 or 60 timesd. $100,000 or 100 times
Use the information below to answer the following questions:
Kobe Jones intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $300 each. The airline intends to reimburse Kobe for any unsold ticket packages. The round-trip tickets will be sold for $400 each.
423. How many ticket packages will he need to sell in order to break even, assuming Kobe incurred $6,000 in expenses to advertise the sale, and there are no other expenses?a. 15 packagesb. 20 packagesc. 50 packagesd. 60 packages
424. If total fixed costs are $93,000, contribution margin per unit is $7.50, and targeted after-tax net income is $18,000 with a 40% tax rate, then the number of units which must be sold isa. 16,400 units.b. 14,800 units.c. 11,440 units.d. 24,667 units.
425. What would be the expected monetary value for the following data using the probability method?
Probability Cash Inflows
0.20 $100,000 0.30 $80,000 0.15 $60,000 0.35 $0a. $20,000b. $94,000c. $53,000d. $30,000
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426. The Manufacturing Overhead Control account is the record of thea. actual costs in the conversion accounts.b. actual costs in all of the separate overhead categories such as
indirect manufacturing labor.c. normal costs in the conversion accounts.d. normal costs in the manufacturing accounts.
427. Management accounting has a dual focus in that it assists managersa. in making decisions in both the internal and external environments.b. in determining how resources should be allocated and where they are
from.c. by determining the profitability and cost of competitors' products
and services.d. in forecasting costs and setting budgets.
428. Which of the following is NOT one of the reasons that companies use an annual time period to compute the budgeted indirect-cost rate?a. The shorter the time period, the greater the seasonal influence.b. The variable indirect-cost rate is too high.c. The budgeted quantity of the allocation base may fluctuate too much
in periods shorter than one year.d. The benefits of shorter periods do not outweigh the costs.
Page 1
1. d2. a
Standard cost per pot = $12,000/2,000 = $6.00 per pot
Standard number of pounds per pot = $6.00/$6.00 = 1.0 pound per pot
3. d($313,500 + $46,200)/($154 - $99) = 6,540 units
4. c(X + $76,800)/0.30 = $480,000X = $67,200
5. b6. c
($29.80 ð 500) + ($5.00 ð 500) = $17,4007. a8. a9. a
($20 - $5)X - $1,500 = [$20 - $5 - 0.10($20)]X - $500;$15X - $1,500 = $13X - $500; $2X = $1,000; ð = 500 units
10. a$400N - $300N - $22,500 = 0; $100N = $22,500; N = $22,500/$100; N = 225 packages
11. d12. d13. b14. b
18,000 + 3,000 - 900 = 20,100 units15. c
$19,500 + $31,500 + 1,000 ($3.45) + $8,100 + $32,100 + 300 ($7.50) = $96,900
16. b(30,000 ð ($20 + $8 + $6)) = $1,020,000
17. b$242,000 - 22,000 ð ($161,250/15,000) = $5,500 unfavorable
18. b($15 ð 15,000) + $20,000 = $245,000
19. b20. c21. c22. d
($110,000 ð 0.35) + ($80,000 ð 0.10) = $46,50023. a
$165,00024. a25. a26. c27. a
$20N - $15N - $2,000 = $22,000; $5N = $24,000; N = 4,800 units
Page 2
28. a Static Budget Variance
Units Sold
Revenues $(200,000) UVariable Costs 1,000,000 FContribution Margin $800,000 FFixed Costs (100,000) UOperating Income $700,000 ÍÍÍÍÍÍÍÍ
29. c$89,000 + $20,000 + $15,000 + $1,000 - $5,000 = $120,000
30. b$240,000 / 507,000 units = 0.4733728 or 0.473
31. c32. c33. d
30,000 + 4,500 - 6,000 = 28,500 uniforms34. c35. a
Actual Results Flex. Bud. Variances
Direct Materials $89,700 $75,000.00 $14,700.00 UDirect Mfg. Labor 28,500 19,950.00 8,550.00 UDirect Marketing Labor 12,000 4,455.00 7,545.00 U
$30,795.00 U ÍÍÍÍÍÍÍÍÍÍ
36. d37. b
($76,000 ð 0.04) + $15,000 + $12,000 = $30,04038. b39. c40. d
($6,000,000) - ($9,200,000) = $3,200,000 unfavorable41. d
N = units of product Y; and 2N = units of product X;
($10.00 - $2.50)2N + ($15.00 - $5.00)N - $50,000 = 0 $15N + $10N = $50,000 $25N = $50,000 N = 2,000 units
Product Y = 2,000 units; Product X = 4,000 units42. c43. d44. c
60,000 + 3,000 - 1,800 = 61,200 units
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45. d$30X - $9X - $4,760 = OI$30(250) - $9(250) - $4,760 = OI$7,500 - $2,250 - $4,760 = $490
46. c47. c48. c
$336,000 + $57,000 - $90,000 = $303,00049. b50. c
Materials 1.35(20,000 units) = $27,000Machinery 54,000
$81,000 ÍÍÍÍÍÍÍ
Materials 1.35(10,000 units) = $13,500Machinery 54,000
$67,500 ÍÍÍÍÍÍÍ
51. b$420,000 + $4,224,000 - $800,000 = $3,844,000
52. d53. a
$250,000 / 35,500 = $7.042 / Output54. a55. b
20,000 ð ($4.00 + $2.00 + $0.80) = $136,00056. d57. c
$773,500 - $100,000 - $150,000 - $4,500 - $900 - $3,500 = $514,60058. b
$84,160 - 2,000 = $82,160$82,160 + 2,800 = $84,960
59. d$525,000 / 500,000 = $1.05 and $396,900 / 504,000 = $0.7875
60. d61. a62. d63. d
$217,728 - $33,600 - (($134,400 - $33,600) x.95) = $88,36864. b65. b66. d67. c
direct materials are variable; therefore, per unit costs remains the same at $4.00
Page 4
68. c$20,000 + $200,000 + $14,000 + $172,000 + $240,000 + $140,000 + $20,000 + $10,000 + $2,028,000 + $1,360,000 = $4,204,000
69. a$13,000 + $74,000 - $41,000 = $46,000
70. a71. a72. b73. d74. d
Mfg. Labor = [4,750 hours - (5,000 ð 0.70 hours)] ð $4.75 = $5,937.50 unfavorableMkt. Labor = [2,500 hours - (5,000 ð 0.27 hours)] ð $2.75 = $3,162.50 unfavorable
75. cCosts = $150,000 + $0.136(2,600,000) = $503,600
76. b($54,000 / 20,000 units) = $2.70 per unit
77. a78. c79. d80. b
$32,000 + $41,000 + $65,000 + 1.25 ($65,000) - $146,000 = $73,25081. a
$60,000 + $240,000 - $40,000 = $260,00082. a83. d84. b
Actual Results
Units Sold 495,000
Revenues $4,950,000Variable Costs 1,250,000Contribution Margin $3,700,000Fixed Costs 925,000Operating Income $2,775,000 ÍÍÍÍÍÍÍÍÍÍ
85. d[($44,000 + $31,000) / 40,000] ð 5,116 = $9,593
86. c87. b
(25,000 - 24,875) ð $120.00 = $15,00088. c
$200,000 / 2,500 = $8089. b90. d91. b
Costs = $225,000 + $0.204(2,600,000) = $755,400
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92. a93. a94. c95. d96. b
20,000 ð $12 = $240,00097. b
$30,000 and $20,000 + $10,000 as given98. a
Static Budget Variance
Units Sold
Revenues $(50,000) UVariable Costs 250,000 FContribution Margin $3,500,000Fixed Costs (25,000) UOperating Income $175,000 F ÍÍÍÍÍÍÍÍ
99. a Small Large
Sales $21.60 $28.80Variable costs 14.40 16.80Contribution margin $7.20 $12.00Sales mix x 3 ð 1 Contribution margin per mix $21.60 $12.00 ÍÍÍÍÍÍ ÍÍÍÍÍÍ
Total contribution margin per mix = $21.60 + $12.00 = $33.60
Break-even point in composite units = $53,760/$33.60 = 1,600
Small: 1,600 ð 3 = 4,800 unitsLarge: 1,600 ð 1 = 1,600 units
100. d101. a102. b
(5,000 ð 0.70) + (7,000 ð 0.30) = 5,600 mattresses103. b
($13.00 - $12.50) ð (11,500) = $5,750 unfavorable104. a105. a106. c
(50,000 - 49,750) ð $30.00 = $7,500107. a108. a
$295,000 - $300,000 = $5,000 favorable
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109. c$29,000 + $146,000 - $128,000 = $47,000
110. a(10,000 - 15,000) ð $3.75 = 18,750 favorable
111. a$84,000 / 2,000 = $42.00
112. a113. d114. b115. c116. a117. a118. d
$100 + $250 + $1,200 + $2,400 + $3,500 + $5,400 + 8 ($42) + 4 ($66) + 96 ($80) = $21,130
119. b($6.50 - $6.25) ð (11,500) = $2,875 unfavorable
120. c121. d122. a
$1,000N - $400N - $90,000 = $18,000/(1 - 0.4); $600N - $90,000 = $30,000; N = 200 units
123. b$2,800,000 - $26,500 - $2,000,000 = $773,500
124. c20,000 + 2,500 - 2,000 = 20,500 cues
125. d126. b127. c
($240,000 + $1,960,000 - $172,000) / 507,000 units = $4.00128. a129. c130. a
28,500 units - 3,000 WIP = 25,50025,500 ð $20 = $510,000 direct materials
131. b132. d133. a
$500,000 + $1,900,000 - $400,000 = $2,000,000134. d135. a
(84,000 x.9) ð ($6.00 ð 1.08) - (84,000 x.9) ð ($4.00 x.9) = $217,728136. d
$50,000 and $3,000 as given137. b
[($44,000 + $31,000) / 20,000] ð 1,676 = $6,285138. c
($40,000 + $10,000) / 2,000 = $25.00 per hour139. c
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140. d$240,000 / 1,000,000 units = $0.24
141. a30,000 ð 110% = 33,000 units; and 60,000 + 12,000 = 72,000 units
142. cApplication
143. c144. d145. b146. a
$34,500 / 10,000 = $3.45147. b
($31,200 + X)/$1.20 = 62,300X = $43,560
148. d149. c150. c
$200,000 - [(200 ð $500) + $20,000]; $200,000 - $120,000 = $80,000151. d152. c153. d154. c155. a
[$5,310/9 - 110(6)] ð $8 = $560 favorable156. d157. b158. c
Costs = $225,000 + [($735,000 - $225,000)/2,500,000] linesCosts = $225,000 + $0.204(lines)
159. c$170,000 - ($10 ð 16,000) = $10,000 unfavorable
160. b161. a162. d
($9,000 + $180) - $8,400 = $780 (F)163. d
27,000 = 30,000 + X - 6,000; 27,000 + 6,000 - 30,000 = X; 3,000 = X164. d165. c
Page 8
166. c Product X Product Y TotalSales units 50,000 100,000 150,000
Revenue $500,000 $1,500,000 $2,000,000Variable costs 125,000 500,000 625,000
Cont. Mar. $375,000 $1,000,000 $1,375,000 ÍÍÍÍÍÍÍÍ ÍÍÍÍÍÍÍÍÍÍFixed costs 50,000
$1,325,000 ÍÍÍÍÍÍÍÍÍÍ
167. c168. c
Materials: 1 unit ð $5.00 = $5.00Labor: 0.35 unit ð $17.50 = 6.13Overhead: 0.25 unit ð $25.00 = 6.25
$17.38 ÍÍÍÍÍÍ
169. a($9,000 / 1,000) / $9 = 1 pound
170. bNET THE VARIANCES: SPENDING: $10,000 U + $5,000 F = $5,000 unfavorable EFFICIENCY: $40,000 U + $0 = $40,000 unfavorable OUTPUT: $0 + $100,000 F = $100,000 favorable
171. b172. a173. c174. c175. c
$600,000 / 7,500 = $80.00176. b
($1.20 ð 40,000) + $192,000 = $240,000($1.20 ð 20,000) + $192,000 = $216,000
177. d178. b179. b180. c
$500 - $30 = $20 per case181. c
($27.00 ð 1,000) + ($5.00 ð 1,000) = $32,000182. d183. d
Materials price variance = Total variance - efficiency variance = ($11,200 - 12,000) - $240 unfavorable = $1,040 favorable
184. d
Page 9
185. b[($100,000 ð 12) + ($29,000 ð 10)] / 50,000 = $29.80 budgeted direct rate$250,000 / 50,000 = $5.00 budgeted indirect rate
186. a$880,000 + $1,800,000 - $320,000 = $2,360,000
187. b$2,360,000 + $1,200,000 + ($800,000) 0.6 + ($240,000)0.6 + ($40,000 + $100,000 - $120,000) = $644,000
188. b$25,000 + $77,000 - $13,000 = $89,000
189. c($27,680 ð 0.9) + ($29,480 ð 0.4) = $36,704
190. c$192,000 / 40,000 = $4.80
191. d192. b193. d194. b
[16,000 - (40,000 ð 0.30)] ð $10 = $40,000 unfavorable195. a
$100N - $20N - $8,000 = 0; $80N = $8,000; N = 100 units;196. b
($90,000 ð 0.65) + ($110,000 ð 0.25) + ($80,000 ð 0.08) = $92,400197. d198. d199. d
VOHEF = [15,000 MH - (30,000 ð 0.45)] ð ($11.25 / 0.45) = $37,500 unfavorable
200. a(30,000 - 40,000) ð $10 = $100,000 favorable
201. c$250,000 / 24,750 = $10.10 / Input
202. a$180,000 + $1,230,000 - $102,000 = $1,308,000
203. c204. b
10,000 + 12,500 + 15,000 - (10,000 ð 0.3) + (30,000 ð 0.1) = 37,500 desks
205. d206. b
$30X - $11.25X - $3,800 = OI X = 250$30(250) - $11.25(250) - $3,800 = OI$7,500 - $2,812.50 - $3,800 = $887.50
207. b200 ð $1,000 = $200,000
208. c209. a210. c
211. d
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212. b213. c
$224,000 + $38,000 - $60,000 = $202,000214. b
$1,000N - $400N - $90,000 = 0; $600N = $90,000; N = 150 dresses215. d
$240,000 + $1,960,000 - $172,000 = $2,028,000216. c
$4,680 favorable + $2,800 unfavorable = $1,880 favorable217. b
30,000 ð $6 = $180,000218. b
40,000 ð $10 = $400,000(30,000 - 40,000) ð $10 = $100,000 favorable$300,000 - $295,000 = $5,000 favorable
219. b$31,720 + $400 = $32,720
220. d221. c222. b223. b224. b225. b226. d227. a
Mfg. Labor ($10.00 - $9.50) ð 4,750 = $2,375.00 unfavorableMkt. Labor ($8.00 - $5.50) ð 2,500 = $6,250.00 unfavorable
228. d229. a
($900,000 ð 0.40) + $36,000 - $30,000 = $366,000230. a
$1,560 (F) + $360 (U) = $1,200 (F)231. d232. b
$20,000 unfavorable + $8,000 favorable = $12,000 unfavorable233. d
20,500 ð $2.00 = $41,00020,500 ð $4.00 = $82,00020,500 ð $0.80 = $16,400
234. c235. a
[($44,000 + $31,000) / $100,000] ð $17,472 = $13,104236. c237. a238. a
[($44,000 + $31,000) / 10,000] ð 460 = $3,450239. b240. b
$12.00 + $2.25 + $0.75 = $15.00
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241. bCOMBINE $5,000 U + $40,000 U = $45,000 unfavorable
242. cNormal setup hours = (15,000 / 250) ð 5 = 300 hoursOH rate = $14,400 / 300 = $48 per setup hour$14,400 - ((11,250 / 250) ð 5 ð $48) = $3,600 (U)
243. a$100,000 as given
244. c245. d246. b
(5,000 ð 0.70) + 7,000 + 6,500 + (8,000 ð 0.30) = 19,400 mattresses247. b248. a
$225,000 - $200,000 = $25,000249. a
$35,480 - $30,280 = $5,200 favorable250. c251. b252. c
Direct cost 10 hours ð $75.00 = $750Indirect cost 10 hours ð $40.00 = 400 $1,150 ÍÍÍÍÍÍ
253. b254. c255. c256. a257. b258. d259. b
[15,000 + (0.1 ð 30,000) - (0.3 ð 15,000)] ð $250 = $3,375,000260. a
Mfg. Labor ($5.00 - $4.75) ð 4,750 = $1,187.50 unfavorableMkt. Labor ($4.00 - $2.75) ð 2,500 = $3,125.00 unfavorable
261. c($50,000 + $154,000 - $26,000) + $40,000 + $30,000 + $2,000 - $10,000 = $240,000
262. d263. c264. c265. c266. a
$36,000 + $246,000 - $20,400 = $261,600267. d268. a269. d
$14,000 - $14,400 = $400 (F)270. d
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271. bTotal standard labor cost of actual hours = ((2,000/2) ð $24) - $672 = $23,328Actual hours = $23,328/24 = 972 hoursTotal actual costs = 972 ð $24.50 = $23,814
272. d$35,480 - $32,160 = $3,320 favorable
273. b($80,000 + $40,800/0.6)/($144 - $80) = 2,312.5 or 2,313 units
274. a275. d
$37,500 / 5,000 = $7.50276. a277. b278. d279. a280. c281. a
($108,000 ð 0.6) + ($132,000 ð 0.3 ð 0.6) - ($108,000 ð 0.3 ð 0.6) = $69,120
282. d283. b284. d285. c
Expected revenues = 0.4(70 ð $37.50) + 0.6(40 ð $37.50) = $1,950
Expected CM before options = 0.4(70 ð $25) + 0.6(40 ð $25) = $1,300
Option 1: $1,300 - $1,000 = $300Option 2: $1,300 - $750 - 0.05($1,950) = $452.50Option 3: $1,300 - 0.2($1,950) = $910*
* = maximization of income286. b287. a
$8,000,000 - $3,200N - $240,000 = 0; $560,000 = $3,200N; N = 175 people288. d289. c290. a
200($1,000) - 200($400) - $90,000 = $30,000291. d
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292. c Static Budget
Units Sold 500,000
Revenues $5,000,000Variable Costs 1,500,000Contribution Margin $200,000 FFixed Costs 900,000Operating Income $2,600,000 ÍÍÍÍÍÍÍÍÍÍ
293. bMaterials 0.45(20,000 units) = $9,000Machinery 18,000
$27,000 ÍÍÍÍÍÍÍ
Materials 0.45(10,000 units) = $4,500Machinery 18,000
$22,500 ÍÍÍÍÍÍÍ
294. b295. d296. b
($40,000 + $10,000) / 2,500 = $20.00 per hour297. b298. d299. c300. d301. c302. b303. b304. b305. b
(11,250 / 225) ð 5.25 ð ($38 - $40) = $525 (F)
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306. d Option 1 Option 2
$1,200 Rental Cost $2,160 1,800 Adm. & Mkt. 1,800 800 Band Expense 800
$3,800 Fixed Cost $4,760 ÍÍÍÍÍÍ ÍÍÍÍÍÍ
$30.00 $ per ticket $30.00 11.25 Catering 9.00
$18.75 Cont. Margin $21.00 ÍÍÍÍÍÍ ÍÍÍÍÍÍ
Break-even point = total fixed cost / contribution margin
Opt. 1: $3,800 / $18.75 = 202.67 tickets307. d308. b309. a310. a311. d312. b313. c
($18,000 / 20,000 units) = $0.90 per unit314. d
[($110,000 ð 12) + ($30,000 ð 10)] / 60,000 = $27.00 actual direct rate$300,000 / 60,000 = $5.00 actual indirect rate
315. d24,875 ð ($216 - $120) = $2,388,000
316. b317. b318. c319. c
30,000 ð $80 = $2,400,000320. a
$750,000 / 53,250 = $14.08 / Output321. a322. a323. b324. b325. d326. c
$8,000 / 80,000 = $0.10327. b328. a
($92,000 ð 0.04) + $15,000 + $12,000 = $30,680
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329. b($29,480 ð 0.9) + ($30,520 ð 0.4) = $38,740
330. a$200,000 / 8,000 = $25.00 $200,000 / 2,000 = $100.00$160,000 / 8,000 = 20.00 $40,000 / 2,000 = 20.00 High Month = $45.00 Low Month = $120.00 ÍÍÍÍÍÍ ÍÍÍÍÍÍÍ
331. a332. c333. b
($0.10 ð 80,000) + $8,000 = $16,000($0.10 ð 40,000) + $8,000 = $12,000
334. a$3,000,000 / 25,000 = $120.00
335. a$1,000N - $500N - $20,000 = 0; $500N = $20,000; N = 40 times
336. c337. c338. a
Total direct cost = $40,500 ð 20 = $810,000Total hours = 500 ð 90 = 45,000 hoursDirect cost rate per hour = $810,000 / 45,000 = $18.00 per hour
339. c12,500 + (15,000 ð 0.3) - (12,500 ð 0.3) = 13,250 desks
340. d341. a342. a343. a
($132,000 ð 0.6) + ($144,000 ð 0.3 ð 0.6) - ($132,000 ð 0.3 ð 0.6) = $81,360
344. c[11,500 - (5,000 units ð 2.00)] ð $6.25 = $9,375 unfavorable
345. a346. a347. b348. d
BVOHR = 10 KWH/MH ð $6 /KWH = $60 per MHAVOHR = 8 KWH/MH ð $6 /KWH = $48 per MHVOH Flexible Variance = ($60 - $48) ð 400 MH = $4,800 favorable
349. b($20 - $5)X - $1,500 = 0.25($20)X;$15X - $1,500 = $5X; $10X = $1,500; X = 150 units
350. a351. d352. b
$66,000 / 1,000 = $66.00353. b
($313,500 + $59,400)/(($154 - $99)/4154) = $1,044,120
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354. b Actual Results
Units Sold 990,000
Revenues $19,800,000Variable Costs 5,000,000Contribution Margin $14,800,000Fixed Costs 3,700,000Operating Income $11,100,000 ÍÍÍÍÍÍÍÍÍÍÍ
355. c356. c357. d358. a
($18,000 / 1,500) / $12 = 1 pound359. d
$350,000 - $299,000 = $51,000 unfavorable360. b
$100,000 - (0.20 ð 25,000 ð $25) = $25,000 favorable361. c
($110,000 ð 0.65) + ($80,000 ð 0.25) + ($100,000 ð 0.08) = $99,500362. d
Indirect cost rate per hour = $787,500 / 45,000 = $17.50 per hour363. d
2.00 MH ð $400 = $800364. d365. d
49,750 ð ($54 - $30) = $1,194,000366. d367. d368. c
Static Budget
Units Sold 1,000,000
Revenues $20,000,000Variable Costs 6,000,000Contribution Margin $14,000,000Fixed Costs 3,600,000Operating Income $10,400,000 ÍÍÍÍÍÍÍÍÍÍÍ
369. b370. d371. c
($18 - $6 - $3) / $18 = 50%372. a
373. a
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374. c375. d
$50N - $30N - $500 = 0; $20N = $500; N = 25 cases376. c377. a378. a379. c380. a381. b
1,600 = ($12,000 + N) / $20; $32,000 = $12,000 + N; $20,000 = N382. d
($27.00 ð 200) + ($5.00 ð 200) = $6,400383. b384. a
Option 1 Option 2
$1,200 Rental Cost $2,160 1,800 Adm. & Mkt. 1,800 800 Band Expense 800
$3,800 Fixed Cost $4,760 ÍÍÍÍÍÍ ÍÍÍÍÍÍ
$30.00 $ per ticket $30.00 11.25 Catering 9.00
$18.75 Cont. Margin $21.00 ÍÍÍÍÍÍ ÍÍÍÍÍÍ
Break-even point = total fixed cost / contribution margin
Opt. 2: $4,760 / $21 = 226.67 tickets385. d
($18,000 + $360) - $16,800 = $1,560 (F)386. b
Total direct cost = $40,500 ð 20 = $810,000Total hours = 500 ð 80 = 40,000 hoursDirect cost rate per hour = $810,000 / 40,000 = $20.25 per hour
387. dWork-in-process $10,000 5% ð 25,000 = $1,250Finished goods 20,000 10% ð 25,000 = 2,500Cost of goods sold 170,000 85% ð 25,000 = 21,250 $200,000 100% ÍÍÍÍÍÍÍÍ ÍÍÍÍ
388. c389. a
$30X - $9X - $4,760 = $5,005$21X = $4,760 + $5,005$21X = $9,765
X = 465 people
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390. c$1,500 (U) + $525 (F) = $975 (U)
391. c392. b
Costs = $150,000 + [($490,000 - $150,000)/2,500,000] linesCosts = $150,000 + $0.136(lines)
393. c($80,000 + $24,000/0.6)/($144 - $80) = 1,875 units1,875 ð $140 = $270,000
394. a$1,500,000/50,000 = $30.00
395. c($15 ð 10,000) + $20,000 = $170,000
396. c397. c398. d
$228,000 as given399. d
$900,000 ð 0.40 = $360,000400. a401. d402. c403. c404. d
($85,000 ð 0.04) + $15,000 + $12,000 = $30,400405. c406. a
($30,520 ð 0.9) + ($29,000 ð 0.4) = $39,068407. b408. a
($2.20 - $2.00) ð 2,100 = $420 unfavorable409. b410. d411. b
$4,204,000 + $60,000 - $40,000 = $4,224,000412. a413. b
Labor price variance = $23,814 - $23,328 = $486 unfavorable
414. a$30,000 + $120,000 - $20,000 = $130,000
415. a((11,250 / 225) ð 5.25 ð $40) - ((11,250 / 250) ð 5 ð $40) = $1,500 (U)
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416. a Actual Results Flex. Bud. Variances
Direct Materials $74,750 $62,500.00 $12,250.00 UDirect Mfg. Labor 23,750 16,625.00 7,125.00 UDirect Marketing Labor 10,000 3,712.50 6,287.50 U
$25,662.50 U ÍÍÍÍÍÍÍÍÍÍ
417. a$25,000 and $15,000 + $10,000 as given
418. b$480,000 - $20N - $200,000 = 0; $280,000 = $20N; N = 14,000 people
419. c$750,000 / 37,125 = $20.20 / Input
420. b421. a
$780 (F) + $180 (U) = $600 (F)422. c
Break-even in number of procedures = $20,000/($1,000 - $500) = 40 times
Actual sales 100 times ð $1,000 = $100,000Break-even sales 40 times ð $1,000 = $40,000Margin of safety 60 times $60,000 ÍÍÍ ÍÍÍÍÍÍÍ
423. d$400N - $300N - $6,000 = 0; $100N = $6,000; N = $6,000/$100; N = 60 packages
424. a($93,000 + $18,000/0.6)/$7.50 = 16,400 units
425. c0.20($100,000) + 0.30($80,000) + 0.15($60,000) = $53,000.
426. b427. a428. b