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Practice Final Exam for AC 225 Managerial AccountingAnswers will be released on FRIDAY.

NOTE: These questions will give you practice on answering questions in the format of the final exam, which has 60 to 70 multiple choice questions. You should not depend on reviewing these specific questions alone to review all of the topics on the Final Exam Review also posted in D2L.

Chapter 11. Managerial Accounting and Financial Accounting differ in the following way:

A. Financial Accounting emphasizes forecasts of future performance.B. Financial Accounting summarizes information for the company as a whole.C. Financial Accounting is private information for company managersD. Financial Accounting emphasizes timeliness over precision.

2. Common users of managerial accounting reports include the following:A. Operations manager and loan officerB. Chief financial officer and public shareholderC. Public shareholder and loan officerD. Chief financial officer and operations manager

3. The management function of controlling is carried out through the use of A. A performance report that compares budgeted to actual results.B. A reconciliation of the beginning and ending retained earnings balances.C. A schedule of cash collections and cash paymentsD. A forecast of next period’s production.

4. Management accounting is used byA. Human resource employees who need to plan hiringB. Marketing employees who make decisions on profit achievable through an advertising campaignC. Accounting employees who make budget recommendations.D. All of the above.

5. The CMA certification requiresA. A rigorous professional exam and experience in financial management only.B. A rigorous professional exam onlyC. Experience in Financial management only.D. An accounting degree and a rigorous professional exam and experience in financial

management.

6. Guidelines for ethical behavior for management accountants requireA. Management accountants maintain professional competence.B. Management accountants disclose confidential information to competitors.C. Management accountants eliminate all potential limitations before communicating

recommendations.D. Management accountants ignore conflicts of interest.

7. Institute of Management Accountants supports ethical practices by A. Staffing an ethics hotline for its members

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B. Representing its members in legal casesC. Investigating corporate ethical lapsesD. Requiring members to report unethical conduct to their supervisors.

Chapter 2

1. The wages of factory maintenance personnel would usually be considered to be aA. Direct labor costB. Manufacturing overhead costC. Administrative costD. Selling cost

2. Conversion costs includeA. Manufacturing overhead costsB. Direct material costsC. Sales commission costsD. Advertising costs

3. Which of the following costs is an example of a period rather than a product cost?A. Depreciation on production equipmentB. Salaries of salespersonsC. Wages of production machine operatorsD. Insurance on production equipment

4. Last month 10,000 units of a product were manufactured, and the total cost per unit was $60. At this level of production the variable cost is $30 per unit and the fixed cost is $30 per unit. If 10,500 units are manufactured the next month, and the costs remain within the same relevant range,

A. Total variable cost will remain unchanged.B. Fixed costs will increase in totalC. Variable cost per unit will increaseD. Total cost per unit will decrease

5. The following costs were incurred in September: Direct materials $39,000Direct labor 23,000Manufacturing overhead 17,000Selling expenses 14,000Administrative expenses 27,000

Prime costs during the month totaledA. $79,000B. $120,000C. $62,000D. $40,000

6. ABC Corporation sells its product for $195.70 per unit. In 2015 the company had total sales in units of 6,000. The total costs were the following:

Variable cost of sales $457,800

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Fixed cost of sales 100,000Variable selling & administrative costs 108,500Fixed selling & administrative costs 512,400

What is the best estimate of the total contribution margin?A. $4,600B. $507,800C. $607,800D. $616,400

7. Supply costs at ABC Corporation's chain of gyms are listed below:

Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to:

A. $2.44 per client-visit; $28,623 per monthB. $1.33 per client-visit; $12,768 per monthC. $0.79 per client-visit; $19,321 per monthD. $0.75 per client-visit; $19,826 per month

8. Buckeye Company has provided the following data for maintenance cost:2014 2015

Machine hours 12,500 15,000Maintenance cost 27,000 31,000The best estimate of the cost formula for maintenance would be:

A. $21,625 per year plus $0.625 per machine hourB. $7,000 per year plus $0.625 per machine hourC. $7,000 per year plus $1.60 per machine hourD. $27,000 per year plus $1.60 per machine hour

Use the following information for questions 9 and 10.

Chaffee Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with respect to the number of calls in a month. At a volume of 33,000 calls in a month, the costs of operating the helpline total $742,500.

9. To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 34,800 calls in a month? (Assume that this call volume is within the relevant range.)

A. $742,500

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B. $783,000C. $704,095D. $762,750

10. To the nearest whole cent, what should be the average cost of operating the helpline per call at a volume of 36,100 calls in a month? (Assume that this call volume is within the relevant range.)

A. $21.54B. $20.57C. $21.34D. $22.50

Chapter 3

1. In computing its predetermined overhead rate, Marple Company inadvertently left its indirect labor costs out of the computation. This oversight will cause:

A. Manufacturing Overhead to be overapplied.B. The Cost of Goods Manufactured to be understated.C. The debits to the Manufacturing Overhead account to be understated.D. The ending balance in Work in Process to be overstated.

2. In a job-order costing system, the use of direct materials that have been previously purchased is recorded as a debit to:

A. Raw Materials inventory. B. Finished Goods inventory. C. Work in Process inventory.D. Manufacturing Overhead.

3. In a job-order costing system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to:

A. Work in Process inventory.B. Manufacturing Overhead.C. Finished Goods inventory.D. Raw Materials inventory.

4.Overapplied manufacturing overhead occurs when: A. applied overhead exceeds actual overhead.B. applied overhead exceeds estimated overhead.C. actual overhead exceeds estimated overhead.D. budgeted overhead exceeds actual overhead

5. Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. Last year, the company's estimated manufacturing overhead was $1,200,000 and its estimated level of activity was 50,000 direct labor-hours. The company's direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted to $1,240,000, with actual direct labor cost of $650,000. For the year, manufacturing overhead was:

A. overapplied by $60,000B. underapplied by $60,000

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C. overapplied by $40,000D. underapplied by $44,000

6. Hayne Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below:

The predetermined overhead rate for the recently completed year was closest to: A. $7.89B. $30.95C. $24.52D. $32.41

7. The following data have been recorded for recently completed Job 674 on its job cost sheet. Direct materials cost was $2,039. A total of 32 direct labor-hours and 175 machine-hours were worked on the job. The direct labor wage rate is $14 per labor-hour. The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $15 per machine-hour. The total cost for the job on its job cost sheet would be:

A. $2,967B. $2,487C. $2,068D. $5,112

8. Hults Corporation has provided data concerning the company's Manufacturing Overhead account for the month of November. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $75,000 and the total of the credits to the account was $57,000. Which of the following statements is true?

A. Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $75,000.

B. Actual manufacturing overhead incurred during the month was $57,000.C. Manufacturing overhead applied to Work in Process for the month was $75,000.D. Manufacturing overhead for the month was underapplied by $18,000.

9. Wedd Corporation had $35,000 of raw materials on hand on May 1. During the month, the company purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The debits to the Work in Process account as a consequence of the raw materials transactions in May total:

A. $92,000B. $0C. $68,000D. $87,000

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10. Lietz Corporation has provided the following data concerning manufacturing overhead for January:

The company's Cost of Goods Sold was $369,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true?

A. Manufacturing overhead was underapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $392,000

B. Manufacturing overhead was underapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $346,000

C. Manufacturing overhead was overapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $346,000

D. Manufacturing overhead was overapplied by $23,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $392,000

Chapter 5

1. The break-even point in unit sales is found by dividing total fixed expenses by: A. the contribution margin ratio.B. the variable expenses per unit.C. the sales price per unit.D. the contribution margin per unit.

2. The break-even point in unit sales increases when variable expenses: A. increase and the selling price remains unchanged.B. decrease and the selling price remains unchanged.C. decrease and the selling price increases.D. remain unchanged and the selling price increases.

3. The amount by which a company's sales can decline before losses are incurred is called the: A. contribution margin.B. degree of operating leverage.C. margin of safety.D. contribution margin ratio.

4. The degree of operating leverage can be calculated as: A. contribution margin divided by sales.B. gross margin divided by net operating income.C. net operating income divided by sales.D. contribution margin divided by net operating income.

5. Mancuso Corporation has provided its contribution format income statement for January. The company produces and sells a single product.

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If the company sells 3,100 units, its total contribution margin should be closest to:

A. $27,045B. $181,000C. $162,400D. $173,600

6. Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a contribution margin ratio of 35%. The company's fixed expenses are $46,800. If Rothe desires a monthly target net operating income equal to 15% of sales, the amount of sales in units will have to be (rounded):

A. 1,486 unitsB. 3,467 unitsC. 1,040 unitsD. 2,600 units

7.Darth Company sells three products. Sales and contribution margin ratios for the three products follow:

Given these data, the contribution margin ratio for the company as a whole would be: A. 25%B. 75%C. 33.3%D. it is impossible to determine from the data given.

8. Pool Company's variable expenses are 36% of sales. Pool is contemplating an advertising campaign that will cost $20,000. If sales increase by $80,000, the company's net operating income should increase by:

A. $28,800B. $64,000C. $8,800D. $31,200

9. Olis Corporation sells a product for $130 per unit. The product's current sales are 28,900 units and its break-even sales are 25,721 units. What is the margin of safety in dollars?

A. $413,270B. $3,343,730

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C. $2,504,667D. $3,757,000

10. Balbuena Corporation produces and sells two products. Data concerning those products for the most recent month appear below:

The fixed expenses of the entire company were $15,630. If the sales mix were to shift toward Product K87W with total sales dollars remaining constant, the overall break-even point for the entire company:

A. would not change.B. would increase.C. would decrease.D. could increase or decrease

Chapter 6

1. Routsong Company had the following sales and production data for the past four years:

Selling price per unit, variable cost per unit, and total fixed cost are the same in each year. Which of the following statements is not correct?

A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.B. Because of the changes in production levels, under variable costing the unit product cost will change each year.C. The total net operating income for all four years combined would be the same under variable and absorption costing.D. Under absorption costing, net operating income in Year 4 would be less than the net operating income in Year 2.

2. Fixed manufacturing overhead is included in product costs under:A. Both Absorption costing and Variable costingB Only Absorption costingC. Only Variable costingD. Neither Absorption costing nor variable costing

3. Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if:

A. production equals sales for that period.B. production exceeds sales for that period.

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C. sales exceed production for that period.D. the variable manufacturing overhead exceeds the fixed manufacturing overhead.

4. In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

A. classified as a traceable fixed expense and not allocated.B. allocated to the product lines on the basis of sales dollars.C. allocated to the product lines on the basis of segment margin.D. classified as a common fixed expense and not allocated.

5. All other things equal, if a division's traceable fixed expenses decrease: A. the division's segment margin will increase.B. the overall company net operating income will decrease.C. the division's contribution margin will increase.D. the division's sales volume will increase.

6. Olds Inc., which produces a single product, has provided the following data for its most recent month of operations:

There were no beginning or ending inventories. The absorption costing unit product cost was: A. $97B. $130C. $99D. $207

7. Cockriel Inc., which produces a single product, has provided the following data for its most recent month of operations:

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There were no beginning or ending inventories. The variable costing unit product cost was:

A. $42B. $43C. $37D. $48

8. Craft Company produces a single product. Last year, the company had a net operating income of $80,000 using absorption costing and $74,500 using variable costing. The fixed manufacturing overhead cost was $5 per unit. There were no beginning inventories. If 21,500 units were produced last year, then sales last year were:

A. 16,000 unitsB. 20,400 unitsC. 22,600 unitsD. 27,000 units

9. Moore Company produces a single product. During last year, Moore's variable production costs totaled $10,000 and its fixed manufacturing overhead costs totaled $6,800. The company produced 5,000 units during the year and sold 4,600 units. There were no units in the beginning inventory. Which of the following statements is true?

A. The net operating income under absorption costing for the year will be $800 higher than net operating income under variable costing.B. The net operating income under absorption costing for the year will be $544 higher than net operating income under variable costing.C. The net operating income under absorption costing for the year will be $544 lower than net operating income under variable costing.D. The net operating income under absorption costing for the year will be $800 lower than net operating income under variable costing.

10. Sugiki Corporation has two divisions: the Alpha Division and the Delta Division. The Alpha Division has sales of $820,000, variable expenses of $369,000, and traceable fixed expenses of $347,300. The Delta Division has sales of $460,000, variable expenses of $294,400, and traceable fixed expenses of $134,100. The total amount of common fixed expenses not traceable to the individual divisions is $97,300. What is the company's net operating income?

A. $135,200B. $37,900C. $616,600D. $519,300

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Chapter 7

1. Which of the following activities would be classified as a batch-level activity?A. Setting up equipment.B. Designing a new product.C. Training employees.D. Milling a part required for the final product.

2. Which of the following is not a limitation of activity-based costing?A. Maintaining an activity-based costing system is more costly than maintaining a traditional direct labor-based costing system.B. Changing from a traditional direct labor-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.C. In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.D. More accurate product costs may result in increasing the selling prices of some products.

3. Designing a new product is an example of (an):A. Unit-level activityB. Batch-level activityC. Product-level activityD. Organization-sustaining activity.

4. Property taxes are an example of a cost that would be considered to be:A. Unit-level.B. Batch-level.C. Product-level.D. Organization-sustaining.

5. McKenrick Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

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How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool? A. $229,000B. $155,000C. $310,000D. $248,000

6. Spendlove Corporation has provided the following data from its activity-based costing system:

The company makes 430 units of product S78N a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit.According to the activity-based costing system, the product margin for product S78N is:

A. $4,116.50B. $29,132.50C. $6,180.50D. $5,161.30

7. Gaucher Corporation has provided the following data from its activity-based costing accounting system:

The activity rate for the "designing products" activity cost pool is closest to:A. $78 per product design hourB. $582,016 per product design hourC. $128 per product design hourD. $89 per product design hour

Chapter 8

1. Which of the following represents the normal sequence in which the indicated budgets are prepared?

A. Direct Materials, Cash, SalesB. Production, Cash, Income StatementC. Sales, Balance Sheet, Direct LaborD. Production, Manufacturing Overhead, Sales

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2. Self-imposed budgets typically are:A. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.B. not subject to review by higher levels of management except in specific cases where the input of higher management is required.C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.D. not critical to the success of a budgeting program.

3. A continuous (or perpetual) budget:A. is prepared for a range of activity so that the budget can be adjusted for changes in activity.B. is a plan that is updated monthly or quarterly, dropping one period and adding another.C. is a strategic plan that does not change.D. is used in companies that experience no change in sales.

4. Budgeted production in units are determined by:A. adding budgeted sales in units to the desired ending inventory in units and deducting the beginning inventory in units from this total.B. adding budgeted sales in units to the beginning inventory in units and deducting the desired ending inventory in units from this total.C. adding budgeted sales in units to the desired ending inventory in units.D. deducting the beginning inventory in units from budgeted sales in units.

5. Shown below is the sales forecast for Cooper Inc. for the first four months of the coming year.

On average, 50% of credit sales are paid for in the month of the sale, 30% in the month following sale, and the remainder are paid two months after the month of the sale. Assuming there are no bad debts, the expected cash inflow in March is:

A. $138,000B. $122,000C. $119,000D. $108,000

6. Prestwich Company has budgeted production for next year as follows:

Two pounds of material A are required for each unit produced. The company has a policy of

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maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:A. 82,500 poundsB. 165,000 poundsC. 200,000 poundsD. 205,000 pounds

7. Hagos Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.84 direct labor-hours. The direct labor rate is $9.40 per direct labor-hour. The production budget calls for producing 2,100 units in June and 1,900 units in July. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? A. $15,792.00B. $15,002.40C. $16,581.60D. $31,584.00

8. Lunderville Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,200 units are planned to be sold in December. The variable selling and administrative expense is $3.10 per unit. The budgeted fixed selling and administrative expense is $60,800 per month, which includes depreciation of $6,720 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the December selling and administrative expense budget should be:

A. $70,720B. $54,080C. $64,000D. $9,920

9. Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $16,000. Budgeted cash receipts total $188,000 and budgeted cash disbursements total $187,000. The desired ending cash balance is $40,000. The excess (deficiency) of cash available over disbursements for June will be:

A. $15,000B. $1,000C. $17,000D. $204,000

10. Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A. $102,870B. $11,340

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C. $91,530D. $111,780

Chapter 9

1. The purpose of a flexible budget is to: A. remove items from performance reports that are not controllable by managers.B. permit managers to reduce the number of unfavorable variances that are reported.C. update the static planning budget to reflect the actual level of activity of the period.D. reduce the amount of conflict between departments when the master budget is prepared.

2. Salyers Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below

The Inn's variable overhead costs are driven by the number of guests.What would be the total budgeted overhead cost for a month if the activity level is 53 guests?A. $7,159.20B. $6,680.60C. $7,184.80D. $26,154.40

3. Wadhams Snow Removal's cost formula for its vehicle operating cost is $1,900 per month plus $430 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 21 snow-days. The actual vehicle operating cost for the month was $11,470. The vehicle operating cost in the planning budget for December would be closest to:

A. $10,930B. $11,470C. $8,739D. $8,780

4. Orscheln Snow Removal's cost formula for its vehicle operating cost is $2,800 per month plus $381 per snow-day. For the month of February, the company planned for activity of 17 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $7,920. The activity variance for vehicle operating cost in February would be closest to:

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A. $1,357 FB. $1,357 UC. $1,143 FD. $1,143 U

5. Farver Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $44,420 per month plus $2,008 per flight plus $1 per passenger. The company expected its activity in May to be 80 flights and 281 passengers, but the actual activity was 81 flights and 277 passengers. The actual cost for plane operating costs in May was $199,650. The spending variance for plane operating costs in May would be closest to:A. $5,691 FB. $7,695 UC. $7,695 FD. $5,691 U

6. Lantto Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $34,810 per month plus $2,850 per flight plus $12 per passenger. The company expected its activity in June to be 70 flights and 292 passengers, but the actual activity was 69 flights and 291 passengers. The actual cost for plane operating costs in June was $236,550. The plane operating costs in the flexible budget for June would be closest to:A. $237,814B. $234,952C. $236,550D. $234,417

Use the following information for questions 7 to 10.

MacPhail Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,600 units, but its actual level of activity was 5,650 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:

Actual results for April:

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7. The revenue variance for April would be closest to: A. $1,645 FB. $1,645 UC. $3,840 UD. $3,840 F 8. The spending variance for direct materials in April would be closest to: A. $3,215 UB. $2,260 UC. $2,260 FD. $3,215 F 9. The spending variance for manufacturing overhead in April would be closest to: A. $875 FB. $970 UC. $970 FD. $875 U 10. The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to: A. $4,880 UB. $4,090 FC. $4,090 UD. $4,880 F

Chapter 10

1. If the labor efficiency variance is unfavorable, then A. actual hours exceeded standard hours allowed for the actual output.B. standard hours allowed for the actual output exceeded actual hours.C. the standard rate exceeded the actual rate.D. the actual rate exceeded the standard rate.

2. Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be: A. favorable.B. unfavorable.

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C. either favorable or unfavorable.D. zero.

3. Last month 75,000 pounds of direct material were purchased and 71,000 pounds were used. If the actual purchase price per pound was $0.50 more than the standard purchase price per pound, then the materials price variance was: A. $2,000 FB. $37,500 FC. $37,500 UD. $35,500 U

4. The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the materials quantity variance for the month? A. $19,460 FB. $9,730 UC. $10,115 UD. $20,230 F

5. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor efficiency variance for the month? A. $13,805 UB. $13,530 U

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C. $15,305 UD. $15,305 F

6. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor rate variance for the month? A. $1,325 UB. $1,780 FC. $430 FD. $430 U

Use the following information for questions 7 to 10

Arrow Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product.

During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor-hours. 7. The direct materials price variance for May is: A. $16,000 favorableB. $16,000 unfavorableC. $14,250 favorableD. $14,250 unfavorable 8. The direct materials quantity variance for May is: A. $14,400 unfavorableB. $1,100 favorableC. $17,100 unfavorableD. $17,100 favorable

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8. The direct labor rate variance for May is: A. $2,200 favorableB. $1,900 unfavorableC. $2,000 unfavorableD. $2,090 favorable 10. The direct labor efficiency variance for May is: A. $2,200 favorableB. $2,000 favorableC. $2,000 unfavorableD. $1,800 unfavorable

Chapter 11

1. Turnover is computed by dividing average operating assets into: A. invested capital.B. total assets.C. net operating income.D. sales.

2. Which of the following will not result in an increase in the residual income, assuming other factors remain constant? A. An increase in sales.B. An increase in the minimum required rate of return.C. A decrease in expenses.D. A decrease in operating assets.

3. Which of the following is true?I. A profit center has control over both cost and revenue.II. An investment center has control over invested funds, but not over costs and revenue.III. A cost center has no control over sales.

A. Only IB. Only IIC. Only I and IIID. Only I and II

4. Average operating assets are $110,000 and net operating income is $23,100. The company invests $25,000 in new assets for a project that will increase net operating income by $4,750. What is the return on investment (ROI) of the new project? A. 21%B. 19%C. 18.5%D. 20%

5. Average operating assets are $110,000, net operating income is $23,100, and sales are $300,000. What is the profit margin?

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A. 7.70%B. 21.00%C. 36.67%D. 92.30%

6. A company's current net operating income is $16,800 and its average operating assets are $80,000. The company's required rate of return is 18%. A new project being considered would require an investment of $15,000 and would generate annual net operating income of $3,000. What is the residual income of the new project? A. 20.8%B. 20%C. ($150)D. $300

7. Galanis Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:

The throughput time was: A. 38.8 hoursB. 33.4 hoursC. 14.1 hoursD. 5.4 hours

8. Niemiec Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:

The manufacturing cycle efficiency (MCE) was closest to: A. 0.20B. 0.06C. 0.12D. 0.96

9. Which are the groups of performance measures on a balanced scorecard?

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A. financial measures, customer measures, internal business process measures, and external business process measures. B. Unit, Batch, Product, and sustaining measuresC.Operating and non-operating measuresD. Product measures, Selling measures, and Administrative measures

10. Which of the following would be a measure in the category of Learning and Growth for a balanced scorecard?A. The percentage of customers that report they would recommend our company to othersB. The percentage of employees that received certifications in their area of expertiseC. The percentage of production that passed quality controlsD. The sales growth over the previous year

Chapter 12

1. The opportunity cost of making a component part in a factory with no excess capacity is the: A. variable manufacturing cost of the component.B. fixed manufacturing cost of the component.C. total manufacturing cost of the component.D. net benefit foregone from the best alternative use of the capacity required.

2. Freestone Company is considering renting Machine Y to replace Machine X. It is expected that Y will waste less direct materials than does X. If Y is rented, X will be sold on the open market. For this decision, which of the following factors is (are) relevant?

I. Cost of direct materials usedII. Resale value of Machine X

A. Only IB. Only IIC. Both I and IID. Neither I nor II

3. When there is a production constraint, a company should emphasize the products with: A. the highest unit contribution margins.B. the highest contribution margin ratios.C. the highest contribution margin per unit of the constrained resource.D. the highest contribution margins and contribution margin ratios.

4. Cung Inc. has some material that originally cost $68,400. The material has a scrap value of $30,100 as is, but if reworked at a cost of $1,400, it could be sold for $30,800. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap? A. -$69,100B. -$700C. $29,400D. -$39,000

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5. A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall net operating income would: A. decrease by $20,000 per yearB. increase by $20,000 per yearC. decrease by $10,000 per yearD. increase by $30,000 per year

6. Peluso Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Peluso's plant manager is considering making the headlights now being purchased from an outside supplier for $11 each. The Peluso plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4 of direct materials, $3 of direct labor, and $6.00 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. A decision by Peluso Company to manufacture the headlights should result in a net gain (loss) for each headlight of: A. $(2.00)B. $1.60C. $0.40D. $2.80

7. A customer has requested that Inga Corporation fill a special order for 2,000 units of product K81 for $25.00 a unit. While the product would be modified slightly for the special order, product K81's normal unit product cost is $19.90:

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product K81 that would increase the variable costs by $1.20 per unit and that would require an investment of $10,000 in special molds that would have no salvage value.

This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by: A. $13,000B. $(9,700)C. $10,200D. $(2,200)

8. An automated turning machine is the current constraint at Naik Corporation. Three products use this constrained resource. Data concerning those products appear below:

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Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. A. OP, KU, YYB. YY, OP, KUC. KU, YY, OPD. YY, KU, OP

9. Wright Company produces products I, J, and K from a single raw material input. Budgeted data for the next month follows:

If the cost of the raw material input is $78,000, which of the products should be processed beyond the split-off point?

A. Option AB. Option BC. Option CD. Option D 10. Galluzzo Corporation processes sugar beets in batches. A batch of sugar beets costs $51 to buy from farmers and $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $20 or processed further for $18 to make the end product industrial fiber that is sold for $45. The beet juice can be sold as is for $41 or processed further for $21 to make the end product refined sugar that is sold for $62. How much profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar? A. $(104)B. $(4)C. $7D. $3