Test 1 Spring 2008 Chapters 1-3 Name: __________________________ 1. Managerial accounting: A) is more future oriented than financial accounting. B) tends to summarize information more than financial accounting

Row?_________

C) is primarily concerned with providing information to external users. D) is more concerned with precision than timeliness. 2. The function of management that compares planned results to actual results is known as: A) planning. B) directing and motivating. C) controlling. D) decision making. 3. Which of the functions of management involves overseeing day-to-day activities? A) Planning B) Directing and motivating C) Controlling D) Decision making 4. Ideally, how many units should be produced in a just-in-time manufacturing system? A) budgeted customer demand for the current week. B) budgeted customer demand for the following week. C) actual customer demand for the current week. D) maximum production capacity for the current week.

5. After careful planning, Jammu Manufacturing Corporation has decided to switch to a just-in-time inventory system. At the beginning of this switch, Jammu has 30 units of product in inventory. Jammu has 2,000 labor hours available in the first month of this switch. These hours could produce 500 units of product. Customer demand for this first month is 400 units. If just-in-time principles are correctly followed, how many units should Jammu plan to produce in the first month of the switch? A) 370 B) 400 C) 430 D) 470 6. Management accounting focuses primarily on providing data for: A) internal uses by managers. B) external uses by stockholders and creditors. C) external uses by the Internal Revenue Service. D) external uses by the Securities and Exchange Commission. 7. Indirect labor is a part of: A) Prime cost. B) Conversion cost. C) Period cost. D) Nonmanufacturing cost. 8. The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): A) period cost. B) direct material cost. C) indirect material cost. D) none of the above.

9. The salary paid to the president of King Company would be classified on the income statement as a(n): A) administrative expense. B) direct labor cost. C) manufacturing overhead cost. D) selling expense. 10. Direct labor cost is a part of: C A B C D ) ) ) ) o N N Y Y n e r sP i r o i nm ce o c s o t s t N o Y e s e s Y e s e s N o o o v

11. Direct material cost is a: C A B C D ) ) ) ) o N N Y Y n e r sP i r o i nm ce o c s o t s t N o Y e s e s Y e s e s N o o o v

12. Prime cost and conversion cost share what common element of total cost? A) Direct materials. B) Direct labor. C) Variable overhead. D) Fixed overhead.

13. Wages paid to a timekeeper in a factory are a: P A B C D ) ) ) ) r i m eC Y e s Y e s N o N o co o n s v t e r s i o N o Y e s N o Y e s n c o s t

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14. Property taxes on a company's factory building would be classified as a(n): A) product cost. B) opportunity cost. C) period cost. D) variable cost. 15. Aable Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is $45,000 and if direct materials are $53,000, the manufacturing overhead is: A) $11,250 B) $13,250 C) $180,000 D) $24,500 16. During the month of January, direct labor cost totaled $17,000 and direct labor cost was 60% of prime cost. If total manufacturing costs during January were $82,000, the manufacturing overhead was: A) $11,333 B) $53,667 C) $28,333 D) $65,000

17. Last month a manufacturing company had the following operating results: B E S G e n a r g i n d i n . l . e . .s . o s s n g . . . . . m. i n f i . . . . . a. g f i n i s. . h . . e . . d . . . g$ . . o7 . . o2 . . d, 0 s 0 i 0 n v e n t o i s h . e . .d . . .g . .o . .o . $ .d . 6 .s . 6 . i . , n. 0 . v. 0 e 0 n t o r y . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. $ .. .. 4 .. .. 6 . . 5 . . , . 0 . . 0 . . 0 . . . . . r . g . . i . n. . .. .. .. .. .. .. .. .. .. .. .$. .. .8. . . .8. . . .,. .0. .. 0 0 n r y

What was the cost of goods manufactured for the month? A) $371,000 B) $459,000 C) $383,000 D) $377,000

Use the following to answer questions 18-21: The following data (in thousands of dollars) have been taken from the accounting records of Karsen Corporation for the just completed year. S R R P D M A S W W F F a . l . e . .s . . . . . . . . . .. . . .. .. . . .. .. .. .. . . .. .. .. . . ... . . . . .$. . . 9. . 3. . 0. . . . . . . . . a w m a t e r i a l s . i . n. . v. . e. . n . . t . o$. . r7. .y 0. , . . b. . e. g i n a w m a t e r i a l . s . . .i . n . . v . . e . n. . t. .o$ . .r4 . y . 0 ., . .e . n. . d. . i. n u r c h a s e s o. . f . . .r . a . .w . . . .m . .. ..a .. .$ .e .1 r. .9i . a .0 .l .s . . . . . . . t. i r e c . .t . . l . a . .b . .o . . r . . .. .. .. .. .. . . . . .. .. .. . $. . 1. .. 5.. .. 0. . . . . . . . . a n u f a c t u . . r . i . n. . g. . . o. . v. . e.. .. r .. h.. .. $ e.. .. 2a . . 1d . . 0 . . . . . . . . d m i n i s t r .a . t. .i .v . .e . . e. . x. . p.. .. e.. .. n.. ..$s .. .e9 . s.0 . . . . . . . . . e l l i n g . . e . . x . . p . . e . n. . s. . e.. .. s . . .. . . . . . $. . 1. . 2. . 0. . . . o r k i n p r o c e s s. . . i . n . . v . . e . . n $. . t 8. o . 0. r . y. . , b e g o r k i n p r o c e . s . s. . . i . n . . v . . e . . n $. . t 7. o . 0. r . y. . , . . e . n d i n i s h e d g o o d s . . i . n. . v. . e. . n . . t$ . o . 9 . r . 0 y. . , . . b. e g i i n i s h e d g o o d . .s . . i . n. . v. . e. . n . $. t . o1. . r4. y. 0. , . . e. . n . . d i n g i n g

i n i n n n n g

n g i n

i n g

g

Use these data to answer the following series of questions.

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18. The cost of the raw materials used in production during the year (in thousands of dollars) was: A) $230 B) $220 C) $160 D) $260 19. The cost of goods manufactured (finished) for the year (in thousands of dollars) was: A) $590 B) $650 C) $660 D) $570 20. The cost of goods sold for the year (in thousands of dollars) was: A) $680 B) $540 C) $640 D) $730 21. The net operating income for the year (in thousands of dollars) was: A) $180 B) $170 C) $390 D) $190

22. Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to: A) understate the predetermined overhead rate. B) overstate the predetermined overhead rate. C) have no effect on the predetermined overhead rate. D) cannot be determined from the information given. 23. Which of the following entries would record correctly the application of overhead cost? A B C D ) W ) M ) M ) W o A a A a W o M r k c n u c n u o r k a i n. c o f a c o f a r k i n. n u . . u c u c P. . .r . o . . c . . e . .s . s. . X. . . X. . . X. . . . . . . . . . n . t. s. . . P . . a. . y . . a . . b . . l . e . X. . . X. . . X t u . .r . i . n . . g . . . O. . X. v . . eX. . r . Xh . . e . . a d n . t. s. . . P . . a. . y . . a . . b . . l . e . X. . . X. . . X t u . .r . i . n . . g . . . O. . X. v . . eX. . r . Xh . . e . . a d i .n . . .P . . r . o . . c . . e . .s . s. . . . X. . . X . . . X . . . P. . .r . o . . c . . e . .s . s. . X. . . X. . . X. . . . . . . . . . f a c t u . r. .i . n . . g . . . O . . v X e Xr h X e a d

A) Item A B) Item B C) Item C D) Item D

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24. The operations of Kalispell Company resulted in overapplied overhead for the month just completed. Which of the following journal entries can be correct if Kalispell allocates under- or overapplied overhead among accounts? A B C ) C ) M ) W F ) M o M a C o i n C M a W F C s t G. . . o . . o . . d . . s . . .S . .. o . .Xl . d . X . . X. . . . . . . . . . . . a n u f a c t u . r. . i . n . . g . . . O . . . v . .X . r Xh e X a d e n u f a c t u . .r . i . n . . g . . . O. . . v X. . e . X. r . h . X. e . . a . .d . . o s t o f G. . . o. . o. . d. . s. . . S . . o . . l . dX. . . X. . . X. r k i n. . . P. . .r . o . . c . . e . .s .. s.. . . ..X . . X . . X. . . . . . . . . . i s h e. . d . . . G. . . o . . o . . d . .. s . . . . .X . . X. . . X. . . . . . . . o s t o f G. . . o. . o. . d. . s. . . S . . o . . l . dX. . . X. . . X. a n u f a c t u . r. . i . n . . g . . . O . . . v . .X . r Xh e X a d e n u f a c t u . .r . i . n . . g . . . O. . . v X. . e . X. r . h . X. e . . a . .d . . o r k i .n . . .P . . r . o. . c . . e . .s . s. . . . . X. . . X. . . X. . . . i n i s h e . . d . . . G . . . o . . o . . d . . s . . . . . .X . . .X . . X . . . . . o s t o f G. . . o. . o. . d. . s. . . S . . o . . l . dX. . . X. . . X. o f

D

A) Item A B) Item B C) Item C D) Item D

25. Which of the following entries would record correctly the monthly salaries earned by the top management of a manufacturing company? A B C D ) M ) S ) W ) S a S a l S o S a l S u f a l a a r i e a l a r k i a l a a r i e a l a n a r .s r n. r s r i . i . i c t u. e s . E. . .x e s . P . .r . e s a n i e s. . . r . i . n . . g. a n d. . .p . .e . n. a n d. . o. . c. .e . a n d. d . . .W . . . E . . x. . p. . . O. . . v . X . e . . X . h. .Xe . . a . r . W . . . a . .g . .e . s. X . P X . . .s. .. e.. .. .. X.. .. .. X.. . . X . . . . W . . . a . .g . .e . s. X . P X . .s .. s.. .. .. .. ..X .. .. ..X . . X . . . . W . . . a . .g . .e . s. X . P X . . a. . g . . e . X . s . . XP. . a.X . y. . . e. . n. . s . . e . . . . X. . . X . .d . . a Xy . . . a Xy . . . a Xy a. . b . . .X . . . a . . a . . a l . . . b b b e . . . l e l e l e

A) Item A B) Item B C) Item C D) Item D

26. The journal entry to record applying overhead during the production process is: A B C D ) M ) F ) M ) W a W i n M a F o M n u f a c t u . . r . i . n. . g. . . O. . . v . .. e. . . . r X.. h. . . Xe . . a . X .d . . . . . . . . . o r k I . n . . . P . . r . o. . c. . e . . s .. . s. . . .. .. . . . . . . . . .X . . X . . X . . . . . i s h e. . d. . . G. . . o . . o . . d . .. s.. .. .. .. .. .. .. .. X.. .. .. X.. .. .. X. . . . .. .. . a n u f a c t u . r. . i . n . . g . . . O . . . v . . e . .r . hX. . e . X .a . d. X . . . . n u f a c t u . . r . i . n. . g. . . O. . . v . .. e. . . . r X.. h. . . Xe . . a . X .d . . . . . . . . . i n i s h e . . d . . . G . . . o . . o . . d . .. s . . . . . . . . . . . . . . . . . . X. . . X . . . X . . . r k I .n . . .P . . r . o. . c. . e . . s .. .s. .. .. .. .. . . . . X. .. . . X. .. . . X. . . . . . . . . . . a n u f a c t u . r. . i . n . . g . . . O . . . v . . e . .r . hX. . e . X .a . d. X . . . .

A) Item A B) Item B C) Item C D) Item D 27. When manufacturing overhead is applied to production, it is added to: A) the Cost of Goods Sold account. B) the Raw Materials account. C) the Work in Process account. D) the Finished Goods inventory account. 28. Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs: A) started in process during the period. B) in process during the period. C) completed and sold during the period. D) completed during the period.

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29. Blackwood Co. uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The predetermined overhead rates for the year are 200% for Department A and 50% for Department B. Job 123, started and completed during the year, was charged with the following costs: D D M D e p D . eA p t . B t i r e c t . m. . . a . . t . e . . r . i . a. . l $. s . 2. . 5. . , . 0.$ . 0.5 . 0., .0 . .0 . .0 i r e c . .t . . l . a . . b . .o . . r . . . . . . . ?. . . . . $ . .3 . .0 . ., .0 . .0 0 a n u f a c t u . . r . i . n. . g. .$ . o.4 . v.0 . e., .0r . h?0 e0 a d

The total manufacturing costs associated with Job 123 should be: A) $135,000 B) $180,000 C) $195,000 D) $240,000 Source: CPA, adapted 30. At the beginning of the year, manufacturing overhead for the year was estimated to be $477,590. At the end of the year, actual direct labor-hours for the year were 29,000 hours, the actual manufacturing overhead for the year was $472,590, and manufacturing overhead for the year was overapplied by $110. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: A) 29,300 direct labor-hours B) 28,987 direct labor-hours C) 28,993 direct labor-hours D) 29,000 direct labor-hours

Answer Key1. A 2. C 3. B 4. C 5. A 6. A 7. B 8. C 9. A 10. C 11. B 12. B 13. D 14. A 15. A 16. B 17. A 18. B 19. A 20. B 21. A 22. B 23. D 24. D 25. B 26. D

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27. C 28. D 29. A 30.Q A

After careful planning, Jammu Manufacturing Corporation has decided to switch to a just-in-time inventory system. At the beginning of this switch, Jammu has 30 units of product in inventory. Jammu has 2,000 labor hours available in the first month of this switch. These hours could (Wort produce 500 units of product. Customer demand for this first month is 400 units. If just-in-time h 2 principles are correctly followed, how many units should Jammu plan to produce in the first points month of the switch? ) 370 Under This is a correct answer a joborder 400 costin g syste 430 m, the dollar 470 amou nt transf Points earned on this question: 2 erred Question 2 (Worth 2 points) from Work Management accounting focuses primarily on providing data for: in Proce ss to internal uses by managers. Finish This is a correct answer ed Goods external uses by stockholders and creditors. is the sum of the external uses by the Internal Revenue Code. costs charg external uses by the Securities and Exchange Commission. ed to all Points earned on this question: 2 jobs:

uest ion 2

Question 3 (Worth 2 points) st arted The costs of staffing and operating the accounting department at Central Hospital would be in considered by the Department of Surgery to be: proce

ss direct costs. during the period indirect costs. . This is a correct answer in incremental costs. proce ss opportunity costs. during the Points earned on this question: 2 period . Question 4 (Worth 2 points) c The following costs were incurred in March: omple ted and sold during the period . Prime costs during the month totaled: c $63,000 omple This is a correct answer ted durin $107,000 g the perio d. $38,000 This is a $77,000 corre ct Points earned on this question: 2 answ er Question 5 (Worth 2 points) Point Using the following data for March, calculate the cost of goods manufactured: s earne d on this questi on: 0 The cost of goods manufactured was:

Que stio

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n3

$74,000 (Wort This is a correct answer h2 points $86,000 ) Wall Comp any uses a predet ermin ed overh ead rate based on direct labor hours to apply manuf acturi ng overh ead to jobs. The comp any's estima ted costs for the next year are: $76,000 $75,000 Points earned on this question: 2

Question 5 (Multiple Choice Worth 2 points)Using the following data for March, calculate the cost of goods manufactured:

The cost of goods manufactured was: $74,000 $86,000 $76,000 $75,000

Quiz 2

Question 1 (Worth 2 points)Johnson Company has provided the following data for the first five months of the year:

Direct materi als-$3,00 0

Month Machine Hours Lubrication Cost

January Direct 120 labor-- $750$20,0 00

February Depre 160 ciation $800on factor y equip ment-$6,00 0 Rent on factor y-$12,0 00

March 200 $870 April 150 $790

May 170 Sales $840salarie s-$29,0 00 Using the high-low method of analysis, the estimated variable lubrication cost per machine hour Factor is closest to: y utilitie $1.25 s-$15,0 $0.67 00 Indire $1.50 ct This is a correct answer labor-$6,00 $1.40 0 Points earned on this question: 2

It is estima ted that 10,00 0 direct labor hours will be worke d during the

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year. The predet ermin ed overh ead rate will be:

$3.90 This is a correc t answe r

$5.90

$6.80

$9.10 Point s earne d on this questi on: 2

Que stio n4(Wort h2 points ) Crick Corpo ration uses

direct laborhours in its predet ermin ed overh ead rate. At the begin ning of the year, the estima ted direct laborhours were 14,40 0 hours and the total estima ted manuf acturi ng overh ead was $355, 680. At the end of the year, actual direct laborhours for the year were 15,20 0

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hours and the actual manuf acturi ng overh ead for the year was $350, 680. Overh ead at the end of the year was:

$24,7 60 under applie d

$24,7 60 overa pplied This is a correc t answe r

$19,7 60 under applie d

$19,7

60 overa pplied Point s earne d on this questi on: 2

Que stio n5(Wort h2 points ) In the stand ard cost formul aY= a+ bX, what does the "X" repres ent? to tal fixed cost v ariabl e cost per unit u nits of activit

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y This is a correc t answe r to tal cost Point s earne d on this questi on: 2

Que stio n1(Multi ple Choic e Worth 3 points ) Dillon Comp any applie s manuf acturi ng overh ead to jobs using a predet ermin ed overh

ead rate of 75% of direct labor cost. Any under or overa pplied overh ead cost is closed out to Cost of Goods Sold at the end of the month . During May, the followi ng transa ctions were record ed by the comp any:

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The balanc e on May 1 in the Raw Materi als invent ory accou nt was:

$11,0 00

$5,00 0

$7,00 0

$9,00 0

Que stio n2(Multi

ple Choic e Worth 3 points ) Sarge nt Comp any applie s overh ead cost to jobs on the basis of 80 perce nt of direct labor cost. If Job 210 shows $10,0 00 of manuf acturi ng overh ead cost applie d, how much was the direct labor cost on the job?

$12,5 00

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$11,0 00

$8,00 0

$10,0 00

Que stio n3(Multi ple Choic e Worth 3 points ) At the begin ning of the year, manuf acturi ng overh ead for the year was estima ted to be $477, 590. At the end of the year, actual direct labor-

hours for the year were 29,00 0 hours, the actual manuf acturi ng overh ead for the year was $472, 590, and manuf acturi ng overh ead for the year was overa pplied by $110. If the predet ermin ed overh ead rate is based on direct laborhours, then the estima ted direct laborhours

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at the begin ning of the year used in the predet ermin ed overh ead rate must have been: 2 9,300 direct laborhours 2 8,987 direct laborhours 2 8,993 direct laborhours 2 9,000 direct laborhours

Que stio n4(Multi ple Choic e

Worth 3 points ) If a comp any applie s overh ead to produ ction on the basis of a predet ermin ed rate, a debit balanc e in the Manuf acturi ng Overh ead accou nt at the end of the period mean s that: a ctual overh ead cost was greate r than the amou nt charg

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ed to produ ction. a ctual overh ead cost was less than the amou nt of direct labor cost. m ore overh ead cost has been charg ed to produ ction than has been charg ed to finishe d goods during the period . a ctual overh ead cost was less

than the amou nt charg ed to produ ction.

Que stio n5(Multi ple Choic e Worth 3 points ) Serenj e Manuf acturi ng Comp any produ ces name plates and uses a joborder cost syste m. The followi ng amou nts relate to name plate produ ction

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for the month of June:

Serenj e applie s overh ead at a predet ermin ed overh ead rate of 60% of direct materi al cost. At the end of June, only one job was in Work in Proce ss invent ory. This job had been charg ed with $150 of

direct materi al cost. What is the direct labor cost assign ed to this job?

$100

$160

$225

$530

Que stio n6(Multi ple Choic e Worth 3 points ) Overa pplied overh ead mean s that: th e applie d

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overh ead cost was less than the actual overh ead cost. th e applie d overh ead cost was greate r than the actual overh ead cost. th e estima ted overh ead cost was less than the actual overh ead cost. th e estima ted overh ead

cost was less than the applie d overh ead cost.

Que stio n7(Multi ple Choic e Worth 3 points ) Echo Corpo ration uses a joborder costin g syste m and applie s overh ead to jobs using a predet ermin ed overh ead rate. During the year the

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comp any's Finish ed Goods invent ory accou nt was debite d for $360, 000 and credit ed for $338, 800. The endin g balanc e in the Finish ed Goods invent ory accou nt was $36,6 00. At the end of the year, manuf acturi ng overh ead was overa pplied by $15,9 00. The balanc e in

the Finish ed Goods invent ory accou nt at the begin ning of the year was:

$15,9 00

$15,4 00

$21,2 00

$36,6 00

Que stio n8(Multi ple Choic e Worth 3 points ) At the begin ning of the year, manuf

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acturi ng overh ead for the year was estima ted to be $670, 700. At the end of the year, actual direct laborhours for the year were 36,20 0 hours, the actual manuf acturi ng overh ead for the year was $665, 700, and manuf acturi ng overh ead for the year was overa pplied by $22,1

00. If the predet ermin ed overh ead rate is based on direct laborhours, then the estima ted direct laborhours at the begin ning of the year used in the predet ermin ed overh ead rate must have been: 3 5,037 direct laborhours 3 5,300 direct laborhours 3

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6,200 direct laborhours 3 3,874 direct laborhours

Que stio n9(Multi ple Choic e Worth 3 points ) Direct materi al cost is a:

It em A It em B It em C It em D

Que

stio n 10(Multi ple Choic e Worth 3 points ) Direct labor cost is a part of:

It em A It em B It em C It em D

Que stio n 11(Multi ple Choic e Worth 3 points ) Which

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of the followi ng types of entitie s would be most likely to use a proce ss costin g syste m? a furnitu re manuf acture r a law firm a comm ercial aircraf t manuf acture r a utility produ cing natura l gas

Que stio

n 12(Multi ple Choic e Worth 3 points ) Data for Cost A and Cost B are as follow s:

Which of the above best descri bes the behavi or of Costs A and B?

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C ost A is fixed, Cost B is variabl e. C ost A is variabl e, Cost B is fixed. B oth Cost A and Cost B are variabl e. B oth Cost A and Cost B are fixed.

Que stio n 13(Multi ple Choic e Worth 3 points ) At a

sales level of $365, 000, Lewis Comp any's gross margi n is $20,0 00 less than its contri bution margi n, its net operat ing incom e is $70,0 00, and its selling and admini strativ e expen ses total $130, 000 At this sales level, its contri bution margi n would be:

$295,

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000

$180, 000

$220, 000

$200, 000

Que stio n 14(Multi ple Choic e Worth 3 points ) The followi ng data pertai ns to activit y and maint enanc e costs for two recent years:

If the highlow

metho d is used to separ ate fixed and variabl e comp onent s of the cost, which of the followi ng state ments is correc t? T he variabl e cost is $0.70 per unit of activit y T he fixed cost is $2,05 0 T he variabl e cost is $2.50 per unit of

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activit y T he fixed cost is $1,80 0

Que stio n 15(Multi ple Choic e Worth 3 points ) The followi ng data relate to two levels of activit y at an outpatien t clinic in a hospit al:

The best estima te of the variabl e

gener al overh ead cost per patien t-visit is closes t to:

$15.5 0

$44.4 4

$59.9 4

$50.2 8

Que stio n 16(Multi ple Choic e Worth 3 points ) Aable Comp any's manuf acturi ng overh ead is 20% of its

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total conve rsion costs. If direct labor is $45,0 00 and if direct materi als are $53,0 00, the manuf acturi ng overh ead is:

$11,2 50

$13,2 50

$180, 000

$24,5 00

Que stio n 17(Multi ple Choic e Worth 3

points ) Abair Comp any's manuf acturi ng overh ead is 20% of its total conve rsion costs. If direct labor is $38,0 00 and if direct materi als are $35,0 00, the manuf acturi ng overh ead is:

$18,2 50

$9,50 0

$8,75 0

$152,

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000

Que stio n 18(Multi ple Choic e Worth 3 points ) Which of the followi ng is not correc t when referri ng to fixed costs? W hether a cost is commi tted or discret ionary will depen d in large part on mana geme nt's strate gy. Di scretio nary

fixed costs arise from annua l decisi ons by mana geme nt. Fi xed costs remai n consta nt in total throug hout the releva nt range. C ommit ted fixed costs can often be reduc ed to zero for short period s of time withou t seriou sly impairi ng the long-

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run goals of the comp any.

Que stio n 19(Multi ple Choic e Worth 3 points ) Discre tionar y fixed costs: c annot be chang ed since they are fixed. h ave a longterm planni ng horizo n, gener ally enco mpass ing many years.

re spons es 1 and 2 are both correc t. n one of these.

Que stio n 20(Multi ple Choic e Worth 3 points ) Which of the followi ng would usuall y be consid ered a discret ionary fixed cost for a financi al planni ng comp any? th e cost of the

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annua l emplo yee picnic pr operty taxes on its corpor ate office buildin g th e cost of intern ships for select ed colleg e senior s b oth a and c above

Que stio n 21(Multi ple Choic e Worth 3 points ) Since Anyti me

Pizza is open 24 hours a day, its pizza oven is consta ntly on and is, theref ore, alway s using natura l gas. Howe ver, when there is no pizza in the oven, the oven autom aticall y lowers its flame and reduc es its natura l gas usage by 70%. The cost of natura l gas would best be

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descri bed as a: fi xed cost. m ixed cost. st epvariabl e cost. tr ue variabl e cost.

Que stio n 22(Multi ple Choic e Worth 3 points ) Which of the followi ng state ments about proce ss costin g syste m is incorr

ect? In a proce ss costin g syste m, each proce ssing depart ment has a work in proce ss accou nt. In a proce ss costin g syste m, a produ ction report is prepar ed for each proce ssing depart ment. In a proce ss costin g syste

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m, units of produ ct are essent ially identic al. In a proce ss costin g syste m, materi als costs are traced to individ ual jobs.

Que stio n 23(Multi ple Choic e Worth 3 points ) Which of the followi ng is unlikel y to be classifi ed as a fixed

cost with respe ct to the numb er of units produ ced and sold? P ropert y taxes on a headq uarter s buildin g. L egal depart ment salarie s. C ost of leasin g the comp any's mainfr ame comp uter. P roduct ion suppli es.

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stio n 24(Multi ple Choic e Worth 3 points ) In descri bing the cost formul a equati on, Y =a+ bX, which of the followi ng is correc t: " Y" is the indep enden t variabl e. "a " is the variabl e cost per unit. "a " and "b" are

valid for all levels of activit y. in the highlow metho d, "b" equals the chang e in cost divide d by the chang e in activit y.

Que stio n 25(Multi ple Choic e Worth 3 points ) Carac o Corpo ration has provid ed the followi ng produ ction and

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avera ge cost data for two levels of month ly produ ction volum e. The comp any produ ces a single produ ct.

The best estima te of the total cost to manuf acture 7,300 units is closes t to:

$1,48 7,375

$1,44 8,320

$1,50 0,750

$1,52 6,430

Que stio n 26(Multi ple Choic e Worth 3 points ) Iaci Corpo ration is a whole saler that sells a single produ ct. Mana geme nt has provid ed the followi ng cost data for two levels of month ly sales volum e. The comp any

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sells the produ ct for $133. 60 per unit.

The best estima te of the total contri bution margi n when 4,300 units are sold is:

$112, 230

$162, 110

$28,3 80

$45,1 50

Que stio n 27(Multi

ple Choic e Worth 3 points ) Given the cost formul aY= $12,5 00 + $5.00 X, total cost for an activit y level of 4,000 units would be:

$20,0 00

$12,5 00

$16,0 00

$32,5 00

Que stio n 28(Multi ple

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Choic e Worth 3 points ) Given the cost formul aY= $13,0 00 + $7.00 X, the total cost for an activit y level of 3,000 units would be:

$13,0 00

$21,0 00

$18,0 00

$34,0 00

Que stio n 29(Multi ple Choic

e Worth 3 points ) Comp ared to financi al accou nting, mana gerial accou nting places more emph asis on: th e flexibili ty of inform ation. th e precisi on of inform ation. th e timelin ess of inform ation. re spons es 1 and 3 are both

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correc t.

Que stio n 30(Multi ple Choic e Worth 3 points ) The journa l entry to record applyi ng overh ead during the produ ction proce ss is:

It em A It em B It em C

It em D

Que stio n 31(Multi ple Choic e Worth 3 points ) Last month a manuf acturi ng comp any had the followi ng operat ing results :

What was the cost of goods manuf acture d for the month ?

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$371, 000

$459, 000

$383, 000

$377, 000

Que stio n 32(Multi ple Choic e Worth 3 points ) The followi ng data (in thous ands of dollars ) have been taken from the accou nting record s of Karsto ne Corpo ration for the

just compl eted year.

The net operat ing incom e for the year (in thous ands of dollars ) was:

$260

$30

$90 ($ 30)

Que stio n 33Page 71

(Multi ple Choic e Worth 3 points ) Last month a manuf acturi ng comp any had the followi ng operat ing results :

What was the cost of goods manuf acture d for the month ?

$375, 000

$414, 000

$399, 000

$351, 000

Que stio n 34(Multi ple Choic e Worth 3 points ) A manuf acture r produ ces water pump s. Each water pump contai ns a small valve that costs $5. During May, 600 valves were drawn from the supply room and

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install ed in water pump s in the produ ction proce ss. Eighty perce nt of these units were compl eted and transf erred into finishe d goods wareh ouses. Of the units compl eted, thirty perce nt were still unsold at the end of the month . There were no begin ning invent ories. The

cost of valves in work in proce ss at the end of May would be:

$2,40 0

$3,00 0

$600

$720

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