Strayer ACC 499 Unit 10 MCQs
KnowledgeCats
1. Reno Corporation uses a predetermined overhead application rate of $.30 per direct labor hour. During the year it incurred $345,000 dollars of actual overhead, but it planned to incur $360,000 of overhead. The company applied $363,000 of overhead during the year. How many direct labor hours did the company plan to incur?
1,150,000
1,190,000
1,200,000
1,210,000
2. For its most recent fiscal year, a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales. If its fixed costs for the year were $60,000, how much were sales?
$150,000
$200,000
$600,000
can't be determined from the information given
3. At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by _______.
$0.25
$0.10
$0.75
can't be determined from the information given
4. At the end of the last fiscal year, Roberts Company had the following account balances:
Overapplied overhead $ 6,000
Cost of Goods Sold $980,000
Work in Process Inventory $ 38,000
Finished Goods Inventory $ 82,000
If the most common treatment of assigning overapplied overhead were used, the final balance in Cost of Goods Sold is _______.
$974,000
$974,660
$985,340
$986,000
5. Strong Products has no Work in Process or Finished Goods inventories at the close of business on December 31, 20X4. The balances of Strong Products’ accounts as of December 31, 20X4, are as follows:
Cost of goods sold--unadjusted $2,040,000
Selling & administrative expenses 900,000
Sales 3,600,000
Manufacturing overhead control 700,000
Manufacturing overhead applied 648,000
Pretax income for 20X4 is ______.
$608,000
$660,000
$712,000
undeterminable from the information given
6. Long Company transferred 5,500 units to Finished Goods Inventory during September. On September 1, the company had 300 units on hand (40 percent complete as to both material and conversion costs). On June 30, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during September was _______.
5,200
5,380
5,500
6,300
7. Green Company started 9,000 units in February. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units were _______.
500
600
1,500
2,000
8. Taylor Company uses a weighted average process costing system and started 30,000 units this month. Taylor had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?
37,800
40,200
40,800
42,000
9. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours were allowed for actual production, applied fixed overhead is _______.
$33,300
$34,000
$34,500
not determinable without knowing the actual number of units produced
10. A company has estimated its economic order quantity for Part A at 2,400 units for the coming year. If ordering costs are $200 and carrying costs are $.50 per unit per year, what is the estimated total annual usage?
6,000 units
28,800 units
7,200 units
2,400 units
11. Modern management accounting can be characterized by its _______.
flexibility
standardization
complexity
precision
12. Which of the following is not a valid method for determining product cost?
arbitrary assignment
direct measurement
systematic allocation
cost-benefit measurement
13. Cost accounting is necessitated by _______.
the high degree of conversion found in certain businesses
regulatory requirements for manufacturing companies
management's need to be aware of all production activities
management's need for information to be used for planning and controlling activities
14. A long-term plan that fulfills the goals and objectives of an organization is known as a(n) ______.
management style
strategy
mission statement
operational mission
15. The world has essentially become smaller because of _______.
improved technology
trade agreements
better communications systems
all of the above
16. The value chain _______.
reflects the production of goods within an organizational context
is concerned with upstream suppliers, but not downstream customers
results when all non-value-added activities are eliminated from a production process
is the foundation of strategic resource management
17. A managerial accountant who communicates information objectively is exercising which of the following standards?
objectivity
integrity
competence
confidentiality
18. Period costs _______.
are generally expensed in the same period in which they are incurred
are always variable costs
remain unchanged over a given period of time
are associated with the periodic inventory method
19. Which of the following would need to be allocated to a cost object?
direct material
direct labor
direct production costs
indirect production costs
20. Conversion cost does not include _______.
direct labor
direct material
factory depreciation
supervisors' salaries
21. Which of the following is not a reason to use predetermined overhead rates?
to overcome the problems of assigning overhead to diverse types of products
to compensate for fluctuations in monthly overhead costs
to provide a means for assigning overhead during the period rather than at the end of the period
to smooth out the amount of overhead cost assigned to products when monthly production activity differs
22. In the formula y = a + bX, a represents ______.
mixed cost
variable cost
total cost
fixed cost
23. All other things being equal, if actual cost per unit is greater than budgeted cost per unit, variable overhead will be _______.
overapplied
the same as fixed overhead
underapplied
applied to Finished Goods
24. Which of the following could not be used in job order costing?
standards
an average cost per unit for all jobs
normal costing
overhead allocation based on the job's direct labor hours
25. A credit to Work in Process Inventory represents _______.
work still in process
raw material put into production
the application of overhead to production
the transfer of completed items to Finished Goods Inventory
26. Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals _______.
cost of goods manufactured in the year
ending Work in Process Inventory
total manufacturing costs to account for
cost of goods available for sale
27. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that employs a job order costing system?
Work in Process Inventory
Raw Material Inventory
Accounts Payable
Supplies Inventory
28. The source document that records the amount of raw material that has been requested by production is the _______.
job order cost sheet
bill of lading
interoffice memo
material requisition
29. A material requisition form should show all of the following information except _______.
job number
quantity required
unit cost
purchase order number
30. The cost of abnormal continuous losses is _______.
considered a product cost
absorbed by all units in ending inventory and transferred out on an equivalent unit basis
written off as a loss on an equivalent unit basis
absorbed by all units past the inspection point
31. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considered ______.
normal and discrete
normal and continuous
abnormal and discrete
abnormal and continuous
32. A continuous loss _______.
occurs unevenly throughout a process
never occurs during the production process
always occurs at the same place in a production process
occurs evenly throughout the production process
33. A primary purpose of using a standard cost system is _______.
to make things easier for managers in the production facility
to provide a distinct measure of cost control
to minimize the cost per unit of production
b and c are correct
34. Standard costs may be used for _______.
product costing
planning
controlling
all of the above
35. A bill of material does not include _______.
quantity of component inputs
price of component inputs
quality of component inputs
type of product output
36. The sum of the material price variance (calculated at point of purchase) and material quantity variance equals ______.
the total cost variance
the material mix variance
the material yield variance
no meaningful number
37. Which of the following components of production are allocable as joint costs when a single manufacturing process produces several salable products?
direct material, direct labor, and overhead
direct material and direct labor only
direct labor and overhead only
overhead and direct material only
38. While preparing a salad, you remove the core of a head of lettuce. This core would be classified as ______.
defective
shrinkage
waste
scrap
39. All costs that are incurred between the split-off point and the point of sale are known as ________.
sunk costs
incremental separate costs
joint cost
committed costs
40. With respect to fixed costs, CVP analysis assumes total fixed costs _______.
per unit remain constant as volume changes
remain constant from one period to the next
vary directly with volume
remain constant across changes in volume
41. According to CVP analysis, a company could never incur a loss that exceeded its total ______.
variable costs
fixed costs
costs
contribution margin
42. If a firm's net income does not change as its volume changes, the firm('s) _______.
must be in the service industry
must have no fixed costs
sales price must equal $0
sales price must equal its variable costs
43. To compute the break-even point in units, which of the following formulas is used?
FC/CM per unit
FC/CM ratio
CM/CM ratio
(FC+VC)/CM ratio
44. A firm's break-even point in dollars can be found in one calculation using which of the following formulas?
FC/CM per unit
VC/CM
FC/CM ratio
VC/CM ratio
45. Which of the following is the least likely to be a relevant item in deciding whether to replace an old machine?
acquisition cost of the old machine
outlay to be made for the new machine
annual savings to be enjoyed on the new machine
life of the new machine
46. The term incremental cost refers to _______.
the profit foregone by selecting one choice instead of another
the additional cost of producing or selling another product or service
a cost that continues to be incurred in the absence of activity
a cost common to all choices in question and not clearly or feasibly allocable to any of them
47. Key variables that are identified in strategic planning are _______.
normally controllable if they are internal
seldom if ever controllable
normally controllable if they occur in a domestic market
normally uncontrollable if they are internal
48. The master budget usually includes _______.
an operating budget
a capital budget
pro forma financial statements
all of the above
49. It is least likely that a production budget revision would cause a revision in the ______.
capital budget
cash budget
purchases budget
pro forma balance sheet
50. The material purchases budget tells a manager all of the following except the _______.
quantity of material to be purchased each period
quantity of material to be consumed each period
cost of material to be purchased each period
cash payment for material each period
51. Of the following budgets, which one is least likely to be determined by the dictates of top management?
sales
material usage
revenues
general and administrative
52. If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the next month's budgeted sales, budgeted production for January will exceed budgeted sales for January when budgeted _______.
February sales exceed budgeted January sales
January sales exceed budgeted December sales
January sales exceed budgeted February sales
December sales exceed budgeted January sales
53. Depreciation on the production equipment would appear in which of the following budgets?
cash budget
production budget
selling and administrative expense budget
manufacturing overhead budget
54. The budgeted amount of selling and administrative expense for a period can be found in the ______. (Points: 4)
sales budget
cash budget
pro forma income statement
pro forma balance sheet
55. ____ is a "pull" system of production and inventory control. (Points: 4)
EDI
EOQ
JIT
ABC
56. Reducing inventory to the lowest possible levels is a major focus of ______. (Points: 4)
JIT
push inventory systems
EOQ
ABC
57. JIT is a philosophy concerned with ______. (Points: 4)
when to do something
how to do something
where to do something
how much of something should be done
58. Striving for flexibility in the number of products that can be produced in a short period of time is characteristic of _______. (Points: 4)
EOQ systems
push systems in general
JIT
pull systems in general
59. Just-in-time (JIT) inventory systems _______. (Points: 4)
result in a greater number of suppliers for each production process
focus on a "push" type of production system
can only be used with automated production processes
result in inventories being either greatly reduced or eliminated
60. With JIT manufacturing, which of the following costs would be considered a direct product cost? (Points: 4)
insurance on the plant
repair parts for machinery
janitors' salaries
salary of the plant supervisor
61. The term "cell" is used to describe _______. (Points: 4)
a grouping of one or more automated machines within a company
a storage bin for "C" type inventory in an ABC inventory system
files in a CAD/CAM system
a factory's area of conversion activity
62. In a production cell, _______. (Points: 4)
an individual worker may be expected to operate several different machines, do setups, and perform preventive maintenance on the equipment
each worker becomes an expert in the operation of a single piece of equipment
machines are arranged so that similar machines are grouped together
clear separation is maintained between those workers who operate the machinery and those workers who set up and maintain the machinery
63. The process of ____ occurs when equipment is programmed to stop when a certain situation arises. (Points: 4)
throughput
automation
backflushing
information sharing
64. Which of the following responsibility centers may be evaluated on the basis of residual income? (Points: 4)
investment center
revenue center
profit center
cost center
65. The Statement of Cash Flows may be superior to the cash budget as a performance evaluation measure because ______. (Points: 4)
cash flows are shown on the accrual basis on the cash budget
the cash budget does not include capital investments
cash flows are arranged by activity
of all the above reasons
66. If sales and expenses both rise by $100,000 _______. (Points: 4)
residual income will increase
return on investment will increase
return on investment will be unchanged
asset turnover will decrease
67. A primary purpose of a balanced scorecard is to give _______. (Points: 4)
managers a way to judge past performance
stockholders a way to judge current performance
managers a way to forecast future performance
stockholders a way to tie strategy to profitability
68. In a balanced scorecard, measurements should be directly linked to _______. (Points: 4)
organizational strategy and values
the cost management system
current organizational profitability
activity-based management concepts
69. A balanced scorecard _______. (Points: 4)
records the variances between budgeted and actual revenues and expenses
can be used at multiple organizational levels by redefining the categories and measurements
is most concerned with organizational financial solvency and business processes
all of the above
70. On a balanced scorecard, which of the following would be most appropriate to measure production process integrity? (Points: 4)
Rapid time-to-market of new products
Corporate financial profits
Low employee turnover
Decrease in reworked products
- 10 years ago
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