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

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