Costs that do not increase or decrease due to a special order are never considered incremental costs for the special order decision



1. Costs that do not increase or decrease due to a special order are never considered incremental costs for the special order decision. .....a.True** .....b.False .....
2. Manufacturing costs include direct material, direct labor, and manufacturing overhead. .....a.True .....b.False .....
3. One goal of just-in-time systems is to minimize inventory levels. .....a.True .....b.False .....
4. Marco Diner produced and sold 2,000 bagels last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?.....a.Total fixed costs will increase. .....b.Total fixed costs will decrease. .....c.Fixed cost per unit will increase. .....d.Fixed cost per unit will decrease. .....
5. Shula's 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $14.00 each. How much is the budgeted variable cost per unit? (Points: 5) $5.80 $7.74 $6.68 $3.25
6. Breezes Curacao has 200 rooms. Each room rents at $130 per night and variable costs total $42 per room per night of occupancy. Fixed costs total $18,700 per month. If Breezes is able to increase occupancy from 70% to 80% by how much will total costs increase per day during the month of June? .....a.$840 .....b.$2,710 .....c.$1,870 .....d.$1,760 .....
7. Which of the following costs is part of manufacturing overhead? .....a.Indirect labor .....b.Direct labor .....c.Salaries for the accounting personnel .....d.Wages for the janitorial staff for the sales offices .....
8. A job-order costing system is likely to be used by a.....a.soft-drink bottler. .....b.breakfast cereal manufacturer. .....c.paint manufacturer. .....d.caterer. .....
9. Wingfield Company budgeted 121,000 direct labor hours and incurred 125,000 direct labor hours. It incurred $720,000 of overhead and estimated overhead was $726,000. What was the predetermined overhead rate? .....a.$5.80 .....b.$6.00 .....c.$5.60 .....d.$5.76 .....
10. If a company has zero beginning inventory and zero ending inventory (is completely just-in-time), then which of the following is true? .....a.Cost of goods sold will equal cost of goods manufactured .....b.Cost of goods sold will be zero .....c.Cost of goods manufactured will be zero .....d.All of the above .....
11. A significant disadvantage of a process costing system is that it requires the use of actual overhead costs rather than predetermined overhead rates. .....a.True .....b.False .....

12. Which of the following costs is not added to the Work in Process account in a process costing system? .....a.Manufacturing overhead .....b.Direct materials .....c.Direct labor .....d.Advertising .....
13. Department Alpha had no beginning inventory. The department added direct materials of $100,000 and conversion costs of $150,000 during the month of July. Materials are added at the beginning of the process and conversion costs are added evenly throughout the process in this department. During the period, 40,000 units were completed. At the end of the period 40,000 units remained which were 10% complete. What is the cost per equivalent unit of materials and conversion costs, respectively in July? .....a.$3.41 and 4.66 .....b.$1.25 and $3.41 .....c.$1.25 and $1.88 .....d.$1.88 and $3.41 .....
14. Ending inventory in the assembly department consists of 700 units which are 50% complete with respect to conversion costs. The beginning inventory consisted of 2,000 units. During the month, 6,000 units were started. How many equivalent units will be used in the cost per equivalent unit calculation for conversion costs? .....a.7,650 .....b.7,300 .....c.8,000 .....d.6,700 .....
15. In the cutting department, all the materials are added at the beginning of the process and conversion costs are added evenly during the processing. During the first month of operations, the cutting department transferred 50,000 units to the sewing department. Ending inventory consisted of 2,800 units which were 35% complete with respect to conversion costs. What are the equivalent units for materials and for conversion costs, respectively? .....a.50,000 and 50,980 .....b.52,800 and 50,980 .....c.52,800 and 52,800 .....d.50,000 and 52,800 .....
16. The account analysis method is subjective in that different managers viewing the same set of facts may reach different conclusions regarding which costs are fixed and which costs are variable. .....a.True .....b.False .....
17. If the contribution margin ratio is 40%, it means that every $1.00 of sales will contribute $0.40 to covering fixed costs and generating a profit. .....a.True .....b.False .....
18. Income statements of manufacturing firms prepared for external purposes use variable costing. .....a.True .....b.False .....
19. Step costs.....a.are the same amount per unit for each range of volume. .....b.are fixed for a range of volume but increase to a higher level when the upper bound of the range is exceeded. .....c.are a different total amount at every level of activity. .....d.contain both a variable cost element and a fixed cost element. .....
20. When considering a process that involves a resource constraint, the optimal decision .....a.minimizes the break-even point. .....b.maximizes the contribution margin per unit of the constraint. .....c.minimizes the contribution margin per unit of output. .....d.minimizes total fixed costs. .....
21. In full costing, when does fixed manufacturing overhead become an expense? .....a.In the period when other fixed costs are at the highest level. .....b.In the period when the product is sold. .....c.In the period when the expense is incurred. .....d.When the controller decides that the expense should be recognized......
22. Which is most consistent with cost-volume-profit analysis? .....a.variable costing......b.full costing. .....c.they are equally useful. .....d.neither is consistent with C-V-P. .....
23. Michael Vick has written a self improvement book that has the following cost characteristics: Assume that the current sales level is 30,000 units. What impact would a 30% increase in sales have on profit?
Selling price $16.00 per book
Variable cost per unit
Production $4.00
Selling & Administrative 2.00
Fixed costs:
Production $88,000 per year
Selling & administrative 18,000 per year

Assume that the current sales level is 30,000 units. What impact would a 30% increase in sales have on profit?

a. Profit would increase 30%.
b. Profit would increase 100%.
c. Profit would increase $90,000.
d. Profit would increase $44,000.

24. The Cider Company experienced the following costs in 2011:
Direct materials $2.65/unit
Direct labor $1.80/unit
Variable manufacturing overhead $3.25/unit
Variable selling $1.15/unit
Fixed manufacturing overhead $94,000
Fixed selling $35,000
Fixed administrative $10,000

During the year the company manufactured 47,000 units and sold 40,000 units. How much is the average unit product cost using full costing?

a. $7.70
b. $9.70
c. $8.85
d. $10.85

25. T-Shirt Man is a direct marketer of popular t-shirts. Following is information about its revenue and cost structure:
Selling Price: $15.00/t-shirt
Variable Costs:
Production (manufacturing costs) $3.00/t-shirt
Selling & Administrative (non-mfg costs) $1.00/t-shirt
Fixed Costs:
Production (mfg costs) $1,000,000/year
Selling & Administration (non-mfg costs) $2,000,000/year

Assume 400,000 t-shirts are produced and 350,000 are sold in 2011. What is income under full costing?

a. $975,000
b. $1,400,000
c. $850,000
d. $2,250,000

26. Allocating actual service department costs allows the service departments to pass on the costs of inefficiencies to the production departments. .....a.True .....b.False .....
27. A major problem with cost-plus contracts is that they .....a.are not acceptable under GAAP. .....b.cause the supplier to take significant financial risks. .....c.require the supplier to use variable costing. .....d.create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract......
28. A grouping of individual costs whose total is allocated using one allocation base is called a .....a.cost objective. .....b.cost pool. .....c.direct cost......d.sunk cost. .....
29. When activity based costing is implemented, the initial outcome is normally that: .....a.the cost of all products will be higher. .....b.The cost of all products will be lower .....c.The cost of low volume products will be higher and the cost of high volume products will be lower. .....d.The cost of low volume products will be lower and the cost of high volume products will be higher. .....
30. The traditional approach to cost allocation.....a.tends to over-cost high volume core products. .....b.usually requires more cost pools than ABC. .....c.attempts to identify the activities that cause costs. .....d.produces more accurate costs than any other method. .....
31. The proper way to analyze the decision to drop a product line is to compare sunk costs to incremental costs. .....a.True .....b.False .....
32. Opportunity costs represent the benefits foregone by selecting one alternative over another. .....a.True .....b.False .....
33. A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units. Which of the following is not relevant to the decision? .....a.The selling price of the completed units. .....b.The costs incurred to process the units to this point. .....c.The selling price of the partially completed units. .....d.The costs that will be incurred to finish the units. .....
34. BigByte Company has 12 obsolete computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold "as is" for $9,000. What is the net advantage or disadvantage of reworking the computers?.....a.$6,300 advantage .....b.$1,200 disadvantage .....c.$5,400 disadvantage .....d.$3,000 advantage .....
35. In theory of constraints, to "break the binding constraint" means to.....a.improve the process that was the binding constraint so that some other process is now the binding constraint. .....b.improve all processes simultaneously. .....c.make sure that the items made in the constrained process yield the highest contribution margin. .....d.All of the above. .....
36. Depreciation itself is not a cash flow, but it reduces the amount of taxes that a company must pay. .....a.True .....b.False .....
37. Suppose you face the prospect of receiving $500 per year for the next five years plus an extra $800 payment at the end of six years. Determine how much this prospect is worth today if the required rate of return is 12 percent. .....a.$1,802 .....b.$2,208 .....c.$2,355 .....d.$2,602 .....
38. Using an interest rate of 14%, how much is the present value of $800,000 to be received in 15 years? .....a.$112,080 .....b.$58,481 .....c.$533,334 .....d.$746,666 .....
39. An investment of $100,000 promises returns of $40,000 per year for each of the next three years. If taxes are ignored and the required rate of return is 14%, what is the net present value of the project? .....a.$92,864 .....b.$20,000 .....c.($7,136) .....d.($19,000) .....
40. An investment of $700,000 is expected to generate the following cash flows:
Year 1 $200,000
Year 2 $200,000
Year 3 $100,000
Year4 $200,000
Year 5 $100,000
What is the investment's payback period?

a. 7 years
b. 5 years
c. 3 years
d. 4 years

41. If the number of units produced equals the number of units sold, the number of units in ending inventory will equal the number of units in beginning inventory. .....a.True .....b.False .....
42. Actual prices or quantities greater than standard are considered favorable. .....a.True .....b.False .....
43. The overhead volume variance is a signal that the actual quantity produced was not equal to the quantity anticipated when the standard overhead rate was set. .....a.True .....b.False .....
44. Realm Company's budget indicates that 16,000 units are to be sold during September. If the company has 4,000 units on hand at the beginning of the period and plan to have 6,000 units on hand at the end of the period at the end of the month, how many units should be produced during the month? .....a.22,000 .....b.18,000 .....c.14,000 .....d.16,000 .....
45. If budgeted profit is less than the company's goals, the company should try to .....a.increase revenues and decrease expenses. .....b.incur more fixed costs and less variable costs. .....c.slow down cash receipts. d.....d.eclare bankruptcy. .....
46. Which of the following does not appear on the budgeted income statement? .....a.Cost of goods sold. .....b.Sales. .....c.Selling and administrative expenses. .....d.Accounts receivable. .....
47. Which of the following is not used in deciding how many units to produce in a period? .....a.The desired number of units in ending inventory. .....b.The expected sales in units. .....c.The number of units in beginning inventory. .....d.The number of units of raw material in inventory. .....
48. The sales budget is based on assumptions about the .....a.number of units to be sold and selling price per unit. .....b.timing of cash receipts. .....c.contribution margin per unit and the number of units to be sold. .....d.costs of the units produced and the total fixed costs. .....
49. The total variance for manufacturing overhead is .....a.the difference between the overhead applied to inventory at standard and the actual overhead costs. .....b.the difference between fixed overhead and variable overhead. .....c.less than the labor efficiency variance. .....d.only calculated if it is exceptional. .....
50. When the manufacturing overhead variance is analyzed, it is usually decomposed into the .....a.overhead volume variance and controllable overhead variance. .....b.overhead rate variance and overhead efficiency variance. .....c.fixed overhead variance and variable overhead variance. .....d.controllable overhead variance and uncontrollable overhead variance. .....
51. The Clarkson Company's Cargo Division is currently operating at 100% of capacity (capacity is 100,000 units). Normal selling price is $20.00 per unit. At current operating levels, fixed costs are $6 per unit and variable costs are $9 per unit. Another division of Clarkson Company would like to buy from the Cargo Division. If this sale is made, $2 per unit in variable selling and administrative costs would be saved. What is the lowest transfer price the Cargo Division should accept? .....a.$13.00 .....b.$18.00 .....c.$15.00 .....d.$7.00 .....
52. A transfer price is the price that is used to value transfers of goods and services .....a.from one subunit of a company to another subunit in the company. .....b.from Work in Process Inventory to Finished Goods Inventory in a standard costing system. .....c.from a subunit of the company to a wholesaler or retailer. .....D. back to one of the company's suppliers. .....
53. If a manager is evaluated using the return on investment, the manager may be reluctant to invest in new equipment because the investment.....a.may increase net income. .....b.will decrease the level of investment. .....c.may decrease the return on investment. .....d.is likely to have a positive net present value. .....
54. Return on investment can be improved by
.....a.increasing the profit margin.
.....b.generating more sales for each dollar invested.
c.Both A and B are correct.
d.Neither A nor B is correct.
55. Kendrick Company reported the following results for August 2011:

Sales $7,000,000
Investment turnover 1.25
Return on investment 30%

Given this information, how much is the company's invested capital?
a. $2,100,000
b. $8,750,000
c. $2,333,333
d. $5,600,000

TYPE SOME PART OF QUESTION YOU ARE LOOKING FOR

.

.
acc week