Cost management

(1)

17.

award: 0 out of 1.00 point

Which of the following perspectives is normally absent in a balanced scorecard?

Learning and innovation/growth.

Internal operations. Financial. → None of these. Customer.

37.

Managerial accounting has changed in recent years because of:

the growth of e-business.

increased global competition. an increased focus on the customer.

→ All of these factors.

the emergence of new industries.

The upper limit on the production of goods and services if everything works perfectly is known as: practical capacity. management capacity. → theoretical capacity. capacity maximization. utilized capacity.

75.

The fixed costs per unit are $15 when a company produces 15,000 units of product. What are the fixed costs per unit when 14,000 units are produced?

(2)

$2.74. $14.00. $15.00. → $16.07. $13.29.

76.

Total costs are $250,000 when 15,000 units are produced; of this amount, variable costs are $76,000. What are the total costs when 21,000 units are produced?

Total costs cannot be calculated based on the information presented. None of these. $350,000. → $280,400. $319,600.

92.

The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds's period costs total:

$375,000. $255,000. $440,000. → $250,000. $185,000.

105.

Which of the following costs is not a component of manufacturing overhead?

Property taxes on the manufacturing plant.

(3)

Indirect materials. Factory utilities. → Factory equipment. Indirect labor.

106.

The accounting records of Diego Company revealed the following costs, among

others:

Calculate the total manufacturing overhead for the company.

→ $149,000.

$442,000. $171,000. $186,000.

some other amount.

123.

Which of the following would likely be a suitable cost driver for the amount of direct

materials used?

The number of employees working in the factory.

→ The number of units produced. The number of machine hours worked. The number of direct labor hours worked. The number of units sold.

(4)

Variable costs are costs that:

remain constant as activity changes.

increase on a per-unit basis as activity increases. vary inversely with changes in activity.

→ vary directly with changes in activity.

decrease on a per-unit basis as activity increases.

127.

As activity increases, unit variable cost:

increases proportionately with activity.

→ remains constant.

decreases proportionately with activity. increases by a fixed amount.

decreases by a fixed amount.

136.

$214,800.

Total costs cannot be calculated based on the information presented. Some other amount.

→ $199,200. $234,000.

141.

Which of the following would not be considered a direct cost with respect to the service department of a new car dealership?

(5)

→ Property taxes paid by the dealership. Salary of the department manager.

Depreciation on new equipment used to analyze engine problems. Repair parts consumed.

153.

A staff assistant at Whitmere Corporation recently determined that the first four units completed in a new manufacturing process took 800 hours to complete, or an average of 200 hours per unit. The assistant also found that when the cumulative output produced doubles, the average labor time declines by 30%. On the basis of this information, how many total hours would Whitmere use if it produces 16 units?

1,120. 98.

An amount other than those listed above. 140. → 1,568.

160.

A forecast of a cost at a particular level of activity is termed: cost analysis. cost behavior. → cost prediction. cost estimation. cost approximation.

167.

A company observed a decrease in the cost per unit. All other things being

equal, which of the following is probably true?

(6)

The company is studying a fixed cost, and total volume has decreased. The company is studying a variable cost, and total volume has increased.

→ The company is studying a fixed cost, and total volume has increased. The company is studying a variable cost, and total volume has decreased. The company is studying a fixed cost, and total volume has remained constant.

176.

DuChien Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?

$153,000. $151,000.

Some other amount not listed above. $150,000. → $152,000.

189.

Property taxes are an example of a(n):

committed variable cost.

→ committed fixed cost. engineered cost.

discretionary variable cost. discretionary fixed cost.

205.

The following data relate to the Lisle Company for May and August of the

current year:

(7)

May and August were the lowest and highest activity levels, and Lisle uses

the high-low method to analyze cost behavior. If maintenance hours are

estimated to be 26,000 hours in October, which of the following statements

is true?

Total maintenance costs will be $1,221,000. Total maintenance costs will be $1,175,000.

→ Total maintenance costs will be $1,193,000. Total maintenance costs will be $1,182,000. Total maintenance costs will be $1,247,000.

The process of encouraging and authorizing workers to take appropriate initiatives to achieve organization goals is commonly known as:

→ employee empowerment.

planning and control.

problem recognition and solution.

decision making.

personnel aggressiveness.

Which of the following choices correctly depicts whether McDonald's, the University of Wisconsin, and Apple Inc. would have a need for managerial accounting?

(8)

Choice B

Choice E

Choice D

Choice A

→ Choice C

Which of the following employees at Starbucks would likely be considered as holding a staff position?

The company's chief financial officer (CFO).

The manager of a store located in Kansas City, Missouri.

→ Choices "C" and "D" above.

The company's chief operating officer (COO).

The company's lead, in-house attorney.

A controller is normally involved in:

managing the firm's credit policy.

managing investments.

→ preparing financial statements.

safeguarding assets.

(9)

The accounting records of Brownwood Company revealed the following information: Work-in-process inventory, Jan. 1 $ 65,000 Work-in-process inventory, Dec. 31 56,000 Finished-goods inventory, Jan. 1 132,000 Finished-goods inventory, Dec. 31 165,000 Cost of goods manufactured 761,000

Brownwood's cost of goods sold is:

$794,000.

$785,000.

$737,000.

→ $728,000.

None of these.

Indirect labor is not a component of manufacturing overhead.

True

False

Which of the following inventories would a company ordinarily hold for sale?

Finished goods.

Work in process.

Raw materials and finished goods.

Work in process and finished goods.

(10)

Godfrey Corporation engages in mass customization and direct sales, the latter by accepting customer orders over the Internet. As a result, Godfrey:

E. would likely find choices "A" and "C" to be applicable.

B. would typically have fairly low inventory levels for the amount of sales revenue generated.

A. would probably begin the manufacturing process upon receipt of a customer's order.

→ D. would likely find choices "A" and "B" to be applicable.

C. would typically have fairly high inventory levels for the amount of sales revenue generated.

In a manufacturing company, the cost of goods completed during the period would include which of the following elements?

All of the above.

Beginning finished goods inventory.

Marketing costs.

Depreciation of delivery trucks.

→ Raw materials used.

Total costs cannot be calculated based on the information presented.

→ $199,200.

Some other amount.

$234,000.

(11)

Indirect costs:

can be traced to a cost object.

are always variable costs.

→ cannot be traced to a particular cost object. are not important.

may be indirect with respect to Disney World but direct with respect to one of its major _{components, Epcot Center.}

Bowman, Inc., has only variable costs and fixed costs. A review of the company's records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $1,000,000 and the cost per unit manufactured totaled $14. On the basis of this information, how much cost would the firm anticipate at an activity level of 205,000 units?

$2,832,000.

→ $2,845,000.

Some other amount not listed above.

$2,800,000.

$2,824,000.

The relevant range is that range of activity where a company achieves its maximum efficiency.

True

False

In regression analysis, the variable that is being predicted is known as the independent variable.

True

(12)

The relationship between cost and activity is termed: cost prediction. cost analysis. cost approximation. cost estimation. → cost behavior.

Normal Company pays a sales commission of 4% on each unit sold. If a graph is prepared, with the vertical axis representing per-unit cost and the horizontal axis representing units sold, how would a line that depicts sales commissions be drawn?

As a curvilinear line.

→ As a horizontal line.

As a straight diagonal line, sloping downward to the right.

As a vertical line.

As a straight diagonal line, sloping upward to the right.

Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed overhead, $250,000. If Wooster now revises its anticipated production slightly upward, it would expect:

total variable overhead of less than $165,000 and a lower hourly rate for variable overhead.

→ total fixed overhead of $250,000 and the same hourly rate for variable overhead.

total fixed overhead of $250,000 and a higher hourly rate for variable overhead.

total fixed overhead of $250,000 and a lower hourly rate for variable overhead.

total variable overhead of less than $165,000 and a higher hourly rate for variable overhead.

Rachelle Hamilton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4% of gross sales. In terms of cost behavior, the fee is a:

(13)

curvilinear cost.

variable cost.

→ semivariable cost. step-fixed cost.

fixed cost.

Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity? Step-fixed cost. Fixed cost. Step-variable cost. Semivariable cost. → Curvilinear cost.

The nonstatistical method of cost estimation that calls for the creation of a scatter diagram is the:

multiple regression method.

high-low method.

least-squares regression method.

→ visual-fit method.

account analysis method.

2.

award:

0 out of 1.00 point

(14)

Which of the following is not an objective of managerial accounting?

Assisting in directing and controlling operations.

Providing information for decision making and planning.

→ Maximizing profits and minimizing costs.

Measuring the performance of managers and subunits. Motivating managers toward the organization's goals.

37.

Managerial accounting has changed in recent years because of:

the emergence of new industries.

→ All of these factors. the growth of e-business.

an increased focus on the customer. increased global competition.

55.

Which of the following can be linked to a wave of corporate scandals that took place not too long ago? Greedy corporate executives.

Lack of oversight by companies' audit boards and boards of directors. All of these.

Managers who made over-reaching business deals. Shoddy work by external auditors.

57.

(15)

Corporate scandals have served as the accounting profession's wake-up call to pay increased attention to ethical issues in the conduct of business.

The Sarbanes-Oxley Act strives to improve the overall quality of corporate reporting.

→ The Robinson-Patman Act strives to improve the overall quality of corporate reporting.

Greedy corporate executives are, in part, to blame for the rash of corporate scandals that occurred not too long ago.

Unethical business behavior can have a negative impact on our economy.

9.

The accounting records of Dolphin Company revealed the following information:

Total manufacturing costs $ 720,000

Work-in-process inventory, Jan. 1 75,000 Work-in-process inventory, Dec. 31 97,000 Finished-goods inventory, Jan. 1 165,000 Finished-goods inventory, Dec. 31 142,000

Dolphin's cost of goods sold is:

$698,000. $721,000. $719,000. None of these. $743,000.

74.

The variable costs per unit are $28 when a company produces 34,000 units of product. What are the variable costs per unit when 36,000 units are produced?

$27.00. $28.00. None of these. $27.50. $26.50.

(16)

7.

When 6,000 units are produced variable costs are $36 per unit and total costs are $246,000. What are the total costs when 9,000 units are produced?

$291,000.

→ $354,000.

Total costs cannot be calculated based on the information presented. None of these. $246,000.

80.

Finished goods inventory is ordinarily held for sale by a manufacturing company.

True False

2.

The following equation -- Beginning finished goods + cost of goods manufactured -

ending finished goods -- is used to calculate cost of goods sold during the period.

True False

106.

(17)

Calculate the total manufacturing overhead for the company.

$442,000. $149,000.

some other amount. $171,000. $186,000.

110.

Which of the following statements is true?

Product costs affect only the income statement.

Neither product costs nor period costs affect the Statement of Retained Earnings. Product costs affect only the balance sheet.

→ Product costs eventually affect both the balance sheet and the income statement. Period costs affect only the balance sheet.

111.

In a manufacturing company, the cost of goods completed during the period would

include which of the following elements?

Marketing costs.

Depreciation of delivery trucks. Beginning finished goods inventory.

(18)

All of the above.

→ Raw materials used.

14.

Holden Industries began July with a finished-goods inventory of $48,000. The

finished-goods inventory at the end of July was $56,000 and the cost of goods sold

during the month was $125,000. The cost of goods manufactured during July was:

$117,000. $125,000. $104,000.

→ $133,000.

some other amount.

115.

Carolina Plating Company reported a cost of goods manufactured of $520,000, with

the firm's year-end balance sheet revealing work in process and finished goods of

$70,000 and $134,000, respectively. If supplemental information disclosed raw

materials used in production of $80,000, direct labor of $140,000, and manufacturing

overhead of $240,000, the company's beginning work in process must have been:

$390,000.

some other amount.

→ $130,000. $10,000. $66,000.

128.

Which of the following is not an example of a variable cost?

Commissions paid to sales personnel.

(19)

Wages of manufacturing workers whose pay is based on hours worked. Aluminum used to make patio furniture.

→ Straight-line depreciation on a machine that has a five-year service life. Tires used in the production of tractors.

178.

A review of Parrish Corporation's accounting records found that at a volume of

90,000 units, the variable and fixed cost per unit amounted to $8 and $4,

respectively. On the basis of this information, what amount of total cost would

Parrish anticipate at a volume of 85,000 units?

→ $1,040,000. $1,020,000. $1,080,000. $1,060,000.

200.

Which of the following methods of cost estimation relies on only two data points? Least-squares regression.

→ The high-low method. Account analysis. The visual-fit method. Multiple regression.

202.

(20)

May and August were the lowest and highest activity levels, and Lisle uses the high-low method to analyze cost behavior. Which of the following statements is true?

The variable maintenance cost is $43 per hour. The variable maintenance cost is $47 per hour.

→ The fixed maintenance cost is $725,000 per month. The variable maintenance cost is $45 per hour. More than one of the above statements is true.

203.

The following data relate to the Lisle Company for May and August of the current

year:

May and August were the lowest and highest activity levels, and Lisle uses the

high-low method to analyze cost behavior. Which of the folhigh-lowing statements is true?

The fixed maintenance cost is $72,000 per month. The variable maintenance cost is $22 per hour.

→ The variable maintenance cost is $18 per hour. More than one of the above statements is true. The variable maintenance cost is $24 per hour.

213.

Wesley Enterprises has determined that three variables play a key role in determining company revenues. To arrive at an objective forecast of revenues for the next accounting period, Wesley should use:

(21)

the high-low method.

→ multiple regression. complex regression. a scatter diagram. simple regression.

Industries reported the following data for the year just ended: sales revenue, $1,820,000; cost

of goods sold, $900,000; cost of goods manufactured, $564,000; and selling and

administrative expenses, $178,000. Glass' gross margin would be:

$1,078,000. → $920,000. $534,000. $1,256,000. $1,098,000.

81.

Indirect labor is not a component of manufacturing overhead.

True False

82.

The following equation -- Beginning finished goods + cost of goods manufactured -

ending finished goods -- is used to calculate cost of goods sold during the period.

True False

84.

(22)

Which of the following statements is true?

All organizations incur the same types of costs.

Cost data, once classified and recorded for a specific application, are appropriate for use in any application.

The word "cost" has the same meaning in all situations in which it is used. Costs incurred in one year are always meaningful in the following year.

→ Different cost concepts and classifications are used for different purposes.

101.

Which of the following employees of a commercial printer/publisher would be classified as direct labor? Payroll supervisor.

→ Book binder.

Sales representative. Plant supervisor. Plant security guard.

105.

Which of the following costs is not a component of manufacturing overhead? → Factory equipment.

Factory utilities.

Property taxes on the manufacturing plant. Indirect materials. Indirect labor.

124.

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

(23)

→ Manufacturing overhead incurred in a heavily automated facility; direct labor hours. Building maintenance cost; building square footage.

Human resources department cost; number of employees. Gasoline consumed; number of miles driven.

136.

Some other amount.

Total costs cannot be calculated based on the information presented. $214,800. $199,200. $234,000.

162.

Mastel Company has a variable selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit behave?

Choice D Choice C → Choice B Choice A Choice E

179.

(24)

A cost that has both a fixed and variable component is best termed a: discretionary cost. semivariable cost. curvilinear cost. step-fixed cost. step-variable cost.

194.

Which of the following choices correctly classifies a committed fixed cost and a

discretionary fixed cost?

Choice A Choice E → Choice B Choice C Choice D

Which type of fixed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad economic times without doing serious harm to organizational goals and objectives?

Choice E

(25)

Choice A Choice D Choice C

197.

The high-low method and least-squares regression are used by accountants to:

→ estimate costs.

evaluate divisional managers for purposes of raises and promotions. choose among alternative courses of action.

control operations. maximize output.

A high R

2

measure in regression analysis is preferred because:

it indicates a good fit of the regression line through the data points.

it shows that a great deal of the change in the dependent variable is explained by change in the independent variable.

it means that the independent variable is a good predictor of the dependent variable.

→ all of the preceding statements are true.

it means that the cost analyst can be relatively confident in his or her cost predictions.

9.

Which of the following managerial functions involves a detailed financial and

operational description of anticipated operations?

Decision making.

Directing operational activities.

→ Planning.

Measuring. Controlling.

1.

(26)

award:

0 out of 1.00 point

Which of the following choices correctly depicts whether McDonald's, the University of Wisconsin, and Apple Inc. would have a need for managerial accounting?

Choice D Choice A Choice B Choice E → Choice C

33.

award: 0 out of 1.00 point Managerial accountants:

are found primarily at lower levels of the organizational hierarchy. are located throughout an organization.

are found primarily at higher levels of the organizational hierarchy.

→ choices "A" and "B" above.

often work in cross-functional teams.

40.

Idaho Corporation recently implemented a just-in-time (JIT) production system along

with a series of continuous improvement programs. If the firm is now considering

adopting a total quality management (TQM) program, it would likely find that TQM:

is an antiquated management technique.

(27)

is inconsistent with both JIT and continuous improvement.

→ is consistent with both JIT and continuous improvement.

is consistent with continuous improvement but inconsistent with JIT.

49.

Which of the following choices correctly depicts activities that would be included in a manufacturer's value chain?

→ Choice C Choice D Choice E Choice B Choice A

78.

Baxter Company, which pays a 11% commission to its salespeople, reported sales

revenues of $300,000 for the period just ended. If fixed and variable sales expenses

totaled $65,000, what would these expenses total at sales of $240,000?

$52,000. $26,400. None of these. $58,400. $32,000.

86.

(28)

Which of the following is a product cost?

D. Rent on a factory.

C. The salary of the vice president-finance. B. Advertising.

A. Glass in an automobile. E. Both "A" and "D."

91.

Which of the following is not a period cost?

Sales commissions.

Legal costs.

Wages of assembly-line workers. Public relations costs.

The salary of a company's chief financial officer (CFO).

92.

The accounting records of Reynolds Corporation revealed the following selected

costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative

expenses, $185,000. Reynolds's period costs total:

$440,000. $375,000. $185,000. → $250,000. $255,000.

102.

(29)

Lake Appliance produces washers and dryers in an assembly-line process. Payroll

costs incurred during a recent period were: corporate executives, $500,000;

assembly-line workers, $180,000; security guards, $45,000; and plant supervisor,

$110,000. The total of Lake's direct labor cost was:

$180,000. $235,000. $110,000. $735,000. $155,000.

127.

As activity increases, unit variable cost:

increases proportionately with activity. increases by a fixed amount.

decreases proportionately with activity.

→ remains constant.

decreases by a fixed amount.

140.

Costs that can be easily traced to a specific department are called:

indirect costs. direct costs. product costs. processing costs. manufacturing costs.

151.

(30)

A review of Parrish Corporation's accounting records found that at a volume of 146,000 units, the variable and fixed cost per unit amounted to $8 and $5, respectively. On the basis of this information, what amount of total cost would Parrish anticipate at a volume of 138,200 units?

Some other amount not listed above. $1,796,600. $1,859,000. $1,835,600. $1,898,000.

Score:

12

out of 20 points (60%) Question #9

160.

A forecast of a cost at a particular level of activity is termed:

→ cost prediction. cost behavior. cost approximation. cost estimation. cost analysis.

Score:

12

162.

Mastel Company has a variable selling cost. If sales volume increases, how will the

total variable cost and the variable cost per unit behave?

(31)

Choice B Choice C Choice A Choice E Choice D

Score:

12

163.

What type of cost exhibits the behavior that follows?

Step-fixed cost.

Semivariable cost. Fixed cost. Variable cost.

Discretionary fixed cost.

Score:

12

out of 20 points (60%)

(32)

178.

A review of Parrish Corporation's accounting records found that at a volume of

90,000 units, the variable and fixed cost per unit amounted to $8 and $4,

respectively. On the basis of this information, what amount of total cost would

Parrish anticipate at a volume of 85,000 units?

$1,060,000. $1,020,000. $1,040,000. $1,080,000.

Score:

12

203.

The following data relate to the Lisle Company for May and August of the current

year:

May and August were the lowest and highest activity levels, and Lisle uses the

high-low method to analyze cost behavior. Which of the folhigh-lowing statements is true?

The fixed maintenance cost is $72,000 per month. The variable maintenance cost is $22 per hour. The variable maintenance cost is $18 per hour. The variable maintenance cost is $24 per hour. More than one of the above statements is true.

(33)

Score:

12

205.

The following data relate to the Lisle Company for May and August of the current

year:

May and August were the lowest and highest activity levels, and Lisle uses the

high-low method to analyze cost behavior. If maintenance hours are estimated to be

26,000 hours in October, which of the following statements is true?

Total maintenance costs will be $1,247,000. Total maintenance costs will be $1,221,000. Total maintenance costs will be $1,193,000. Total maintenance costs will be $1,182,000. Total maintenance costs will be $1,175,000.

Score:

12

213.

Wesley Enterprises has determined that three variables play a key role in

determining company revenues. To arrive at an objective forecast of revenues for

the next accounting period, Wesley should use:

simple regression. multiple regression.

(34)

a scatter diagram. complex regression. the high-low method.

208. Around Town, Inc. operates a small package delivery service in the Columbus suburbs. If the

company uses a regression equation to forecast total operating costs, the equation's intercept

would correspond to the:

number of deliveries.

total variable operating costs.

total operating costs.

variable operating cost per delivery.

→

fixed operating costs.

189. Property taxes are an example of a(n):

discretionary variable cost.

engineered cost.

committed variable cost.

→

committed fixed cost.

discretionary fixed cost.

181. Rachelle Hamilton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4%

of gross sales. In terms of cost behavior, the fee is a:

variable cost.

fixed cost.

→

semivariable cost.

curvilinear cost.

step-fixed cost.

179. A cost that has both a fixed and variable component is best termed a:

step-variable cost.

(35)

curvilinear cost.

discretionary cost.

step-fixed cost.

171. Straight-line depreciation is a typical example of a:

mixed cost.

step-variable cost.

→

fixed cost.

curvilinear cost.

variable cost.

170. When graphed, a typical fixed cost appears as:

→

a horizontal line.

a u-shaped line.

a vertical line.

a diagonal line that slopes downward to the right.

a diagonal line that slopes upward to the right.

125. Variable costs are costs that:

remain constant as activity changes.

vary inversely with changes in activity.

increase on a per-unit basis as activity increases.

→

vary directly with changes in activity.

decrease on a per-unit basis as activity increases.

116. The accounting records of Bronco Company revealed the following information:

(36)

Bronco's cost of goods manufactured is:

$568,000.

$571,000.

$522,000.

some other amount.

→

$519,000.

99. Companies that engage in mass customization:

tend to have a relatively low production volume.

tend to have a high production volume, many unique components, and

customer-specified combinations of components.

could be typified by the refining operations of Shell Oil.

→

tend to have a high production volume, many standardized components, and

_{customer-specified combinations of components.}

tend to have a high production volume that involves highly standardized

end-products.

91. Which of the following is not a period cost?

Sales commissions.

Public relations costs.

→

Wages of assembly-line workers.

The salary of a company's chief financial officer (CFO).

Legal costs.

88. The accounting records of Georgia Company revealed the following costs: direct materials

used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and

administrative expenses, $220,000. Georgia's product costs total:

→

$1,050,000.

$895,000.

$830,000.

some other amount.

$1,270,000.

82.

(37)

The following equation -- Beginning finished goods + cost of goods manufactured - ending

finished goods -- is used to calculate cost of goods sold during the period.

True

False

76. Total costs are $244,000 when 16,000 units are produced; of this amount, variable costs are

$72,000. What are the total costs when 17,000 units are produced?

$254,750.

→

$248,500.

$259,250.

Total costs cannot be calculated based on the information presented.

None of these.

73. Pumpkin Enterprises began operations on January 1, 20x1, with all of its activities conducted

from a single facility. The company's accountant concluded that the year's building

depreciation should be allocated as follows: selling activities, 20%; administrative activities,

35%; and manufacturing activities, 45%. If Pumpkin sold 60% of 20x1 production during

that year, what percentage of the depreciation would appear (either directly or indirectly) on

the 20x1 income statement?

27%.

45%.

55%.

→

82%.

100%.

72. Glass Industries reported the following data for the year just ended: sales revenue,

$1,820,000; cost of goods sold, $920,000; cost of goods manufactured, $566,000; and selling

and administrative expenses, $173,000. Glass' gross margin would be:

$1,254,000.

$507,000.

$1,081,000.

→

$900,000.

$1,073,000.

62.

(38)

The accounting records of Reynolds Corporation revealed the following selected costs: Sales

commissions, $74,000; plant supervision, $280,000; and administrative expenses, $196,000.

Reynolds's period costs total:

$550,000.

$196,000.

→

$270,000.

$354,000.

$476,000.

46. Given the following information, what is the cost of unused capacity? Cost of material

supplied is $3,200; Cost of material used is $3,000; Cost of material used per cake is $3; Cost

of material supplied per cake is $3.20.

$0.20.

→

$200.

$2,000.

There is no unused capacity.

$1,000.

30. Which of the following typically does not relate to the role of a controller?

A controller supervises the accounting department.

A controller normally assumes a narrow role within the organization, often

preventing the individual's rise to top management ranks.

A controller oversees the preparation of reports required by governmental

authorities.

A controller safeguards an organization's assets.

→

Choices "B" and "D" above.

8. Which of the following functions is best described as choosing among available alternatives?

Directing operational activities.

Planning.

→

Decision making.

Controlling.

Budgeting.

5.

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The upper limit on the production of goods and services if everything works perfectly is

known as practical capacity.

True

False

Baxter Company, which pays a 12% commission to its salespeople, reported sales revenues of $280,000 for the period just ended. If fixed and variable sales expenses totaled $70,000, what would these expenses total at sales of $260,000? $65,000. → $67,600. $36,400. $31,200. None of these.

Which of the following inventories would a discount retailer such as Wal-Mart report as an asset? All of these.

Finished goods.

→ Merchandise inventory. Raw materials. Work in process.

The accounting records of Diego Company revealed the following costs, among others:

Calculate the total manufacturing overhead for the company.

some other amount.

→ $149,000.

$442,000. $171,000. $186,000.

Carolina Plating Company reported a cost of goods manufactured of $520,000, with the firm's year-end balance sheet revealing work in process and finished goods of $70,000 and $134,000, respectively. If supplemental information disclosed raw materials used in production of $80,000, direct labor of $140,000, and manufacturing overhead of $240,000, the company's beginning work in process must have been:

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$390,000.

→ $130,000.

$66,000.

some other amount.

Costs that can be easily traced to a specific department are called: → direct costs.

manufacturing costs. product costs. processing costs. indirect costs.

The relevant range is that range of activity where a company achieves its maximum efficiency. True

False

Which of the following costs changes in direct proportion to a change in the activity level? Step-variable cost.

Step-fixed cost. Semivariable cost.

→ Variable cost. Fixed cost.

When graphed, a typical variable cost appears as: a horizontal line.

a u-shaped line.

a diagonal line that slopes downward to the right.

→ a diagonal line that slopes upward to the right. a vertical line.

Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed overhead, $250,000. If Wooster now revises its anticipated production slightly upward, it would expect:

→ total fixed overhead of $250,000 and the same hourly rate for variable overhead. total fixed overhead of $250,000 and a lower hourly rate for variable overhead. total fixed overhead of $250,000 and a higher hourly rate for variable overhead.

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total variable overhead of less than $165,000 and a higher hourly rate for variable overhead. total variable overhead of less than $165,000 and a lower hourly rate for variable overhead. Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are termed: → step-fixed costs. step-variable costs. curvilinear costs. mixed costs. semivariable costs.

When graphed, a typical step-fixed cost graph over a wide range of activity level appears as: a vertical line.

→ a series of staggered horizontal lines

a diagonal line that slopes downward to the right. a horizontal line.

a diagonal line that slopes upward to the right.

A cost that has both a fixed and variable component is best termed a: step-fixed cost.

curvilinear cost. discretionary cost. step-variable cost.

→ semivariable cost.

Within the relevant range, a curvilinear cost function can sometimes be graphed as a: curved line.

horizontal straight line. jagged line.

→ sloping straight line. vertical straight line.

Which of the following is not an example of a committed fixed cost? Equipment rental costs.

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Property taxes.

Salaries of management personnel. Depreciation on buildings.

The following data relate to the Lisle Company for May and August of the current year:

May and August were the lowest and highest activity levels, and Lisle uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?

Total maintenance costs will be $1,247,000. Total maintenance costs will be $1,221,000.

→ Total maintenance costs will be $1,193,000. Total maintenance costs will be $1,175,000. Total maintenance costs will be $1,182,000.

The role of managerial accounting information in assisting management is a(n):

financial-directing role.

organizational role.

planning and controlling role.

problem-solving role.

attention-directing role.

Which of the following would likely be considered an internal user of accounting information

rather than an external user?

→

Middle-level managers.

Consumer groups.

Lenders.

Stockholders.

Government agencies.

Which of the following statement(s) about just-in-time (JIT) inventory management is

(are) true?

I. The emphasis of JIT is on "pull" approach to controlling manufacturing.

II. Raw materials are purchased just in time to be used in production.

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III. JIT is an inventory technique that focuses on reduction of both inventory and related

inventory costs.

I only.

III only.

→

I, II, and III.

II only.

II and III.

A company has a bottleneck operation that slows production. Which of the following tools or

approaches could the firm use to determine the most cost-effective ways to eliminate this

problem?

Payoff matrices.

Strategic path analysis (SPA).

→

Theory of constraints.

Linear programming.

Decision-tree diagrams.

Which of the following acts strives to improve corporate governance and the quality of

corporate accounting/reporting?

Robinson-Patman.

Franks-Ashcroft.

Sarbanes-Oxley.

Bush-Cheney.

Taft-Hartley

Assume that a managerial accountant regularly communicates with business associates to

avoid conflicts of interest and advises relevant parties of potential conflicts. In so doing, the

accountant will have applied the ethical standard of:

objectivity.

unified behavior.

→

integrity.

confidentiality.

credibility.

Yang Corporation recently computed total product costs of $568,000 and total period costs of

$430,000, excluding $36,000 of sales commissions that were overlooked by the company's

administrative assistant. On the basis of this information, Yang's income statement should

reveal operating expenses of:

$604,000.

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$36,000.

$430,000.

$568,000.

For the year just ended, Cole Corporation's manufacturing costs (raw materials used, direct

labor, and manufacturing overhead) totaled $1,750,000. Beginning and ending

work-in-process inventories were $85,000 and $115,000, respectively. Cole's balance sheet also

revealed respective beginning and ending finished-goods inventories of $275,000 and

$205,000. On the basis of this information, how much would the company report as cost of

goods manufactured (CGM) and cost of goods sold (CGS)?

CGM, $1,820,000; CGS, $1,790,000.

CGM, $1,780,000; CGS, $1,710,000.

None of these.

CGM, $1,680,000; CGS, $1,710,000.

→

CGM, $1,720,000; CGS, $1,790,000.

Which of the following is a product cost?

B. Advertising.

D. Rent on a factory.

→

E. Both "A" and "D."

A. Glass in an automobile.

C. The salary of the vice president-finance.

Which of the following would not be classified as a product cost?

Direct materials.

→

Sales commissions.

Indirect materials.

Direct labor.

Insurance on a manufacturing plant.

The accounting records of Reynolds Corporation revealed the following selected costs: Sales

commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000.

Reynolds's period costs total:

→

$250,000.

$440,000.

$185,000.

$255,000.

$375,000.

Godfrey Corporation engages in mass customization and direct sales, the latter by accepting

customer orders over the Internet. As a result, Godfrey:

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revenue generated.

E. would likely find choices "A" and "C" to be applicable.

→

D. would likely find choices "A" and "B" to be applicable.

B. would typically have fairly low inventory levels for the amount of sales revenue

generated.

A. would probably begin the manufacturing process upon receipt of a customer's

order

Which of the following employees of a commercial printer/publisher would be classified as

direct labor?

Sales representative.

Payroll supervisor.

Plant security guard.

→

Book binder.

Plant supervisor.

Lake Appliance produces washers and dryers in an assembly-line process. Payroll costs

incurred during a recent period were: corporate executives, $500,000; assembly-line workers,

$180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct

labor cost was:

$110,000.

$155,000.

$235,000.

→

$180,000.

$735,000

The accounting records of Diego Company revealed the following costs, among others:

Calculate the total manufacturing overhead for the company.

$171,000.

→

$149,000.

$442,000.

some other amount.

$186,000

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