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ACC 349 Final Exam MCQs. 87/87. Get an A++.

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Question;1) What is the best way to handle manufacturing overhead costs;in order to get the most timely job cost information?;A. The company should add actual manufacturing overhead costs to;jobs as soon as the overhead costs are incurred.;B. The company should determine an allocation rate as soon as;the actual costs are known, and then apply manufacturing overhead to jobs.;C. The company should apply overhead using an estimated rate;throughout the year. D. The company should account for only the direct;production costs.;2) At the end of the year, manufacturing overhead has been;overapplied. What occurred to create this situation?;A. The company incurred more manufacturing overhead costs than;the manufacturing overhead assigned to jobs;B. The actual manufacturing overhead costs were less than the;manufacturing overhead assigned to jobs;C. The company incurred more total job costs than the amount;budgeted for the job;D. Estimated manufacturing overhead was less than actual;manufacturing overhead costs;3) Luca Company overapplied manufacturing overhead during 2006.;Which one of the following is part of the year end entry to dispose of the;overapplied amount assuming the amount is material;A. A decrease to work in process inventory;B. A decrease to applied overhead;C. An increase to finished goods;D. An increase to cost of goods sold;4) Which of the following would be accounted for using a job;order cost system?;A. The production of textbooks;B. The production of town homes;C. The pasteurization of milk;D. The production of cans of spinach;5) Which one of the following is NEVER part of recording the;issuance of raw materials in a job order cost system?;A. Debit Manufacturing Overhead;B. Debit Finished Goods Inventory;C. Debit Work in Process Inventory;D. Credit Raw Materials Inventory;Finished Goods Inventory is debited when goods are transferred;from work in process to finished goods, not when raw materials are issued for a;job.;6. What is unique about the flow of costs in a job order cost;system?;A. It involves accumulating material, labor, and manufacturing;overhead costs as they are incurred in order to determine the job cost;B. Each job is costed separately in a Work in Process subsidiary;ledger;C. Job costs cannot be measured until all overhead costs are;determined;D. There are no costs remaining in Work in Process at year end;7) Which one of the following costs would be included in;manufacturing overhead of a lawn mower manufacturer?;A. The cost of the fuel lines that run from the motor to the gas;tank;B. The cost of the wheels;C. Depreciation on the testing equipment;D. The wages earned by motor assemblers;Depreciation on testing equipment would be included in;manufacturing overhead because it is indirectly associated with the finished;product.;8) What broad functions do the management of an organization;perform?;A. Planning, directing, and controlling;B. Directing, manufacturing, and controlling;C. Planning, directing, and selling;D. Planning, manufacturing, and controlling;9) Which of the following represents the correct order in which;inventories are reported on a manufacturer?s balance sheet?;A. Work in process, finished goods raw materials;B. Raw materials, work in process, finished goods;C. Finished goods, work in process, raw materials;D. Work in process, raw materials, finished goods;10) In traditional costing systems, overhead is generally;applied based on;A. machine hours;B. direct labor;C. direct material dollars;D. units of production;11) An activity that has a direct cause-effect relationship with;the resources consumed is a(n);A. overhead rate;B. product activity;C. cost driver;D. cost pool;12) A well-designed activity-based costing system starts with;A. computing the activity-based overhead rate;B. analyzing the activities performed to manufacture a product;C. identifying the activity-cost pools;D. assigning manufacturing overhead costs for each activity cost;pool to products;13) Which of the following factors would suggest a switch to;activity-based costing?;A. Overhead costs constitute a significant portion of total;costs;B. Production managers use data provided by the existing system.;C. Product lines similar in volume and manufacturing complexity;D. The manufacturing process has been stable;14) All of the following statements are correct EXCEPT that;A. the objective of installing ABC in service firms is different;than it is in a manufacturing firm;B. the general approach to identifying activities and activity;cost pools is the same in a service company as in a manufacturing company;C. activity-based costing has been widely adopted in service;industries;D. a larger proportion of overhead costs are company-wide costs;in service industries;15) What sometimes makes implementation of activity-based;costing difficult in service industries is;A. identifying activities, activity cost plus, and cost drivers;B. attempting to reduce or eliminate nonvalue-added activities;C. the labeling of activities as value-added;D. that a larger proportion of overhead costs are company-wide;costs;16) One of Astro Company?s activity cost pools is machine;setups, with estimated overhead of $150,000. Astro produces sparklers (400;setups) and lighters (600 setups). How much of the machine setup cost pool;should be assigned to sparklers?;A. $60,000;B. $90,000;C. $150,000;D. $75,000;17) Poodle Company manufactures two products, Mini A and Maxi B.;Poodle?s overhead costs consist of setting up machines, $800,000;machining, $1,800,000, and inspecting, $600,000. Information on;the two products is;Overhead applied to Mini A using activity-based costing is;A. $1,536,000;B. $1,664,000;C. $1,920,000;D. $1,200,000;18) Poodle Company manufactures two products, Mini A and Maxi B.;Poodle?s overhead costs consist of setting up machines, $800,000, machining;$1,800,000, and inspecting, $600,000. Information on the two products is;Overhead applied to Maxi B using activity-based costing is;A. $1,536,000;B. $1,664,000;C. $2,000,000;D. $1,280,000;19) Seran Company has contacted Truckel Inc. with an offer to;sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets;variable costs are $11 per unit. Fixed costs are $12 per unit, however, $5 per;unit is avoidable. Should Truckel make or buy the wickets?;A. Buy, savings = $10,000;B. Make, savings = $20,000;C. Make, savings = $10,000;D. Buy, savings = $25,000;20) Rosen, Inc. has 10,000 obsolete calculators, which are;carried in inventory at a cost of $20,000. If the calculators are scrapped;they can be sold for $1.10 each (for parts). If they are repackaged, at a cost;of $15,000, they could be sold to toy stores for $2.50 per unit.;What alternative should be chosen, and why?;A. Repackage, revenue is $5,000 greater than cost;B. Scrap, incremental loss is $9,000;C. Repackage, receive profit of $10,000;D. Scrap, profit is $1,000 greater;21) The cost to produce Part A was $10 per unit in 2005. During;2006, it has increased to $11 per unit. In 2006, Supplier Company has offered;to supply Part A for $9 per unit. For the make-or-buy decision;A. incremental costs are $1 per unit;B. net relevant costs are $1 per unit;C. differential costs are $2 per unit;D. incremental revenues are $2 per unit;22) Hartley, Inc. has one product with a selling price per unit;of $200, the unit variable cost is $75, and the total monthly fixed costs are;$300,000. How much is Hartley?s contribution margin ratio?;A. 37.5%;B. 150%;C. 266.6%;D. 62.5%.;23. Which statement describes a fixed cost?;A. The amount per unit varies depending on the activity level;B. It varies in total at every level of activity;C. It remains the same per unit regardless of activity level;D. Its total varies proportionally to the level of activity;24) Disney?s variable costs are 30% of sales. The company is;contemplating an advertising campaign that will cost $22,000. If sales are;expected to increase $40,000, by how much will the company?s net income;increase?;A. $28,000;B. $18,000;C. $6,000;D. $12,000;25) Variable costing;A. is required under GAAP;B. is used for external reporting purposes;C. is also known as full costing;D. treats fixed manufacturing overhead as a period cost;26) Which cost is NOT charged to the product under variable;costing?;A. Direct labor;B. Direct materials;C. Fixed manufacturing overhead;D. Variable manufacturing overhead;27) Orbach Company sells its product for $40 per unit. During;2005, it produced 60,000 units and sold 50,000 units (there was no beginning;inventory). Costs per unit are: direct materials $10, direct labor $6, and;variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and;$60,000 selling and administrative expenses. The per unit manufacturing cost;under absorption costing is;A. $18;B. $16;C. $27;D. $26;28) Which of the following is NOT considered an advantage of;using standard costs?;A. Standard costs can be useful in setting prices for finished;goods;B. Standard costs can reduce clerical costs;C. Standard costs can make employees ?cost-conscious.?;D. Standard costs can be used as a means of finding fault with;performance;29) The difference between a budget and a standard is that;A. a budget expresses management?s plans, while a standard;reflects what actually happened;B. standards are excluded from the cost accounting system;whereas budgets are generally incorporated into the cost accounting system;C. a budget expresses a total amount while a standard expresses;a unit amount;D. a budget expresses what costs were, while a standard;expresses what costs should be;30) If a company is concerned with the potential negative;effects of establishing standards, they should;A. offer wage incentives to those meeting standards;B. set tight standards in order to motivate people;C. not employ any standards;D. set loose standards that are easy to fulfill;31) The per-unit standards for direct materials are 2 gallons at;$4 per gallon. Last month, 11,200 gallons of direct materials that actually;cost $42,400 were used to produce 6,000 units of product. The direct materials;quantity variance for last month was;A. $2,400 favorable;B. $5,600 unfavorable;C. $3,200 unfavorable;D. $3,200 favorable;32) The standard number of hours that should have been worked;for the output attained is 8,000 direct labor hours and the actual number;of direct labor hours worked was 8,400. If the direct labor;price variance was $8,400 unfavorable, and the standard rate of pay was $18 per;direct labor hour, what was the actual rate of pay for direct labor?;A. $15 per direct labor hour;B. $18 per direct labor hour;C. $19 per direct labor hour;D. $17 per direct labor hour;33) The total variance is $10,000. The total materials variance;is $4,000. The total labor variance is twice the total overhead variance. What;is the total overhead variance?;A. $2,000;B. $4,000;C. $3,000;D. $1,000;34) Manufacturing overhead costs are applied to work in process;on the basis of;A. standard hours allowed;B. actual overhead costs incurred;C. ratio of actual variable to fixed costs;D. actual hours worked;35) The overhead volume variance relates only to;A. variable overhead costs;B. both variable and fixed overhead costs;C. all manufacturing costs;D. fixed overhead costs;36) If the standard hours allowed are less than the standard;hours at normal capacity;37) Gottberg Mugs is planning to sell 2,000 mugs and produce;2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of;direct labor. Resin costs $1 per pound and employees of the company are paid;$12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct;labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and;wants to have 2,400 pounds in ending inventory. How much is the total amount of;budgeted direct labor for April?;38) Lewis Hats is planning to sell 600 straw hats. Each hat;requires a half pound of straw and a quarter hour of direct labor. Straw costs;$0.20 per pound and employees of the company are paid $22 per hour. Lewis has;80 pounds of straw and 40 hats in beginning inventory and wants to have 50;pounds of straw and 60 hats in ending inventory. How many units should Lewis;Hats produce in April?;A. 600;B. 580;C. 630;D. 620;39) At January 1, 2004, Barry, Inc. has beginning inventory of;4,000 widgets. Barry estimates it will sell 35,000 units during the first;quarter of 2004 with a 10% increase in sales each quarter. Barry?s policy is to;maintain an ending inventory equal to 25% of the next quarter?s sales. Each;widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for;the third quarter of 2004?;A. $57,525;B. $63,525;C. $42,350;D. $63,000;40) In most cases, prices are set by the;A. customers;B. largest competitor;C. selling company;D. competitive market;41) A company must price its product to cover its costs and earn;a reasonable profit in;A. all cases;B. its early years;C. the long run;D. the short run;42) The cost-plus pricing approach?s major advantage is;A. it considers customer demand;B. that sales volume has no effect on per unit costs;C. it is simple to compute;D. it can be used to determine a product?s target cost;43) What does cost accounting measure, record, and report;A. Future costs;B. Product costs;C. Managerial accounting decisions;D. Manufacturing processes;44) Why is factory overhead applied to products and jobs by;manufacturing companies?;45) In a job order cost accounting system, the Work in Process;account is;A. a period cost;B. a control account;C. closed at year end;D. an expense;46) Managerial accounting;A. is governed by generally accepted accounting principles;B. places emphasis on special-purpose information;C. is concerned with costing products;D. pertains to the entity as a whole and is highly aggregated;47) A well-designed activity-based costing system starts with;48) Which of the following is a value-added activity?;A. Machinery repair;B. Inventory storage;C. Engineering design;D. Inspections;49) Which of the following is a nonvalue-added activity?;A. Machining;B. Inspection;C. Engineering design;D. Packaging;50) Each of the following is a limitation of activity-based;costing EXCEPT;A. It is more complex than traditional costing;B. More cost pools are used;C. It can be expensive to use;D. Some arbitrary allocations continue;51) Ace Company sells office chairs with a selling price of $25;and a contribution margin per unit of $15. It takes 3 machine hours to produce;one chair. How much is the contribution margin per unit of limited resource?;A. $3.33;B. $45;C. $10;D. $5;52) Walton, Inc. is unsure of whether to sell its product;assembled or unassembled. The unit cost of the unassembled product is $16;while the cost of assembling each unit is estimated at $17. Unassembled units;can be sold for $55, while assembled units could be sold for $71 per unit. What;decision should Walton make?;53) Which cost is charged to the product under variable costing?;54) Which of the following statements is FALSE?;55) If standard costs are incorporated into the accounting;system;system;56) A standard cost is;57) The per-unit standards for direct labor are 2 direct labor;hours at $12 per hour. If in producing 2,400 units, the actual direct labor;cost;was $51,200 for 4,000 direct labor hours worked, the total;direct labor variance is;A. $6,400 favorable;B. $6,400 unfavorable;C. $1,920 unfavorable;D. $4,000 unfavorable;58) If the standard hours allowed are less than the standard;hours at normal capacity, the volume variance;A. will be favorable;B. will be greater than the controllable variance;C. cannot be calculated;D. will be unfavorable;59) Which of the following statements is FALSE?;60) Looker Hats is planning to sell 600 felt hats, and 700 will;be produced during June. Each hat requires a half yard of felt and a quarter;hour of direct labor. Felt costs $3.00 per yard and employees of the company;are paid $20 per hour. How much is the total amount of budgeted direct labor;for June?;61) In cost-plus pricing, the markup percentage is computed by;dividing the desired ROI per unit by the;62) Which would be an appropriate cost driver for the ordering;and receiving activity cost pool?;63) The first step in activity-based costing is to;64) Which one of the following is required in order for an;activity base to be useful in cost behavior analysis?;65) Which cost is NOT charged to the product under absorption;costing?;A. Fixed administrative expenses;B. Variable manufacturing overhead;C. Direct labor;D. Direct materials;66) A company developed the following per-unit standards for its;product: 2 pounds of direct materials at $6 per pound. Last month, 2,000 pounds;of direct materials were purchased for $11,400. The direct materials price;variance for last month was;A. $600 unfavorable;B. $11,400 favorable;C. $300 favorable;D. $600 favorable;67) The standard rate of pay is $5 per direct labor hour. If the;actual direct labor payroll was $19,600 for 4,000 direct labor hours worked;the direct labor price (rate) variance is;68) Waco?s Widgets plans to sell 22,000 widgets during May;19,000 units in June, and 20,000 during July. Waco keeps 10% of the next;month?s sales as ending inventory. How many units should Waco produce during;June?;69) In cost-plus pricing, the target selling price is computed;as;70) Which one of the following is an important feature of a job;order cost system?;71) Which of the following represents the two basic types of;cost accounting systems?;72) Which one of the following is indirect labor considered?;73) Which of the following is an element of manufacturing;overhead?;74) Which of the following is NOT typical of traditional costing;systems?;75) Max Company uses 10,000 units of Part A in producing its;products. A supplier offers to make Part A for $7. Max Company has relevant;costs of $8 a unit to manufacture Part A. If there is excess capacity, the;opportunity cost of buying Part A from the supplier is;76) H55 Company sells two products, beer and wine. Beer has a 10;percent profit margin and wine has a 12 percent profit margin. Beer has a 27;percent contribution margin and wine has a 25 percent contribution margin. If;other factors are equal, which product should H55 push to customers?;77) During December, the capital budget indicates a $280,000;purchase of equipment. The ending November cash balance is budgeted to be;$40,000. Cash receipts are $840,000, and cash disbursements are $610,000 during;December. The company wants to maintain a minimum cash balance of $20,000. What;is the minimum cash loan that must be planned to be borrowed from the bank;during December?;78) Prices are set by the competitive market when;79) The standards and rules that are recognized as a general;guide for financial reporting are called __________.;80) Hess, Inc. sells a single product with a contribution margin;of $12 per unit and fixed costs of $74,400 and sales for the current year of;$100,000. How much is Hess?s break even point?;81) In what situations will a static budget be most effective in;evaluating a manager?s effectiveness?;82) The primary purpose of the statement of cash flows is to;83) The category that is generally considered to be the best;measure of a company?s ability to continue as a going concern is;84) Of the items below, the one that appears first on the;statement of cash flows is;85) Which of the following transactions does not affect cash;during a period?;86) One of Lara Dole Company?s activity cost pools is machine;setups, with estimated overhead of $300,000. Dole produces flares (400 setups);and health packs (600 setups). How much of the machine setup cost pool should;be assigned to flares?;87) As compared to a high-volume product, a low-volume product

 

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