Accounting

1)   Preparing budgets is an example of the management function of:
A.  controlling. B.  decision-making.
C.  directing. D.  planning.
2)  Which of the following groups are external users of financial information?
A.  Customers of the company B.  Vendors of the company
C.  Potential investors of the company D.  All of the above

3)  Which of the following is TRUE?
A.  Managerial accounting reports are audited by CPAs.
B.  Managerial accounting reports provide detailed internal information.
C.  Managerial accounting reports aid potential investors.
D.  Managerial accounting reports must follow GAAP.

7) The main goal of financial accounting is to provide information for
A.  potential investors. B.  creditors.
C.  governmental regulators. D.  all of the above.

3)  Which of the following is an example of overhead in a factory?
A.  Wages of machine operators
B.  Wages of factory maintenance personnel
C.  Wages of administrators in the corporate office
D.  Salaries of salespersons

Use the following information for the next three questions:
Comfy Furniture Company manufactures furniture at its Akron, Ohio, factory.  Some of its costs from the past year include:
Depreciation on sales office  $      11,000
Depreciation on factory equipment  $      16,000
Factory supervisor salary  $      52,500
Sales commissions  $      23,000
Lubricants used in factory equipment  $        3,000
Insurance costs for factory  $      21,000
Wages paid to maintenance workers  $     115,000
Fabric used to upholster furniture  $        7,000
Costs of delivery to customers  $        9,000
Wages paid to assembly-line workers  $     132,500
Lumber used to build product  $      72,000
Utilities in factory  $      44,500
Utilities in sales office  $      26,500
5) MOH costs for Comfy Furniture Company totaled:
A.  $ 324,000. B.  $ 122,000.
C.  $ 228,000. D.  $ 252,000.

8) When manufacturing products, which of the following is an example of an inventoriable product cost?
A.  Depreciation on office equipment B.  Depreciation on building
C.  Depreciation on factory equipment D.  Sales salaries expenses

10)  Active Apparel Company reports the following data for its first year of operation (000s omitted).
Cost of goods manufactured  $500,000
Work in process inventory, beginning 0
Work in process inventory, ending 120,000
Direct materials used    85,000
Manufacturing overhead   100,000
Finished goods inventory, ending  72,000
 

What is the cost of goods sold?
A.  $500,000 B.  $428,000
C.  $685,000 D.  $548,000

15)  A  Company mistakenly treated a $20,000 product cost as a period cost. They produced 2,000 units of product & sold 1,000 of them during the year.  In the year in which the mistake was made
A. net income will be too high. B. net income will be too low.
C. net income will be correct.

17)  When manufacturing products, DL & DM are classified as:
A. period costs & expensed when incurred.
B. period costs & expensed when the goods are sold.
C. product costs & expensed when incurred.
D. product costs & expensed when the goods are sold.

18)  Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?
A.  The salary is a fixed cost that is directly traceable to the cost of making hamburgers.
B.  The salary is a fixed cost that is directly traceable to the cost of operating a specific restaurant.
C.  The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant.
D.  None of the above.

1)  Manufacturing overhead would include:
A. indirect labor costs only.
B. all manufacturing costs except direct materials & direct labor.
C. all manufacturing costs. D. indirect materials only.

2)  Which of the following is most likely NOT to use process costing?
A.  DuPont Chemical B.  Ashley Custom Furnishings
C.  Exxon-Mobile (gasoline) D.  General Mills (cereal)

3)  Which costing system would a manufacturer of plywood use?
A.  Job costing    B.  Process costing
C.  Either job or process D.  Both job & process

Before the year began, a company estimated that manufacturing overhead for the year would be $160,000 & that 12,000 direct labor hours would be worked.  Actual results for the year included the following:
Actual MOH $175,000
Actual direct labor hours          15,000

4)  The predetermined manufacturing overhead rate per direct labor hour is closest to:
A.  $13.33.  B.  $10.67.
C.  $11.67. D.  $14.58.

5)  The amount of manufacturing overhead allocated for the year based on direct labor hours would have been:
A.  $160,000.  B.  $167,500.
C.  $175,000. D.  $200,000.

Use the following data to answer the next three questions:
Data below pertains to Garrett Company’s most recently completed fiscal year before any adjustments for over or underapplied overhead were made:
Estimated manufacturing overhead   $       240,000   Factory utilities  $      29,100
Estimated labor hours             35,000   Indirect labor   $      23,500
Actual direct labor hours             36,000   Sales commissions                        $      53,700
Estimated direct labor cost  $       300,000   Factory rent   $      49,200
Actual direct labor cost  $       320,000   Factory property taxes   $      28,100
Factory depreciation   $         67,200   Indirect materials  $      33,000

6)  If the company allocates manufacturing overhead based on direct labor cost, what are the allocated manufacturing overhead costs?
A.  $240,000 B.  $256,000
C.  $230,100 D.  $400,000

7)  Actual overhead incurred during the year totaled
A.  $230,100 B.  $300,000
C.  $283,800 D.  $240,000

10)  Mountain Made quilts had a predetermined overhead allocation rate of $5.00 per direct labor hour.  If 5 direct laborers worked 1 ½  hours each to make a batch of  10 quilts, how much total overhead would be allocated to the batch of quilts?
A) $7.50   B) $37.50
C) $30.00  D) $75.00

11)   Assume that the total cost for the batch of 10 quilts made above in #10 was $400.  If Mountain Made wants to earn a gross profit of 40% on each quilt, what price should be charged for each quilt?
A) $160 B) $16 C) $56 D) $560

12)  Job 2301 requires $12,000 of direct materials, $5,000 of direct labor, 500 direct labor hours, & 300 machine hours.  Manufacturing overhead is computed at $15 per direct labor hour used & $12 per machine hour used.  The total cost of Job 1547 is:
A.  $28,100.  B.  $11,100.
C.  $17,000.  D.  $24,500.

15)  The requisition of direct & indirect materials into production reduces:
A.  finished goods inventory.    B.  manufacturing overhead.
C.  raw materials inventory.    D.  work in process inventory.

16)  Which of the following represents the flow of costs in a manufacturing firm?
A.  Raw materials inventory, finished goods inventory, COGS
B.  Raw materials inventory, WIP, finished goods inventory
C.  Finished goods inventory, work in process inventory, COGS
D.  Work in process inventory, COGS, finished goods inventory

1. Cost distortion results in the:
A. over costing of all products.
B. under costing of all products.
C. over costing of some products & under costing of other products.
D. accurate costing of all products.

2.  What is the first step in developing an ABC system?
A.  Identify the primary activities & estimate a total cost pool for each.
B.  Allocate the costs to the cost object using the activity cost allocation rates.
C.  Select an allocation base for each activity.
D.  Calculate an activity cost allocation rate for each activity.

4.  Which of the following describes how, in ABC, the activity allocation rate is computed?
A.  The total estimated activity cost pool is divided by the total estimated activity allocation base.
B.  The total estimated activity allocation base is divided by the total estimated activity cost pool.
C.  The total estimated activity allocation base is multiplied by the total estimated activity cost pool.
D.  You take the total estimated activity allocation base & subtract the total estimated total activity cost pool.

USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS:  a Company manufactures clocks & uses an activity-based costing system. Each clock consists of 10 separate parts totaling $120 in direct materials, & requires 2.0 hours of machine time to produce.
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $1.25 per part
Machining Machine hours $2.50 per machine hour
Assembling Number of parts $0.50 per part

Packaging Number of finished units $1.50 per finished unit

5.  What is the cost of materials handling per cuckoo clock?
A.  $3.00   B.  $5.00
C.  $4.50   D.  $12.50

6.  What is the total manufacturing cost per cuckoo clock?
A.  $142.50  B.  $  24.00
C.  $144.00  D.  $  25.00

10.  Four basic steps are used in an ABC system.  List the proper order of these steps, which are currently scrambled below:
a. Identify the primary activities & estimate a total cost pool for each.
b. Allocate the costs to the cost object using the activity cost allocation rates.
c. Select an allocation base for each activity.
d. Calculate an activity cost allocation rate for each activity.
A. a, c, d, b B. c, a, b, d
C. b, a, c, d D. a, d, c, b

1.  Which of the following statements is TRUE with respect to total variable costs?
A. They will remain the same as production levels change within the relevant rang
B. They will decrease as production increases within the relevant range.
C. They will decrease as production decreases within the relevant range.
D. They will increase as production decreases within the relevant range.

2.  Which of the following equations represents the total mixed cost?
A.  y = vx + f  B.  y = vx
C.  y = f   D.  y = v + f

3. YouCall offers a calling plan that charges $2.00 per month plus $0.05 per minute of call time.  Under this plan, what is your monthly cost if you talk for a total of 100 minutes?
A.  $7.00   B.  $5.00
C.  $3.00   D.  $2.00

4. The following graph indicates which type of cost behavior?

A. Fixed   B. Mixed  C.  Step D. Variable

5.  Total costs for Watson & Company at 100,000 units are $350,000, while total fixed costs are $150,000.  The total variable costs at a level of 200,000 units would be:
A.  $700,000. B.  $175,000.
C.  $400,000. D.  $300,000.

6.  Harbor Manufacturing is trying to predict the cost associated with producing its anchors.  At a production level of 4,000 anchors, Harbor Manufacturing’s average cost per anchor is $50.00.   If $20,000 of the costs are fixed, & the plant manager uses the cost equation to predict total costs, her forecast for 5,000 anchors will be:
A. $  50,000.  B. $245,000.
C. $250,000.  D. $200,000.

7.  Using account analysis, what type of cost is the rental of a space at $2,000 per month?
A. Fixed  B. Mixed
C. Step  D. Variable

10.  Traditional income statements organize costs by:
A.  function.   B.  behavior.
C.  discretionary vs. committed. D.  no particular manner.

11.  The contribution margin is equal to:
A.  sales minus cost of goods sold.
B.  sales minus variable expenses.
C.  sales minus fixed expenses.
D.  sales minus operating expenses.

12. A Store buys portable generators for $500 & sells them for $800. He pays a sales commission of 5% of sales revenue to his sales staff. Toby pays $2,000 a month rent for his store, & also pays $1,800 a month to his staff in addition to the commissions. Toby sold 200 generators in June. If Toby prepares a contribution margin income statement for the month of June, what would be his contribution margin?
A. $268,000  B. $160,000
C. $52,000  D. $108,000

1.  To compute the unit contribution margin, __________ should be subtracted from the sales price per unit.
A.  only variable period costs
B.  only variable inventoriable product costs
C.  all variable costs
D.  all fixed costs

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