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WorksheetsBAC1054 Final Exam MCQ
Total questions: 50
Worksheet time: 6hrs 10mins
Management accountants would not
assist in budget planning.
prepare reports primarily for external users.
determine cost behavior.
be concerned with the impact of cost and volume on profits.
Directing includes
providing a framework for management to have criteria to terminate employees when needed.
running a department under quality control standards universally accepted.
coordinating a company's diverse activities and human resources to produce a smooth-running operation.
developing a complex performance ranking system to give certain high performers good raises.
For the work of factory employees to be considered as direct labor, the work must be conveniently and
materially associated with raw materials conversion.
periodically associated with raw materials conversion.
physically associated with raw materials conversion.
promptly associated with raw materials conversion.
A manufacturing company reports cost of goods manufactured as a(n)
current asset on the balance sheet.
administrative expense on the income statement.
component in the calculation of cost of goods sold on the income statement.
component of the raw materials inventory on the balance sheet.
Worth Company reported the following year-end information: beginning work in process inventory, $180,000; cost of goods manufactured, $816,000; beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Worth Company's cost of goods sold for the year is
$804,000.
$828,000.
$776,000.
$552,000.
Wood Company has beginning work in process inventory of $128,000 and total manufacturing costs of $477,000. If cost of goods manufactured is $480,000, what is the cost of the ending work in process inventory?
$110,000.
$131,000.
$140,000.
$125,000.
A company expected its annual overhead costs to be $1,800,000 and direct labor costs to be $1,000,000. Actual overhead was $1,740,000, and actual labor costs totaled $1,100,000. How much is the company’s predetermined overhead rate to the nearest cent?
$1.74
$1.57
$1.80
$1.64
Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $1,025,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $1,050,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?
$1,050
$51,250
$52,500
$1,025
Kinney Company applies overhead on the basis of 150% of direct labor cost. Job No. 176 is charged with $100,000 of direct materials costs and $120,000 of manufacturing overhead. The total manufacturing costs for Job No. 176 is
$220,000.
$400,000.
$300,000.
$270,000.
When determining costs of jobs, how does a company account for indirect materials?
It is added to work in process as used.
It remains part of raw materials inventory.
It is transferred out of raw materials into manufacturing overhead when used.
It is transferred out of raw materials into work in process as used.
If, at the end of the year, Manufacturing Overhead has been overapplied, it means that
actual overhead costs were greater than the overhead assigned to jobs.
actual overhead costs were less than the overhead assigned to jobs.
overhead has not been applied to jobs still in process.
cost of goods will have to be increased by the amount of the overapplied overhead.
During 2013, Cotte Manufacturing expected Job No. 59 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Cotte applied overhead based on direct labor cost. Actual production required an overhead cost of $290,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. How much is the amount of over- or underapplied overhead?
$10,000 underapplied
$10,000 overapplied
$40,000 underapplied
$40,000 overapplied
Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?
The detail at which costs are calculated.
The time period each covers.
The number of work in process accounts.
The manufacturing cost elements included.
Which of the following manufacturing cost elements occurs in a process cost system?
Direct materials.
Direct labor.
Manufacturing overhead.
All of these.
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?
88,000 equivalent units.
72,000 equivalent units.
60,000 equivalent units.
80,000 equivalent units.
In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June?
80,000 units.
70,000 units.
90,000 units.
100,000 units.
Which of the following is not a necessary step in preparing a production cost report?
Compute the equivalent units of production.
Compute the physical unit flow.
Prepare the job order cost sheet.
Prepare a cost reconciliation schedule.
Madison Industries has equivalent units of 8,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit?
$15.
$5.
$20.
$4.
Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true?
(1) Direct labor constitutes a significant part of total product cost.
(2) A high correlation exists between direct labor and changes in the amount of overhead costs.
(1) only
(2) only
Either (1) or (2)
Both (1) and (2)
A well-designed activity-based costing system starts with
identifying the activity-cost pools.
computing the activity-based overhead rate.
assigning overhead costs to products.
analyzing the activities performed to manufacture a product.
Which would be an appropriate cost driver for the machining activity cost pool?
Machine setups
Purchase orders
Machine hours
Inspections
For its inspecting cost pool, Davidson, Inc. expected overhead cost of $300,000 and 4,000 inspections. The actual overhead cost for that cost pool was $360,000 for 5,000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is
$60 per inspection.
$72 per inspection.
$75 per inspection.
$90 per inspection.
Wilder Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10,000 direct labor hours and the Luxury requires 30,000 direct labor hours. The company produces 3,400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $84,600 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing?
$21,150
$30,600
$42,300
$71,910
Which of the following is a limitation of activity-based costing?
More cost pools
Less control over overhead costs
Poorer management decisions
Some arbitrary allocations continue
The increased use of automation and less use of the work force in companies has caused a trend towards an increase in
both variable and fixed costs.
fixed costs and a decrease in variable costs.
variable costs and a decrease in fixed costs.
variable costs and no change in fixed costs.
Why is identification of a relevant range important?
It is required under accounting principles.
Cost behavior outside of the relevant range is not linear, which distorts CVP analysis.
It directly impacts the number of units of product a customer buys.
It is a cost that is incurred by a company that must be accounted for.
Gribble Company’s high and low level of activity last year was 60,000 units of product produced in May and 20,000 units produced in November. Machine maintenance costs were $104,000 in May and $40,000 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45,000 units.
$90,000
$96,000
$78,000
$80,000
Which of the following is not an underlying assumption of CVP analysis?
Changes in activity are the only factors that affect costs.
Cost classifications are reasonably accurate.
Beginning inventory is larger than ending inventory.
Sales mix is constant.
Sales are $500,000 and variable costs are $350,000. What is the contribution margin ratio?
43%
30%
70%
Cannot be determined because amounts are not expressed per unit.
A company has total fixed costs of $200,000 and a contribution margin ratio of 20%. The total sales necessary to break even are
$800,000.
$1,000,000.
$250,000.
$240,000.
At the break-even point,
sales equal total variable costs.
contribution margin equals total variable costs.
contribution margin equals total fixed costs.
sales equal total fixed costs.
Which one of the following is not a benefit of budgeting?
It facilitates the coordination of activities.
It provides definite objectives for evaluating performance.
It provides assurance that the company will achieve its objectives.
It requires all levels of management to plan ahead on a recurring basis.
If budgets are to be effective, all of the following must be present except
acceptance at all levels of management.
research and analysis in setting realistic goals.
stockholders' approval of the budget.
sound organizational structure.
If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 410,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?
350,000 pounds
530,000 pounds
290,000 pounds
470,000 pounds
The direct materials and direct labor budgets provide information for preparing the
sales budget.
production budget.
manufacturing overhead budget.
cash budget.
The financial budgets include the
cash budget and the selling and administrative expense budget.
cash budget and the budgeted balance sheet.
budgeted balance sheet and the budgeted income statement.
cash budget and the production budget.
A company budgeted unit sales of 204,000 units for January, 2013 and 240,000 units for February 2013. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2012, how many units should be produced in January, 2013 in order for the company to meet its goals?
214,800 units
204,000 units
193,200 units
276,000 units
Which of the following statements is false?
A standard cost is more accurate than a budgeted cost.
A standard is a unit amount.
In concept, standards and budgets are essentially the same.
The standard cost of a product is equivalent to the budgeted cost per unit of product.
If standard costs are incorporated into the accounting system,
it may simplify the costing of inventories and reduce clerical costs.
it can eliminate the need for the budgeting process.
the accounting system will produce information which is less relevant than the historical cost accounting system.
approval of the shareholders is required.
An unfavorable materials quantity variance would occur if
more materials were purchased than were used.
actual pounds of materials used were less than the standard pounds allowed.
actual labor hours used were greater than the standard labor hours allowed.
actual pounds of materials used were greater than the standard pounds allowed.
The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing
budgeted overhead costs by an expected standard activity index.
actual overhead costs by an expected standard activity index.
budgeted overhead costs by actual activity.
actual overhead costs by actual activity.
The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?
Favorable materials quantity variance
Favorable total materials variance
Unfavorable materials price variance
Unfavorable labor quantity variance
An unfavorable labor quantity variance may be caused by
paying workers higher wages than expected.
misallocation of workers.
worker fatigue or carelessness.
higher pay rates mandated by union contracts.
The total overhead variance is the difference between the
actual overhead costs and overhead costs applied based on standard hours allowed.
actual overhead costs and overhead costs applied based on actual hours.
overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed.
the actual overhead costs and the standard direct labor costs.
A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to
assign responsibility for the decision.
provide relevant revenue and cost data about each course of action.
determine the amount of money that should be spent on a project.
decide which actions that management should consider.
Which of the following is an irrelevant cost?
An avoidable cost
An incremental cost
A sunk cost
An opportunity cost
In incremental analysis,
only costs are analyzed.
only revenues are analyzed.
both costs and revenues may be analyzed.
both costs and revenues that stay the same between alternate courses of action will be analyzed.
Which of the following is a true statement about cost behaviors in incremental analysis?
1. Fixed costs will not change between alternatives.
2. Fixed costs may change between alternatives.
3. Variable costs will always change between alternatives.
1
2
3
2 and 3
In the analysis concerning the acceptance or rejection of a special order, which items are relevant?
Variable costs only
Fixed costs only
Variable costs and fixed costs
Variable costs and unavoidable costs
Which of the following is not a qualitative factor to be considered in a make-or-buy decision?
Possible lost jobs from buying outside
Supplier’s ability to satisfy quality standards
Incremental benefit from buying outside
Supplier’s ability to meet production schedule
