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WorksheetsAccounting Chapter 3
Total questions: 72
Worksheet time: 41mins
What is a disadvantage of the high/low method?
Because it uses only two data points, it may not represent all data well
You need specialized mathematical equipment to calculate it
It cannot separate variable and fixed costs or revenues
It has a dumb name
What is an advantage of the high/low method?
It is easy to use
It is the most accurate method for revenue/cost projection
It uses only two data points
It can be used outside of the relevant range
How has automation affected the conversion process?
t has increased manufacturing overhead costs, but made made the process more flexible
It has decreased labor costs and made scheduling more difficult
It has increased manufacturing overhead costs and increased raw material waste
It has made accurate overhead allocation less critical.
What is the difference between FOB Destination and FOB Shipping Point?
In FOB Destination title passes when the item is delivered by the common carrier to the recipient. In FOB Shipping Point, title passes to the recipient when the item is given to the common carrier.
In FOB Shipping Point title passes when the item is delivered by the common carrier to the recipient. In FOB Destination, title passes to the recipient when the item is given to the common carrier.
There is no difference. FOB Shipping Point and FOB Destination are arbitrarily defined in the Bill of Lading and can vary by contract.
In FOB Shipping Point title remains with the common carrier during delivery while in FOB Destination title passes only when delivery is complete.
For a hair styling salon, which of these would be considered fixed costs?
Computer costs for inventory maintenance
Rent on the facilities
Industrial hair dryers
All of these
For a hair styling salon, which of the following would be considered mixed costs?
Utilities and combs, brushes, and miscellaneous hair supplies
Industrial hair dryers and stylists' salaries and commissions
Rent on the facilities and utlities
Computer costs for inventory maintenance
For a hair styling salon, which of the following would be considered mixed costs?
Stylists' salaries and commissions and combs, brushes, and miscellaneous hair supplies
Hair dyes and other single-use coloring products and utilities
Computer costs for inventory maintenance and rent
Combs, brushes, and miscellaneous hair supplies and hair products sold to customers
For a hair styling salon, which of the following would be considered variable costs?
hair products sold to customers and hair dyes and other single-use coloring products
Stylists' salaries and commissions and combs, brushes, and miscellaneous hair supplies
Utilities and Rent on the facilities
Industrial hair dryers and computer costs for inventory maintenance
A corporation has the following cost formula: Y=30(x) + $250,000. If they sell 7,000 units, what will its total cost be?
The frozen yogurt shop sells only yogurt and only in cups. Which of the following would be a variable cost if the number of customers is the cost driver?
spoons
rent on the shop
wages
electricity
A cost that increases in total but decreases per unit as the cost driver increases is a(n)
mixed cost
fixed cost
variable cost
activity cost
Y=m(X) is the formula for a(n)
variable cost
activity cost
fixed cost
mixed cost
The document listing the quantities of materials and parts needed by the production department is referred to as a(n)
materials requisition
operations list
bill of lading
production order
Manufacturing products is associated with which of the following processes?
conversion process
revenue process
expenditure process
evaluation process
Delivery of goods is associated with which of the following process?
revenue process
expenditure process
conversion process
evaluation process
A sales invoice originates with the
sales department
vendor
purchasing department
accounting department
A document sent by the purchasing department to order a specific quantity of goods or services is called a
purchase order
purchase requisition
purchasing report
vendor invoice
Which of the following is not part of the expenditure process?
Using equipment to manufacture products
Receiving goods and services
Paying suppliers
Ordering goods and services
A Co. ordered $50,000 of fertilizer from B Industries and was given terms of 2/15, net/60. Which of the following describes how soon the payment must be made in order to receive a discount and the amount of the discount?
$1,000 if payment is made within 15 days
$1,000 if payment is made between 2 and 15 days
$7,500 if payment is made within 60 days
$20,000 if payment is made between 2 and 15 days
A company purchases $25,000 of merchandise with terms 3/10, n/60; FOB destination point on December 30. The merchandise arrives on January 3 and the company pays its bill on January 12. How much does the company owe?
A company used the high/low method and determined that the variable cost per unit was $6 while the fixed cost per month was $10,000. What is the estimated total cost if 200 units are produced?
Which of the following is not part of the conversion process?
Paying for the raw material used in production
Machine set-ups
Storing the raw material used in production
Storing finished manufactured goods until sold
Which of the following is not part of the revenue process?
Receive goods and services
Receive and accept orders for goods and services
Receive payments for goods and services rendered
Provide customer support
A company ships $20k of merchandise with terms 1/10, n/30, FOB destination. What is the amount of the discount available to the purchaser?
$200
$2,000
$6,000
$0, the goods were shipped free on board
A revenue that does not change in total as the amount of the activity changes
Fixed Revenue
Mixed Revenue
Variable Revenue
Changeable Revenue
A revenue that varies, but not proportionately, to a change in activity
Mixed Revenue
Fixed Revenue
Variable Revenue
Changeable Revenue
A cost that varies, but not proportionately, to a change in activity
Mixed Cost
Fixed Cost
Variable Cost
Changeable Cost
A cost that changes inversely proportionally to an activity (i.e. the cost per unit goes down as the number of units increases)
Fixed Cost
Mixed Cost
Variable Cost
Changeable Cost
A span of activity that is normal for a company
Relevant Range
Activity Driver
Fixed Activity
Normal Range
A cost that changes in direct proportion to an activity
Variable Cost
Fixed Cost
Mixed Cost
Changeable Cost
Basis that reflects the consumption or provision of resources
Activity Driver
Variable Cost
Relevant Range
Mixed Driver
Discount given buyer for paying amount due early
Purchase Discount
Sales Allowance
Purchase Return
Purchase Allowance
Legal title transfers when goods leave the seller's place of business
FOB Shipping Point
FOB Destination
Bill of Lading
Manufacturing Overhead
Reduction in price of goods purchased as a result of dissatisfaction by customer (buyers books)
Purchase Allowance
Sales Allowance
Purchase Discount
Sales Discount
Adjustments made to machines in preparation for new production run
Machine Set-ups
Cells
Manufacturing Overhead
Purchase Discounts
Goods return by buyer on buyer's books
Purchase Returns
Sales Returns
Purchase Discount
Sales Discount
A group of machines arranged to reduce travel time of product between machines
Cell
Machine Set-ups
Manufacturing Overhead
Bill of Lading
Legal title transfers to customer when goods are received
FOB Destination
FOB Shipping Point
Bill of Lading
Purchase Allowance
Manufacturing cost not directly associated with the production of a product
Manufacturing Overhead
Machine Set-ups
Sales Allowance
Purchase Discounts
Shipping document that describes agreement between business and common carrier
Bill of Lading
FOB Shipping Point
FOB Destination
Purchase Discount
Discounts given to unhappy customers by seller (seller books)
Sales Allowances
Purchase Allowances
Sales Discount
Purchase Discount
Which of the following best describes a primary step in the revenue process?
Billing customers for goods and services provided
Purchasing raw materials
Paying employee wages
Depreciating equipment
The expenditure process typically involves which of the following activities?
Procuring necessary resources and paying suppliers
Negotiating sales contracts
Receiving cash from customers
Conducting market research
The conversion process in a manufacturing business is primarily concerned with:
Transforming raw materials into finished goods
Selling finished products
Marketing products to consumers
Managing accounts receivable
A cost that changes in total with an increase or decrease in the volume of activity is
known as a:
Variable cost
Fixed cost
Step-cost
Semi-variable cost
Which of the following is a classic example of a fixed cost?
Rent on a factory building
Direct materials for a product
Sales commissions
Packaging for goods
Revenue behavior refers to how revenue changes in response to
The level of production or sales
The number of employees
Depreciation expense
The company's marketing budget
In the context of a production process, the conversion cost includes
Direct labor and manufacturing overhead
The cost of raw materials
The cost of selling and administrative expenses
The cost of purchasing land for a new factory
Which of the following is a key objective of the expenditure process?
Ensuring timely and efficient acquisition of resources
Maximizing profit from sales
Building strong customer relationships
Managing inventory levels
The relationship between total revenue and the quantity of goods sold is a
fundamental aspect of
Revenue behavior
Cost behavior
The expenditure process
The conversion process
A business sells a product for $10 per unit. If they sell 100 units, the total revenue
is $1,000. If they sell 200 units, the total revenue is $2,000. This indicates that
revenue is acting as a
Variable behavior
Fixed behavior
Step behavior
Mixed behavior
The high/low method helps you:
Find fixed and variable costs
Find profit
Find cash
Find revenue
Revenue process does all the following except:
Determine needs for goods or services
Generate sales
Provide customer support
Receive payment
A variable cost per unit:
None of these
Stays the same
Goes down as activity goes up
Goes up as activity goes down
Terms 2/20, n/40 mean
2% discount if paid in 20 days, full amount due in 40
2% off if paid in 40 days
Full payment due in 20 days
40% off in 2 days
The revenue process is
Activities that involve customers
Activities that involve suppliers
Activities of the production process
None of these
The expenditure process is:
Activities that involve customers
Activities that involve suppliers
Activities of the production process
None of these
The conversion process is:
Activities that involve customers
Activities that involve suppliers
Activities of the production process
None of these
A cost that has both fixed and variable parts is:
Mixed costs
Step costs
Direct costs
Random costs
Costs are $14,000 at 12,000 hours and $20,000 at 18,000 hours. Variable cost per hour
is
$1.00
$0.50
$1.20
$1.50
Which is not a cost behavior type?
Fixed
Variable
Mixed
Steep
Name of method to calculate cost and revenue behavior?
Cash method
High/Low method
Revenue process
Accrual method
What is a discount given to customers who pay there bill early (buyers perspective)
Purchase allowance
Purchase discount
Sales discount
Sales allowance
What is a discount given to customers who pay their bill early (sellers perspective)
Sales allowance
Purchase discount
Sales discount
Purchase allowance
Discount given to unhappy customers (buyers perspective)
Purchase discount
Sales disount
Purchase allowance
Sales allowance
Discount given to unhappy customers (sellers perspective)
Sales allowance
Purchase discount
Sales discount
Purchase allowance
Shipping agreement
Free on board (FOB) destination
ree on board (FOB) shipping point
Bill of lading
Expenditure process
Responsible for product if damaged in shipping in case of FOB shipping point
customer
seller/business
delivery company
customer and seller share responsibility
Responsible for product if damaged in shipping in case of FOB destination
customer
seller/business
delivery company
customer and seller share responsibilty
Given a fixed cost of 5 and a variable cost of 3 how much would 500 units cost
considering that it's in the relevant range
$1,505
$5,003
$2,503
$1,005
Given a fixed cost of 5 and a variable cost of 3 how much would 385,809 units cost
considering that it's in the relevant range
$1,929,048
$500
$200,000
$1,958,554
Given a fixed cost of 3 and a variable cost of 5 how much would 500 units cost
considering that its in the relevant range
$1,505
$5,003
$2,503
$1,005
