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A manufacturing company has begun work on a batch of units at the beginning of the current period with no work in process at that point. The manufacturing process adds direct materials at the beginning of the process and adds direct labor and factory overhead evenly throughout the process. If the units are considered to be 60% complete in conversion costs at the end of the period, in which of the following accounts are the costs held?
A. 60% of conversion costs are in work-in-process inventory and direct materials costs are in finished goods inventory. |
B. 60% of conversion costs are in factory overhead and direct materials costs are in finished goods inventory. |
C. All costs are in work-in-process inventory. |
D. Direct materials costs are in materials inventory and all conversion costs are in work-in-process inventory. |
What is the estimated total cost for handling 75,000 gallons?
A. $153,000. |
B. $150,000. |
C. $146,000. |
D. $165,000. |
A. 11,000 units |
B. 22,000 units |
C. 4,400 units |
D. 8,800 units |
A. Kaizen. |
B. Back flush costing. |
C. Lean manufacturing. |
D. Activity-based management. |
A. Potential inventory accumulation |
B. Additional inventory on hand to cover orders should product be damaged or lost |
C. Relies on demand forecasts |
D. Minimizes machine setup time |
A. maximum capacity. |
B. normal capacity. |
C. master-budget (expected annual) capacity. |
D. practical capacity. |
A. $260 |
B. $120 |
C. $28 |
D. $140 |
A. purchasing manager only. |
B. plant controller only. |
C. production manager only. |
D. production manager and/or the purchasing manager. |
A. Design buffer management worksheets to facilitate quantitative analysis. |
B. Provide net profit, ROI, and cash flow data. |
C. Supply activity-based cost data. |
D. Determine outsourcing costs to off-load long-term critical constraints. |
A. $0.92/board-foot finished lumber; $0.48/board-foot plywood |
B. $0.64/board-foot finished lumber; $0.32/board-foot plywood |
C. $0.82/board-foot finished lumber; $0.44/board-foot plywood |
D. $1.12/board-foot finished lumber; $0.56/board-foot plywood |
A. Concurrent engineering |
B. Flexible manufacturing |
C. Computer-aided design |
D. Capacity planning |
A. indeterminable since it is not related to the labor efficiency variance. |
B. favorable. |
C. the same amount as the labor efficiency variance. |
D. unfavorable. |
A. activities that convert resources into products and services consistent with external customer requirements. |
B. a series of transactions between employees or between internal customers and internal suppliers to deliver an end product. |
C. activities that can be eliminated with no deterioration in product service, functionality, performance, or quality in the eyes of the end user. |
D. a series of transactions between employees to deliver an end product to external customers and external suppliers. |
A. uses cost drivers that have a cause-and-effect relationship with the activities performed. |
B. recognizes interactions between different departments. |
C. establishes multiple cost pools. |
D. eliminates product variations. |
A. 70,000 units. |
B. 90,000 units. |
C. 85,000 units. |
D. 65,000 units. |
A. $9.78 variable cost rate for basic model, $9.21 variable cost rate for fabric model |
B. $9.12 variable cost rate for basic model, $9.78 variable cost rate for fabric model |
C. $9.21 variable cost rate for basic model, $9.78 variable cost rate for fabric model |
D. $9.12 variable cost rate for basic model, $9.78 variable cost rate for fabric model |
A. Maintenance department: $594; tennis balls: $47,525; racquet balls: $11,881 |
B. Maintenance department: $0; tennis balls: $48,000; racquet balls: $12,000 |
C. Maintenance department: $594; tennis balls: $35,644; racquet balls: $23,762 |
D. Maintenance department: $0; tennis balls: $36,000; racquet balls: $24,000 |
Production and sales:
- Two Oil, 300,000 barrels produced; 80,000 barrels sold at $20 each.
- Six Oil, 240,000 barrels produced; 120,000 barrels sold at $30 each.
- Distillates, 120,000 barrels produced and sold at $15 per barrel.
The portion of the joint production costs assigned to Six Oil based upon physical output would be
A. $3,636,363. |
B. $3,750,000. |
C. $1,818,181. |
D. $4,800,000. |
A. equalizing set-up costs for all product lines. |
B. lower unit costs for low-volume products than is reported by traditional product costing. |
C. decreased set-up costs being charged to low-volume products. |
D. substantially greater unit costs for low-volume products than is reported by traditional product costing. |
The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000 per month. During May, Ardmore produced 1,650 units of Zeb compared to a normal capacity of 1,800 units. The actual cost per unit was as follows.
The material price variance for May is
A. $4,950 favorable. |
B. $14,355 unfavorable. |
C. $14,355 favorable. |
D. $4,950 unfavorable. |
A. Each method uses only one cost driver (allocation base) but multiple cost pools. |
B. Cost drivers (allocation base) for all three methods are selected because of assumed or determined cause-and-effect relationships with costs. |
C. Departmental overhead is the most accurate of the methods. |
D. ABC overhead rates are the best selection for processes that are very homogeneous. |
A. The muffins are $1,925 more profitable. |
B. The muffins have a higher profitability as a percentage of sales and, therefore, are more advantageous. |
C. The muffins are $2,000 more profitable. |
D. The cheesecakes are $75 more profitable. |
There were 100 units in beginning WIP, which were 20% complete in direct materials (DM) and 30% complete in conversion costs (CC). During the period 2,000 units were started in production and 1,900 were completed. Ending WIP inventory was 70% complete in DM and 60% complete in CC. If the firm uses the FIFO inventory method, what are equivalent units for the period?
A. DM: 1,900 units; CC: 1,900 units |
B. DM: 2,040 units; CC: 2,020 units |
C. DM: 2,020 units; CC: 1,990 units |
D. DM: 2,000 units; CC: 1,980 units |
A. prevention cost. |
B. internal failure cost. |
C. appraisal cost. |
D. external failure cost. |
A. process inspection. |
B. spoilage. |
C. product testing. |
D. inspection. |
The current production rate is the budgeted rate for the entire year. Direct labor employees earn $20 per hour and the company has a "no layoff" policy in effect. What is the amount of the throughput contribution per unit as computed using the theory of constraints?
A. $26.67. |
B. $46.67. |
C. $90.00. |
D. $76.67. |
A. a value chain. |
B. activity-based costing. |
C. process value analysis. |
D. integrated manufacturing. |
A. ABC provides actionable information; ABM is a source of explanatory data. |
B. ABC seeks to change costs and their drivers; ABM focuses on understanding costs and their drivers. |
C. ABC is predominately forward -looking; ABM is primarily historical. |
D. ABC provides information on process, product, and market performance; ABM finds ways to improve them. |
Actual output for the month of April was 800,000 units of glassware.
When Nash Glassworks Company allocates fixed costs, management will select a capacity level to use as the denominator or volume. All of the following would be appropriate as the capacity level that approximates actual volume levels except
A. normal capacity. |
B. theoretical capacity. |
C. expected annual capacity. |
D. master-budget capacity. |
A. Client support services for product fulfillment |
B. Redesign of a product |
C. Rework of defective product |
D. Quality assurance activities |
The beginning inventory was 60 percent complete for materials and 20 percent complete for conversion costs. The ending inventory was 90 percent complete for materials and 40 percent complete for conversion costs.
Costs pertaining to the month of May are as follows:
- Beginning inventory costs are: materials, $54,560; direct labor, $20,320; and factory overhead, $15,240.
- Costs incurred during May are: materials used, $468,000; direct labor, $182,880; and factory overhead, $391,160.
Using the weighted-average method, the equivalent unit cost of materials for May is
A. $4.60. |
B. $4.50. |
C. $4.12. |
D. $5.03. |
A. Volume analysis for volume-based cost drivers |
B. Relevant range analysis |
C. Activity analysis for activity-based cost drivers |
D. Variable costing |
A. Determines sources of profitability and the relative cost of internal processes |
B. Evaluates opportunities for achieving relative cost advantages |
C. Identifies the customer's value perceptions of the firm's products and services |
D. Diagnoses the cost drivers for each value-creating process |
A. $577,500. |
B. $645,000. |
C. $660,000. |
D. $600,000. |
A. continuous improvement. |
B. cycle-time improvements. |
C. lower costs. |
D. design simplicity. |
A. Exploiting the constraint improves long-term profitability; elevating the constraint boosts short-term profitability. |
B. Exploiting the constraint increases capital investments; elevating the constraint does not. |
C. Exploiting the constraint improves short-term profitability; elevating the constraint looks at long-term profitability. |
D. Exploiting the constraint typically does not increase capital investments; elevating the constraint does. |
Assuming that Dremmon used absorption costing, the amount of operating income earned in the last fiscal year was
A. $30,000. |
B. $21,500. |
C. $28,000. |
D. $27,000. |
A. $160,000 |
B. $180,000 |
C. $360,000 |
D. $220,000 |
A. greater protection of proprietary information. |
B. reduced investments. |
C. increased quality control. |
D. improved employee morale. |
A. strong supplier relationships requiring careful screening. |
B. reduced manufacturing lead time and setup time to run smaller batches. |
C. specialized workers stressing work-force expertise. |
D. use of manufacturing cells that group similar processes and minimize handling costs. |