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Study Resources (Accounting)

11) In making a short-term decision, which of the following is MOST important? A) Separate variable costs from fixed costs B) Focus on total costs C) Use a conventional absorption costing approach D) Focus on the bottom line net income 12) Which of the following describes a sunk cost? A) One that is relevant to a.
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21) Bakersfield Manufacturing produces agricultural tools including a hand tiller.  Their current full-product cost for a hand tiller is $20.   Bakersfield wishes to make a 15% profit on the selling price.  Bakersfield uses a target pricing strategy.  The current competitive market price for this product is $22.  What does Bakersfield.
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8) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year A potential deal has come up for a one time.
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21) Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $.08 Machining Machine hours $7.20 Assembling Number of parts $.35 Packaging Number of finished units $2.70 What is.
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Learning Objective 18-1 1) With increased competition, managers need more accurate estimates of product costs to set prices and to identify the most profitable products. 2) Activity-based costing focuses on a single predetermined overhead rate for cost analysis. 3) The main difference between activity-based costing and traditional costing systems is that activity-based costing.
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18) Argyle sells steel beams to building contractors in two sizes-regular and heavy.  Argyle sells 4 regular beams for every one heavy beam.  Cost data are as follows: Regular Heavy Price per unit $20.00 $28.00 Variable cost per unit $16.00 $20.00 Argyle's fixed costs are $2,880 per month.  How much is the breakeven point in.
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Learning Objective 19-1 1) Peterson Company has both fixed and variable costs.  If the volume doubles, the total fixed costs will double. 2) Total variable costs change in response to changes in the volume of production. 3) The mixed cost per unit is constant throughout the relevant range of activity. 4) Fixed costs.
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51) Which of the following would NOT be considered an activity for the purposes of an activity-based costing system? A) Materials handling B) Machine processing C) Direct materials cost D) Packaging 52) Which of the following would most likely be treated as an activity in an activity-based costing system? A) Direct labor cost B) Machine processing C) Direct.
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9) Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled.  After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars.  The guitars sell for $600, and the fixed monthly operating costs.
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Learning Objective 18-3 1) Just-in-time methodology depends on maintaining higher inventory levels to ensure that the manufacturing process isn't interrupted by supply shortages. 2) Just-in-time production systems are organized into independent work cells that have all the resources needed to complete the manufacturing process. 3) The traditional manufacturing process focuses on small.
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8) LDR Manufacturing produces a pesticide chemical and uses process costing.  There are three processing departments?Mixing, Refining, and Packaging.  On January 1, 2012, the first department, Mixing, had a zero beginning balance.  During January, 40,000 liters of chemicals were started into production.  During the month, 32,000 liters were completed, and.
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31) Pitt Jones Company had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $60,000 2,000 hours Account billing (lines) $30,000 20,000 lines Account verification (accounts) $15,000 20,000 accounts Correspondence (letters) $10,000 1,000 letters The above activities are carried out at two of their regional offices. Northeast Office Midwest Office Account inquiry (hours) 100 hours 200 hours Account billing (lines) 10,000 lines 7,000 lines Account verification (accounts) 1,000 accounts 600.
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Learning Objective 18-2 1) Activity-based costing systems and traditional costing systems will produce the same results for product cost and profitability, although they use different methods of calculation. 2) Target cost is the price that customers are willing to pay and target price is the desired cost to produce the product. 3).
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31) Orleans Company has a normal range of production volumes between 100,000 units and 180,000 units per month.  That is considered the relevant range for production cost analysis.  If the company expands significantly beyond 180,000 units per month, which of the following would be the most likely expectation? A) The fixed.
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18) Pueblo Products is a price-taker and uses target pricing.  Pueblo has just done an analysis of their revenues, costs and desired profits, and has calculated its target full cost.  Please refer to the following information: Target full cost $400,000 Per year Actual fixed cost $160,000 Per year Actual variable cost $1.00 Per unit Production volume 250,000 Units.
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11) An activity-based costing system would be of less value to a business making a single product than it would be for a company with multiple products. 12) A traditional costing system employs multiple allocation rates, but an activity-based costing system uses only one single allocation rate. 13) An activity-based costing system.
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11) Which of the following is CORRECT about a just-in-time production system? A) Customer orders drive the production process. B) Goods are produced ahead of time to protect against running out of inventory. C) Materials are purchased in large quantities. D) Inventory levels are maintained at high levels. 12) Which of the following pertains to.
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14) The cost of inspection at various stages of production is an example of what type of cost? A) Appraisal cost B) External failure cost C) Prevention cost D) Internal failure cost 15) The cost of reengineering the production process to reduce defect rate is an example of which of the following? A) Internal failure cost B).
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38) If a company is a price-taker, which of the following is probably TRUE? A) The company is in a highly competitive market. B) The company's product is unique. C) The company has considerable flexibility in setting prices of its products. D) The company clearly differentiates its product from the competitors. 39) Grove Company makes.
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11) Chambers Company sells glass vases at a wholesale price of $2.50 per unit.  Variable cost is $1.75 per unit.  Chambers' fixed costs are $6,500 per month.  If Chambers wishes to make operating income of $2,500, how many units must be sold? A) 11,500 B) 11,750 C) 12,000 D) 12,500 12) Chambers Company sells glass.
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39) A small business produces a single product and reports the following data: Price $8.00 per unit Variable cost $5.00 per unit Fixed cost $21,000 per month Volume 10,000 per month The company's variable cost goes up by $0.25 per unit.  Fixed costs are lowered from $21,000 to $18,000.   Assume other factors remain the same.  How would this change.
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31) Nemesis Company manufactures water skis.  Nemesis pursues a target pricing strategy.  Please review the data below: Current market price$180 per pair Current manufacturing cost$110 per pair Current non-manufacturing cost$25 per pair Desired profit30% of price Which of the following would be the desired cost reduction?  (Please round all amounts to nearest cent.) A) $12.50 B) $16.00 C).
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31) Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology.  At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place: 1.Purchase $40,000 of materials on account. 2.Pay out $25,000 of direct labor costs. 3.Incur.
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29) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows: Price$720 per unit Variable cost$470 per unit Fixed costs$8,000 per month How much is his margin of safety expressed.
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56) AAA Metal Bearings produces two sizes of metal bearings (sold by the crate)-standard and heavy.  The standard bearings require $200 of direct materials per unit (per crate) and the heavy bearings require $245 of direct materials per unit.  The operation is mechanized and there is no direct labor.  Previously.
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21) Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled.  After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars.  The guitars sell for $600, and the fixed monthly operating costs.
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Learning Objective 17-5 1) Darrius Travel Services provided the following information: Cost allocation rate for direct labor:  $40 per hour Cost allocation rate for indirect costs:  $22 per hour If Darrius receives $700 for a job requiring 12 hours of direct labor, they will make a profit of $44. 2) Darrius Travel Services provided.
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42) At the beginning of 2012, Conway Manufacturing Company had the following account balances:   During the year, the following transactions took place: Direct materials placed in production:$80,000 Direct labor incurred:$190,000 Manufacturing overhead incurred$300,000 Manufacturing overhead allocated to production:$295,000 Jobs completed with cost of:$500,000 Please record these transactions to the T-accounts and calculate preliminary balances in the.
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11) Which of the following is NOT a fixed cost? A) Property taxes B) Salary of plant manager C) Direct materials cost D) Straight-line depreciation 12) A 15% increase in production volume will result in a: A) 15% increase in the variable cost per unit. B) 15% increase in total mixed costs. C) 15% increase in total manufacturing.
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21) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.  Fogelin has 4 public relations specialists, plus an office staff.  At the beginning of 2012, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at.
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29) Which of the following statements describes a scenario when management should consider dropping a business division? A) The division has consistently reported an operating loss. B) The division's avoidable fixed costs are less than its contribution margin. C) The division's avoidable fixed costs are greater than its contribution margin. D) The division's unavoidable.
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19) A company has two different products that sell to separate markets.  Financial data are as follows: Product A Product B Total Revenue $12,000 $8,000 $20,000 Variable cost ($7,500) ($8,100) ($15,600) Fixed cost (allocated) ($3,000) ($1,000) ($4,000) Operating income $1,500 ($1,100) $400 Assume that fixed costs of $500 could be eliminated if product B was dropped; assume furthermore that dropping one product would not impact.
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41) Orlando Avionics makes three types of radios for small aircraft-model A, model B, and model C.  The manufacturing operations are mechanized and there is no direct labor.  Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system.  Direct materials costs per unit for each model are.
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21) Johnson Production Company uses just-in-time production and accounting methods.  On June 1, Johnson paid $6,000 for factory repair and maintenance costs in cash. Which of the following journal entries correctly records this transaction? A) Debit $6,000 to Cash, credit $6,000 to Manufacturing overhead. B) Debit $6,000 to Raw and in-process inventory,.
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18) LDR Manufacturing produces a pesticide chemical and uses process costing.  There are three processing departments-Mixing, Refining, and Packaging.  On January 1, 2012, the Refining Department had 2,000 liters of partially processed product in production.  During January, 32,000 liters were transferred in from the Mixing Department and 29,000 liters were.
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4) Internal failure costs occur when the company detects and corrects poor-quality goods or services before delivery to customers. 5) Costs spent to detect poor-quality goods are considered appraisal costs. 6) Costs incurred when the company corrects for poor-quality goods before they are delivered to the customer are considered internal failure costs. 7).
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28) Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: Sale price per unit $150 Variable costs per unit:     Manufacturing 55     Marketing and administrative 25 Total fixed costs:     Manufacturing $640,000     Marketing and.
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48) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year An offer has come in for a one time sale.
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