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Study Resources (Accounting)

Learning Objective 19-3 1) Activity-based management uses activity-based costs to make decisions that increase profits while meeting customer needs. 2) Activity-based management (ABM) can be used to make pricing and product mix decisions. 3) A product mix decision focuses on generating maximum profit but does not consider limited production capabilities. 4) Target cost is.
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21) Which of the following is an attribute of traditional costing systems? A) raw materials are ordered in large quantities B) production is completed in self-contained work cells C) suppliers make frequent deliveries of small quantities of raw materials D) management works with suppliers to ensure defect-free raw materials 22) Under the just-in-time costing system,.
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Learning Objective 20-2 1) If the selling price of Product X is $15.50 per unit and unit fixed cost is $5.50, its contribution margin per unit is $10.00. 2) Contribution margin is the difference between net sales revenue and variable costs. 3) Contribution margin is the amount that contributes to covering variable costs. 4).
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11) The high-low method requires the identification of the lowest and highest levels of total costs, not activity, over a period of time. 12) Which of the following is a variable cost? A) property taxes B) salary of plant manager C) direct materials cost D) straight-line depreciation expense 13) A 15% increase in production volume will.
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21) Which of the following statements is true if total fixed costs decreases while the sales price per unit and variable costs per unit remain constant? A) The contribution margin increases. B) The breakeven point increases. C) The contribution margin decreases. D) The breakeven point decreases. 22) Colin was a professional classical guitar player until.
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Learning Objective 19-4 1) Activity-based management is not suitable for service companies as it deals with the proper allocation of manufacturing overhead. 2) While using an activity-based costing in service companies, the allocation of indirect costs to the cost object is the last step of the process. 3) Activity-based costing can be.
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Learning Objective 18-3 1) In a production cost report, the number of units to account for must always be greater than the number of units accounted for. 2) A production cost report shows only the calculations for the physical flow of products. 3) The task of summarizing the flow of physical units is.
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21) Colin was a professional classical guitarist until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows: Rent and.
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Learning Objective 19-5 1) An inventory management system in which a company produces just in time to satisfy customer needs is known as just-in-time management. 2) Just-in-time management systems typically help reduce direct labor costs of a company. 3) The just-in-time management system results in an increase in the inventory carrying costs of.
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11) A process costing system is generally used by companies that produce homogeneous products. 12) Under a process costing system, product costs are accumulated with respect to jobs completed. 13) Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting.
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21) Which of the following costs does not change in total despite changes in volume? A) fixed cost B) variable cost C) mixed cost D) total production cost 22) Costs that have both variable and fixed components are called ________. A) fixed cost B) variable cost C) mixed cost D) contribution cost 23) Which of the following costs changes in.
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Learning Objective 19-1 1) Direct material costs and direct labor costs cannot be easily traced to products. Therefore, they are allocated to products. 2) Manufacturing overhead costs, which are also known as indirect costs, cannot be cost-effectively traced to products. 3) Predetermined overhead allocation rate is an estimated overhead cost per unit of.
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11) An activity-based costing system is developed in four steps. a. Compute the allocation rate for each activity. b. Identify activities and estimate their total costs. c. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base. d. Allocate the indirect costs to the cost object. Which of.
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31) The phone bill for a company consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question. Minutes Total Bill January 460 $3,000 February 200 $2,675 March 160 $2,625 April 300 $2,800 What is the variable cost per minute? A) $1.25 B) $0.67 C) $1.08 D) $0.58 32) The phone bill for a corporation consists of both fixed.
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11) LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, 2014, the first department—Mixing—had no beginning inventory. During January, 40,000 fl. oz. of chemicals were started in production. Of these, 32,000 fl. oz. were completed and 8,000 fl..
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Learning Objective 20-1 1) Fixed costs per unit is inversely proportional to the volume of units produced. 2) Total variable costs change in direct proportion to changes in the volume of production. 3) Variable cost per unit is constant throughout various relevant ranges. 4) Fixed costs per unit decrease as production levels decrease. 5) If.
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Learning Objective 21-2 1) The level of inventory on hand at the end of the year does not affect the amount of operating income calculated under variable costing and absorption costing. 2) In variable costing, the value of ending finished goods inventory includes fixed manufacturing overhead. 3) When there are no units in.
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27) The Polishing Department of Laminates Inc. had 15,000 units in process on June 1, and received 25,000 units from the Machining Department. During the month, it completed 32,000 units and transferred them to the Packaging Department. Prepare the production cost report for the Polishing Department for the whole units.
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11) One of the assumptions of cost-volume-profit (CVP) analysis is that there are no changes in the ________. A) accounts payable B) cash balance C) inventory levels D) accounts receivables 12) Maywood Company sells hand-knit scarves.. Each scarf sells for $25. The company pays $30 to rent vending space for one day. The variable costs.
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Learning Objective 19-2 1) Activity-based costing focuses on a single predetermined overhead rate for cost analysis. 2) Traditional costing provides more detailed information on costs of activities and the drivers of these costs than activity-based costing. 3) Traditional costing systems employ multiple allocation rates, but an activity-based costing system uses only one rate.
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31) The activity-based costing system improves the allocation of ________. A) indirect manufacturing costs B) direct labor C) direct materials D) sales commissions 32) 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 materials cost D) sales revenues 33) Ace Plastics produces different.
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11) A ________ groups cost by behavior; costs are classified as either variable costs or fixed costs. A) balance sheet B) contribution margin income statement C) traditional income statement D) absorption costing income statement 12) Contribution margin ratio is equal to ________. A) fixed costs divided by contribution margin per unit B) net sales revenue per unit.
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Learning Objective 20-4 1) Sensitivity analysis allows managers to see how various business strategies will affect profit levels. 2) Sensitivity analysis empowers managers with better information for decision making by analyzing how various business strategies will affect profits earned by the company. 3) Managers can use CVP relationships to conduct sensitivity analysis. 4) When.
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Learning Objective 20-3 1) The sales level at which operating income is zero is called breakeven point. 2) The breakeven point represents the sales volume at which the company's net income is zero. 3) If all other factors remain constant, an increase in fixed costs will increase the breakeven point. 4) Fixed costs divided.
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21) Fasetech Inc. has collected the following data for November (there are no beginning inventories): Units produced 500 units Sale price $110 per unit Direct materials $20 per unit Direct labor $15 per unit Variable manufacturing overhead $10 per unit Fixed manufacturing overhead $15,000 per year Variable selling and administrative costs $5 per unit Fixed selling and administrative costs $10,000 per year What is the operating income using absorption costing if 450 units are sold? A).
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Learning Objective 18-4 1) When raw materials are purchased on account, the Accounts Payable account is credited. 2) The Raw Materials Inventory account is debited when direct materials are issued for production. 3) When indirect materials are issued to production, the Manufacturing Overhead account is credited. 4) When indirect materials are issued to production,.
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Learning Objective 19-6 1) Quality management systems (QMS) are systems that help managers improve the business's performance by providing quality products and services. 2) Companies which use a just-in-time management system do not benefit from a quality management system. 3) Companies using just-in-time management systems are far more vulnerable to production shutdowns.
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11) A predetermined overhead allocation rate is used to allocate direct materials cost to various processes or departments. 12) The adjusting entry for overallocated or underallocated manufacturing overhead is usually prepared at the beginning of the accounting period. 13) The four-steps of tracking product costs in a process costing system are ________. A).
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21) The Assembling Department of Mat Liners Inc. had 10,000 units in process in December beginning and received 30,000 units from the Sewing Department. During the month, it completed 20,000 units and transferred them to the Packaging Department. Calculate the number of units accounted for by the Assembling Department for.
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Learning Objective 21-1 1) Variable costing considers direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead as product costs. 2) Absorption costing considers fixed selling and administrative costs as product costs. 3) Absorption costing is required by the Generally Accepted Accounting Principles (GAAP) for financial statements issued to investors, creditors, and.
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11) The traditional income statement format is prepared under absorption costing. 12) The contribution margin format of the income statement categorizes costs by their behavior. 13) The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing. 14) Which of the following statements is true.
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11) The just-in-time management system is a(n) ________. A) labor management system B) overhead management system C) inventory management system D) debt management system 12) Which of the following statements is true of the just-in-time costing system? A) It increases the need for suppliers to deliver raw materials on time. B) It records summary journal entries before.
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11) When there are no beginning or ending finished goods inventories, ________. A) variable and absorption costing will result in different values for ending finished goods inventories B) variable and absorption costing will result in the same operating profits C) variable and absorption costing will result in different sales revenue D) variable and absorption.
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21) Divine Foods produces a gourmet condiment which sells for $16.00 per unit. Variable costs are $6 per unit, and fixed costs are $5,000 per month. If Divine expects to sell 1,500 units, compute the margin of safety in dollars. A) $16,000 B) $15,000 C) $10,000 D) $6,000 22) Antique Works is owned and operated.
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Learning Objective 18-6 1) Production cost reports prepared using the first-in-first-out (FIFO) method, determines the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs. 2) Production cost reports prepared using first-in-first-out (FIFO) method assumes that the first units started in the production process.
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11) Costs incurred in customer service are categorized as ________. A) prevention costs B) appraisal costs C) internal failure costs D) external failure costs 12) Which of the following is most likely to be categorized as an external failure cost? A) the cost of testing a product before shipment B) the cost of machinery maintenance to avoid.
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21) The cost of units sold is recorded by debiting Cost of Goods Sold and crediting ________. A) Finished Goods Inventory B) Sales Revenue C) Work-in-Process Inventory D) Wages Payable 22) Jetwell Inc. incurred $7,000 for indirect labor in Department III. The journal entry to record indirect labor utilized is ________. A) debit Manufacturing Overhead, $7,000;.
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21) Which of the following is considered a period cost under variable costing but not under absorption costing? A) fixed selling and administrative costs B) variable manufacturing costs C) fixed manufacturing overhead D) variable selling and administrative costs 22) Which of the following is considered a period cost in absorption costing? A) variable manufacturing overhead costs B).
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11) In target pricing, the target price is the ________. A) total product cost incurred in producing a product B) net profit desired by the company C) amount customers are willing to pay for a product or service D) price calculated by deducting the desired profit from the total production cost 12) ________ is the.
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11) Which of the following is used to calculate the number of units accounted for under first-in-first-out (FIFO) method of inventory valuation of process costing? A) Accounted for = Beginning balance + Started and completed + In process B) Accounted for = Beginning balance + Started and completed C) Accounted for = Beginning.
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21) The Assembly Department of Smart Inc., manufacturer of computers, incurred $250,000 in direct materials and $75,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,000 and 800, respectively. The cost per equivalent unit of production (EUP) for conversion costs is ________. A) $93.75.
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21) Alpha Company manufactures breadboxes and uses an activity-based costing system. The following information is provided for the month of May: Activity Estimated Indirect Activity Costs Allocation Base Estimated Quantity of Allocation Base Materials handling $3,500 Number of parts 5,000 parts Assembling $12,000 Number of parts 5,000 parts Packaging $5,750 Number of bread boxes 1,250 bread boxes Each breadbox consists of four parts, and the direct materials.
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31) Jupiter Inc. reports the following information for August: Sale revenue $800,000 Variable costs 200,000 Fixed costs 75,000 Calculate the operating income for August using variable costing. A) $625,000 B) $450,000 C) $525,000 D) $420,000 32) Nimtrans Inc. reports the following information for August: Sale revenue $800,000 Variable cost of goods sold 200,000 Fixed cost of goods sold 100,000 Variable selling and administrative costs 150,000 Fixed selling and administrative costs 75,000 Calculate the.
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