1. Inventory accounts for a manufacturer include:
a. materials, work in process, and finished goods
b. merchandise, materials, and finished goods
c. work in process, direct labor, and finished goods
d. work in process, materials, and manufacturing overhead
2. All of the following would probably be considered a direct material except:
a. steel
b. fabric
c. glue
d. lumber
3. Inventoriable product costs:
a. are used for external reporting purposes
b. include marketing and distribution costs
c. are not shown on the income statement until the products are sold
d. both A and C are correct
4. Work in process inventory on December 31, 20X6, is $42,000. Work in process inventory decreased 40% during 20X6. Total manufacturing costs incurred in 20X6 amount to $260,000. What is cost of goods manufactured?
a. $232,000
b. $302,000
c. $288,000
d. $190,000
5. The following information is provided for the Heather Company for the current year:
Beginning work in process inventory $150,000
Ending work in process inventory $70,000
Beginning finished goods inventory $20,000
Ending finished goods inventory $30,000
Direct materials used $120,000
Direct labor $160,000
Manufacturing overhead $200,000
Selling and administrative expenses $100,000
What is the costs of goods manufactured?
a. $480,000
b. $540,000
c. $560,000
d. $660,000
6. All of the following are examples of manufacturing overhead except:
a. indirect materials
b. utilities incurred in the factory
c. insurance expired on the factory equipment
d. wages of assembly line workers
7. Which of the following industries is most likely not to use a job costing system?
a. paint
b. aircraft
c. custom furniture
d. unique furniture accessories
8. Which of the following would be debited to record the requisition of direct materials?
a. finished goods inventory
b. materials inventory
c. work in process inventory
d. cost of goods manufactured
9. Upstart Company provided the following information. Upstart uses machine hours as its overhead allocation base.
Estimated manufacturing overhead $1,000,000
Estimated machine hours 40,000
Actual machine hours worked 50,000
Actual manufacturing overhead incurred $1,200,000
What is the predetermined overhead rate?
a. $20 per machine hour
b. $22.5 per machine hour
c. $25 per machine hour
d. $30 per machine hour
10. Upstart Company provided the following information. Upstart uses machine hours as its overhead allocation base.
Estimated manufacturing overhead $1,000,000
Estimated machine hours 40,000
Actual machine hours worked 50,000
Actual manufacturing overhead incurred $1,200,000
What is the amount of over-applied or under-applied overhead?
a. $50,000 under-applied
b. $50,000 over-applied
c. $200,000 under-applied
d. $200,000 over-applied
11. Which of the following would be debited to assign the cost of indirect labor?
a. manufacturing overhead
b. work in process inventory
c. finished
goods inventory
d. wages payable
12. The Heminway Company uses a job costing system. In April, material requisitions of $44,000 were issued and materials purchases totaled $56,600. The ending balance in materials inventory was $18,400. The beginning balance was:
a. $5,800
b. $25,600
c. $31,000
d. None of the above
13. Which of the following is a characteristic of a variable cost?
a. Variable costs vary in total with production and sales.
b. Variable costs are variable per unit, and fixed in total.
c. Variable costs do not change in total over the relevant range.
d. All of the above are charters of variable costs
14. Fixed Company produces a single product selling for $30 per unit. Variable costs are $12 per unit and total fixed costs are $4,000. What is the contribution margin ratio?
a. 0.40
b. 2.50
c. 0.60
d. 1.67
15. If the sale price per unit is $7, the unit contribution margin is $3, and total fixed expenses are $19,500, the breakeven sales in units is:
a. 5,850
b. 6,500
c. 2,786
d. 4,875
16. If the sale price per units is $24.50, the variable expense per unit is $17, and total fixed expenses are $324,000, the breakeven sales in dollars is:
a. $43,200
b. $734,400
c. $1,058,400
d. $224,808
17. If the sale price per unit decreases and variable costs remain the same, the contribution margin ratio will:
a. decrease
b. increase
c. remain the same
d. impossible to determine using the given data
18. Lighfoot Company sells its product for $55 and has variable costs of $30 per unit. Total fixed costs are $25,000. Suppose variable costs increase by 10% due to an increase in the cost of direct materials. The breakeven point will
a. increase from 1,000 units to 1,136 units
b. decrease form 1,000 units to 864 units
c. increase from 758 units to 1,000 units
d. decrease from 1,000 units to 758 unit
19. Dakota Company provides the following information about its single product.
Targeted operating income $40,000
Selling price per unit $3.50
Variable cost per unit $1.05
Total fixed costs $90,000
How many units must be sold to earn the targeted operating income?
a. 37,143
b. 53,061
c. 123,810
d. 36,735
20. Which of the following is an advantage of the budgeting process?
a. aids in performance evaluation
b. coordinates the activities of the organization
c. assures the company of achieving its objectives
d. both A and B
21. Operating budgets include all of the following except:
a. budgeted income statement
b. sales budget
c. budgeted balance sheet
d. inventory budget
22. When preparing the cash budget, all of the following should be considered except:
a. cash receipts from customers
b. payments for inventory
c. cash payments to suppliers
d. depreciation expense
23. Lan Corporation had beginning inventory of 42,000 units and expects sales of 96,000 units during the year. Desired ending inventory is 31,000 units. Lan Corporation should produce:
a. 65,000 units
b. 73,000 units
c. 85,000 units
d. 103,000 units
24. Lue Electronics budgeted sales of $400,000 for the month of November and costs of goods sold equal to 65% of sales. Beginning inventory was $80,000 and ending inventory is estimated at $72,000. The budgeted purchases for November are:
a. $252,000
b. $254,800
c. $264,800
d. $265,200
25. A sporting goods store purchased $4,500 of ski boots in September. The store had $2,000 of ski boots on hand at the beginning of September, and expected to have $2,500 of ski boots at the end in order to cover part of anticipated October sales. What is the budgeted costs of goods sold for September?
a. $6,500
b. $6,000
c. $4,500
d. $4,000
26. Farmington Enterprises has budgeted sales for the months of September and October at $300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. The October cash collections from customers are:
a. $168,000
b. $288,000
c. $232,000
d. $290,000
27. All of the following statements regarding flexible budgets are true except:
a. they are designed to estimate revenues, costs, and profit
b. managers use them to help plan for uncertainties
c. they are prepared for a range of activity levels
d. all of the above are true
28. An unfavorable direct labor price variance indicates that:
a. both actual quantity and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output
b. the actual quantity of direct labor hours worked exceeded the standard quantity of hours for actual output
c. the actual cost of direct labor per hour was less than the standard cost of direct labor per hour
d. the actual direct labor cots per hour exceeded the standard direct labor cots per hour for actual output
Use the following data about Joy Corporation to answer Questions 31 to 34
39. Joy Corporation manufactures a product with the following per unit standard costs:
Direct Materials 10 square yards at $6 per yard
Direct Labor 12 hours at $10 per hour
The following information relates to actual operations:
Direct materials purchased = 1000 square yards at $5 per yard
Direct materials used in production = 900 square yards
Direct labor cost = $10,000
Direct labor hours = 1,200
Actual output = 80 units
The direct materials price variance is:
a. $600 favorable
b. $600 unfavorable
c. $1,000 favorable
d. $1,000 unfavorable
30. The direct materials efficiency variance is:
a. $600 favorable
b. $600 unfavorable
c. $1,200 favorable
d. $1,200 unfavorable
31. The direct labor price variance is:
a $1,000 favorable
b. $1,000 unfavorable
c. $2,000 favorable
d. $2,000 unfavorable
32. The direct labor efficiency variance is:
a. $2,000 favorable
b. $2,000 unfavorable
c. $2,400 favorable
d. $2,400 unfavorable
33. A budget based on a single predicted amount of sales or production is called:
a. static budget
b. fixed budget
c. flexible budget
d. standard budget
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