1. Which of the following are easy to trace to individual jobs?:
A. direct materials and overhead
B. direct materials and direct labor
C. direct labor and overhead
D. overhead and indirect labor
2. "Which method of measuring costs associated with production is more widely used in practice"?:
A. Normal Costing
B. Actual Costing
C. Both are used equally
D. Neither one is used
3. Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor hours to be 40,000. During February, Morrow has 4,200 direct labor hours and 8,000 machine hours. What is the predetermined overhead rate?
A. $3.44 per machine hour
B. $147.62 per direct labor hour
C. $15.50 per direct labor hour
D. $77.50 per machine hour
4. Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor hours to be 40,000. During February, Morrow has 4,200 direct labor hours and 8,000 machine hours. What is the amount of overhead applied for February?
A. $65,100
B. $42,000
C. $24,000
D. $78,200
5. Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor hours to be 40,000. During February, Morrow has 4,200 direct labor hours and 8,000 machine hours. If the actual overhead for February is $64,700, what is the overhead variance and is it overapplied or underapplied?
A. $400 underapplied
B. $200 overapplied
C. $1,000 underapplied
D. $400 overapplied
6. The unit cost of a job excludes which of the following?:
A. Materials used on the job.
B. Labor used on the job.
C. Applied Overhead.
D. Materials Purchased.
7. A normal job-order costing system is a system that uses:
A. actual costs for direct materials and estimated costs for direct labor and overhead
B. estimated costs for direct materials, direct labor, and overhead.
C. actual costs for direct materials and direct labor and estimated costs for overhead.
D. actual costs for direct materials and overhead, estimated costs for direct labor.
8. The budgeting process that most likely creates an attitude supportive of achieving organization goals is:
A. top-down approach.
B. zero based approach.
C. proportionate increase approach.
D. participative approach.
9. The key data element on which the entire budget is based is the:
A. sales/revenue forecast.
B. income statement budget.
C. cash budget.
D. balance sheet forecast.
10. A materials purchases budget must be completed immediately after the preparation of the:
A. direct labor budget.
B. operating expense budget.
C. cash budget.
D. production budget.
11. Which of the following lists the components of the master budget in correct chronological order?
A. direct labor budget, production budget, cost of goods sold budget.
B. sales budget, production budget, direct labor budget.
C. sales budget, raw materials budget, production budget.
D. cash budget, production budget, manufacturing overhead budget.
12. A standard cost or production standard that is achievable under actual operating conditions is called a(n):
A. attainable standard.
B. ideal standard.
C. past experience standard.
D. average standard.
13. A standard cost or production standard that assumes maximum operating conditions and 100% efficiency at all times is called a(n):
A. attainable standard.
B. ideal standard.
C. past experience standard.
D. average standard.
14. What percentage of the contribution margin is profit on units sold in excess of the breakeven point?
A. It's 50% to the contribution margin ratio.
B. It's equal to the variable cost ratio.
C. It's equal of the gross profit ratio.
D. It's 100%.
15. ____ is present whenever products have different consumption ratios for different overhead activities.
A. Environmental Costs
B. Activity Sharing
C. Product Diversity
D. Activity Elimination
16. A company is able to produce 300 units in 6 hours. What is the cycle time?
A. 50 units per hour
B. 50 minutes per unit
C. 1.2 units per minute
D. 1.2 minutes per unit
17. A company is able to produce 300 units in 6 hours. What is the velocity?
A. 50 units per hour
B. 50 minutes per unit
C. 1.2 units per minute
D. 1.2 minutes per unit
18. The activity driver for the shipping activity is the number of orders shipped. Product A uses 20 orders and Product B uses 60 orders. Calculate the consumption ratios for each product.
A. 0.3; 0.7
B. 0.625; 0.375
C. 0.25; 0.75
D. 0.215; 0.785
19. Producing 10,000 units of a cell phone requires $300,000 of prime costs, uses 2,000 machine hours, and takes 1,200 setup hours. The activity rates are $40 per machine hour and $100 per setup hour. What is the unit cost of a cell phone?
A. $60
B. $40
C. $50
D. $100
20. Each unit of a product requires four components. The average number of components is 4.25 due to component failure. Purchasing higher quality components can reduce the average number of components to four per unit. The cost per component is $350. Calculate the reduction in failure costs per unit due to purchasing higher quality components.
A. $43.75
B. $350
C. $175
D. $87.50
21. Which of the following is not one of the cost reduction techniques used in activity management?
A. Activity Elimination
B. Activity Sharing
C. Activity Reduction
D. Activity Revisions
22. Which of the four types of costs would include a CEO's salary?
A. Unit-Level
B. Batch-Level
C. Product Sustaining
D. Facility Sustaining
23. Which of the four types of costs would include Direct Labor?
A. Unit-Level
B. Batch-Level
C. Product Sustaining
D. None of the above
24. A company started with $0 in direct materials, purchased $5,000 of materials, and ended with $300 in materials. Direct labor equaled $4,000. The applied overhead for the period was $2,250. There were no beginning or ending work in process amounts. What was the cost of goods manufactured for the period?
A. $11,250
B. $10,950
C. $11,550
D. $9,000
25. Which of the four types of costs would include setup costs to retool equipment to produce a certain type of product?
A. Unit-Level
B. Batch-Level
C. Product Sustaining
D. None of the above
True/False -
26. T/F - Manufacturing and service firms producing unique products or services require job-order accounting systems.
27. T/F - The difference between actual overhead and applied overhead is called an overhead variance.
28. T/F - In an actual cost system, actual direct materials, actual direct labor and estimated overhead are used to determine unit cost.
29. T/F - When materials are put into production, they are taken from the Raw Materials account and put into the Work in Process account.
30. T/F - Product diversity means that products consume overhead activities in systematically different proportions.
31. T/F - Cycle time indicates how many units can be produced in a particular period of time
32. T/F - The cost associated with filing income tax returns and SEC filings is non-value added and should be eliminated because the customer does not see any value added to the product or service they are buying.
33. T/F - The cost of inspection is included as an external cost of failure.
34. T/F - The use of departmental overhead rates is the same as using activity based costing.