2. A measure of the productivity of a process with respect to its use of direct materials, direct labor, or overhead, and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period, is called:
A. Manufacturing overhead.
B. Units in process.
C. A job cost sheet.
D. Equivalent units of production.
E. Process cost summary.
3. A production department's output for the most recent month consisted of 10,000 units completed and transferred to the next stage of production and 10,000 units in ending goods in process inventory. The units in ending goods in process inventory were 50% complete with respect to both direct materials and conversion costs. There were 1,000 units in beginning goods in process inventory, and they were 70% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.
A. 10,000 units.
B. 10,300 units.
C. 15,000 units.
D. 15,300 units.
E. 10,700 units.
4. Which of the following characteristics applies to process cost accounting but not to job order cost accounting?
A. Use of a predetermined overhead rate.
B. Identifiable lots of production.
C. Equivalent units of production.
D. Labor time ticket for each employee.
E. Use of a single Goods in Process account.
8. A company has two departments, A and B, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. B. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% in Dept. B.
The delivery expenses that should be charged to Dept. A and Dept. B, respectively, are:
11. If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
A. $ 60,000.
E. $ 24,000.
12. Hartman Co. has fixed costs of $36,000 and a contribution margin ratio of 24%. If expected sales are $200,000, what is the margin of safety as a percent of sales?
13. A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 pretax income, how many units must be sold?
14. Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales. What will pretax income equal if sales are $325,000?
A. $ 57,500.
15. Which of the following is not a benefit of following a well-designed budgeting process?
A. Improved decision-making processes.
B. Improved performance evaluations.
C. Improved coordination of business activities.
D. Assurance of future profits.
E. All of these are benefits of effective budgeting.
16. A budget is best described as:
A. A formal statement of a company's future plans usually expressed in monetary terms.
B. A master control device.
C. An informal statement of company future plans usually expressed in monetary terms.
D. The most crucial component of a company evaluation process.
E. The minimum acceptable performance level.
17. Bentels Co. desires a December 31 ending inventory of 2,840 units. Budgeted sales for December are 4,000 units. The November 30 inventory was 1,800 units. Budgeted purchases are:
A. 5,040 units.
B. 1,240 units.
C. 6,840 units.
D. 4,000 units.
E. 5,800 units.
18. A department store has budgeted sales of 12,000 men's suits in September. Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 suits. What is the dollar amount of the purchase of suits? Each suit has a cost of $75.
A. $ 750,000.
B. $ 900,000.
19. A sporting goods store purchased $7,000 of ski boots in October. The store had $3,000 of ski boots in inventory at the beginning of October, and expects to have $2,000 of ski boots in inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?
A. $ 5,000.
B. $ 7,000.
C. $ 8,000.
D. $ 9,000.
20. Ecology Co. sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year:
Jan 1,700 Feb 1,900 March 2,100 April 1,600
Ending inventory for each month should be 20% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?
21. Standard costs are used to measure:
A. Price and quantity variances.
B. Price variances only.
C. Quantity variances only.
D. Price, quantity, and sales variances.
E. Quantity and sales variances.
22. A company had the following direct materials cost information:
standard cost assingned
Direct materrials standard cost (405,000 [email protected]
Direct materials cost incurred (403,750 units @ $2.20/unit) 888,250
What was the cost variance?
A. $2,500 Favorable.
B. $78,250 Favorable
C. $78,250 Unfavorable
D. $80,750 Favorable.
E. $80,750 Unfavorable.
23. Identify the situation that will result in a favorable variance.
A. Actual revenue is higher than budgeted revenue.
B. Actual revenue is lower than budgeted revenue.
C. Actual income is lower than expected.
D. Actual costs are higher than budgeted costs.
E. Actual expenses are higher than budgeted expenses.
24. A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:
A. $ 2,667.