ACC 211 Exam 2

Which of the following is the formula to compute unit cost under the job-order costing system?

Total Job Costs ÷ Output

Process costing is unsuitable for the:

construction industry

Manufacturing firms producing unique products require a:

job-order costing system

Identify the formula to compute unit costs used by firms in process industries.

Process Costs ÷ Output

The following information is related to Alpha Company:

Estimated manufacturing overhead costs for the year $245,000

Actual manufacturing overhead costs for the year $204,000

Estimated direct labor hours for the year 51,000

Actual direct labor hours for the year 36,000

Alpha uses normal costing and applies overhead on the basis of direct labor hours. The predetermined overhead rate of Alpha Company is:

$4.8 per hour

At the end of the year, any difference between actual and applied overhead must be recognized and closed to:

the cost of goods sold account

Normal costing determines unit cost by adding:

direct materials, direct labor, and estimated overhead

Wisteria Corp. has an overhead rate of $9 per machine hour. In the month of March, the company used 9,000 hours of machine time. The actual overhead cost for the month is $97,000. If Wisteria follows normal costing, determine the overhead applied to the month's production.

$81,000

If actual overhead is greater than applied overhead, then the variance is called:

underapplied overhead

In job-order costing, the total of all the job-order cost sheets for the incomplete jobs at the end of the month will constitute the balance in:

Work in Process

In a job-order system, all completed job-order cost sheets of a firm can serve as a subsidiary ledger for the:

finished goods inventory account

Theta Inc. uses normal costing and applies overhead based on direct material costs. The predetermined overhead rate for the current year is 250% of direct material costs. During the year, $3,500,000 of direct material costs and $4,200,000 of direct labor costs were incurred. Theta's applied overhead is:

$8,750,000

The following information relates to Langley Inc. for the month of May:

Beginning raw materials inventory $16,000

Purchases of raw materials during May $7,400

Ending raw materials inventory $4,800

Determine the amount of raw materials used in production during May.

$18,600

In a job-order costing, both work-in-process and finished goods inventories are carried at:

normal cost

Which of the following costs are a part of the manufacturing cost flows?

Direct materials cost

Identify the journal entry that is made to adjust underapplied overhead?

-Debit Cost of Goods Sold

-Credit Overhead Control

When finished goods are sold on account:

-Sales Revenue is credited

-Accounts Receivable is debited

A company has $2,500 of overapplied overhead for a period. Identify the journal entry made to adjust the overapplied overhead at the end of the period.

-Debit Overhead Control for $2,500

-Credit Cost of Goods Sold for $2,500

A company has $3,100 of overapplied overhead for a period. Identify the journal entry made to adjust the overapplied overhead at the end of the period.

-Debit Overhead Control for $3,100

-Credit Cost of Goods Sold for $3,100

In order to calculate departmental overhead rates:

it is necessary to allocate support department costs to the producing departments

Which of the following methods of allocation completely ignores support department interactions and assigns support department costs only to the producing departments?

The direct method

An example of a cost driver for a machining activity could be the:

number of machine hours

Steven Co. has two products: A and B. The following is information about the assembly activity in its factory:

Estimated cost $14,500

Product A 480

Product B 240

Total 720

The activity rate for the Assembly Department is closest to:

$20.14

The proportion of each activity used by a product is called:

consumption ratio

Steven Co. has two products: A and B. The following is information about the assembly activity in its factory:

Estimated cost $14,900

Product A 520

Product B 260

Total 780

The activity rate for the Assembly Department is closest to:

$19.10

Activity drivers can be classified as:

either unit based or non-unit based

Activity drivers are:

actors that measure the consumption of activities by products

Carr Manufacturing makes a product that incurs prime costs of $290,000. Production uses 1,000 setup hours and 1,900 machine hours. Activity rates are $80 per setup hour and $40 per machine hour. Carr's total product cost is:

$446,000

Which of the following stages are a part of activity-based costing?

I. Trace costs to activities

II. Overhead costs are assigned to cost objects

III. Trace costs to cost objects

IV. Overhead costs are assigned to a plant or department

I & III

A clerk spends 35% of his time packaging parts and 65% of his time numbering parts. Assuming his salary is $30,000, calculate the amount of resource cost assigned to the numbering activity.

$19,500

Carr Manufacturing makes a product that incurs prime costs of $290,000. Production uses 1,400 setup hours and 2,000 machine hours. Activity rates are $80 per setup hour and $40 per machine hour. Carr's total product cost is:

$482,000

Which of the following is true of activity-based costing?

It is used by organizations that manufacture only one product

Activity-based customer costing:

has customers as cost objects

Aquamarine Company produces precision parts for 16 major buyers. Of the 20 customers, one accounts for 40% of the sales, with the remaining 15 accounting for the rest. The 15 smaller customers purchase parts in equal quantities. Data concerning Aquamarine's customer activity follow:

[chart]

*Allocated based on sales volume

Customer-driven costs are assigned to customers based on units sold, which is a unit-level driver. Compute the cost associated with the large customer.

$44,000

The whale curve of cumulative customer profitability:

identifies customers to the far right of the curve who severely decrease the firm's profitability and should be terminated

Which of the following is an example of a supplier-driven activity?

Reworking products

Identify the cost reduction technique that involves choosing among different sets of activities that are caused by competing strategies.

Activity selection

Which of the following is an example of a nonvalue-added activity?

Scheduling goods

Which of the following is an example of a value-added activity?

Supervision

Which of the following equations is used to calculate the break-even units?

Break-Even Units = Total Fixed Cost / (Price - Variable Cost per Unit)

The Northern Co. manufactures office chairs. The following information for the month of June is available:

Selling price per chair $160

Variable cost per chair $90

Total fixed cost $110,000

The company's break-even point in units is:

1,571 chairs

Contribution margin is the difference between:

sales and variable expense

Which of the following equations can be used to determine the number of units to be sold to earn a target income?

Number of Units to Earn Target Income = (Total Fixed Cost + Target Income) / Contribution Margin per Unit

Which of following equations is used to obtain the total change in profits from a change in revenues?

Change in Profits = Contribution Margin Ratio × Change in Sales

Glaucous Company is planning to sell 1,500 refrigerators at $360 each for the coming year. Variable cost per unit is $280, and total fixed cost is $80,000. Calculate the number of refrigerators that Glaucous must sell to earn an operating income of $68,150.

1,852 refrigerators

Which of the following is an assumption of cost-volume-profit analysis?

Selling prices and costs are known with certainty

In cost-volume-profit analysis, assuming price and total fixed costs remain the same, any increase in unit variable costs will mean:

a higher break-even point

Burlywood Company sells two products that are expected to produce total revenue of $222,155 and total variable cost of $128,850 next year. Total fixed cost is expected to equal $42,850.

Determine the break-even point in sales dollars for Burlywood. Round all ratios to two decimal places.

$102,024

Which of the following is true of common fixed expenses?

These costs will continue to exist even if one segment or product is eliminated

The process of building a package contribution margin is followed in:

the units sold approach in a multiple-product setting

Burlywood Company sells two products that are expected to produce total revenue of $198,692 and total variable cost of $129,150 next year. Total fixed cost is expected to equal $44,250.

Determine the break-even point in sales dollars for Burlywood. Round all ratios to two decimal places.

$126,429

In cost-volume-profit analysis, a multiple-product problem is converted into a single-product problem by:

defining a particular sales mix in units

Which of the following equations is used to calculate the degree of operating leverage?

Degree of Operating Leverage = Total Contribution Margin / Operating Income

The Northern Co. manufactures office chairs. The following information is available for June:

Selling price per chair $140

Variable cost per chair $80

Total fixed costs $103,000

If the company sells 1,500 chairs in the month of June, the margin of safety in units is _____. (Round-off the answer to the nearest whole number.)

-217 chairs

Which of the following is true of sensitivity analysis?

It allows managers to vary costs, prices, and sales mix to show various possible break-even points

The Northern Co. manufactures office chairs. The following information is available for June:

Selling price per chair $140

Variable cost per chair $80

Total fixed costs $98,000

If the company sells 1,600 chairs in the month of June, the margin of safety in units is _____. (Round-off the answer to the nearest whole number.)

-33 chairs

Which of the following equations is used to determine the margin of safety?

Margin of Safety = Sales - Break-Even Sales