Questions and Answers of Management And Cost Accounting 11th

Of the three types of standards, which is probably used most often?A. base B. ideal C. currently attainable D. all have equal use
If you purchased 9 lemons for $4.50 and you expected to pay$0.40 for each lemon, then by how much is the purchase variance unfavorable?A. $0.40 B. $0.90 C. $3.60 D. $4.50
Refer to Question 2.Suppose that you use 5 lemons to make 7 lemonades and that you expected to use 1 lemon to make each lemonade. What is the quantity variance in dollars?A. $0.80 favorable B. $0.80
Suppose that you pay your niece $5 for 4 hours work operating your lemonade stand. You had expected to pay her $1 per hour.What is the labor rate variance?A. $4 unfavorable B. $4 favorable C. $1.25
Refer to Question 4.Suppose that you expected your niece to work 1/2 hour for each lemonade sold. What is the labor efficiency variance, given that 7 lemonades were sold?A. $0.50 unfavorable B.
A mathematician has looked at your budget information and stated that total overhead for your lemonade stand is expressed as Y= $12 + $0.40 X. What is the total overhead that would be estimated for
Refer to Question 6.If the mathematician is correct, what is the fixed overhead in the flexible budget?A. $14.80 B. $12.40 C. $12 D. $2.80 The following information is for Questions 8, 9, and
What is the total overhead spending variance?A. $1 favorable B. $3 unfavorable C. $5 unfavorable D. $7 unfavorable
What is the total overhead controllable variance?A. $1 favorable B. $3 favorable C. $3 unfavorable D. $7 unfavorable
What is the total overhead volume variance?A. $2 unfavorable B. $3 favorable C. $4 unfavorable D. $10 unfavorable
Considering the blanket, direct, and step methods of overhead allocation, which is most used and which is most complex to use? Most Used Most Complex A.Blanket Step B.Step Step C.Step Direct D.Direct
What is the total allocated overhead to the two service departments?The following information is for Questions 2 and 3.The overhead for a company consists of $400 of machine repairs and $600 of
What is the total allocated overhead to the two production departments?The following information is for Questions 2 and 3.The overhead for a company consists of $400 of machine repairs and $600 of
The blanket method uses direct labor dollars as its denominator(the basis for applying overhead). What is the applied overhead rate for Production Department A and for Production Department B?The
The Custodial Department provides the most services to other departments, and square feet is used as the basis for its allocation;the Electric Plant allocation is based upon kilowatt hours. What are
What are the numerators for the calculation of the applied overhead rate using the step method?The following information is for Questions 4, 5, and 6. Production A Production B A.$574 $426 B.$426
Using activity-based costing, what are the total overhead costs assigned to Product A?A. $960 B. $1,000 C. $1,040 D. $2,000 The following information is for Questions 7 and 8. Units Overhead Cost
Using activity-based costing, what are the total overhead costs assigned to Product B?A. $2,000 B. $1,040 C. $1,000 D. $960 The following information is for Questions 7 and 8. Units Overhead Cost
How much of the $400 should be allocated to each product, using the physical measures approach?The following information is for Questions 9 and 10.Following are the characteristics for two joint
How much of the $400 should be allocated to each product, using the sales value at splitoff approach?The following information is for Questions 9 and 10.Following are the characteristics for two
Your neighbor is building a new house on the vacant lot next door. The carpenter saw your lemonade stand and asked you about supplying him and his helpers with lemonades during the six weeks that
Refer to Question 1.What method(s) can you employ to reach the target cost needed in order to sell lemonades to the carpenter?A. find a supplier of lemons who will sell to you at a lower cost than
The goal of benchmarking is:A. to improve performance by using the best practices that exist elsewhere B. to stamp the product with a recognizable trademark as a form of advertising C. to establish
Total quality management:A. refers to rules established by the federal government regarding quality standards B. is not related to customer needs C. is adopted by an organization attempting to excel
Continuous improvement:A. ends at December 31 each year, and must be renewed by vote of management B. is a complete employees' commitment to improve what they do C. is designed primarily to provide
When a machine malfunctions and raw materials sit idle waiting for the machine repair:A. what develops is a bottleneck B. what develops is a constraint C. what develops is an increase in
Bottlenecks are broken:A. by maximizing the potential of the bottleneck B. by making sure that nothing prevents the bottleneck from operating at full capacity C. by increasing the capacity of the
Suppose that your business uses just-in-time practices for raw materials, work-in-process, and finished goods inventories. It also wants to reduce recordkeeping costs, so it uses backflush costing.
Under the concepts of the total cost of ownership:A. only the amount paid to the seller is important B. purchasers must consider both the direct and indirect costs associated with acquiring a product
In solving ethical dilemmas, a good rule of thumb is:A. to ask what family and friends would think if they learned what you are planning to do B. to determine whether you will likely be caught C. to
Cost accounting, as used in this book:A. provides information for the decision makers in an organization B. focuses on accumulating information related to product costing C. focuses on accumulating
The fundamental cost elements are:A. materials, labor, and overhead B. direct materials, direct labor, and factory overhead C. raw materials inventory, work-in-process inventory, and finished goods
A gourmet pizza incurs the following costs:Ingredients: 1/2 pound @ $4 per pound Labor: 1/3 hour @ $18 per hour Overhead: 2/3 hour @ $12 per hour The total cost to make 3 pizzas is:A. $48 B. $34 C.
Referring to Question 3, the cost to make one pizza is:A. $34 B. $11.33 C. $16 D. An amount other than A, B, or C
Dividing costs among people, departments, or products:A. should never be equal B. should always be equal C. should depend on logic, fairness, and the cost/benefit of any method D. should depend on
For a purchasing decision that must be made on Thursday, Fred estimates on Monday that his needs will be 11 units. On Friday, Fred knows with certainty (by counting inventory on hand) that he needs
Reports prepared by an accountant:A. should be based primarily upon the accountant's view of what information the "customer" needs Page 9 B. need not include computations, judgment, and assumptions
The three primary inventories used by cost accountants are:A. raw materials, work-in-process, and finished goods B. direct materials, direct labor, and factory overhead C. raw materials,
Just-in-time inventory:A. started in the United States just after World War II B. was adopted in Japan in the mid-1980s because of international competition C. attempts to reduce inventory to zero D.
Just-in-time inventory:A. should be used by all businesses B. is rarely used outside Japan C. has few benefits for United States businesses D. causes delivery problems in Japan because too many
In a manufacturing organization, the normal flow of costs is direct materials plus direct labor plus factory overhead:A. to work-in-process inventory to cost of goods sold to finished goods inventory
Distinguish between a product cost and a period cost. Product Cost A. carried in inventory B. expensed in year incurred Period Cost expensed in year incurred carried in inventory C. expensed in year
Before starting your lemonade stand, you estimated costs of $30 for overhead and that 10 lemonades would be made. At the end of the day, you found that actual overhead was $28 and that only 7
Refer to Question 3.Suppose that applied overhead was $25 (not the correct answer) and that all other facts stay the same. How much is overhead over- or underapplied?A. $5 underapplied B. $4
Your 10-year-old niece normally works 20 hours per week at your lemonade stand. You agree to pay her ''time and three-fourths"for overtime. Her pay rate is $2 per hour. This week she worked 23 hours.
Refer to Question 5.What amount should you charge to factory overhead for your niece's employment this week?A. $4.50 B. $6 C. $10.50 D. $34.50
Your niece took 10 minutes to make her first lemonade at your lemonade stand. She made the second one in 9 minutes. Her apparent learning curve is:A. 95 percent B. 90 percent C. 10 percent D. 5
Refer to Question 7.What is your best estimate of the total time needed by your niece to make her first four lemonades?A. 32.4 minutes B. 34 minutes C. 34.295 minutes D. 36.1 minutes
Lemons sell for 50 cents each. At the beginning of the day, your niece had 3 lemons in the refrigerator. You bought her 12 more lemons this morning. There were 10 lemons remaining at the end of the
Near the end of yesterday, your niece made 6 lemonades and placed them in the refrigerator for sale today. Today she made another 10 lemonades. At the end of the day, there were 9 lemonades in the
For conversion costs, the beginning work-in-process inventory(WIP) was 1/3 complete last month, and the ending WIP is 3/4 complete this month. There were 33 units in the beginning WIP, 333 units were
Materials are added only at the beginning of a process. For this month, 30 units received materials at a cost of $96. The beginning WIP of 4 units had the previous month's (last month) materials cost
The beginning WIP was made up of 10 units. The ending WIP was 8 units. Normal spoilage was 2 units, and abnormal spoilage was 3 units. Units completed and shipped to finished goods inventory were
Assume the following for EFU:Also assume that the materials unit cost is $3 and that the conversion unit cost is $5. What is the total cost associated with the units completed?A. $96 B. $60 C. $36 D.
Refer to Question 4.What are the total costs associated with normal spoilage?A. $8 B. $11 C. $13 D. $24
Refer to Questions 4 and 5.Assume that the 2 units of normal spoilage are sold for $2.50 each. What is the dollar amount associated with the 12 units completed and sent to finished goods inventory?A.
Refer to Question 4.What is the dollar amount associated with the ending WIP?A. $64 B. $49 C. $40 D. $39
Refer to Question 4.What is the total amount of conversion cost this period?A. $128 B. $110 C. $80 D. $48
A photographic process produces a sheet of paper with 4 identical photographs. When sent to the next department, via computer, a 25 percent accretion occurs, resulting in 5 photos per page. If 80
This month, the Preparation Department made 1,200 pounds of salad at a total cost of $4,800. It shipped 800 pounds to the Cafeteria Department this month. At the beginning of the month, the Cafeteria
A hospital’s records show that the cost of carrying out health checks in the last five accounting periods has been as follows:Using the high–low method and ignoring inflation, the estimated cost
Intermediate: Cost estimation using the linear regression formula. The management accountant at Josephine Ltd is trying to predict the quarterly total maintenance cost for a group of similar
Albatross Plc, the Australian subsidiary of a British packaging company, is preparing its budget for the year to 30 June 2013. In respect of fuel oil consumption, it is desired to estimate an
The budget for the production cost of a new product was based on the following assumptions:(i) Time for the 1st batch of output = 10 hours(ii) Learning rate = 80 per cent(iii) Learning will cease
The following details show the direct labour requirements for the first six batches of a new product that were manufactured last month:The Management Accountant reported the following variances:The
Big Cheese Chairs (BCC) manufactures and sells executive leather chairs. They are considering a new design of massaging chair to launch into the competitive market in which they operate.They have
According to the Techleader blog on South Africa’s Mail and Guardian website, e-books are about to do to the publishing sector what iTunes did to the music industry. According to the blog post,
It seems a perennial problem in recent years; grit supplies run dangerously low in winter months in the United Kingdom and other European countries.Cathy Newman’s blog on the Channel 4 news website
Japanese management and manufacturing techniques focus on principles like close supplier relationships, just-in-time deliveries and zero defects. Many western companies have implemented such
In recent years, two global companies have had to deal with some quite large costs as a result of quality control failures. First, take the example of Toyota cars in the US. In late 2009 and early
What are ordering costs? Provide some examples.
What are the assumptions underlying the economic order quantity?
Define lead time.
Explain what is meant by the re-order point.
What are stockout costs? Provide some examples.
XY, a company that manufactures a range of timber products, is considering changing to a just-in-time (JIT) production system.Currently XY employs staff who are contracted to work and be paid for a
Brass Ltd produces two products, the Masso and the Russo. Budgeted data relating to these products on a unit basis for August are as follows:Each unit of product incurs costs of machining and
Higgins Co (HC) manufactures and sells pool cues and snooker cues. The cues both use the same type of good quality wood (ash) which can be difficult to source in sufficient quantity. The supply of
LM produces two products from different quantities of the same resources using a just-in-time (JIT) production system. The selling price and resource requirements of each of these two products are as
The Alphab Group has five divisions A, B, C, D and E.Group management wish to increase overall group production capacity per year by up to 30 000 hours. Part of the strategy will be to require that
(a) The Argonaut Company makes three products, Xylos, Yo-yos and Zicons. These are assembled from two components, Agrons and Bovons, which can be produced internally at a variable cost of £5 and £8
The Kaolene Co. Ltd has six different products all made from fabricated steel. Each product passes through a combination of five production operations: cutting, forming, drilling, welding and
(a) Spiro Division is part of a vertically integrated group of divisions allocated in one country. All divisions sell externally and also transfer goods to other divisions within the group.Spiro
A CIMA 2009 report on the UK agriculture industry reports how farmers in general do not prioritize cost management. This may be partly due to EU subsidies, which distracts farmers from a
In 1996 Insteel Industries decided to implement ABC at the Andrews, South Carolina plant. The ABC team analyzed operations and identified 12 business processes involving a total of 146 activities.
The Boeing 737 jet is the world’s most popular and reliable commercial airliner. The company has manufactured over 6000 jets in the 737 family. The latest model, the 737-900ER, was launched in 2005
In recent years, two global companies have had to deal with some quite large costs as a result of quality control failures. First, take the example of Toyota cars in the US. In late 2009 and early
Most businesses are concerned with their effect on the environment. Many businesses portray themselves as being friendly to the environment or carbon neutral. Lever Brothers, for example, developed a
The following presents extracts from a case study on the use of an ABC cost model by a large UK retail firm (Sainsbury’s) and a group of suppliers for supporting their supply chain management
What are committed (locked-in) costs?
Distinguish between value added and non-value added activities.
Distinguish between a pull and push manufacturing system.
CAL manufactures and sells solar panels for garden lights. Components are bought in and assembled into metal frames that are machine manufactured by CAL. There are a number of alternative suppliers
Burdoy plc has a dedicated set of production facilities for component X. A just-in-time system is in place such that no stock of materials; work-in-progress or finished goods are held.At the
X Ltd manufactures and distributes three types of car (the C1, C2 and C3).Each type of car has its own production line. The company is worried by extremely difficult market conditions and forecasts
The implementation of budgeting in a world class manufacturing environment may be affected by the impact of (i) a total quality ethos (ii) a just-in-time philosophy and (iii) an activity based
HT manufactures and sells consumer goods. The market in which it operates is highly competitive and HT is constantly designing new products in order to maintain its market share. The life cycle of
You are financial controller of a medium-sized engineering business. This business was family-owned and managed for many years but has recently been acquired by a large group to become its
The term corporate social responsibility (CSR) emerged in the 1990s. Today, this term has largely been supplanted by the term sustainability. The sustainability of a business refers of course to its
The term ‘balanced scorecard’ may have been popularized by Kaplan and Norton, but their four perspectives on performance are not the only ones used by organizations in practice. For example,

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