1) Which criterion for allocation of overhead (indirect) costs most likely promotes acceptance of the allocation? A. Direct cause-and-effect relationship B. Benefit-received relationship. C. Ability-to-bear relationship. D. Arbitrary allocation. 2) Brownstone Corp. production cost structure consists of both fixed and variable cost components. Using the high-low method their cost equation is: y = $150,000 + $112(x) where x is equal to the number of machine hours. Using regression analysis the cost equation is: y = $122,000 + $148(x) where x is the number of machine hours. Brownstone is considering adding more machines and permanently lay off a significant number of direct-laborers (full-time employees). If Brownstone makes this change, the most likely outcome will be to A) increase the variable cost amount of $148 using regression analysis B) reduce the fixed cost amount of $150,000 using the high-low method C) reduce the cost of jobs that require a significant amount of machine hour time D) increase the total fixed cost amounts under both the high-low and regression methods 3) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is: A) cost accumulation B) cost assignment C) cost tracing D) conversion costing 4) Kelly Company sells its only product for $9 per unit, variable production costs are $3 per unit, and selling and administrative costs are $1.50 per unit. Fixed production costs for 10,000 units are $5,000; fixed selling and administrative costs for 10,000 units are $7,000. The contribution margin is: A) $6 per unit B) $4.50 per unit C) $5.50 per unit D) $4 per unit 5) Fixed costs remain constant at $400,000 per month. During high-output months variable costs are $320,000, and during low-output months variable costs are $80,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months? A) $45.00 per hour; $45.00 per hour B) $45.00 per hour; $120.00 per hour C) $25.00 per hour; $20.00 per hour D) $56.20 per hour; $120.00 per hour 6) Activity-based costing is most likely to yield benefits for companies with all of the following characteristics except: A) numerous products that consume different amounts of resources B) a highly competitive environment, where cost control is critical C) accessible accounting and information systems expertise to maintain the system D) operations that remain fairly consistent 7) Grandma's Basket Company is currently using the weighted-average method to account for their production under a process costing system. Their material and overhead costs have been fluctuating and they are considering changing to the FIFO method for process costing. All direct materials are added at the beginning of the process. If direct material costs are increasing, the FIFO method will report A) a lesser equivalent unit cost for direct materials under weighted average than FIFO. B) a greater equivalent unit cost for direct materials under weighted average than FIFO. C) the same equivalent unit cost using weighted average or FIFO. D) cannot be determined with the information given. 8) Playhouse Square is considering closing one of their theaters, the State Theater. Total variable costs per month average $50,000, and total annual fixed costs total $1,800,000. Of the $1,800,000, $600,000 are allocated costs and will continue if the theater is closed. The remaining fixed costs will be reduced by 80% of the remaining amount of fixed costs if the State Theater is closed. Of the $50,000 monthly variable costs, $40,000 per month will no longer be incurred if the State Theater is closed. Average annual attendance is 15,000, with approximately $100 being spent by each attendee for parking, tickets, and concessions. Annual parking receipts total $100,000 and will be the same as the parking facility will be rented out for $100,000 per year of the State Theater is closed. When considering the decision to close or keep the State Theater open, the net relevant amount to consider is A) $40,000 net savings if closed B) $60,000 net savings if closed C) $60,000 net loss if closed D) none of the above answers, A, B, or C 9) Browns Manufacturing Inc. decided to prorate their under-or over-applied overhead. Actual total overhead costs amounted to $80,000; applied overhead amounted to $81,000. The proration will likely result in A) a greater amount of costs of goods sold than what would be reported if they close all of the under- or over-applied overhead to cost of goods sold B) a lesser amount of costs of goods sold than what would be reported if they close all of the under- or over-applied overhead to cost of goods sold C) the same amount of work-in-process (W-I-P) would be reported if the prorate or close all of the under- or over-applied overhead to cost of goods sold D) cannot be determined with the information given 10) Which of the following statements refers to management accounting information? A) There are no regulations governing the reports. B) The reports are generally delayed and historical. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures and records business transactions