also see attached for more clear version

• A transaction involving a gain on the sale of equipment affects cash provided (used) by

• operating and financing activities.
  • operating and investing activities.
  • operating, financing, and investing activities.
  • financing and investing activities.

• Which of the following would be subtracted from net income using the indirect method?

• A decrease in prepaid expenses.
  • An increase in accounts receivable.
  • Depreciation expense.
  • An increase in accounts payable.

• Using the indirect method, if equipment is sold at a gain, the

• sale proceeds received are added in the operating activities section.
  • amount of the gain is added in the operating activities section.
  • sale proceeds received are deducted in the operating activities section.
  • amount of the gain is deducted in the operating activities section.

• The best way to study the relationship of the components within a financial statement is to prepare

• ratio analysis.
  • common size statements.
  • profitability analysis.
  • a trend analysis.
• Comparative balance sheets

do not show both dollar amount and percentage changes.are usually prepared for at least one year.are usually prepared for at least two years.do not show a comparison of total stockholders' equity.The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.27.8%8.3% 33.3%55.6%For the work of factory employees to be considered as direct labor, the work must be conveniently and

• promptly associated with raw materials conversion.
• materially associated with raw materials conversion.
• periodically associated with raw materials conversion.
• physically associated with raw materials conversion.

• A manufacturing company reports cost of goods manufactured as a(n)

• component in the calculation of cost of goods sold on the income statement.
• administrative expense on the income statement.
• component of the raw materials inventory on the balance sheet.
• current asset on the balance sheet.

• On the costs of goods manufactured schedule, depreciation on factory equipment

• is not listed because it is not a product cost.
• is not an inventoriable cost.
• is not listed because it is included with Depreciation Expense on the income statement.
• appears in the manufacturing overhead section.

• Which one of the following is an example of a period cost?

• A manager's salary for work that is done in the corporate head office
• A box cost associated with computers
• A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer
• Workers' compensation insurance on factory workers' wages allocated to the factory

• If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is:

• a loss on the income statement under "Other Expenses and Losses."
• considered a miscellaneous expense.
• underapplied.
• overapplied.

• Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system?

• Manufacturing overhead is applied
• Manufacturing overhead is incurred
• Raw materials are used
• Completed goods are recognized

• The predetermined overhead rate is based on the relationship between

• estimated monthly costs and actual monthly activity.
• estimated annual costs and actual activity.
• actual monthly costs and actual annual activity.
• estimated annual costs and expected annual activity.
• Factory Labor is a(n)

• control account.
• subsidiary account.
• temporary account.
• expense account.
• Which of the following would not appear as a debit in the Work in Process account of a second department in a two stage production process?

• Labor assigned.
• Overhead applied.
• Cost of products transferred out.
• Materials used.

• Total physical units to be accounted for are equal to the units

• started (or transferred) into production plus the units in beginning work in process.
• started (or transferred) into production less the units in beginning work in process.
• started (or transferred) into production.
• completed and transferred out.
• The total units to be accounted for is computed by adding

• ending units in process to total units accounted for.
• ending units in process to units started into production.
• beginning units in process to units started into production.
• beginning units in process to units transferred out.
• The total units accounted for equals units in

• ending work in process + units transferred out.
• beginning work in process + ending work in process.
• ending work in process ? units started into production.
• beginning work in process ? units transferred out.
• Which of these best reflects a distinguishing factor between a job order cost system and a process cost system?

• The manufacturing cost elements included.
• The time period each covers.
• The number of work in process accounts.
• The detail at which costs are calculated.
• A well-designed activity-based costing system starts with

• identifying the activity-cost pools.
• computing the activity-based overhead rate.
• analyzing the activities performed to manufacture a product.
• assigning overhead costs to products.
• Which would be an appropriate cost driver for the machining activity cost pool?

• Machine hours
• Inspections
• Machine setups
• Purchase orders

• Use of activity-based costing will result in the development of

• no overhead rates; overhead rates are not used in activity-based costing.
• one overhead rate based on direct labor hours.
• multiple activity-based overhead rates.
• one plantwide activity-based overhead rate.
• As compared to a low-volume product, a high-volume product

• usually requires less special handling.
• is usually responsible for more overhead costs per unit.
• requires relatively more machine setups.
• requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead.
• Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by

• decreasing direct labor costs and increasing overhead costs.
• decreasing direct labor costs and decreasing overhead costs.
• increasing direct labor costs and increasing overhead costs.
• increasing direct labor costs and decreasing overhead costs.
• Contribution margin is

• unit selling price less unit fixed costs.
• the amount of revenue remaining after deducting fixed costs.
• available to cover fixed costs and contribute to income for the company.
• sales less fixed costs.
• An activity index might be referred to as a cost

• multiplier.
• element.
• correlation.
• driver.
• Required sales in dollars to meet a target net income is computed by dividing

• total costs plus target net income by contribution margin ratio.
• fixed costs plus target net income by contribution margin per unit.
• variable costs plus target net income by contribution margin per unit.
• fixed costs plus target net income by contribution margin ratio.
• In a CVP income statement, a selling expense is generally

• neither a variable cost nor a fixed cost.
• completely a variable cost.
• partly a variable cost and partly a fixed cost.
• completely a fixed cost.
• Select the correct statement concerning the cost-volume-profit graph below:

• At point B, profits equal total costs.
• The point identified by "B" is the break-even point.
• Line F is the variable cost line.
• Line E is the total cost line.
• The decision rule on whether to sell or process further

• varies from situation to situation.
• is process further as long as total revenue exceeds present revenues.
• is process further if incremental revenue from such processing exceeds the incremental processing costs.
• is process further if incremental revenue from such processing exceeds incremental fixed costs.

• Each of the following is a disadvantage of buying rather than making a component of a company's product except that

• the supplier may not deliver on time.
• the outside supplier could increase prices significantly in the future.
• quality control specifications may not be met.
• profitable product lines may be dropped.
• A company is considering eliminating a product line. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. If the product line is discontinued,

• total net income will increase by the amount of the product line's fixed costs.
• total net income will decrease by the amount of the product line's fixed costs.
• the contribution margin of the product line will indicate the net income increase or decrease.
• the company's total fixed costs will decrease.
• What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment?

• It is relevant since it increases the cost of the new equipment.
• It is not relevant since it reduces the cost of the old equipment.
• It is not relevant to the decision since it does not impact the cost of the new equipment.
• It is relevant since it reduces the cost of the new equipment.
• If a company must expand capacity to accept a special order, it is likely that there will be

• an increase in fixed costs.
• an increase in unit variable costs.
• no increase in fixed costs.
• an increase in variable and fixed costs per unit.
• The projection of financial position at the end of the budget period is found on the

• budgeted income statement.
• cash budget.
• budgeted balance sheet.
• sales budget.
• Which of the following does not appear as a separate section on the cash budget?

• Cash disbursements
• Cash receipts
• Capital expenditures
• Financing
• A master budget consists of

• financial budgets and a long-term plan.
• interrelated financial budgets and operating budgets.
• all the accounting journals and ledgers used by a company.
• an interrelated long-term plan and operating budgets.
• The financial budgets include the

• cash budget and the selling and administrative expense budget.
• budgeted balance sheet and the budgeted income statement.
• cash budget and the production budget.
• cash budget and the budgeted balance sheet.
• The total direct labor hours required in preparing a direct labor budget are calculated using the

• production budget.
• direct materials budget.
• sales budget.
• sales forecast.
• All of the following statements are correct about management by exception except it

• means that top management's review of a budget report is focused primarily on differences between actual results and planned objectives.
• enables top management to focus on problem areas that need attention.
• means that management has to investigate every budget difference.
• requires that there must be some guidelines for identifying an exception.
• Under management by exception, which differences between planned and actual results should be investigated?

• Material and noncontrollable
• Controllable and noncontrollable
• All differences should be investigated
• Material and controllable
• Which department is usually responsible for a labor price variance attributable to misallocation of workers?

• Engineering
• Quality control
• Purchasing
• Production
• The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the

• total labor variance.
• labor price variance.
• labor quantity variance.
• labor efficiency variance.
• The total overhead variance is the difference between the

• actual overhead costs and overhead costs applied based on standard hours allowed.
• overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed.
• actual overhead costs and overhead costs applied based on actual hours.
• the actual overhead costs and the standard direct labor costs.

  1. A transaction involvinga gain on the sale of equipment affects cash provided (used) by

  i. operating and financingactivities.

  ii. operating and investingactivities.

  iii. operating, financing,and investing activities.

  iv. financing and investingactivities.

  2. Which of the followingwould be subtracted from net income using the indirect method?

  i. A decrease in prepaidexpenses.

  ii. An increase in accountsreceivable.

  iii. Depreciation expense.

  iv. An increase in accountspayable.

  3. Using the indirectmethod, if equipment is sold at a gain, the

  i. sale proceeds receivedare added in the operating activities section.

  ii. amount of the gain isadded in the operating activities section.

  iii. sale proceeds receivedare deducted in the operating activities section.

  iv. amount of the gain isdeducted in the operating activities section.

  4. The best way to studythe relationship of the components within a financial statement is to prepare

  i. ratio analysis.

  ii. common size statements.

  iii. profitability analysis.

  iv. a trend analysis.

  5. Comparative balancesheets

  i. do not show both dollaramount and percentage changes.

  ii. are usually preparedfor at least one year.

  iii. are usually preparedfor at least two years.

  iv. do not show acomparison of total stockholders' equity.

  6. The followinginformation pertains to Unique Company. Assume that all balance sheet amountsrepresent both average and ending balance figures. Assume that all sales wereon credit.

  Assets

  Cash and short-terminvestments $ 40,000

  Accounts receivable(net) 30,000

  Inventory 20,000

  Property, plant andequipment 210,000

  Total Assets $300,000

  Liabilities andStockholders' Equity

  Current liabilities $ 60,000

  Long-term liabilities 90,000

  Stockholders' equity -common 150,000

  Total Liabilities andStockholders' Equity $300,000

  Income Statement

  Sales revenue $ 90,000

  Cost of goods sold 45,000

  Gross profit 45,000

  Operating expenses 20,000

  Net income $ 25,000

  Number of shares ofcommon stock 6,000

  Market price of commonstock $20

  Dividends per share oncommon stock 0.90

  Cash provided byoperations $30,000

  What is the profitmargin for this company?

  i. 27.8%

  ii. 8.3%

  iii. 33.3%

  iv. 55.6%

  7. For the work of factoryemployees to be considered as direct labor, the work must be conveniently and

  i. promptly associatedwith raw materials conversion.

  ii. materially associatedwith raw materials conversion.

  iii. periodically associatedwith raw materials conversion.

  iv. physically associatedwith raw materials conversion.

  8. A manufacturing companyreports cost of goods manufactured as a(n)

  i. component in thecalculation of cost of goods sold on the income statement.

  ii. administrative expenseon the income statement.

  iii. component of the rawmaterials inventory on the balance sheet.

  iv. current asset on thebalance sheet.

  9. On the costs of goodsmanufactured schedule, depreciation on factory equipment

  i. is not listed becauseit is not a product cost.

  ii. is not an inventoriablecost.

  iii. is not listed becauseit is included with Depreciation Expense on the income statement.

  iv. appears in themanufacturing overhead section.

  10. Which one of thefollowing is an example of a period cost?

  i. A manager's salary forwork that is done in the corporate head office

  ii. A box cost associatedwith computers

  iii. A change in benefitsfor the union workers who work in the New York plant of a Fortune 1000manufacturer

  iv. Workers' compensationinsurance on factory workers' wages allocated to the factory

  11. If actual overhead isless than applied manufacturing overhead, then manufacturing overhead is:

  i. a loss on the incomestatement under "Other Expenses and Losses."

  ii. considered amiscellaneous expense.

  iii. underapplied.

  iv. overapplied.

  12. Which of the followingis not viewed as part of assigning manufacturing costs in a job order costsystem?

  i. Manufacturing overheadis applied

  ii. Manufacturing overheadis incurred

  iii. Raw materials are used

  iv. Completed goods arerecognized

  13. The predetermined overheadrate is based on the relationship between

  i. estimated monthly costsand actual monthly activity.

  ii. estimated annual costsand actual activity.

  iii. actual monthly costsand actual annual activity.

  iv. estimated annual costsand expected annual activity.

  14. Factory Labor is a(n)

  i. control account.

  ii. subsidiary account.

  iii. temporary account.

  iv. expense account.

  15. Which of the followingwould not appear as a debit in the Work in Process account of a seconddepartment in a two stage production process?

  i. Labor assigned.

  ii. Overhead applied.

  iii. Cost of productstransferred out.

  iv. Materials used.

  16. Total physical units tobe accounted for are equal to the units

  i. started (ortransferred) into production plus the units in beginning work in process.

  ii. started (ortransferred) into production less the units in beginning work in process.

  iii. started (ortransferred) into production.

  iv. completed andtransferred out.

  17. The total units to beaccounted for is computed by adding

  i. ending units in processto total units accounted for.

  ii. ending units in processto units started into production.

  iii. beginning units inprocess to units started into production.

  iv. beginning units inprocess to units transferred out.

  18. The total unitsaccounted for equals units in

  i. ending work in process+ units transferred out.

  ii. beginning work inprocess + ending work in process.

  iii. ending work in process? units started into production.

  iv. beginning work inprocess ? units transferred out.

  19. Which of these bestreflects a distinguishing factor between a job order cost system and a processcost system?

  i. The manufacturing costelements included.

  ii. The time period eachcovers.

  iii. The number of work inprocess accounts.

  iv. The detail at whichcosts are calculated.

  20. A well-designedactivity-based costing system starts with

  i. identifying theactivity-cost pools.

  ii. computing theactivity-based overhead rate.

  iii. analyzing theactivities performed to manufacture a product.

  iv. assigning overheadcosts to products.

  21. Which would be anappropriate cost driver for the machining activity cost pool?

  i. Machine hours

  ii. Inspections

  iii. Machine setups

  iv. Purchase orders

  v. Use of activity-basedcosting will result in the development of

  vi. no overhead rates;overhead rates are not used in activity-based costing.

  vii. one overhead rate basedon direct labor hours.

  viii.multipleactivity-based overhead rates.

  ix. one plantwideactivity-based overhead rate.

  22. As compared to alow-volume product, a high-volume product

  i. usually requires lessspecial handling.

  ii. is usually responsiblefor more overhead costs per unit.

  iii. requires relativelymore machine setups.

  iv. requires use of directlabor hours as the primary cost driver to ensure proper allocation of overhead.

  23. Advances incomputerized systems, technological innovation, global competition, andautomation have changed the manufacturing environment drastically by

  i. decreasing direct laborcosts and increasing overhead costs.

  ii. decreasing direct laborcosts and decreasing overhead costs.

  iii. increasing direct laborcosts and increasing overhead costs.

  iv. increasing direct laborcosts and decreasing overhead costs.

  24. Contribution margin is

  i. unit selling price lessunit fixed costs.

  ii. the amount of revenueremaining after deducting fixed costs.

  iii. available to coverfixed costs and contribute to income for the company.

  iv. sales less fixed costs.

  25. An activity index mightbe referred to as a cost

  i. multiplier.

  ii. element.

  iii. correlation.

  iv. driver.

  26. Required sales indollars to meet a target net income is computed by dividing

  i. total costs plus targetnet income by contribution margin ratio.

  ii. fixed costs plus targetnet income by contribution margin per unit.

  iii. variable costs plustarget net income by contribution margin per unit.

  iv. fixed costs plus targetnet income by contribution margin ratio.

  27. In a CVP incomestatement, a selling expense is generally

  i. neither a variable costnor a fixed cost.

  ii. completely a variablecost.

  iii. partly a variable costand partly a fixed cost.

  iv. completely a fixedcost.

  28. Select the correctstatement concerning the cost-volume-profit graph below:

  i. At point B, profitsequal total costs.

  ii. The point identified by"B" is the break-even point.

  iii. Line F is the variablecost line.

  iv. Line E is the totalcost line.

  29. The decision rule onwhether to sell or process further

  i. varies from situationto situation.

  ii. is process further aslong as total revenue exceeds present revenues.

  iii. is process further ifincremental revenue from such processing exceeds the incremental processingcosts.

  iv. is process further ifincremental revenue from such processing exceeds incremental fixed costs.

  30. Each of the followingis a disadvantage of buying rather than making a component of a company'sproduct except that

  i. the supplier may notdeliver on time.

  ii. the outside suppliercould increase prices significantly in the future.

  iii. quality controlspecifications may not be met.

  iv. profitable productlines may be dropped.

  31. A company isconsidering eliminating a product line. The fixed costs currently allocated tothe product line will be allocated to other product lines upon discontinuance.If the product line is discontinued,

  i. total net income willincrease by the amount of the product line's fixed costs.

  ii. total net income willdecrease by the amount of the product line's fixed costs.

  iii. the contribution marginof the product line will indicate the net income increase or decrease.

  iv. the company's totalfixed costs will decrease.

  32. What role does atrade-in allowance on old equipment play in a decision to retain or replaceequipment?

  i. It is relevant since itincreases the cost of the new equipment.

  ii. It is not relevantsince it reduces the cost of the old equipment.

  iii. It is not relevant tothe decision since it does not impact the cost of the new equipment.

  iv. It is relevant since itreduces the cost of the new equipment.

  33. If a company mustexpand capacity to accept a special order, it is likely that there will be

  i. an increase in fixedcosts.

  ii. an increase in unitvariable costs.

  iii. no increase in fixedcosts.

  iv. an increase in variableand fixed costs per unit.

  34. The projection offinancial position at the end of the budget period is found on the

  i. budgeted incomestatement.

  ii. cash budget.

  iii. budgeted balance sheet.

  iv. sales budget.

  35. Which of the followingdoes not appear as a separate section on the cash budget?

  i. Cash disbursements

  ii. Cash receipts

  iii. Capital expenditures

  iv. Financing

  36. A master budgetconsists of

  i. financial budgets and along-term plan.

  ii. interrelated financialbudgets and operating budgets.

  iii. all the accountingjournals and ledgers used by a company.

  iv. an interrelatedlong-term plan and operating budgets.

  37. The financial budgetsinclude the

  i. cash budget and theselling and administrative expense budget.

  ii. budgeted balance sheetand the budgeted income statement.

  iii. cash budget and theproduction budget.

  iv. cash budget and thebudgeted balance sheet.

  38. The total direct laborhours required in preparing a direct labor budget are calculated using the

  i. production budget.

  ii. direct materialsbudget.

  iii. sales budget.

  iv. sales forecast.

  39. All of the followingstatements are correct about management by exception except it

  i. means that topmanagement's review of a budget report is focused primarily on differencesbetween actual results and planned objectives.

  ii. enables top managementto focus on problem areas that need attention.

  iii. means that managementhas to investigate every budget difference.

  iv. requires that theremust be some guidelines for identifying an exception.

  40. Under management byexception, which differences between planned and actual results should beinvestigated?

  i. Material andnoncontrollable

  ii. Controllable andnoncontrollable

  iii. All differences shouldbe investigated

  iv. Material andcontrollable

  41. Which department isusually responsible for a labor price variance attributable to misallocation ofworkers?

  i. Engineering

  ii. Quality control

  iii. Purchasing

  iv. Production

  42. The difference betweenthe actual labor rate multiplied by the actual labor hours worked and thestandard labor rate multiplied by the standard labor hours is the

  i. total labor variance.

  ii. labor price variance.

  iii. labor quantityvariance.

  iv. labor efficiencyvariance.

  43. The total overheadvariance is the difference between the

  i. actual overhead costsand overhead costs applied based on standard hours allowed.

  ii. overhead costs appliedbased on actual hours and overhead costs applied based on standard hoursallowed.

  iii. actual overhead costsand overhead costs applied based on actual hours.

  iv. the actual overheadcosts and the standard direct labor costs.

1. A transaction involving a gain on the sale of equipment affects cash provided (used) by i. ii. iii. iv. operating and financing activities. operating and investing activities. operating, financing, and investing activities. financing and investing activities. 2. Which of the following would be subtracted from net income using the indirect method? i. ii. iii. iv. A decrease in prepaid expenses. An increase in accounts receivable. Depreciation expense. An increase in accounts payable. 3. Using the indirect method, if equipment is sold at a gain, the i. sale proceeds received are added in the operating activities section. ii. amount of the gain is added in the operating activities section. iii. sale proceeds received are deducted in the operating activities section. iv. amount of the gain is deducted in the operating activities section. 4. The best way to study the relationship of the components within a financial statement is to prepare i. ratio analysis. ii. common size statements. iii. profitability analysis. iv. a trend analysis. 5. Comparative balance sheets i. do not show both dollar amount and percentage changes. ii. are usually prepared for at least one year. iii. are usually prepared for at least two years. iv. do not show a comparison of total stockholders' equity. 6. The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 40,000 Accounts receivable (net) 30,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders' Equity Current liabilities $ 60,000 Long-term liabilities 90,000 Stockholders' equity - common 150,000 Total Liabilities and Stockholders' Equity $300,000 Income Statement Sales revenue $ 90,000 Cost of goods sold 45,000 Gross profit 45,000 Operating expenses 20,000 Net income $ 25,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share on common stock 0.90 Cash provided by operations $30,000 What is the profit margin for this company? i. 27.8% ii. 8.3% iii. 33.3% iv. 55.6% 7. For the work of factory employees to be considered as direct labor, the work must be conveniently and i. promptly associated with raw materials conversion. ii. materially associated with raw materials conversion. iii. periodically associated with raw materials conversion. iv. physically associated with raw materials conversion. 8. A manufacturing company reports cost of goods manufactured as a(n) i. component in the calculation of cost of goods sold on the income statement. ii. administrative expense on the income statement. iii. component of the raw materials inventory on the balance sheet. iv. current asset on the balance sheet. 9. On the costs of goods manufactured schedule, depreciation on factory equipment i. is not listed because it is not a product cost. ii. is not an inventoriable cost. iii. is not listed because it is included with Depreciation Expense on the income statement. iv. appears in the manufacturing overhead section. 10. Which one of the following is an example of a period cost? i. A manager's salary for work that is done in the corporate head office ii. A box cost associated with computers iii. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer iv. Workers' compensation insurance on factory workers' wages allocated to the factory 11. If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is: i. a loss on the income statement under "Other Expenses and Losses." ii. considered a miscellaneous expense. iii. underapplied. iv. overapplied. 12. Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system? i. ii. iii. iv. Manufacturing overhead is applied Manufacturing overhead is incurred Raw materials are used Completed goods are recognized 13. The predetermined overhead rate is based on the relationship between 14. i. estimated monthly costs and actual monthly activity. ii. estimated annual costs and actual activity. iii. actual monthly costs and actual annual activity. iv. estimated annual costs and expected annual activity. Factory Labor is a(n) i. control account. ii. subsidiary account. iii. temporary account. iv. expense account. 15. Which of the following would not appear as a debit in the Work in Process account of a second department in a two stage production process? i. ii. iii. iv. Labor assigned. Overhead applied. Cost of products transferred out. Materials used. 16. Total physical units to be accounted for are equal to the units i. started (or transferred) into production plus the units in beginning work in process. ii. started (or transferred) into production less the units in beginning work in process. iii. started (or transferred) into production. iv. completed and transferred out. 17. The total units to be accounted for is computed by adding 18. i. ending units in process to total units accounted for. ii. ending units in process to units started into production. iii. beginning units in process to units started into production. iv. beginning units in process to units transferred out. The total units accounted for equals units in i. ending work in process + units transferred out. ii. beginning work in process + ending work in process. iii. ending work in process - units started into production. iv. beginning work in process - units transferred out. 19. Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? 20. i. The manufacturing cost elements included. ii. The time period each covers. iii. The number of work in process accounts. iv. The detail at which costs are calculated. A well-designed activity-based costing system starts with i. identifying the activity-cost pools. ii. computing the activity-based overhead rate. iii. analyzing the activities performed to manufacture a product. iv. assigning overhead costs to products. 21. Which would be an appropriate cost driver for the machining activity cost pool? i. ii. iii. iv. Machine hours Inspections Machine setups Purchase orders v. Use of activity-based costing will result in the development of vi. no overhead rates; overhead rates are not used in activity-based costing. vii. one overhead rate based on direct labor hours. viii. multiple activity-based overhead rates. ix. one plantwide activity-based overhead rate. 22. As compared to a low-volume product, a high-volume product i. usually requires less special handling. ii. is usually responsible for more overhead costs per unit. iii. requires relatively more machine setups. iv. requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead. 23. Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by 24. i. decreasing direct labor costs and increasing overhead costs. ii. decreasing direct labor costs and decreasing overhead costs. iii. increasing direct labor costs and increasing overhead costs. iv. increasing direct labor costs and decreasing overhead costs. Contribution margin is 25. i. unit selling price less unit fixed costs. ii. the amount of revenue remaining after deducting fixed costs. iii. available to cover fixed costs and contribute to income for the company. iv. sales less fixed costs. An activity index might be referred to as a cost i. multiplier. ii. element. iii. correlation. iv. driver. 26. Required sales in dollars to meet a target net income is computed by dividing 27. i. total costs plus target net income by contribution margin ratio. ii. fixed costs plus target net income by contribution margin per unit. iii. variable costs plus target net income by contribution margin per unit. iv. fixed costs plus target net income by contribution margin ratio. In a CVP income statement, a selling expense is generally i. neither a variable cost nor a fixed cost. ii. completely a variable cost. iii. partly a variable cost and partly a fixed cost. iv. completely a fixed cost. 28. Select the correct statement concerning the cost-volumeprofit graph below: 29. i. At point B, profits equal total costs. ii. The point identified by "B" is the break-even point. iii. Line F is the variable cost line. iv. Line E is the total cost line. The decision rule on whether to sell or process further i. varies from situation to situation. ii. is process further as long as total revenue exceeds present revenues. iii. is process further if incremental revenue from such processing exceeds the incremental processing costs. iv. is process further if incremental revenue from such processing exceeds incremental fixed costs. 30. Each of the following is a disadvantage of buying rather than making a component of a company's product except that i. the supplier may not deliver on time. ii. the outside supplier could increase prices significantly in the future. iii. quality control specifications may not be met. iv. profitable product lines may be dropped. 31. A company is considering eliminating a product line. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. If the product line is discontinued, i. total net income will increase by the amount of the product line's fixed costs. ii. total net income will decrease by the amount of the product line's fixed costs. iii. the contribution margin of the product line will indicate the net income increase or decrease. iv. the company's total fixed costs will decrease. 32. What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment? i. It is relevant since it increases the cost of the new equipment. ii. It is not relevant since it reduces the cost of the old equipment. iii. It is not relevant to the decision since it does not impact the cost of the new equipment. iv. It is relevant since it reduces the cost of the new equipment. 33. If a company must expand capacity to accept a special order, it is likely that there will be i. an increase in fixed costs. ii. an increase in unit variable costs. iii. no increase in fixed costs. iv. an increase in variable and fixed costs per unit. 34. The projection of financial position at the end of the budget period is found on the i. budgeted income statement. ii. cash budget. iii. budgeted balance sheet. iv. sales budget. 35. Which of the following does not appear as a separate section on the cash budget? 36. i. Cash disbursements ii. Cash receipts iii. Capital expenditures iv. Financing A master budget consists of 37. i. financial budgets and a long-term plan. ii. interrelated financial budgets and operating budgets. iii. all the accounting journals and ledgers used by a company. iv. an interrelated long-term plan and operating budgets. The financial budgets include the i. cash budget and the selling and administrative expense budget. ii. budgeted balance sheet and the budgeted income statement. iii. cash budget and the production budget. iv. cash budget and the budgeted balance sheet. 38. The total direct labor hours required in preparing a direct labor budget are calculated using the i. production budget. ii. direct materials budget. iii. sales budget. iv. sales forecast. 39. All of the following statements are correct about management by exception except it i. means that top management's review of a budget report is focused primarily on differences between actual results and planned objectives. ii. enables top management to focus on problem areas that need attention. iii. means that management has to investigate every budget difference. iv. requires that there must be some guidelines for identifying an exception. 40. Under management by exception, which differences between planned and actual results should be investigated? i. Material and noncontrollable ii. Controllable and noncontrollable iii. All differences should be investigated iv. Material and controllable 41. Which department is usually responsible for a labor price variance attributable to misallocation of workers? i. Engineering ii. Quality control iii. Purchasing iv. Production 42. The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the 43. i. total labor variance. ii. labor price variance. iii. labor quantity variance. iv. labor efficiency variance. The total overhead variance is the difference between the i. actual overhead costs and overhead costs applied based on standard hours allowed. ii. overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed. iii. actual overhead costs and overhead costs applied based on actual hours. iv. the actual overhead costs and the standard direct labor costs