Garcia's inventory increased during the year. On the basis of this information, income reported under absorption costing: Answer will be the same as that reported under variable costing. will be higher than that reported under variable costing. will be lower than that reported under variable costing. will differ from that reported under variable costing, the direction of which cannot be determined from the information given. will be less than that reported in the previous period. Which of the following product-costing systems is/are required for tax purposes? Answer Absorption costing. Variable costing. Throughput costing. Either absorption or variable costing. Either absorption, variable costing, or throughput costing. Which of the following situations would cause variable-costing income to be higher than absorption-costing income? Answer Units sold equaled 39,000 and units produced equaled 42,000. Units sold and units produced were both 42,000. Units sold equaled 55,000 and units produced equaled 49,000. Sales prices decreased by $7 per unit during the accounting period. Selling expenses increased by 10% during the accounting period. Which of the following formulas can often reconcile the difference between absorption- and variable-costing income? Answer Change in inventory units predetermined variable-overhead rate per unit. Change in inventory units predetermined variable-overhead rate per unit. Change in inventory units predetermined fixed-overhead rate per unit. Change in inventory units predetermined fixed-overhead rate per unit. (Absorption-costing income - variable-costing income) fixed-overhead rate per unit. Which of the following conditions would cause absorption-costing income to be lower than variable-costing income? Answer Units sold exceeded units produced. Units sold equaled units produced. Units sold were less than units produced. Sales prices decreased. Selling expenses increased. Gourmet Restaurants has the following flexible-budget formula: Y = $13PH + $450,000 where PH is defined as process hours. Which of the following statements is (are) true? Answer Gourmet has $450,000 of fixed costs. Each additional hour of process time is expected to cost Gourmet $13. Y would equal the amount shown as "total cost" in the company's flexible budget. Choices "A" and "B" are true. Choices "A," "B," and "C" are true. Darling Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual fixed overhead incurred: $730,000 Actual machine hours worked: 60,000 Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 50,000 If Darling estimates four hours to manufacture a completed unit, the company's standard fixed overhead rate per machine hour would be: Answer $12.00. $14.40. $14.60. $15.00. some other amount. The budget variance arises from a comparison of: Answer budgeted fixed overhead expenditures with budgeted fixed overhead costs. actual fixed overhead costs with budgeted fixed overhead costs. actual variable overhead expenditures with budgeted variable overhead costs. variable overhead costs with budgeted fixed overhead costs. static-budget amounts with flexible-budget amounts. Smithville uses labor hours to apply variable overhead to production. If the company's workers were very inefficient during the period, which of the following statements would be true about the variable-overhead efficiency variance? Answer The variance would be favorable. The variance would be unfavorable. The nature of the variance (favorable or unfavorable) would be unknown based on the facts presented. The variance would be the same amount as the labor efficiency variance. None of these. The following data relate to product no. 89 of Des Moines Corporation: Direct material standard: 3 square feet at $2.50 per square foot Direct material purchased: 30,000 square feet at $2.60 per square foot Direct material consumed: 29,200 square feet Manufacturing activity: 9,600 units completed Assume that the company computes variances at the earliest point in time. The direct-material price variance is: Answer $2,880U. $2,920F. $2,920U. $3,000F. $3,000U. Taylor Enterprises purchased 56,000 pounds (cost = $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units. An examination of Taylor's payroll records revealed that the company worked 22,000 labor hours (cost = $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour. Assume that the company computes variances at the earliest point in time. Taylor's direct-material price variance was: Answer $16,050F. $16,050U. $16,800F. $16,800U. None of these. Consider the following statements: I. Behavioral scientists find that perfection standards often discourage employees and result in low worker morale. II. Practical standards are also known as attainable standards. III. Practical standards incorporate a certain amount of inefficiency such as that caused by an occasional machine breakdown. Which of the above statements is (are) true? Answer I only. II only. III only. II and III. I, II, and III. Lead indicators guide management to: Answer take actions now that will have positive effects on organizational performance now. take actions now that will have positive effects on organizational performance in the future. take actions in the future that will have positive effects on organizational performance now. take actions in the past that will have positive effects on organizational performance in the future. pursue identical strategies as those implemented with lag indicators. Newbill Enterprises recently used 24,000 labor hours to produce 8,600 completed units. According to manufacturing specifications, each unit is anticipated to take 2.75 hours to complete. The company's actual payroll cost amounted to $456,000. If the standard labor cost per hour is $19.20, Newhart's labor rate variance is: Answer $1,920U. $1,920F. $4,800U. $4,800F. None of these. In the calculation of manufacturing cycle efficiency, which of the following activities results in value-added time? Answer Moving. Processing. Inspection. Waiting. All of these. Generally speaking, budgets are not used to: Answer identify a company's most profitable products. evaluate performance. create a plan of action. assist in the control of profit and operations. facilitate communication and coordinate activities. Coleman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively. Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month's sales. On the basis of this information, how many units would the company plan to produce in July? Answer 46,800. 49,200. 49,800. 52,200. Some other amount. Which of the following statements about financial planning models (FPMs) is (are) false? Answer FPMs express a company's financial and operating relationships in mathematical terms. FPMs allow a user to explore the impact of changes in variables. FPMs are commonly known as "what-if" models. FPMs have become less popular in recent years because of computers and spreadsheets. Statements "C" and "D" are both false. A company's plan for the issuance of stock or incurrence of debt is commonly called a: Answer pro-forma budget. master budget. financial budget. profit plan. capital budget An organization's budgets will often be prepared to cover: Answer one month. one quarter. one year. periods longer than one year. All of these. Sainte Claire Corporation has a highly automated production facility. Which of the following correctly shows the two factors that would likely have the most direct influence on the company's manufacturing overhead budget? Answer Sales volume and labor hours. Contribution margin and cash payments. Production volume and management judgment. Labor hours and management judgment. Management judgment and indirect labor cost. Garcia's inventory increased during the year. On the basis of this information, income reported under absorption costing: Answer will be the same as that reported under variable costing. will be higher than that reported under variable costing. will be lower than that reported under variable costing. will differ from that reported under variable costing, the direction of which cannot be determined from the information given. will be less than that reported in the previous period. Which of the following product-costing systems is/are required for tax purposes? Answer Absorption costing. Variable costing. Throughput costing. Either absorption or variable costing. Either absorption, variable costing, or throughput costing. Which of the following situations would cause variable-costing income to be higher than absorption-costing income? Answer Units sold equaled 39,000 and units produced equaled 42,000. Units sold and units produced were both 42,000. Units sold equaled 55,000 and units produced equaled 49,000. Sales prices decreased by $7 per unit during the accounting period. Selling expenses increased by 10% during the accounting period. Which of the following formulas can often reconcile the difference between absorption- and variable-costing income? Answer Change in inventory units predetermined variable-overhead rate per unit. Change in inventory units predetermined variable-overhead rate per unit. Change in inventory units predetermined fixed-overhead rate per unit. Change in inventory units predetermined fixed-overhead rate per unit. (Absorption-costing income - variable-costing income) fixed-overhead rate per unit. Which of the following conditions would cause absorption-costing income to be lower than variable-costing income? Answer Units sold exceeded units produced. Units sold equaled units produced. Units sold were less than units produced. Sales prices decreased. Selling expenses increased. Gourmet Restaurants has the following flexible-budget formula: Y = $13PH + $450,000 where PH is defined as process hours. Which of the following statements is (are) true? Answer Gourmet has $450,000 of fixed costs. Each additional hour of process time is expected to cost Gourmet $13. Y would equal the amount shown as "total cost" in the company's flexible budget. Choices "A" and "B" are true. Choices "A," "B," and "C" are true. Darling Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual fixed overhead incurred: $730,000 Actual machine hours worked: 60,000 Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 50,000 If Darling estimates four hours to manufacture a completed unit, the company's standard fixed overhead rate per machine hour would be: Answer $12.00. $14.40. $14.60. $15.00. some other amount. The budget variance arises from a comparison of: Answer budgeted fixed overhead expenditures with budgeted fixed overhead costs. actual fixed overhead costs with budgeted fixed overhead costs. actual variable overhead expenditures with budgeted variable overhead costs. variable overhead costs with budgeted fixed overhead costs. static-budget amounts with flexible-budget amounts. Smithville uses labor hours to apply variable overhead to production. If the company's workers were very inefficient during the period, which of the following statements would be true about the variable-overhead efficiency variance? Answer The variance would be favorable. The variance would be unfavorable. The nature of the variance (favorable or unfavorable) would be unknown based on the facts presented. The variance would be the same amount as the labor efficiency variance. None of these. The following data relate to product no. 89 of Des Moines Corporation: Direct material standard: 3 square feet at $2.50 per square foot Direct material purchased: 30,000 square feet at $2.60 per square foot Direct material consumed: 29,200 square feet Manufacturing activity: 9,600 units completed Assume that the company computes variances at the earliest point in time. The direct-material price variance is: Answer $2,880U . $2,920F. $2,920U . $3,000F. $3,000U . Taylor Enterprises purchased 56,000 pounds (cost = $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units. An examination of Taylor's payroll records revealed that the company worked 22,000 labor hours (cost = $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour. Assume that the company computes variances at the earliest point in time. Taylor's direct-material price variance was: Answer $16,050F. $16,050U. $16,800F. $16,800U. None of these. Consider the following statements: I. Behavioral scientists find that perfection standards often discourage employees and result in low worker morale. II. Practical standards are also known as attainable standards. III. Practical standards incorporate a certain amount of inefficiency such as that caused by an occasional machine breakdown. Which of the above statements is (are) true? Answer I only. II only. III only. II and III. I, II, and III. Lead indicators guide management to: Answer take actions now that will have positive effects on organizational performance now. take actions now that will have positive effects on organizational performance in the future. take actions in the future that will have positive effects on organizational performance now. take actions in the past that will have positive effects on organizational performance in the future. pursue identical strategies as those implemented with lag indicators. Newbill Enterprises recently used 24,000 labor hours to produce 8,600 completed units. According to manufacturing specifications, each unit is anticipated to take 2.75 hours to complete. The company's actual payroll cost amounted to $456,000. If the standard labor cost per hour is $19.20, Newhart's labor rate variance is: Answer $1,920U. $1,920F. $4,800U. $4,800F. None of these. In the calculation of manufacturing cycle efficiency, which of the following activities results in value-added time? Answer Moving. Processing. Inspection. Waiting. All of these. Generally speaking, budgets are not used to: Answer identify a company's most profitable products. evaluate performance. create a plan of action. assist in the control of profit and operations. facilitate communication and coordinate activities. Coleman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively. Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month's sales. On the basis of this information, how many units would the company plan to produce in July? Answer 46,800. 49,200. 49,800. 52,200. Some other amount. Which of the following statements about financial planning models (FPMs) is (are) false? Answer FPMs express a company's financial and operating relationships in mathematical terms. FPMs allow a user to explore the impact of changes in variables. FPMs are commonly known as "what-if" models. FPMs have become less popular in recent years because of computers and spreadsheets. Statements "C" and "D" are both false. A company's plan for the issuance of stock or incurrence of debt is commonly called a: Answer pro-forma budget. master budget. financial budget. profit plan. capital budget An organization's budgets will often be prepared to cover: Answer one month. one quarter. one year. periods longer than one year. All of these. Sainte Claire Corporation has a highly automated production facility. Which of the following correctly shows the two factors that would likely have the most direct influence on the company's manufacturing overhead budget? Answer Sales volume and labor hours. Contribution margin and cash payments. Production volume and management judgment. Labor hours and management judgment. Management judgment and indirect labor cost