QUESTION 1 Choosing the proper method of allocating overhead costs to products and services can have a major impact on: a. The selling price of the product or service if selling price is based on market factors b. The amount of direct material costs assigned to a product or service c. The amount of direct labor costs assigned to a product or service d. The total unit cost of a product or service 0 points QUESTION 2 Although __________________ costs are important in management decision making, they are difficult to trace to a particular product. a. Direct Material b. Direct Labor c. Overhead d. None of the cost above are important 0 points QUESTION 3 Why would a company choose NOT to use activity based costing instead of volume based costing? a. Volume based costing produces more accurate product costs b. Activity based costing can be a very time consuming and expensive process c. Volume based costing helps with improved decision making d. Activity based costing is unreliable 0 points QUESTION 4 An activity-based cost system a. Differs from an volume -based (normal) cost system in the nature and number of the cost drivers used b. Only uses unit-based cost drivers c. Is the correct method to allocate cost for all companies d. Causes the Direct materials cost of a product to change 0 points QUESTION 5 A manager refuses to replace an existing asset even though an extensive analysis indicates that replacement is desirable. One possible explanation for the manager's action is that a. a financial loss may be reported in the current period if the asset is replaced. b. the manager is concerned that his or her superior may think that the original asset purchase was a mistake on the part of the manager. c. the manager expects to be promoted or transferred in the near future and is concerned primarily about short-term performance. d. All of the above can be explanations. 0 points QUESTION 6 Harrison Co. produces two products, AB and XY. Information about the current periods production is as follows: AB XY Units produced 50,000 65,000 Prime cost $750,000 $650,000 Machine hours 30,000 60,000 Harrison uses a predetermined allocation rate of $4 per machine hour to apply overhead to production. Budgeted overhead was $392,000, but actual overhead was $376,000. How much of Harrison Companys overhead was applied to product AB? a. $120,000 b. $130,000 c. $195,000 d. $187,500 0 points QUESTION 7 Harrison Co. produces two products, AB and XY. Information about the current periods production is as follows: AB XY Units produced 50,000 65,000 Prime cost $750,000 $650,000 Machine hours 30,000 60,000 Harrison uses a predetermined allocation rate of $4 per machine hour to apply overhead to production. Budgeted overhead was $392,000, but actual overhead was $376,000. What was Harrison Companys total cost to produce product AB? a. $910,000 b. $900,000 c. $870,000 d. $890,000 0 points QUESTION 8 Products might consume overhead in different proportions due to a. Differences in product size b. Differences in setup times c. Differences in product complexity d. All of the above 0 points QUESTION 9 The first step in the budgeting process is the preparation of the a. sales forecast b. cash budget c. selling and administrative expenses budget d. production budget 0 points QUESTION 10 Well designed budgets Are static Lead to desired changes in behavior and minimize any undesired behavior that results from the measurement proces Will insure profitability Will achieve all of the above 0 points QUESTION 11 Susan Mason is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in? a. Information that is local, relevant, and timely b. Information that is global and pertains to the business as a whole c. Information that meets cost/benefit criteria d. Both A and C 0 points QUESTION 12 Managerial accounting information is limited or restricted by which of the following authorities or principles? a. Securities and Exchange Commission b. Financial Accounting Standards Board c. Generally Accepted Accounting Principles d. Value Added Principle 0 points QUESTION 13 Why do accountants normally calculate cost per unit as an average? a. Determining the exact cost of a product is virtually impossible. b. Some manufacturing-related costs cannot be accurately traced to specific units of product. c. Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used. d. All of the above are justifications for computing average unit costs. 0 points QUESTION 14 Assuming a company's inventory increased during the period, which of the following misclassifications increases net income? a. recording administrative salaries as a product cost b. recording depreciation on production equipment as an expense c. expensing raw material costs instead of including them in inventory d. B and C 0 points QUESTION 15 The line in the graph below depicts which type of total cost? Cost a. variable cost b. fixed cost c. mixed cost d. none of the above 0 points QUESTION 16 Odette Treasures operates a chain of gift shops. The company pays liability insurance premiums of $2,500 per year for each shop. The managers of each shop are paid a salary of $3,000 per month and all other employees are paid on an hourly basis. Relative to the number of shops, the cost of insurance is which kind of cost? a. Variable Cost b. Fixed Cost c. Mixed Cost d. None of the Above 0 points QUESTION 17 The activity director for Harris Hotel is planning an activity. She is considering alternative ways to set up the activity's cost structure. Select the incorrect statement from the following. a. If the director expects a low turnout, she should use a fixed cost structure. b. If the director expects a large turnout, she should attempt to convert variable costs into fixed costs. c. If the director shifts the cost structure from fixed to variable, the level of risk decreases. d. If the director shifts the cost structure from fixed to variable, the potential for profits will be reduced. 0 points QUESTION 18 Once sales reach the breakeven point, each additional unit sold will a. increase fixed cost by a proportionate amount. b. reduce the margin of safety. c. increase profit by an amount equal to the per unit contribution margin. d. increase the company's operating leverage. 0 points QUESTION 19 Ford Company had beginning raw materials inventory of $8,000. During the period, the company purchased $46,000 of raw materials on account. If the ending balance in raw materials was $5,000, the amount of raw materials transferred to Work in Process Inventory is a. $43,000. b. $46,000 c. $51,000 d. $49,000 0 points QUESTION 20 Equivalent whole units of production would best be defined as a. units of production that are the same kind of product. b. completed units that are produced through the same process. c. number of units transferred out during the period, regardless of when the units were started into production. d. the number of whole units that could have been completed with direct material, direct labor and overhead used during the period. 0 points QUESTION 21 A process cost system is used when a. a company produces unique, one-of-a-kind inventory items. b. batches of special order inventory items are produced. c. homogenous items are produced in a continuous flow production process. d. All of the above 0 points QUESTION 22 Select the incorrect statement regarding cost flows through a process cost system. a. The process cost system is patterned after the physical flow of products as they move through the production process. b. The three inventory accounts used are maintained on a perpetual basis. c. Product costs are accumulated separately by job. d. A separate work in process account is maintained for each department or process. 0 points QUESTION 23 All of the following transactions lead to an entry on the job cost sheet except a. a materials requisition for material used on a job. b. indirect material used on the job. c. work ticket for labor incurred on the job. d. application of estimated overhead to the job. 0 points QUESTION 24 Which event results in the transfer of product costs from the balance sheet to the income statement? a. Sale of goods b. Delivery of goods c. Production of goods d. Application of estimated manufacturing overhead to job 0 points QUESTION 25 When should variances be investigated? a. only when they are unfavorable b. only when they are favorable c. when outside of the acceptable range d. never 0 points QUESTION 26 Nadia Company uses a job order cost system. During the month of September, the company worked on three jobs. During September Job B was completed and transferred to finished goods. The job order cost sheets for the three jobs contained the following information at the end of September: Job A Job B Job C Beginning Balances $2,000 $1,500 $3,000 Direct Materials $500 $800 $1,000 Direct Labor $1,200 $2,300 $900 The company applies overhead at 120% of direct labor cost. At the end of September what was the total cost transferred to finished goods? a. $4,600 b. $7,360. c. $5,860. d. none of the above