Question 8

Supervisor salaries at a manufacturing plant are an element of a

Product Cost Period Cost

1. Yes No

2. Yes Yes

3. No Yes

4. No No

a. 4

b. 3

c. 2

d. 1

Question 9

A static budget is not appropriate in evaluating a managers effectiveness if a company has

a. no variable costs.

b. planned activity levels that match actual activity levels.

c. substantial fixed costs.

d. substantial variable costs

Question 10

The master budget of Amax Co. shows that the planned activity level for next year is expected to be 40,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:

Indirect labor $720,000

Machine supplies 180,000

Indirect materials 210,000

Depreciation on factory building 150,000

Total manufacturing overhead $1,260,000

The actual costs came in at $1,600,000 based on 50,000 machine hours. A flexible budget for a level of activity of 50,000 machine hours would show total manufacturing overhead costs of

Select one:

a. $340,000

b. $1,575,000.

c. $25,000.

d. $315,000.

Question 11

If there were 140,000 pounds of raw materials on hand on January 1, 180,000 pounds are desired for inventory at January 31, and 610,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?

Select one:

a. 290,000 pounds

b. 790,000 pounds

c. 650,000 pounds

d. 430,000 pounds

Q12

In a make-or-buy decision, which costs can be considered relevant?

a. Incremental variable costs, incremental fixed costs, and opportunity costs

b. Incremental variable costs, unavoidable fixed costs, and opportunity costs

c. Unavoidable variable costs, incremental fixed costs, and sunk costs

d. Incremental variable costs, incremental fixed costs, and sunk costs

Question 13

Which is the correct order to prepare the following budgets from last to first?

1. Budgeted Balance Sheet

2. Sales Budget

3. Production Budget

4. Budgeted Income Statement

Select one:

a. 2, 3, 1, 4

b. 1, 4, 3, 2

c. 1, 3, 4 ,2

d. 1, 2, 3, 4

Question 14

The total direct labor hours required in preparing a direct labor budget are calculated using the

:

a. sales forecast.

b. production budget.

c. direct materials budget.

d. sales budget.

Q15

A company has a minimum required rate of return of 10%. It is considering investing in a project which costs $250,000 and is expected to generate cash inflows of $110,000 at the end of each year for three years. The net present value of this project is

a. $23,553.50

b. $-167,354.80

c. $223,553.50

d. $82,645.20

Question 16

Cinnamon Company reported the following year-end information:

Beginning work in process inventory $ 900,000

Beginning raw materials inventory 100,000

Ending work in process inventory 500,000

Ending raw materials inventory 320,000

Raw materials purchased 460,000

Direct labor 600,000

Indirect labor 200,000

Manufacturing overhead 520,000

Cinnamon Company's cost of goods manufactured for the year is

Select one:

a. $1,560,000.

b. $1,760,000.

c. $2,120,000.

d. $1,360,000.

Question 17

Detroit Auto Company collected the following production data for the past month:

Units Produced Total Cost

1,600 $68,000

1,300 57,000

1,100 49,500

1,500 67,500

If the high-low method is used, what is the monthly total cost equation?

Select one:

a. Total cost = $16,500 + $30/unit

b. Total cost = $8,800 + $45/unit

c. Total cost = $9,900 + $36/unit

d. Total cost = $8,800 + $37/unit