1.Reno Corporation uses a predetermined overhead application rate of $.30 per direct labor hour. During the year it incurred $345,000 dollars of actual overhead, but it planned to incur $360,000 of overhead. The company applied $363,000 of overhead during the year. How many direct labor hours did the company plan to incur? 1,150,000 1,190,000 1,200,000 1,210,000 2. Aztec Company is relocating its facilities. The company estimates that it will take three trucks to move office contents. If the per truck rental charge is $1,000 plus 25 cents per mile, what is the expected cost to move 800 miles? $1,000 $1,200 $2,400 $3,600 3. At its present level of operations, a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales. Based on variable costing, if sales change by $1.00, income will change by _. $0.25 $0.10 $0.75 can't be determined from the information given 4. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours were allowed for actual production, applied fixed overhead is _. $33,300 $34,000 $34,500 not determinable without knowing the actual number of units produced 5. One unit requires 2 direct labor hours to produce. Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75. If 330 units were produced this month, what total amount of overhead is applied to the units produced? $990 $1,980 $660 cannot be determined without knowing the actual hours worked 6. Western Company uses a standard cost accounting system. The following overhead costs and production data are available for August: Standard fixed OH rate per DLH $1 Standard variable OH rate per DLH $4 Budgeted monthly DLHs 40,000 Actual DLHs worked 39,500 Standard DLHs allowed for actual production 39,000 Overall OH variance-favorable $2,000 The total applied manufacturing overhead for August should be _. $195,000 $197,000 $197,500 $199,500 7. Alpha, Beta, and Epsilon Companies Below are income statements that apply to three companies: Alpha, Beta, and Epsilon: Alpha Co. Beta Co. Epsilon Co. Sales $100 $100 $100 Variable costs (10) (20) (30) Contribution margin $ 90 $ 80 $ 70 Fixed costs (30) (20) (10) Profit before taxes $ 60 $ 60 $ 60 Refer to Alpha, Beta, and Epsilon Companies. At sales of $100, which firm has the highest margin of safety? Alpha Company Beta Company Epsilon Company They all have the same margin of safety. 8. Precious Jewels Corporation produces quality jewelry items for various retailers. For the coming year, it has estimated it will consume 500 ounces of gold. Its carrying costs for a year are $2 per ounce. No safety stock is maintained. If the EOQ is 100 ounces, what is the cost per order? $40 $20 $5 $25 9. A company has estimated its economic order quantity for Part A at 2,400 units for the coming year. If ordering costs are $200 and carrying costs are $.50 per unit per year, what is the estimated total annual usage? 6,000 units 28,800 units 7,200 units 2,400 units 10. A company annually consumes 10,000 units of Part C. The carrying cost of this part is $2 per year and the ordering costs are $100. The company uses an order quantity of 500 units. By how much could the company reduce its total costs if it purchased the economic order quantity instead of 500 units? $500 $2,000 $2,500 $0 11. Modern management accounting can be characterized by its _. flexibility standardization complexity precision 12. Which of the following is not a valid method for determining product cost? arbitrary assignment direct measurement systematic allocation cost-benefit measurement 13. Cost accounting is directed toward the needs of _. regulatory agencies external users internal users stockholders 14. The process of ____ causes the need for cost accounting. conversion sales controlling allocating 15. The Institute of Management Accountants issues _. Statements on Accounting Research for Managers Statements on Management Accounting Statements on Managerial and Cost Accounting Cost Accounting Standards 16. Period costs _. are generally expensed in the same period in which they are incurred are always variable costs remain unchanged over a given period of time are associated with the periodic inventory method 17. The indirect costs of converting raw material into finished goods are called . period costs prime costs overhead costs conversion costs 18. Conversion cost does not include _. direct labor direct material factory depreciation supervisors' salaries 19. The distinction between direct and indirect costs depends on whether a cost _. is controllable or non-controllable is variable or fixed can be conveniently and physically traced to a cost object under consideration will increase with changes in levels of activity 20. Applied overhead consists of which of the following? actual activity times predetermined overhead rate estimated activity times predetermined overhead rate actual activity times actual overhead rate estimated activity times actual overhead rate 21. If a company used two overhead accounts (actual overhead and applied overhead), the one that would receive the most debits would be _. actual overhead applied overhead both would receive an equal number of debits impossible to determine without additional information 22. The measure of production that considers historical and estimated future production levels and cyclical fluctuations is referred to as _. theoretical capacity practical capacity normal capacity expected capacity 23. A short-run measure of activity that represents a firm’s anticipated activity level for an upcoming period based upon expected demand is referred to as _. theoretical capacity practical capacity normal capacity expected capacity 24. An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a _. mixed cost predictor direct cost cost driver 25. Which of the following could not be used in job order costing? standards an average cost per unit for all jobs normal costing overhead allocation based on the job's direct labor hours 26. Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that employs a job order costing system? Work in Process Inventory Raw Material Inventory Accounts Payable Supplies Inventory 27. The source document that records the amount of raw material that has been requested by production is the _. job order cost sheet bill of lading interoffice memo material requisition 28. The cost sheets for incomplete jobs at the end of the period comprise the subsidiary ledger for _. Finished Goods Inventory Raw Material Inventory Work in Process Inventory Supplies Inventory 29. The source document that records the amount of time an employee worked on a job and his/her pay rate is the . job order cost sheet employee time sheet interoffice memo labor requisition form 30. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to _. Finished Goods Inventory Work in Process Inventory Cost of Goods Sold Raw Material Inventory 31. The weighted average method is thought by some accountants to be inferior to the FIFO method because it _. is more difficult to apply only considers the last units worked on ignores work performed in subsequent periods commingles costs of two periods 32. When standard costs are used in process costing, _. variances can be measured during the production period total costs rather than current production and current costs are used process costing calculations are made simpler the weighted average method of calculating EUPs makes computing transferred-out costs easier 33. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considered . normal and discrete normal and continuous abnormal and discrete abnormal and continuous 34. A continuous loss _. occurs unevenly throughout a process never occurs during the production process always occurs at the same place in a production process occurs evenly throughout the production process 35. Standard costs may be used for _. product costing planning controlling all of the above 36. A purpose of standard costing is to __. replace budgets and budgeting simplify costing procedures eliminate the need for actual costing for external reporting purposes eliminate the need to account for year-end underapplied or overapplied manufacturing overhead 37. A bill of material does not include _. quantity of component inputs price of component inputs quality of component inputs type of product output 38. An operations flow document _. tracks the cost and quantity of material through an operation tracks the network of control points from receipt of a customer's order through the delivery of the finished product specifies tasks to make a unit and the times allowed for each task charts the shortest path by which to arrange machines for completing products 39. A total variance is best defined as the difference between total _. actual cost and total cost applied for the standard output of the period standard cost and total cost applied to production actual cost and total standard cost of the actual input of the period actual cost and total cost applied for the actual output of the period 40. If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied on a DLH basis, a(n) _. favorable variable overhead spending variance exists favorable variable overhead efficiency variance exists favorable volume variance exists unfavorable volume variance exists
