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ACC2052 Test#3

Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. In cost-volume-profit analysis, all costs are classified into the following two categories: a. mixed costs and variable costs b. variable costs and fixed costs c. discretionary costs and sunk costs d. sunk costs and fixed costs . !he benefits of comparing actual performance of the operations against planned goals include all of the following except: a. preventing unplanned expenditures b. determining how managers are performing against prior years" actual operating results c. helping to establish spending priorities d. providing prompt feedback to employees about their performance relative to the goal #. !he standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of ,$%% units of product are as follows: &tandard 'osts (irect materials (irect labor -ctual 'osts (irect materials (irect labor 0actory overhead 11%%2 capacity 3 1%,%%% hrs.4: 5ariable cost ) * per hour !otal variable cost, *1+,%%% 0ixed cost ) *.+% per hour !otal fixed cost, *+,%%% !he amount of the factory overhead volume variance is: a. * ,%%% unfavorable b. * ,%%% favorable c. * ,$%% unfavorable d. *% /. If fixed costs are *+$%,%%% and variable costs are ,$2 of sales, what is the break-even point 1dollars46 a. *#,/%%,%%% b. * ,$$%,%%% c. *1,7+#,### d. *1,1##,### $. If a business had sales of */,%%%,%%%, fixed costs of *1, %%,%%%, a margin of safety of $2, and a contribution margin ratio of /%2, what was the break-even point6 a. * ,+%%,%%% b. *1,%%%,%%% c. *#,%%%,%%% d. */,+%%,%%% ,$%% kilograms ) *+ ,,$%% hours ) *1 ,.%% kilograms ) *+.,$ ,,/%% hours ) *11./%

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.. 'ost-volume-profit analysis cannot be used if which of the following occurs6 a. 'osts cannot be properly classified into fixed and variable costs b. !he per unit variable costs change c. 8er unit sales prices change d. !he total fixed costs change ,. 8roduction and sales estimates for 9arch for the 0inneaty 'o. are as follows: :stimated inventory 1units4, 9arch 1 (esired inventory 1unit4, 9arch #1 :xpected sales volume 1units4: -rea ; -rea < -rea = >nit sales price
17,500 19,300 6,000 7,000 9,000 $15

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+.

____

7.

____ 1%.

____ 11.

!he number of units expected to be sold in 9arch is: a. ,%%% b. #,+%% c. %, %% d. 1,+%% 9c'abe 9anufacturing 'o."s static budget at +,%%% units of production includes */%,%%% for direct labor and */,%%% for electric power. !otal fixed costs are * #,%%%. -t 7,%%% units of production, a flexible budget would show: a. variable costs of */7,$%% and * $,+,$ of fixed costs b. variable costs of */7,$%% and * #,%%% of fixed costs c. variable and fixed costs totaling *,$,#,$ d. variable costs of *//,%%% and * #,%%% of fixed costs !he use of standards for nonmanufacturing expenses is: a. not useful b. impossible c. as common as it is for manufacturing costs d. not as common as it is for manufacturing costs !he budgetary unit of an organi?ation which is led by a manager who has both the authority over and responsibility for the unit"s performance is known as a: a. budgetary area b. responsibility center c. managerial department d. control center 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead *#.%% #1,%%% *1+.1% /,7%% labor hrs. * .+% . kilograms *1+.%% 1 hr. *#/,7%%

0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period

*1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

!he direct materials cost variance is: a. *#,/%% unfavorable b. *#,/%% favorable c. *7,%%% favorable d. *7,%%% unfavorable ____ 1 . - variant of fiscal-year budgeting whereby a twelve-month pro@ection into the future is maintained at all times is termed: a. master budgeting b. continuous budgeting c. ?ero-based budgeting d. flexible budgeting ____ 1#. 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 1%%2 of normal capacity 8lant operated during the period >nits completed during the period *#.%% #1,%%% *1+.1% /,7%% labor hours * .+% . kilograms *1+.%% 1 hr. *#/,7%% *1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

!he total factory overhead cost variance is: a. *#,7%% favorable b. *+,1%% favorable c. *7,7%% unfavorable d. *+,1%% unfavorable ____ 1/. Aelow is budgeted production and sales information for 0leming 'ompany for the month of (ecember: :stimated beginning inventory (esired ending inventory Cegion I, anticipated sales Cegion II, anticipated sales 8roduct <<< #%,%%% units # ,%%% units # %,%%% units 17%,%%% units 8roduct BBB 1+,%%% units 1$,%%% units .%,%%% units 1#%,%%% units

!he unit selling price for product <<< is *$ and for product BBB is *1/. Audgeted production for product <<< during the month is: a. $1 ,%%% units b. $1%,%%% units c. $, ,%%% units d. $/ ,%%% units ____ 1$. -gnew 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period *1.,. .1,$%% * %..% +,+$% *1.+% $ kilograms * %.%% #D/ hr. *./,$%% *#%,%%% *#.%% per labor hour *$.%% per labor hour 1%,%%% hours 7,%%% hours 1 ,%%%

!he direct materials price variance is: a. * ,,%% unfavorable b. * ,/.% unfavorable c. * ,/.% favorable d. * ,,%% favorable ____ 1.. 9ancini 'orporation sells a single product. Audgeted sales for the year are anticipated to be ./%,%%% units, estimated beginning inventory is 1%+,%%% units, and desired ending inventory is 7%,%%% units. !he Euantities of direct materials expected to be used for each unit of finished product are given below. 9aterial - .$% lb. per unit ) * ..% per pound 9aterial A 1.%% lb. per unit ) *1.,% per pound 9aterial ' 1. % lb. per unit ) *1.%% per pound !he amount of direct material - purchased during the year is: a. *1+.,.%% b. * /%,%%% c. * 1%,.%% d. *1+1, %% ____ 1,. !he following data relate to direct labor costs for 0ebruary: -ctual costs &tandard costs ;hat is the direct labor time variance6 a. *.,#%% unfavorable ,,,%% hours at *1# ,,%%% hours at *7

____ 1+.

____ 17.

____

%.

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1.

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b. *.,#%% favorable c. *7,1%% favorable d. *7,1%% unfavorable 'ost behavior refers to the manner in which: a. a cost is allocated to products b. a cost is estimated c. a cost changes as the related activity changes d. a cost is used in setting selling prices 'hristiansen and &ons" static budget for 1%,%%% units of production includes *$%,%%% for direct materials, *//,%%% for direct labor, utilities of *$,%%%, and supervisor salaries of *1$,%%%. - flexible budget for 1 ,%%% units of production would show: a. total variable costs of *1#.,+%% b. the same cost structure in total c. direct materials of *.%,%%%, direct labor of *$ ,+%%, utilities of *.,%%%, and supervisor salaries of *1$,%%% d. direct materials of *.%,%%%, direct labor of *$ ,+%%, utilities of *.,%%%, and supervisor salaries of *1+,%%% ;right 'orporation began its operations on &eptember 1 of the current year. Audgeted sales for the first three months of business are * /%,%%%, *#%%,%%%, and */ %,%%%, respectively, for &eptember, Fctober, and Govember. !he company expects to sell %2 of its merchandise for cash. Ff sales on account, ,%2 are expected to be collected in the month of the sale, $2 in the month following the sale, and the remainder in the following month. !he cash collections from accounts receivable in &eptember are: a. *1#/,/%% b. * /%,%%% c. *1.+,%%% d. *17 ,%%% If fixed costs are *#%%,%%%, the unit selling price is *7$, and the unit variable costs are */$, what is the breakeven sales 1units46 a. .,%%% units b. 1/,%%% units c. #,$%% units d. #,1$+ units 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 1%%2 of normal capacity 8lant operated during the period >nits completed during the period *#.%% #1,%%% *1+.1% /,7%% labor hours * .+% . kilograms *1+.%% 1 hr. *#/,7%% *1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

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!he factory overhead volume variance is: a. * ,1%% favorable b. * ,1%% unfavorable c. *.,%%% favorable d. *1 ,%%% unfavorable #. If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed: a. variable variance b. Euantity variance c. volume variance d. rate variance /. ;hich of the graphs in 0igure 17-1 illustrates the behavior of a total variable cost6

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a. Hraph b. Hraph # c. Hraph / d. Hraph 1 $. !he following data relate to direct materials costs for Govember: -ctual costs &tandard costs ;hat is the direct materials Euantity variance6 a. *.%% unfavorable b. *.%% favorable /,.%% pounds at *$.$% /,$%% pounds at *..%%

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c. *$$% unfavorable d. *$$% favorable .. 8roduction and sales estimates for Iune are as follows: :stimated inventory 1units4, Iune 1 (esired inventory 1units4, Iune #% :xpected sales volume 1units4: -rea < -rea = -rea B >nit sales price
8,000 9,000 3,000 4,000 5,500 $20

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!he budgeted total sales for Iune is: a. * %%,%%% b. * ,%,%%% c. * $%,%%% d. * #%,%%% ,. Aelow is budgeted production and sales information for 0leming 'ompany for the month of (ecember: :stimated beginning inventory (esired ending inventory Cegion I, anticipated sales Cegion II, anticipated sales 8roduct <<< #%,%%% units # ,%%% units # %,%%% units 17%,%%% units 8roduct BBB 1+,%%% units 1$,%%% units .%,%%% units 1#%,%%% units

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!he unit selling price for product <<< is *$ and for product BBB is *1/. Audgeted production for product BBB during the month is: a. / #,%%% units b. #+,,%%% units c. #7%,%%% units d. /%$,%%% units +. 9ancini 'orporation sells a single product. Audgeted sales for the year are anticipated to be ./%,%%% units, estimated beginning inventory is 7+,%%% units, and desired ending inventory is +%,%%% units. !he Euantities of direct materials expected to be used for each unit of finished product are given below. 9aterial - .$% lb. per unit ) * ..% per pound 9aterial A 1.%% lb. per unit ) *1.,% per pound 9aterial ' 1. % lb. per unit ) *1.%% per pound !he amount of direct material ' purchased during the year is: a. *,/.,/%% b. *, /,+%% c. *,$+,1.% d. *+ /,/%% 7. ;hich of the graphs in 0igure 17-1 illustrates the nature of a mixed cost6

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____ #%.

____ #1.

____ # .

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a. Hraph # b. Hraph / c. Hraph 1 d. Hraph Jidder 'ompany began its operations on 9arch #1 of the current year. 8ro@ected manufacturing costs for the first three months of business are *1$.,+%%, *17$, %%, and * 1,,.%%, respectively, for -pril, 9ay, and Iune. (epreciation, insurance, and property taxes represent * +,+%% of the estimated monthly manufacturing costs. Insurance was paid on 9arch #1, and property taxes will be paid in Govember. !hree-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. !he cash payments for manufacturing in the month of 9ay are: a. *1$.,+%% b. *1/.,/%% c. *17$, %% d. *1..,/%% !he budget that summari?es future plans for the acEuisition of fixed assets is the: a. direct materials purchases budget b. capital expenditures budget c. sales budget d. production budget !he cost of available but unused productive capacity is indicated by the: a. direct labor cost time variance b. direct labor cost rate variance c. factory overhead cost volume variance d. factory overhead cost controllable variance &tandards that represent levels of operation that can be attained with reasonable effort are called:

a. theoretical standards b. normal standards c. ideal standards d. practical standards ____ #/. !he following data relate to direct labor costs for the current period: &tandard costs -ctual costs .,%%% hours at *1 .%% ,,$%% hours at *11..%

;hat is the direct labor rate variance6 a. *1$,%%% unfavorable b. *#,%%% favorable c. * ,/%% favorable d. *1,,/%% unfavorable ____ #$. If a business had a margin of safety ratio of %2, variable costs of ,$2 of sales, fixed costs of * /%,%%%, a break-even point of *7.%,%%%, and operating income of *.%,%%% for the current year, what are the current year"s sales6 a. *1, %%,%%% b. *1, .%,%%% c. *1,% %,%%% d. *1,%/%,%%% ____ #.. 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 1%%2 of normal capacity 8lant operated during the period >nits completed during the period *#.%% #1,%%% *1+.1% /,7%% labor hours * .+% . kilograms *1+.%% 1 hr. *#/,7%% *1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

!he factory overhead controllable variance is: a. *.,%%% favorable b. * ,1%% favorable c. *.,%%% unfavorable d. * ,1%% unfavorable ____ #,. ;hen a business sells more than one product at varying selling prices, the business"s break-even point can be determined as long as the number of products does not exceed: a. two b. fifteen c. there is no limit

d. three ____ #+. If sales are *+ %,%%%, variable costs are . 2 of sales, and operating income is * .%,%%%, what is the contribution margin ratio6 a. #+2 b. $#.12 c. . 2 d. # 2 ____ #7. !he process of developing budget estimates by reEuiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as: a. ?ero-based budgeting b. continuous budgeting c. flexible budgeting d. master budgeting ____ /%. !he standard factory overhead rate is *,.$% per machine hour 1*.. % for variable factory overhead and *1.#% for fixed factory overhead4 based on 1%%2 capacity of +%,%%% machine hours. !he standard cost and the actual cost of factory overhead for the production of 1$,%%% units during -ugust were as follows: -ctual: &tandard: 5ariable factory overhead 0ixed factory overhead .%,%%% hours at *,.$%
$360,000 104,000 450,000

;hat is the amount of the factory overhead controllable variance6 a. *1/,%%% unfavorable b. *1 ,%%% unfavorable c. *1 ,%%% favorable d. * .,%%% unfavorable ____ /1. 'osts that remain constant in total dollar amount as the level of activity changes are called: a. opportunity costs b. fixed costs c. mixed costs d. variable costs ____ / . 8lanning for capital expenditures is necessary for all of the following reasons except: a. fixed assets may fall below minimum standards of efficiency b. expansion may be necessary to meet increased demand c. machinery and other fixed assets wear out d. amounts spent for office eEuipment may be immaterial ____ /#. !he standard factory overhead rate is *1% per direct labor hour 1*+ for variable factory overhead and * for fixed factory overhead4 based on 1%%2 capacity of #%,%%% direct labor hours. !he standard cost and the actual cost of factory overhead for the production of $,%%% units during 9ay were as follows: &tandard: -ctual: $,%%% hours at *1% 5ariable factory overhead 0ixed factory overhead
$250,000 202,500 60,000

;hat is the amount of the factory overhead volume variance6 a. *1 ,$%% unfavorable b. *1%,%%% unfavorable c. *1%,%%% favorable d. *1 ,$%% favorable

____ //. !he first budget customarily prepared as part of an entity"s master budget is the: a. sales budget b. production budget c. cash budget d. direct materials purchases ____ /$. ;right 'orporation began its operations on &eptember 1 of the current year. Audgeted sales for the first three months of business are * /%,%%%, *#%%,%%%, and */ %,%%%, respectively, for &eptember, Fctober, and Govember. !he company expects to sell %2 of its merchandise for cash. Ff sales on account, ,%2 are expected to be collected in the month of the sale, $2 in the month following the sale, and the remainder in the following month. !he cash collections from accounts receivable in Fctober are: a. * 1%,%%% b. * ++,%%% c. * /%,%%% d. * 1.,%%% ____ /.. F"Geill 'o. has * 7.,%%% in accounts receivable on Ianuary 1, %%%. Audgeted sales for Ianuary are *+.%,%%%. F"Geill expects to sell %2 of its merchandise for cash. Ff the remaining +%2 of sales on account, ,$2 are expected to be collected in the month of sale and the remainder the following month. !he Ianuary cash collections from sales are: a. */.+,%%% b. *.++,%%% c. *+1 ,%%% d. *7+/,%%% ____ /,. !he standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of ,$%% units of product are as follows: &tandard 'osts (irect materials (irect labor -ctual 'osts (irect materials (irect labor 0actory overhead 11%%2 capacity - 1%,%%% hrs.4: 5ariable cost ) * per hour !otal variable cost, *1+,%%% 0ixed cost ) *.+% per hour !otal fixed cost, *+,%%% !he amount of the direct labor time variance is: a. *1,1/% unfavorable b. *1, %% unfavorable c. *1,1/% favorable d. *1, %% favorable ____ /+. 0avorable volume variances may be harmful when: a. supervisors fail to maintain an even flow of work b. production in excess of normal capacity cannot be sold c. machine repairs cause work stoppages d. there are insufficient sales orders to keep the factory operating at normal capacity ,$%% kilograms ) *+ ,,$%% hours ) *1 ,.%% kilograms ) *+.,$ ,,/%% hours ) *11./%

____ /7. 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used. -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period *#.%% #1,%%% *1+.1% /,7%% labor hours * .+% . kilograms *1+.%% 1 hr. *#/,7%% *1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

!he direct labor cost variance is: a. *1,#1% favorable b. *1,#1% unfavorable c. * , 7% favorable d. * , 7% unfavorable ____ $%. !he following data relate to direct labor costs for the current period: &tandard costs -ctual costs 7,%%% hours at *$.$% +,,$% hours at *$.,$

;hat is the direct labor rate variance6 a. *1,/#+.%% favorable b. * ,1+,.$% unfavorable c. *1,#,$.%% favorable d. * , $%.%% unfavorable ____ $1. !he following data relate to direct labor costs for the current period: &tandard costs -ctual costs ;hat is the direct labor time variance6 a. *#,%%% favorable b. * ,/%% favorable c. *1,,/%% favorable d. *1$,%%% unfavorable ____ $ . 8roduction and sales estimates for Iune are as follows: :stimated inventory 1units4, Iune 1 (esired inventory 1units4, Iune #% :xpected sales volume 1units4: -rea <
18,000 19,000 3,000

,,$%% hours at *11..% .,%%% hours at *1 .%%

-rea = -rea B >nit sales price !he number of units expected to be manufactured in Iune is: a. 1%,%%% b. 11,$%% c. 1#,$%% d. 1 ,$%% ____ $#. 'osts that vary in total in direct proportion to changes in an activity level are called: a. variable costs b. sunk costs c. fixed costs d. differential costs ____ $/. 8roduction estimates for -ugust are as follows: :stimated inventory 1units4, -ugust 1 (esired inventory 1units4, -ugust #1 :xpected sales volume 1units4, -ugust 0or each unit produced, the direct materials reEuirements are as follows: (irect material - 1*$ per lb.4 (irect material A 1*1+ per lb.4

4,000 5,500 $20

12,000 9,000 75,000

3 lbs. 1/2 lb.

!he number of pounds of materials - and A reEuired for -ugust production is: a. #/,%%% lbs. of -K #7,%%% lbs. of A b. $,%%% lbs. of -K #,,$%% lbs. of A c. 1.,%%% lbs. of -K #.,%%% lbs. of A d. 1.,%%% lbs. of -K , ,%%% lbs. of A ____ $$. !he point where the profit line intersects the left vertical axis on the profit-volume chart represents: a. the break-even point b. the total fixed costs c. the maximum possible operating loss d. the maximum possible operating income ____ $.. -ssuming that the 9orrita (esk 'o. purchases +,%%% feet of lumber at *$.$% per foot and the standard price for direct materials is *$.%%, the entry to record the purchase and unfavorable direct materials price variance is: 44,000 a. Work in Process
Direct Materials Price ariance !cco"nts Pa#able b. Direct Materials Direct Materials Price ariance !cco"nts Pa#able Direct Materials c. !cco"nts Pa#able d. Direct Materials Direct Materials Price ariance !cco"nts Pa#able 40,000 4,000 40,000 44,000 4,000 40,000 44,000 40,000 4,000 40,000

____ $,. -gnew 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended:

-ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period

*1.,. .1,$%% * %..% +,+$% *1.+% $ kilograms * %.%% #D/ hr. *./,$%% *#%,%%% *#.%% per labor hour *$.%% per labor hour 1%,%%% hours 7,%%% hours 1 ,%%%

!he factory overhead controllable variance is: a. *1%,$%% unfavorable b. *1%,$%% favorable c. *,,$%% favorable d. *,,$%% unfavorable ____ $+. -gnew 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period *1.,. .1,$%% * %..% +,+$% *1.+% $ kilograms * %.%% #D/ hr. *./,$%% *#%,%%% *#.%% per labor hour *$.%% per labor hour 1%,%%% hours 7,%%% hours 1 ,%%%

!he direct labor cost variance is: a. *$,#1% unfavorable b. * ,#1% favorable c. * ,#1% unfavorable d. *+,#1% favorable ____ $7. !he graph of a variable cost when plotted against its related activity base appears as a: a. straight line b. circle c. curved line

d. rectangle ____ .%. !he standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of ,$%% units of product are as follows: &tandard 'osts (irect materials (irect labor -ctual 'osts (irect materials (irect labor 0actory overhead 11%%2 capacity - 1%,%%% hrs.4: 5ariable cost ) * .%+ per hour !otal variable cost, *1+,, % 0ixed cost ) *.+# per hour !otal fixed cost, *+,# % !he amount of direct materials price variance is: a. *1,+,$ favorable b. *1,7$% unfavorable c. *1,+,$ unfavorable d. *1,7$% favorable - disadvantage of static budgets is that they: a. start with a clean slate b. do not show possible changes in underlying activity levels c. cannot be used by service companies d. show the expected results of a responsibility center for several levels of activity ;hen management seeks to achieve personal departmental ob@ectives that may work to the detriment of the entire company, the manager is experiencing: a. cushions b. padding c. budgetary slack d. goal conflict !he three most common cost behavior classifications are: a. variable costs, product costs, and sunk costs b. variable costs, period costs, and differential costs c. fixed costs, variable costs, and mixed costs d. variable costs, sunk costs, and opportunity costs !he standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of ,$%% units of product are as follows: &tandard 'osts (irect materials (irect labor -ctual 'osts (irect materials (irect labor 0actory overhead 11%%2 capacity 3 1%,%%% hrs.4: ,.%% kilograms ) *+.,$ ,,/%% hours ) *11./% ,$%% kilograms ) *+ ,,$%% hours ) *1 ,.%% kilograms ) *+.,$ ,,/%% hours ) *11./% ,$%% kilograms ) *+ ,,$%% hours ) *1

____ .1.

____ . .

____ .#.

____ ./.

5ariable cost ) * per hour !otal variable cost, *1+,%%% 0ixed cost ) *.+% per hour !otal fixed cost, *+,%%% !he amount of the factory overhead controllable variance is: a. *% b. *#,%%% unfavorable c. * ,%%% unfavorable d. *#,%%% favorable If fixed costs are *$%%,%%% and the unit contribution margin is */%, what is the break-even point if fixed costs are increased by *+%,%%%6 a. 7,.., b. 1 ,$%% c. +,### d. 1/,$%% &cher 'orporation sells product H for *1$% per unit, the variable cost per unit is *1%$, the fixed costs are *, %,%%%, and &cher is in the $2 corporate tax bracket. ;hat are the sales 1dollars4 reEuired to earn a net income 1after tax4 of */%,%%%6 a. * ,$,,,,,, b. * ,7##,/%% c. * ,$##,#$% d. * ,/%%,%%% :stimated cash payments are planned reductions in cash from all of the following except: a. payments for interest or dividends b. capital expenditures c. manufacturing and operating expenses d. notes and accounts receivable collections If fixed costs are *1, %%,%%%, the unit selling price is * %%, and the unit variable costs are *1 %, what is the amount of sales reEuired to reali?e an operating income of * %%,%%%6 a. 1$,%%% units b. 1%,%%% units c. 1,,$%% units d. 11,.., units Aelow is budgeted production and sales information for 0leming 'ompany for the month of (ecember: :stimated beginning inventory (esired ending inventory Cegion I, anticipated sales Cegion II, anticipated sales 8roduct <<< #%,%%% units # ,%%% units # %,%%% units 17%,%%% units 8roduct BBB 1+,%%% units 1$,%%% units .%,%%% units 1#%,%%% units

____ .$.

____ ...

____ .,.

____ .+.

____ .7.

!he unit selling price for product <<< is *$ and for product BBB is *1/. Audgeted sales for the month are: a. */,.+%,%%% b. *.,.7 ,%%% c. * ,%/%,%%% d. *+,%1%,%%% ____ ,%. !he following data relate to direct materials costs for Govember:

-ctual costs &tandard costs

/,.%% pounds at *$.$% /,$%% pounds at *..%%

;hat is the direct materials price variance6 a. * , $% unfavorable b. * ,#%% favorable c. * , $% favorable d. *1,,%% unfavorable ____ ,1. !he standard fixed factory overhead rate is based on 1%%2 capacity of 1 %,%%% machine hours for !hompson Inc. !he standard costs and the actual costs of factory overhead for the production of $,%%% units during 9arch were as follows: -ctual: 0actory overhead &tandard: 1%%,%%% hours at *7.%%
$950,000 900,000

If there was a *.%,%%% unfavorable volume variance for 9arch, what is the standard fixed factory overhead cost rate6 a. *#.%% b. *..., c. * .$% d. *..% ____ , . If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed: a. price variance b. variable variance c. volume variance d. controllable variance ____ ,#. 8roduction estimates for Iuly are as follows: :stimated inventory 1units4, Iuly 1 (esired inventory 1units4, Iuly #1 :xpected sales volume 1units4, Iuly 0or each unit produced, the direct materials reEuirements are as follows: (irect material - 1*$ per lb.4 (irect material A 1*1+ per lb.4
3 lbs. 1/2 lb. 8,500 10,500 76,000

!he total direct materials purchases of materials - and A reEuired for Iuly production is: a. *1,%+%,%%% for -K *1, 7.,%%% for A b. *1,1 $,%%% for -K *.,$,%%% for A c. *1,%+%,%%% for -K *./+,%%% for A d. *1,1,%,%%% for -K *,% ,%%% for A ____ ,/. ;hich of the following costs is a mixed cost6 a. Cental costs of *$,%%% per month plus *.#% per machine hour of use b. &traight-line depreciation on factory eEuipment c. :lectricity costs of * per kilowatt-hour d. &alary of a factory supervisor ____ ,$. 8roduction and sales estimates for 9arch for the 0inneaty 'o. are as follows: :stimated inventory 1units4, 9arch 1
17,500

(esired inventory 1unit4, 9arch #1 :xpected sales volume 1units4: -rea 9 -rea L -rea F >nit sales price

19,300

6,000 7,000 9,000 $15

!he number of units expected to be manufactured in 9arch is: a. #,+%% b. 1,+%% c. ,%%% d. %, %% ____ ,.. - series of budgets for varying rates of activity is termed a1n4: a. flexible budget b. master budget c. variable budget d. activity budget ____ ,,. 8hipps 'o. sells two products, -rks and Ains. Last year 8hipps sold 1 ,%%% units of -rks and +,%%% units of Ains. Celated data are: 8roduct -rks Ains >nit &elling 8rice
$120 80

>nit 5ariable 'ost


$80 60

>nit 'ontribution 9argin


$40 20

;hat was 8hipps 'o."s sales mix last year6 a. ,%2 -rks, #%2 Ains b. #%2 -rks, ,%2 Ains c. /%2 -rks, %2 Ains d. 1 2 -rks, +2 Ains ____ ,+. 0or Ianuary, sales revenue is *.%%,%%%K sales commissions are $2 of salesK the sales manager"s salary is *7.,%%%K advertising expenses are *+%,%%%K shipping expenses total 2 of salesK and miscellaneous selling expenses are * ,1%% plus 1D of 12 of sales. !otal selling expenses for the month of Ianuary are: a. *1+#,,$% b. * #,1%% c. *1$,,1%% d. *1+ ,1%% ____ ,7. 0or 0ebruary, sales revenue is *,%%,%%%K sales commissions are $2 of salesK the sales manager"s salary is *7.,%%%K advertising expenses are *+%,%%%K shipping expenses total 2 of salesK and miscellaneous selling expenses are * ,1%% plus 1D of 12 of sales. !otal selling expenses for the month of 0ebruary are: a. *1+7,$%% b. *1+$,.$% c. * #%,.%% d. *17.,1%% ____ +%. If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would: a. increase or decrease, depending upon the percentage increase in wage rates b. decrease c. increase d. remain the same

____ +1. ;hich of the graphs in 0igure 17-1 illustrates the behavior of a total fixed cost6

____ + .

____ +#.

____ +/.

____ +$.

a. Hraph # b. Hraph / c. Hraph 1 d. Hraph If the expected sales volume for the current period is ,,%%% units, the desired ending inventory is %% units, and the beginning inventory is #%% units, the number of units set forth in the production budget, representing total production for the current period, is: a. .,7%% b. ,,1%% c. ,, %% d. ,,%%% 9anagement accountants usually provide for a minimum cash balance in their cash budgets for which of the following reasons: a. stockholders demand a minimum cash balance b. it is an important way of effectively managing cash c. it provides a safety buffer for variations in estimates d. to have funds available for ma@or capital expenditures If fixed costs are */$%,%%%, the unit selling price is *,$, and the unit variable costs are *$%, what are the old and new break-even sales 1units4 if the unit selling price increases by *$6 a. .,%%% units and $, $% units b. 7,%%% units and .,%%% units c. 1+,%%% units and 1$,%%% units d. 7,%%% units and 1$,%%% units 5ariances from standard costs are usually reported to: a. creditors b. suppliers c. stockholders d. management

____ +.. ;hich of the following conditions normally would not indicate that standard costs should be revised6 a. !he world price of raw materials increased. b. -ctual costs differed from standard costs for the preceding week. c. !he engineering department has revised product specifications in responding to customer suggestions. d. !he company has signed a new union contract which increases the factory wages on average by * .%% an hour. ____ +,. - formal written statement of management"s plans for the future, expressed in financial terms, is a: a. responsibility report b. budget c. performance report d. gross profit report ____ ++. -gnew 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period *1.,. .1,$%% * %..% +,+$% *1.+% $ kilograms * %.%% #D/ hr. *./,$%% *#%,%%% *#.%% per labor hour *$.%% per labor hour 1%,%%% hours 7,%%% hours 1 ,%%%

!he direct labor time variance is: a. *#,%%% favorable b. *$,#1% favorable c. *#,%%% unfavorable d. *$,#1% unfavorable ____ +7. ;hich of the following budgets provides the starting point for the preparation of the direct labor cost budget6 a. 8roduction budget b. &ales budget c. (irect materials purchases budget d. 'ash budget ____ 7%. If fixed costs are * $%,%%%, the unit selling price is * %, and the unit variable costs are *1., what is the breakeven sales 1units4 if the variable costs are decreased by * 6 a. . ,$%% units b. /1,.., units c. +#,### units d. 1 ,$%% units ____ 71. 8hipps 'o. sells two products, -rks and Ains. Last year 8hipps sold 1 ,%%% units of -rks and +,%%% units of Ains. Celated data are:

8roduct -rks Ains

>nit &elling 8rice


$120 80

>nit 5ariable 'ost


$80 60

>nit 'ontribution 9argin


$40 20

;hat was 8hipps 'o."s total unit contribution margin6 a. *7 b. *.% c. * . d. * % ____ 7 . 5ariable costs as a percentage of sales for Leamon Inc. are ,%2, current sales are *$%%,%%%, and fixed costs are *1$%,%%%. Mow much will operating income change if sales increase by *.%,%%%6 a. *$%,%%% decrease b. *.%,%%% increase c. *1+,%%% increase d. *1+,%%% decrease ____ 7#. -t the end of the fiscal year, variances from standard costs are usually transferred to the: a. direct labor account b. cost of goods sold account c. direct materials account d. factory overhead account ____ 7/. !he standard factory overhead rate is *1% per direct labor hour 1*+ for variable factory overhead and * for fixed factory overhead4 based on 1%%2 capacity of #%,%%% direct labor hours. !he standard cost and the actual cost of factory overhead for the production of $,%%% units during 9ay were as follows: &tandard: -ctual: $,%%% hours at *1% 5ariable factory overhead 0ixed factory overhead
$250,000 202,500 60,000

;hat is the amount of the factory overhead controllable variance6 a. *1%,%%% unfavorable b. * ,$%% unfavorable c. * ,$%% favorable d. *1%,%%% favorable ____ 7$. ;hich of the following activity bases would be the most appropriate for gasoline costs of a delivery service, such as >nited 8ostal &ervice6 a. Gumber of trucks in service b. Gumber of packages delivered c. Gumber of trucks employed d. Gumber of miles driven ____ 7.. 8eriodic comparisons between planned ob@ectives and actual performance are reported in: a. master budgets b. budgets c. ?ero-base reports d. budget performance reports ____ 7,. !he standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of ,$%% units of product are as follows: &tandard 'osts (irect materials ,$%% kilograms ) *+

(irect labor -ctual 'osts (irect materials (irect labor 0actory overhead 11%%2 capacity - 1%,%%% hrs.4: 5ariable cost ) * per hour !otal variable cost, *1+,%%% 0ixed cost ) *.+% per hour !otal fixed cost, *+,%%% !he amount of the direct materials Euantity variance is: a. *+%% unfavorable b. *+,$ favorable c. *+%% favorable d. *+,$ unfavorable ____ 7+. 8roduction and sales estimates for -pril are as follows: :stimated inventory 1units4, -pril (esired inventory 1units4, -pril #% :xpected sales volume 1units4: -rea -rea A -rea ' >nit sales price

,,$%% hours ) *1 ,.%% kilograms ) *+.,$ ,,/%% hours ) *11./%

19,000 18,000 3,500 4,750 4,250 $20

!he number of units expected to be manufactured in -pril is: a. 1#,$%% b. 1%,%%% c. 11,$%% d. 1 ,$%% ____ 77. 0rogue 'orporation uses a standard cost system. !he following information was provided for the period that @ust ended: -ctual price per kilogram -ctual kilograms of material used. -ctual hourly labor rate -ctual hours of production &tandard price per kilogram &tandard kilograms per completed unit &tandard hourly labor rate &tandard time per completed unit -ctual total factory overhead 0ixed factory overhead &tandard fixed factory overhead rate &tandard variable factory overhead rate 9aximum plant capacity 8lant operated during the period >nits completed during the period *#.%% #1,%%% *1+.1% /,7%% labor hours * .+% . kilograms *1+.%% 1 hr. *#/,7%% *1+,%%% *1. % per labor hour *#.+% per labor hour 1$,%%% hours 1%,%%% hours $,%%%

!he direct labor rate variance is: a. */7% unfavorable b. *1,+%% unfavorable c. *1,+%% favorable d. */7% favorable ____ 1%%. 8rincipal components of a master budget include which of the following6 a. 8roduction budget b. &ales budget c. 'apital expenditures budget d. -ll of the above

ACC2052 Test#3 Answer Section


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/ . /#. //. /$. /.. /,. /+. /7. $%. $1. $ . $#. $/. $$. $.. $,. $+. $7. .%. .1. . . .#. ./. .$. ... .,. .+. .7. ,%. ,1. , . ,#. ,/. ,$. ,.. ,,. ,+. ,7. +%. +1. + . +#. +/. +$. +.. +,.

-G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&:

( A ( ( ( A A ' ' ' ' A A ' A ( ' A ( ( ' ( A ( A A ' ' ' ' ' ( A A

++. +7. 7%. 71. 7 . 7#. 7/. 7$. 7.. 7,. 7+. 77. 1%%.

-G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&: -G&:

A ' ' A A ( ( ' (