Questions -
Use the following to answer questions 1 - 5.
Updike Inc. has the following information for its product, Rabbit Redux:
Units produced this period - 1000
Direct Material - $10 per unit
Direct Labor - $5 per unit
Variable Manufacturing Overhead - $20 per unit
Variable Selling and Administrative - $2 per unit
Total Fixed Manufacturing Overhead - $10,000
Total Fixed Selling and Administrative - $15,000
Sales price per unit - $100
Units Sold - 800
Inventory Method - FIFO
Q1. The contribution margin per unit is
A) $38
B) $53
C) $63
D) $65
Q2. The cost of each unit using absorption costing is
A) $35
B) $37
C) $45
D) $47
Q3. Total ending inventory using variable costing is
A) $12,400
B) $9,400
C) $7,400
D) $7,000
Q4. The difference between net incomes using absorption versus variable costing is
A) absorption will be $2000 more
B) variable will be $2000 more
C) absorption will be $5500 more
D) variable will be $3000 less
Q5. The $2 per unit of variable selling and administrative costs are
A) treated as a product cost under variable costing but not absorption costing
B) treated as a period cost under variable and absorption costing
C) treated as a product cost under absorption costing but not variable costing
D) treated as a period cost under variable costing but not absorption costing
Q6. The phase of accounting concerned with providing information to managers for use in planning and controlling operations and in decision making is called:
A) performance evaluation.
B) managerial accounting.
C) financial accounting.
D) controlling.
Q7. Which of the following activities would be included in the value chain of a manufacturing company?
A) Research and Development
B) Customer Service
C) Design
D) All of the above are included in the value chain
Q8. At a production level of 0, an activity has a cost of $1000. At a production level of 100 units, that same activity has a cost of $1100. This is an example of a
A) variable cost.
B) fixed cost.
C) mixed cost.
D) salvageable cost.
Q9. The extended value chain:
A) Is a set of linked operations or processes that begins with obtaining resources and ends with providing products or services that customers value.
B) Is a related set of tasks, manual or automated, that transforms inputs into identifiable outputs.
C) Encompasses how companies obtain their resources and distribute their products and services, possibly using the services of other organizations.
D) Is a technique for identifying opportunities for improvement and measuring the effects of proposed improvements by comparing both the costs and benefits of a proposal.
Q10. May Company manufactures and sells washing machines. In order to make assembly of the machines faster and easier, some of the metal parts in the machines are coated with grease. How should the cost of this grease be classified?
Direct Material Cost Fixed Cost
A) Yes Yes
B) Yes No
C) No Yes
D) No No
Use the following to answer questions 11-13:
A partial listing of costs incurred at Arch Corporation during September appears below:
Direct materials $113,000
Utilities, factory 5,000
Administrative salaries 81,000
Indirect labor 25,000
Sales commissions 48,000
Depreciation of production equipment 20,000
Depreciation of administrative autos 30,000
Direct labor 129,000
Advertising 135,000
Q11. The total of the manufacturing overhead costs listed above for September is:
A) $586,000
B) $50,000
C) $292,000
D) $30,000
Q12. The total of the product costs listed above for September is:
A) $292,000
B) $294,000
C) $50,000
D) $586,000
Q13. The total of the period costs listed above for September is:
A) $294,000
B) $344,000
C) $292,000
D) $393,000
Use the following to answer questions 14-16:
The following data pertain to Graham Company's operations in May:
May 1 May31
Work in process inventory $7 $12
Raw materials inventory 15 ?
Finished goods inventory ? 20
Other data (in dollars):
Raw materials used 40
Sales 200
Cost of goods manufactured 135
Manufacturing overhead cost 60
Raw materials purchases 30
Gross Margin 60
Q14. The ending materials inventory was:
A) $5
B) $10
C) $15
D) $20
Q15. The beginning finished goods inventory was:
A) $5
B) $15
C) $25
D) $30
Q16. The direct labor cost for May was:
A) $35
B) $40
C) $30
D) $25
Q17. Domo Corporation reported the following data (in dollars):
Inventories: Begin End
Raw materials 30,000 34,000
Work in process 23,000 22,000
Finished goods 32,000 35,000
If the company transferred $222,000 of completed goods from work in process to finished goods inventory during September, what was the cost of goods sold for the month?
A) $219,000
B) $225,000
C) $222,000
D) $221,000
Use the following to answer questions 18-19:
Boardman Company reported the following data for the month of January (in dollars):
Inventories: 1/1 1/31
Raw materials 32,000 31,000
Work in process 18,000 12,000
Finished goods 30,000 35,000
Additional information (in dollars):
Sales revenue 210,000
Direct labor costs 40,000
Manufacturing overhead costs 70,000
Selling expenses 25,000
Administrative expenses 35,000
Q18. If raw materials costing $35,000 were purchased during January, the total manufacturing costs for the month would be:
A) $145,000
B) $144,000
C) $151,000
D) $146,000
Q19. Boardman Company's total conversion cost for January would be:
A) $110,000
B) $170,000
C) $135,000
D) $130,000
Q20. Period costs
A) Do not become part of the value of inventory for financial or tax reporting.
B) Become part of the value of inventory for financial reporting but not tax reporting.
C) Become part of the value of inventory for tax reporting but not financial reporting.
D) Are the same as indirect manufacturing costs.
Q21. Which of the following would be considered an indirect product cost?
A) Depreciation on sales staff automobiles
B) CEO's salary
C) Maintenance on factory equipment
D) Direct materials used in production
Q22. Which of the following would you most likely not find on an insurance company's financial statements?
A) depreciation expense
B) salaries payable
C) pension liability
D) merchandise inventory
Q23. Unused capacity costs should be
A) allocated to all of the products using ABC.
B) allocated to all of the products using traditional costing methods.
C) reported as unused capacity and not allocated.
D) treated as a unit level cost and be allocated using ABC or traditional methods.
Q24. A list of activities performed to produce an organization's products is referred to as a(n)
A) subsidiary ledger.
B) ABC (activity based costing) checklist.
C) PCR (product control record).
D) activity dictionary.
Q25. Movement of materials for products in production is classified as:
A) Unit-level resources
B) Batch-level resources
C) Product-level resources
D) Facility-level resources
Q26. The difference between the resources supplied and resources used is
A) practical capacity.
B) normal capacity.
C) unused capacity.
D) resource capacity.