84 test bank for managerial accounting for managers 3rd edition

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84 Test Bank for Managerial Accounting for Managers 3rd Edition

Multiple Choice Questions - Part 1

Each of the following would be a period cost except:

1 A the salary of the company president's secretary.

2 B the cost of a general accounting office.

3 C depreciation of a machine used in manufacturing.

4 D sales commissions.

When a decision is made among a number of alternatives, the

benefit that is lost by choosing one alternative over

The following data pertains to activity and the cost of cleaning

and maintenance for two recent months: Production

volume is 2,000 units in month 1 and 2,500 units in month 2; cleaning and maintenance cost is $900 in month 1 and

$1,100 in month 2 The best estimate of the total month 1 variable cost for cleaning and maintenance is:

1 A $300

2 B $500

3 C $800

4 D $100

Which of the following statements regarding fixed costs is

incorrect?

1 A Expressing fixed costs on a per unit basis usually is the best approach for decision making.

2 B Fixed costs expressed on a per unit basis will decrease with increases in activity.

3 C Total fixed costs are constant within the relevant range.

4 D Fixed costs expressed on a per unit basis will increase with decreases in activity.

In September direct labor was 40% of conversion cost If the

manufacturing overhead for the month was $66,000 and the direct materials cost was $20,000, the direct labor cost was:

1 A $13,333

2 B $44,000

3 C $99,000

4 D $30,000

An example of a committed fixed cost is:

1 A a training program for salespersons.

2 B executive travel expenses.

3 C property taxes on the factory building.

4 D new product research and development.

Jumpst Corporation uses the cost formula Y = $3,600 + $0.30X

for the maintenance cost in Department B, where X is

machine-hours The August budget is based on 20,000 hours of planned machine time Maintenance cost

expected to be incurred during August is:

1 A $3,600

2 B $6,000

3 C $6,300

4 D $9,600

Which of the following costs would not be included as part of

manufacturing overhead?

1 A Insurance on sales vehicles.

2 B Depreciation of production equipment.

3 C Lubricants for production equipment.

4 D Direct labor overtime premium.

The salary paid to the production manager in a factory is:

1 A a variable cost.

2 B part of prime cost.

3 C part of conversion cost.

4 D both a variable cost and a prime cost.

Aberge Company's manufacturing overhead is 60% of its total

conversion costs If direct labor is $38,000 and if direct materials are $21,000, the manufacturing overhead is:

1 A $57,000

2 B $88,500

3 C $25,333

4 D $31,500

Manufacturing overhead consists of:

1 A all manufacturing costs.

2 B indirect materials but not indirect labor.

3 C all manufacturing costs, except direct materials and direct labor.

4 D indirect labor but not indirect materials.

At an activity level of 9,200 machine-hours in a month, Nooner

Corporation's total variable production engineering cost

is $761,300 and its total fixed production engineering cost

is $154,008 What would be the total production

engineering cost per unit, both fixed and variable, at an activity level of 9,300 machine-hours in a month? Assume that this level of activity is within the relevant range

1 A $98.42

2 B $99.49

3 C $99.31

4 D $98.96

Last month, when 10,000 units of a product were manufactured,

the cost per unit was $60 At this level of activity, variable costs are 50% of total unit costs If 10,500 units are

manufactured next month and cost behavior patterns

remain unchanged the:

1 A total variable cost will remain unchanged.

2 B fixed costs will increase in total.

3 C variable cost per unit will increase.

4 D total cost per unit will decrease.

Which of the following would NOT be treated as a product cost

for external financial reporting purposes?

1 A Depreciation on a factory building.

2 B Salaries of factory workers.

3 C Indirect labor in the factory.

4 D Advertising expenses.

The term differential cost refers to:

1 A a difference in cost which results from selecting one alternative instead of another.

2 B the benefit forgone by selecting one alternative instead of another.

3 C a cost which does not involve any dollar outlay but which is relevant to the making process.

decision-4 D a cost which continues to be incurred even though there is no activity.

The term "relevant range" means the range of activity over

which:

1 A relevant costs are incurred.

2 B costs may fluctuate.

3 C production may vary.

4 D the assumptions about fixed and variable cost behavior are reasonably valid.

Conversion cost consists of which of the following?

1 A Manufacturing overhead cost.

2 B Direct materials and direct labor cost.

3 C Direct labor cost.

4 D Direct labor and manufacturing overhead cost.

Variable cost:

1 A increases on a per unit basis as the number of units produced increases.

2 B remains constant on a per unit basis as the number of units produced increases.

3 C remains the same in total as production increases.

4 D decreases on a per unit basis as the number of units produced increases.

Which of the following costs is often important in decision

making, but is omitted from conventional accounting records?

1 A Fixed cost.

2 B Sunk cost.

3 C Opportunity cost.

4 D Indirect cost.

In describing the cost formula equation Y = a + bX, which of the

following statements is correct?

1 A "X" is the dependent variable.

2 B "a" is the fixed component.

3 C In the high-low method, "b" equals change in activity divided by change in costs.

4 D As "X" increases "Y" decreases.

Anaconda Mining Company shipped 9,000 tons of copper

concentrate for $450,000 in March and 11,000 tons for

$549,000 in April Shipping costs for 12,000 tons to be shipped in May would be expected to be:

1 A $548,780

2 B $549,020

3 C $594,000

4 D $598,500

The advertising costs that Pepsi incurred to air its commercials

during the Super Bowl can best be described as a:

1 A variable cost.

2 B fixed cost.

3 C product cost.

4 D prime cost.

Within the relevant range, variable cost per unit will:

1 A increase as the level of activity increases.

2 B remain constant.

3 C decrease as the level of activity increases.

4 D none of these.

The salary of the president of a manufacturing company would

be classified as which of the following?

1 A Product cost

2 B Period cost

3 C Manufacturing overhead

4 D Direct labor

Average maintenance costs are $1.50 per machine-hour at an

activity level of 8,000 machine-hours and $1.20 per

machine-hour at an activity level of 13,000 machine-hours Assuming that this activity is within the relevant range, total expected maintenance cost for a budgeted activity level of 10,000 machine-hours would be closest to:

1 A $16,128

2 B $15,000

3 C $13,440

4 D $11,433

Which one of the following costs should NOT be considered a

direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

1 A the cost of the hard disk drive installed in the computer.

2 B the cost of shipping the computer to the customer.

3 C the cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers.

4 D the cost of packaging the computer for shipment.

Which of the following should NOT be included as part of

manufacturing overhead at a company that makes office furniture?

1 A sheet steel in a file cabinet made by the company.

2 B manufacturing equipment depreciation.

3 C idle time for direct labor.

4 D taxes on a factory building.

Which of the following costs is an example of a period rather

than a product cost?

1 A Depreciation on production equipment.

2 B Wages of salespersons.

3 C Wages of production machine operators.

4 D Insurance on production equipment.

For a lamp manufacturing company, the cost of the insurance

on its vehicles that deliver lamps to customers is best described as a:

1 A prime cost.

2 B manufacturing overhead cost.

3 C period cost.

4 D differential (incremental) cost of a lamp.

During the month of September, direct labor cost totaled

$11,000 and direct labor cost was 40% of prime cost If total manufacturing costs during September were

$73,000, the manufacturing overhead was:

1 A $16,500

2 B $27,500

3 C $62,000

4 D $45,500

Which of the following would be considered a product cost for

external financial reporting purposes?

1 A Cost of a warehouse used to store finished goods.

2 B Cost of guided public tours through the company's facilities.

3 C Cost of travel necessary to sell the manufactured product.

4 D Cost of sand spread on the factory floor to absorb oil from manufacturing machines.

Conversion costs do NOT include:

1 A depreciation.

2 B direct materials.

3 C indirect labor.

4 D indirect materials.

55 Free Test Bank for Managerial Accounting for

Managers 3rd Edition by Noreen Multiple Choice Questions - Part 2

Buckeye Company has provided the following data for

maintenance cost: Machine hours are 12,500 in prior year and 15,000 in current year; maintenance cost is $27,000 in prior year and $31,000 in current year The best estimate

of the cost formula for maintenance would be:

1 A $21,625 per year plus $0.625 per machine hour

2 B $7,000 per year plus $0.625 per machine hour

3 C $7,000 per year plus $1.60 per machine hour

4 D $27,000 per year plus $1.60 per machine hour

Slappy Corporation leases its corporate headquarters building

This lease cost is fixed with respect to the company's

sales volume In a recent month in which the sales

volume was 20,000 units, the lease cost was $482,000 To the nearest whole dollar, what should be the total lease cost at a sales volume of 16,900 units in a month?

(Assume that this sales volume is within the relevant

At an activity level of 4,400 units in a month, Goldbach

Corporation's total variable maintenance and repair cost

is $313,632 and its total fixed maintenance and repair cost

is $93,104 What would be the total maintenance and

repair cost, both fixed and variable, at an activity level of 4,600 units in a month? Assume that this level of activity

is within the relevant range

1 A $420,992

2 B $425,224

3 C $415,980

4 D $406,736

At a sales volume of 35,000 units, Thoma Corporation's sales

commissions (a cost that is variable with respect to sales volume) total $448,000 To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 36,800 units? (Assume that this sales volume is within the relevant range.)

1 A $13.49

2 B $12.17

3 C $12.80

4 D $12.49

At a sales volume of 35,000 units, Thoma Corporation's sales

commissions (a cost that is variable with respect to sales volume) total $448,000 To the nearest whole dollar, what should be the total sales commissions at a sales volume

of 33,200 units? (Assume that this sales volume is within the relevant range.)

1 A $424,960

2 B $448,000

3 C $436,480

4 D $472,289

A soft drink bottler incurred the following plant utility costs:

1,800 units bottled with utility costs of $5,750, and 1,500 units bottled with utility costs of $5,200 What is the

variable cost per unit bottled (Use the High-low method Round to the nearest cent.)

The following data pertains to activity and utility costs for two

recent years: Activity level in units is 10,000 in year 2 and 6,000 in year 1; maintenance cost is $12,000 in year 2 and

$9,000 in year 1 Using the high-low method, the cost

formula for utilities is:

1 A $1.50 per unit

2 B $1.20 per unit

3 C $3,000 plus $3.00 per unit

4 D $4,500 plus $0.75 per unit

Emilio Corporation reports that at an activity level of 3,400

units, its total variable cost is $59,058 and its total fixed cost is $101,150 What would be the total variable cost at

an activity level of 3,500 units? Assume that this level of activity is within the relevant range

1 A $59,058

2 B $160,208

3 C $60,795

4 D $104,125

Slappy Corporation leases its corporate headquarters building

This lease cost is fixed with respect to the company's

sales volume In a recent month in which the sales

volume was 20,000 units, the lease cost was $482,000 To the nearest whole cent, what should be the average lease cost per unit at a sales volume of 19,200 units in a month? (Assume that this sales volume is within the relevant

Erkkila Inc reports that at an activity level of 7,900

machine-hours in a month, its total variable inspection cost is

$210,061 and its total fixed inspection cost is $191,970 What would be the average fixed inspection cost per unit

at an activity level of 8,100 machine-hours in a month? Assume that this level of activity is within the relevant range

1 A $50.89

2 B $24.30

3 C $23.70

4 D $32.96

At an activity level of 5,300 machine-hours in a month, Clyburn

Corporation's total variable maintenance cost is $114,268 and its total fixed maintenance cost is $154,336 What

would be the total variable maintenance cost at an activity level of 5,600 machine-hours in a month? Assume that this level of activity is within the relevant range

1 A $163,072

2 B $268,604

3 C $114,268

4 D $120,736

At a sales volume of 27,000 units, Danielle Corporation's

property taxes (a cost that is fixed with respect to sales volume) total $207,900 To the nearest whole cent, what should be the average property tax per unit at a sales

volume of 27,600 units? (Assume that this sales volume is within the relevant range.)

1 A $6.73

2 B $7.70

3 C $7.62

4 D $7.53

Erkkila Inc reports that at an activity level of 7,900

machine-hours in a month, its total variable inspection cost is

$210,061 and its total fixed inspection cost is $191,970 What would be the total variable inspection cost at an activity level of 8,100 machine-hours in a month? Assume that this level of activity is within the relevant range

1 A $210,061

2 B $196,830

3 C $215,379

4 D $402,031

Emilio Corporation reports that at an activity level of 3,400

units, its total variable cost is $59,058 and its total fixed cost is $101,150 What would be the average fixed cost per unit at an activity level of 3,500 units? Assume that this level of activity is within the relevant range

1 A $29.75

2 B $47.12

3 C $35.26

4 D $28.90

At a volume of 10,000 units, Company P incurs $30,000 in

factory overhead costs, including $10,000 in fixed costs Assuming that this activity is within the relevant range, if volume increases to 12,000 units, Company P would

expect to incur total factory overhead costs of:

1 A $36,000

2 B $34,000

3 C $30,000

4 D $32,000

Given the cost formula, Y = $9,000 + $2.50X, total cost for an

activity level of 3,000 units would be:

1 A $9,750