Strategic-Cost-Management-Reviewer

COURSE MATERIAL NO Which of the following is not a factory overhead allocation method? a Single Plantwide Rate Method b Multiple Production Department Rate Method c Traditional Costing Method d Activity-Based Costing Method C Which of the following does not support managerial decisions involving accurate product costing? a product constraints b emphasis of a product line c product mix d product price A Lasso Corp budgeted P250,000 of overhead cost for 2019 Actual overhead costs for the year were P240,000 Lasso's plant-wide allocation base, machine hours, was budgeted at 50,000 hours Actual machine hours were 40,000 Budgeted units to be produced are 100,000 units Lasso's plant-wide factory overhead rate for 2019 is: a P1.25 per unit b P6.00 per machine hour c P6.25 per machine hour d P5.00 per machine hour D The Nite Lite Factory has determined that its budgeted factory overhead budget for the year is P6,750,000 and budgeted direct labor hours are 5,000,000 Using the single plantwide factory overhead rate based on direct labor hours, determine the factory overhead rate for the year a P1.35 b P1.20 c P0.74 d cannot be determined A The Nite Lite Factory has determined that its budgeted factory overhead budget for the year is P6,750,000 and budgeted direct labor hours are 5,000,000 If the actual direct labors for the period are 180,000 and direct labor hours is the allocation base, the factory overhead allocation using the single plantwide factory overhead rate is? a P375,000 b P133,333 c P243,000 d cannot be determined C D Nite Lite Factory produces two similar products - small lamps and desk lamps The total plant overhead budget is P640,000 with 400,000 estimated direct labor hours It is further estimated that small lamp production will have 275,000 direct labor hours and desk lamp production will require 125,000 direct labor hours Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the small lamp production if the actual direct hours for the period is 290,000? a P220,690 b P400,000 c P440,000 d P464,000 Nite Lite Factory produces two similar products - small lamps and desk lamps The total plant overhead budget is P640,000 with 400,000 estimated direct labor hours It is further estimated that small lamp production will have 275,000 direct labor hours and desk lamp production will require 125,000 direct labor hours Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the desk lamp production if the actual direct hours for the period is 121,000? a P220,690 b P200,000 c P193,600 d P279,000 C Nite Lite Factory produces two similar products - small lamps and desk lamps The total plant overhead budget is P640,000 with 400,000 estimated direct labor hours It is further estimated that small lamp production will use direct labor hours for each unit and desk lamp production will require 1.25 direct labor hours for each unit Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the desk lamp production if the actual production for the period is 121,000 units? a P151,250 b P242,000 c P580,800 d P363,000 B Nite Lite Factory produces two similar products - small lamps and desk lamps The total plant budget is P640,000 with 400,000 estimated direct labor hours It is further estimated that small lamp production will use direct labor hours for each unit and desk lamp production will require 1.25 direct labor hours for each unit Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the small lamp production if the actual production for the period is 108,000 units? a P518,400 b P324,000 c P580,800 d P363,000 A 10 The Nite Lite Factory produces two products - small lamps and desk lamps It has two separate departments - finishing and production The overhead budget for the finishing department is P550,000, using 500,000 direct labor hours The overhead budget for the production department is P400,000 using 80,000 direct labor hours If the budget estimates that a desk lamp will require hours of finishing and hours of production, what is the total amount of factory overhead to be allocated to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 26,000 units are produced? a P540,000 b P300,000 c P400,000 d P288,600 D 11 Phelan Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives The indirect labor can be traced to four separate activity pools The budgeted activity cost and activity base information, along with the estimated activity-base information, is provided below Number of Purchase Orders Activity Cost P 360,000 240,000 480,000 720,000 1,420,000 Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours 4,000 2,000 12,000 300 150 800 1,400 600 4,000 10 25 2,000 8,000 10,000 Procurement Scheduling Materials handling Product development Production Disk drives Tape drives Wire drives Activity Base Number of purchase orders Number of production orders Number of moves Number of engineering changes Machine hours Determine the activity rate for procurement per purchase order a P192 b P20 c P80 d P71 B 12 Determine the activity rate per purchase order for scheduling a P192 b P20 c P80 d P71 A 13 Determine the activity rate for materials handling per move a P192 b P20 c P71 d P80 D 14 a b c d D Determine the activity rate for product development per change P72,000 P28,000 P36,000 P18,000 Number of Units 2,000 4,000 2,500 15 Phelan Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives The indirect labor can be traced to four separate activity pools The budgeted activity cost and activity base information, along with the estimated activity-base information, is provided below Procurement Scheduling Materials handling Product development Production Disk drives Tape drives Wire drives Activity Cost P 360,000 240,000 480,000 720,000 1,420,000 Activity Base Number of purchase orders Number of production orders Number of moves Number of engineering changes Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours 4,000 2,000 12,000 300 150 800 1,400 600 4,000 10 25 2,000 8,000 10,000 Number of Units 2,000 4,000 2,500 Determine the activity-based cost for each disk drive unit a P193.70 b P192.00 c P142.90 d P285.80 D COURSE MATERIAL NO – STANDARD COST Which of the following conditions normally would not indicate that standard costs should be revised? a The engineering department has revised product specifications in responding to customer suggestions b The company has signed a new union contract which increases the factory wages on average by $2.00 an hour c Actual costs differed from standard costs for the preceding week d The world price of raw materials increased C Standards that represent levels of operation that can be attained with reasonable effort are called: a theoretical standards b ideal standards c variable standards d normal standards D Manufacturing companies use standard costs for the following except: a Variable costs b Direct Materials c Direct Labor d Factory Overhead A Standard costs are used in companies for a variety of reasons Which of the following is not one of the benefits for using standard costs? a Used to indicate where changes in technology and machinery need to be made b Used to value inventory c Used to plan direct materials, direct labor, and factory manufacturing cost d Used to control costs A The principle of exceptions allows managers to a b c d focus on correcting variances between standard costs and actual costs focus on correcting variances between variable costs and actual costs focus on correcting variances between competitor’s costs and actual costs focus on correcting variances between competitor’s costs and standard costs A Several people play an essential part in setting standards Which of the following is incorrect as to setting standards? a Accountants expresses judgement in dollars and cents b Engineers identify material, labor, and machine requirements c Human resource managers provide personnel information d Quality managers provide quality measures that will be used to evaluate rejects D Periodic comparisons between planned objectives and actual performance are reported in: a zero-base reports b budget performance reports c master budgets d budgets B The standard price and quantity of direct materials are separated because: a GAAP reporting requires this separation b direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department c standard quantities are more difficult to estimate than standard prices d standard prices change more frequently than standard quantities B Standard costs are divided into which of the following components? a Price Standard and Quantity Standard b Materials Standard and Labor Standard c Quality Standard and Quantity Standard d Price Standard and Quantity Standard D 10 A favorable cost variance occurs when a Actual costs are more than standard costs b Standard costs are more than actual costs c Standard costs are less than actual costs d None of the above B 11 Total manufacturing cost variance includes: a Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance b Direct materials cost variance, direct labor rate variance, and factory overhead cost variance c Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance d Direct materials cost variance, direct labor cost variance, factory overhead cost variance D 12 Which of the following is not a reason standard costs are separated in two components? a the price and quantity variances need to be identified separately to correct the actual major differences b identifying variances determines which manager must find a solution to major discrepancies c if a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections d variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual D 13 The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct materials (per completed unit) 1.04 kilograms @$8.75 Actual Costs Direct materials 2,500 kilograms @ $8 The amount of direct materials price variance is: a $1,875 unfavorable b $1,950 favorable c $1,875 favorable d $1,950 unfavorable C 14 The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct materials 2,500 kilograms @ $8 Actual Costs Direct materials 2,600 kilograms @ $8.75 The amount of the direct materials quantity variance is: a $875 favorable b $800 unfavorable c $800 favorable d $875 unfavorable B 15 The following data relate to direct materials costs for November: Actual costs Standard costs 4,600 pounds at $5.50 4,500 pounds at $6.00 What is the direct materials price variance? a $2,250 favorable b $2,250 unfavorable c $2,300 favorable d $1,700 unfavorable C COURSE MATERIAL NO – TARGET COST A practical approach which is frequently used by managers when setting normal long-run prices is the: a cost-plus approach b economic theory approach c price graph approach d market price approach A Which of the following is NOT a cost concept commonly used in applying the cost-plus approach to product pricing? a Total cost concept b Product cost concept c Variable cost concept d Fixed cost concept D In using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a Total selling and administrative expenses plus desired profit b Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit c Total costs plus desired profit d Desired profit D In using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a Desired profit b Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit c Total costs plus desired profit d Total selling and administrative expenses plus desired profit D In using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a Total costs plus desired profit b Desired profit c Total selling and administrative expenses plus desired profit d Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit D What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"? a Total cost concept b Product cost concept c Variable cost concept d Sunk cost concept B What cost concept used in applying the cost-plus approach to product pricing includes only desired profit in the "markup"? a Product cost concept b Variable cost concept c Sunk cost concept d Total cost concept D C What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the "cost" amount to which the markup is added? a Variable cost concept b Total cost concept c Product cost concept d Opportunity cost concept C Managers who often make special pricing decisions are more likely to use which of the following cost concepts in their work? a Total cost b Product cost c Variable cost d Fixed cost DIF: Easy OBJ: 24(9)-02 10 Defense contractors would be more likely to use which of the following cost concepts in pricing their product? a Variable cost b Product cost c Total cost d Fixed cost C 11 In contrast to the total product and variable cost concepts used in setting seller's prices, the target cost approach assumes that: a a markup is added to total cost b selling price is set by the marketplace c a markup is added to variable cost d a markup is added to product cost B 12 When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising: a target costing b life cycle costing c variable costing d absorption costing A 13 Which one of the following is used in target costing to reduce product cost by analyzing the tradeoffs between (1) different types and levels of product functionality and (2) total product costs? a benchmarking b functional analysis c productivity analysis d value engineering D 14 Which one of the following is a common type of value engineering in which each major functions or feature of the product is examined in terms of its performance and cost? a benchmarking b functional analysis c productivity analysis d functional engineering B 15 Which one of the following is a common form of value engineering in which the designing team prepares several possible designs of the product? a benchmarking b functional analysis c productivity analysis d design analysis COURSE MATERIAL NO – LIFE CYCLE COSTING Which of the following is not one of the steps in the life cycle of a product? a manufacturing, inspecting, packaging and warehousing b research and development c purchasing and receiving d marketing, promotion and distribution C In comparison to the Cost Life Cycle of a product, the Sales Life Cycle of a product is a much shorter b much longer c exactly parallel, except that it is expressed in sales terms d different because it represent a sequence of phases relating to sales, not production D In each of the phases of a product’s sales life cycle, management’s focus will be: a parallel b on the next phase as well as the current one c different d undifferentiated C Generally, firms will price a product more competitively at which stage of the products sales life cycle? a Product Introduction b Growth c Maturity d Decline D Because of the four stages of a product’s sales life cycle has a different emphasis, the cost management system will be expected to provide data that is: a different at each stage b common to all stages c lesser in amount in the later stages d lesser in amount in the early stages A The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing/ distribution, and customer service is the a sales life cycle b target life cycle c market life cycle d cost life cycle D The sequence of phases in the product or service’s life in the market – from the introduction of the product or service to the growth in sales and finally maturity, decline and withdrawal from the market is the a sales life cycle b target life cycle c market life cycle d cost life cycle A Which one of the following is a downstream cost? a research and development b packaging c purchasing d prototyping B Which one of the following industries has high upstream costs? a retail b perfumes c cosmetics d computer software D 10 Which of the following is not a critical success factor at the design stage? a improved ear of manufacture b reduced tome to market c reduced expected service costs d enhanced quality D 11 Which one of the following is not a common design method? a concurrent engineering b design engineering c templating d prototyping B 12 Sales begin to grow rapidly and product variety increases in: a phase three b phase two c phase five d phase four B 13 Sales continue to increase but at a decreasing rate is a phase three b phase two c phase five d phase four A 14 Sales begin to decline, as does the number of competitors, in: a phase three b phase two c phase five d phase four D 15 What is a management technique used to identify and monitor the costs of product or service throughout its life cycle? a Target costing b Life cycle costing c Theory of Constraints d Absorption costing B