1. (TCO 1) Managerial accounting stresses accounting concepts and procedures that are relevant to
preparing reports for (Points : 4)
internal users of accounting information.
external users of accounting information.
the Securities and Exchange Commission (SEC).
0 1625115892 MultipleChoice 1
2. (TCO 1) Which of the following costs does not change when the level of business activity changes?
(Points : 4)
total fixed costs
total variable costs
total direct materials costs
fixed costs per unit
0 1625115893 MultipleChoice 4
3. (TCO 1) You own a car and are trying to decide whether or not to trade it in and buy a new car. Which
of the following costs is an opportunity cost in this situation? (Points : 4)
the trip to Cancun that you will not be able to take if you buy the car
the cost of the car you are trading in
the cost of your books for this term
the cost of your car insurance last year
0 1625115894 MultipleChoice 7
4. (TCO 1) Shula’s 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners
will be produced and sold: materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700;
depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $14.00 each. What is the
budgeted fixed cost per unit? (Points : 4)
0 1625115895 MultipleChoice 12
5. (TCO 1) Which of the following costs is not part of manufacturing overhead? (Points : 4)
electricity for the factory
depreciation of factory equipment
salaries for the production supervisors
health insurance for sales staff
0 1625115896 MultipleChoice 14
6. (TCO 1) Which of the following is not a period cost? (Points : 4)
accounting staff salaries
depreciation of accounting office equipment
0 1625115897 MultipleChoice 18
7. (TCO 1) At December 31, 2010, WDT Inc. has a balance in the Work in Process Inventory account of
$62,000. At January 1, 2010, the balance was $55,000. Current manufacturing costs for the year are
$292,000, and cost of goods sold is $284,000. How much is cost of goods manufactured? (Points : 4)
0 1625115898 MultipleChoice 19
8. (TCO 2) Lanking Company applies manufacturing overhead based on direct labor hours. Information
concerning manufacturing overhead and labor for August follows:
Overhead cost $160,000 $161,000
Direct labor hours 8,000 8,200
Direct labor cost $120,000 $115,800
How much is the predetermined overhead rate? (Points : 4)
0 1625115899 MultipleChoice 24
9. (TCO 2) Citrus Company incurred manufacturing overhead costs of $300,000. Total overhead applied
to jobs was $306,000. What was the amount of overapplied or underapplied overhead? (Points : 4)
0 1625115900 MultipleChoice 26
10. (TCO 3) Companies in which of the following industries would not be likely to use process costing?
(Points : 4)
auto body shop
0 1625115901 MultipleChoice 29
11. (TCO 3) The Blending Department began the period with 20,000 units. During the period the
department received another 80,000 units from the prior department and at the end of the period
30,000 units remained, which were 40% complete. How much are equivalent units in The Blending
Department’s work in process inventory at the end of the period? (Points : 4)
0 1625115902 MultipleChoice 31
12. (TCO 3) During March, the varnishing department incurred costs of $90,250 for direct labor. The
beginning inventory was 3,500 units and 10,000 units were transferred to the varnishing department
from the sanding department during June. The direct labor cost in the beginning inventory was $27,270.
The ending inventory consisted of 2,000 units, which were 25% complete with respect to direct labor.
What is the cost per equivalent unit for direct labor? (Points : 4)
0 1625115903 MultipleChoice 36
13. (TCO 4) Clearance Depot has total monthly costs of $8,000 when 2,500 units are produced and
$12,400 when 5,000 units are produced. What is the estimated total monthly fixed cost? (Points : 4)
1. (TCO 4) The three elements of the profit margin are: (Points : 4)
Selling price per unit, variable cost per unit, and fixed cost per unit.
Total revenues, total variable costs, and total fixed cost.
Selling price per unit, variable cost per unit, and total fixed costs.
Selling price per unit, total variable costs, and fixed cost per unit.
0 1625115905 MultipleChoice 1
2. (TCO 4) Allen Company sells homework machines for $100 each. Variable costs per unit are $75 and
total fixed costs are $62,000. Allen is considering the purchase of new equipment that would increase
fixed costs to $84,000, but decrease the variable costs per unit to $60. At that level Allen Company
expects to sell 3,000 units next year. What is Allen’s break-even point in units if it purchases the new
equipment? (Points : 4)
0 1625115906 MultipleChoice 5
3. (TCO 4) Randy Company produces a single product that is sold for $85 per unit. If variable costs per
unit are $26 and fixed costs total $47,500, how many units must Randy sell in order to earn a profit of
$100,000? (Points : 4)
0 1625115907 MultipleChoice 8
4. (TCO 5) In variable costing, when does fixed manufacturing overhead become an expense? (Points : 4)
In the period when the product is sold
In the period when the expense is incurred
In the period when other expenses are at the lowest level
0 1625115908 MultipleChoice 11
5. (TCO 5) Variable costing income is a function of: (Points : 4)
Units sold only.
Units produced only
Both units sold and units produced.
Neither units sold nor units. produced
0 1625115909 MultipleChoice 14
6. (TCO 5) Peak Manufacturing produces snow blowers. The selling price per snow blower is $100. Costs
involved in production are:
Direct Material per unit $20
Direct Labor per unit 12
Variable manufacturing overhead per unit 10
Fixed manufacturing overhead per year $148,500
In addition, the company has fixed selling and administrative costs of $150,000 per year. During the
year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much is net income
using full costing? (Points : 4)
0 1625115910 MultipleChoice 17
7. (TCO 6) Costs may be allocated to (Points : 4)
any of the above.
0 1625115911 MultipleChoice 20
8. (TCO 6) Which of the following statements about cost pools is not
true? (Points : 4)
The costs in each of the cost pools should be homogeneous or similar.
Managers must make a cost-benefit decision when determining how many cost pools are appropriate.
Only four different kinds of costs may be included in a single cost pool.
More cost pools usually provide more accurate information, but are more expensive.
0 1625115912 MultipleChoice 23
9. (TCO 6) AC Consulting Company has purchased a new $18,038 copier. This overhead cost will be
shared by the purchasing, accounting, and information technology departments since those are the only
departments which will be able to access the machine. The company has decided to allocate the cost
based on the number of copies made by each department. Each department has estimated the number
of copies which will be made over the life of the copier.
Information Tech 425,000
If cost allocations are computed to four significant digits and the purchasing department makes 58,000
copies this year, how much overhead will be allocated to purchasing? (Points : 4)
0 1625115913 MultipleChoice 26
10. (TCO 7) A company is trying to decide whether to keep or drop the sporting goods department in its
department store. If the segment is dropped, the manager will be fired. The manager's salary, in
relation to the decision to keep or drop the sporting goods department, is (Points : 4)
avoidable and therefore relevant.
not avoidable and therefore relevant.
sunk and therefore not relevant.
the same for all alternatives and therefore not relevant.
0 1625115914 MultipleChoice 29
11. (TCO 7) Ricket Company has 1,500 obsolete calculators that are carried in inventory at a cost of
$13,200. If these calculators are upgraded at a cost of $9,500, they could be sold for $22,500.
Alternatively, the calculators could be sold "as is" for $9,000. What is the net advantage or disadvantage
of reworking the calculators? (Points : 4)
0 1625115915 MultipleChoice 32
12. (TCO 7) Olde Store has 12,000 cans of crab meat just a week past the expiration date. Each can cost
$0.31. The cans could be sold as is for $0.20 each, or relabeled and sold as gourmet cat food. The cost
of relabeling the cans would be $0.04 per can and the cans would then sell for $0.29 per can. What
should be done with the cans and why? (Points : 4)
The cans should be thrown away since there will be a loss with the other alternatives.
The cans should be relabeled into cat food since the sales price increases $0.09 per can and the cost
is only $0.04 per can.
The cans should be put on clearance since there is no reason to put more money into something that
is already selling below cost.
It doesn’t matter what you do since all alternatives result in a loss.