Reference no: EM13915114

1.Throughput margin is defined as sales less:

• Direct labor costs.
• Direct material costs.
• Direct labor and material costs.
• Processing costs.
• Manufacturing costs.

2.Henry Ford was an early pioneer in the use of:

• the theory of constraints.
• target costing.
• life cycle costing.
• just-in-time manufacturing.

3.During the sales life cycle, which is an example of what happens during the introduction phase?

• Sales and price decline, as do the number of competitors
• Sales continue to increase but at a decreasing rate. The number of competitors and product variety decline.
• Sales increase rapidly along with an increase in product variety
• Sales rise slowly as customers become aware of the new product or service. Product variety is limited

4.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:

• Target costing.
• Life cycle costing.
• Variable costing.
• Absorption costing.
• Competitive costing.

5.For a direct material, which one of the following is the difference between the actual and standard unit price of the direct material multiplied by the actual quantity of the material purchased?

• Direct materials purchase price variance.
• Direct materials volume variance.
• Direct materials usage variance.
• Direct materials flexible-budget variance.
• Direct materials mix variance.

6.A "standard cost" is a predetermined amount (e.g., cost) that:

• Should be incurred under relatively efficient operating conditions.
• Will be incurred for an operation or a specific objective.
• Must occur for an operation or a specific objective.
• Cannot be changed once it is established by management.
• Is useful for planning and control but not inventory valuation purposes.

7.Which one of the following is the difference between the actual hourly wage rate and the standard hourly wage rate, multiplied by the actual direct labor hours worked during a period?

• Total direct labor standard cost variance.
• Direct labor efficiency variance.
• Direct labor usage variance.
• Direct labor flexible-budget variance.
• Direct labor rate variance.

8. A flexible-budget variance measures the impact on short-term operating profit of:

• Changes in sales volume.
• Changes in output during the period.
• Differences in sales mix-budgeted versus actual.
• Selling price and cost differences-actual versus budgeted.
• Selling price, but not cost differences-actual versus budgeted.

9.In deciding whether to further investigate a variance, an organization needs to weigh the costs of investigation against the:

• Ongoing time constraints.
• Size of the variance.
• Nature of the variance.
• Difficulty of the investigation.
• Anticipated benefits from the investigation.

10.Which of the following factors is not usually important when deciding whether to investigate a variance?

• Magnitude of the variance.
• Trend of the variance over time.
• Whether the variance is favorable or unfavorable.
• Cost of investigating the variance.
• Likelihood that the variance will recur in the future.

11.The difference between the total actual overhead cost incurred during a period and budgeted total factory overhead for the actual quantity of the cost driver used to apply overhead is equal to the:

• Total overhead spending variance.
• Total overhead efficiency variance.
• Factory overhead production-volume variance.
• Total overhead rate variance.
• Total overhead variance.

12.Which one of the following journal entries in a standard cost system would be used to apply factory overhead costs to production?

• A debit to the factory overhead account, at standard cost.
• A credit to the factory overhead account, at standard cost.
• A debit to WIP inventory, at actual cost.
• A credit to Finished Goods Inventory, at standard cost.

13.The following budget data pertain to the Machining Department of Yolkenverst Co.:

Maximum Capacity = 60,000 Units
Machine Hours/Unit = 2.5 Hours
Variable Factory O/H = $ 3.60 Per Machine Hour
Fixed Factory O/H = $433,500

The company prepared the budget at 85% of the maximum capacity level. The department uses machine hours as the basis for applying standard factory overhead costs to production.

The standard fixed overhead application rate for the Machining Department is:

$2.89 per machine hour.
$3.40 per machine hour.
$3.47 per machine hour.
$4.08 per machine hour.
$8.50 per machine hour.

14. Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.

Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?

• $280.00.
• $292.50.
• $299.00.
• $308.50.

15.Bonehead Co. has the following factory overhead costs:

Standard Overhead Applied to this Period's Production = $72,500
Flexible Budget for Overhead Based on Output (Units Produced) = 65,000
Total Budgeted Overhead in the Master (Static) Budget = 86,000
Actual Total Overhead Cost Incurred During the Period = 76,000

The total underapplied or overapplied factory overhead for Bonehead Co. for the period is:

• $4,000 underapplied.
• $7,000 overapplied.
• $10,000 overapplied.
• $11,000 underapplied.
• $14,000 underapplied.