Reference no: EM132593581

Problem 1: Ben Gordon, Inc. manufactures 2 products, wheels and seats. The company has estimated its overhead in the assembling department to be $660,000. The company produces 300,000 wheels and 600,000 seats each year. Each wheel uses 2 parts, and each seat uses 3 parts. How much of the assembly overhead should be allocated to wheels??

?Option 1: ?$264,000

Option 2: ??$282,856

Option 3: ??$165,000

Option 4: ??$220,000

Problem 2: Which of the following will not result in an unfavorable controllable margin difference??

?Option 1: ?Sales under budget; costs over budget

Option 2: ??Sales under budget; costs under budget

Option 3: ??Sales exceeding budget; costs over budget

Option 4: ??Sales exceeding budget; costs under budget

Problem 3: Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 3,900 units, although it had planned to make only 3,300 units. Total yards used for production were 3,960. How much is the total materials variance??

Option 1: ??$4,860 U

?Option 2: ?$48,600 U

Option 3: ??$900 U

Option 4: ??$3,960 F

Problem 4: Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable??

Option 1: ??Department managers' performances should not be evaluated based on actual results to budgeted results.

Option 2: ??Department managers should only be held accountable for controllable variances for their departments.

Option 3: ??Department managers should be held accountable for all variances from budgets for their departments.

Option 4: ??Department managers should be credited for favorable variances even if they are beyond their control.

Problem 5: Financial and managerial accounting are similar in that both:?

?Option 1: ?have the same primary users.

Option 2: ??have reports that are prepared quarterly and annually.

Option 3: ??deal with the economic events of an enterprise.

Option 4: ??produce general-purpose reports.

Problem 6: What is the primary difference between a static budget and a flexible budget??

Option 1: ??The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

Option 2: ??The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

Option 3: ??The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.

?Option 4: ?The static budget contains only fixed costs, while the flexible budget contains only variable costs.

Problem 7: It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will be the effect on net income??

Option 1: ??$45,000 increase

Option 2: ??$6,000 increase

Option 3: ??$6,000 decrease

?Option 4: ?$9,000 decrease

Problem 8: ?Which of the following statements concerning users of accounting information is incorrect?

Option 1: ??Management is considered an internal user.

Option 2: ??Taxing authorities are considered external users.

Option 3: ??Regulatory authorities are considered internal users.

Option 4: ??Present creditors are considered external users.

Problem 9: The entry to record the acquisition of raw materials on account is:?

Option 1: ??Raw Materials Inventory Accounts Payable

Option 2: ??Manufacturing Overhead Raw Materials Inventory Accounts Payable

Option 3: ??Accounts Payable Raw Materials Inventory

Option 4: ??Work in Process Inventory Accounts Payable

Problem 10: Which of the following is not an underlying assumption of CVP analysis??

Option 1: ?Sales mix is constant.

Option 2: ??Beginning inventory is larger than ending inventory.

Option 3: ??Cost classifications are reasonably accurate.

Option 4: ??Changes in activity are the only factors that affect costs.