Reference no: EM13907267
1. Horton and Sons produces specialty furniture. The company has received an order to create 50 custom tables for a customer. What type of costing method should they use?
Inventory costing,
Cost of goods sold
Batch costing
Job order costing
2. Omega Manufacturing bases its rate on direct labor cost. At the beginning of the year, the company made the following estimates:
Direct labor-hours: 30,000
Machine-hours: 5,000
Materials overhead cost: $486,000
Direct labor cost: $270,000
What is the predetermined overhead rate?
17%
56%
180%
600%
3. Omega Manufacturing had a total applied manufacturing overhead of $486,000 budgeted direct labor cost was $270,000. Their actual manufacturing overhead was $350,000 and actual direct labor cost was $300,000. Which of the following would best describe the overhead?
Overestimated
Mixed
Underapplied
Overapplied
4. A sporting goods company manufactures sports shoes in batches. Why should a job order costing system be implemented for the production of the shoes?
To find the total cost of doing a run of the shoes
To find the exact cost per unit for each run of the shoes
To find if manufacturing the shoes will be profitable
To let managers decide if making the shoes is worth the cost
5. Depont Enterprises uses the job order costing system. They have received their first product order and need to make entries to the accounts. How should the flow of costs be recorded for their first job?
Work in process inventory, finished goods inventory, job cost record, cost of goods sold
Work in process inventory, finished goods inventory, costs of goods sold, job cost record
Job cost record, work in process inventory, finished goods inventory, cost of goods sold
Job cost record, work in process inventory, cost of goods sold, finished goods inventory
6. John knows that 1,000 widgets are needed in the upcoming job order. What type of document does he need to fill out in order to put the widgets into production?
Materials requisition
Job cost record
Direct materials requisition
Subsidiary ledger
7. Under a job order costing system, how are accumulated costs treated when a company finishes a job?
Accumulated costs are recorded as overhead on the income statement
Accumulated costs are assigned to batches and transferred to Work in Process Inventory (WIP)
Accumulated costs are moved from Work in Process Inventory (WIP) to finished goods inventory
Accumulated costs are recorded as cost of goods sold on the income statement
8. Why do organizations prepare specific strategic budgets?
They show how many resources are needed to implement a business strategy
They help identify where the main focus should be placed in an organization
They give managers detailed information on costs in a company
They allow managers to create more detailed plans
9. Seaside Software Company is a decentralized company with management taking control at different levels. When looking at information flow, what type of budget should be implemented?
Bottom-up budget
Strategic budget
Participative budget
Top-down budget
10. Sara's Cake Company uses the following materials in its cakes:
1 cup flour
0.25 cups sugar
2 eggs
0.25 cups cocoa powder
Here are the costs for each of the items:
Flour: $0.50 per cup
Sugar: $0.20 per cup
Eggs: $0.25 per egg
Cocoa: $0.80 per cup
What is the standard materials cost of a single cake?
$2.25 per cake
$1.25 per cake
$1.05 per cake
$1.00 per cake
11. Sara's Cake Company needs to figure out what her labor cost is for baking each cake. She currently pays the following an hour:
$10 base hourly rate for bakers
$14 base hourly rate for sales representatives
$2 in payroll taxes per hour
$2 in health and fringe benefits per hour
It takes the following time to to bake a cake:
Mixing: 15 minutes
Baking: 1 hour
Frosting: 15 minutes
What is the standard cost for labor for baking a cake?
$42 per cake
$36 per cake
$21 per cake
$15 per cake
12. Which one of the following budgets is the last component before creating budgeted (pro-forma) financial statements?
Sales budget
Direct labor budget
Production budget
Cash budget
13. When creating a master budget, which one of the following is not directly related to manufacturing?
Manufacturing overhead budget
Cash budget
Sales and administrative budget
Sales budget
14. B&B Used Car Sales likes to keep a minimum cash balance of $25,000. Last year, the company had sales of $225,000. Of those sales, $100,000 were made on account. The company made a gross profit of $75,000. At the end of the year, it had a cash deficit of $32,000. How much cash would B&B need to borrow in short-term loans to cover the cash requirements?
$25,000
$32,000
$43,000
$57,000
15. Which of the following statements describes pro-forma financial statements?
They are based on estimations of future investment
They are based on estimations of future operations
They are a combination of actual and estimated operations
They are a combination of past and current operations
16. Which of the following would be considered a goal of budget planning?
To have management set budget goals through a top-down approach
To define realistic goals that will contribute to the financial well-being of the company
To analyze the financial and operation amounts for a specific project
To decide the cost of the direct materials needed for production
17. Hansen Company has prepared a budgeted income statement. Reported were the following amounts.
1. Sales revenue - $350,000
2. Cost of goods sold - $175,000
3. Variable operating expenses - $55,000
4. Fixed operating expenses - $11,000
What is the gross profit amount?
$109,000
$164,000
$175,000
$284,000