overhead costallocation baseestimated activity levelfactory utilitiesdirect labor B u s i n e s s F i n a n c e

answer all question please

1:The margin of safety is calculated by:

Multiple Choice

• dividing fixed costs plus target income by the contribution margin.
• subtracting break-even income from current income.
• subtracting break-even sales from current sales.
• subtracting fixed costs from current contribution margin.

2: When volume increases, fixed cost per unit:

Multiple Choice

• decreases.
• increases or decreases, depending upon the situation.
• increases.
• stays the same.

3:In the area of cost-volume-profit analysis, the contribution margin ratio shows how much each dollar of sales contributes to:

Multiple Choice

• fixed expenses and variable expenses.
• variable expenses and interest charges.
• cover the fixed costs of the business and providing operating income.
• variable expenses when production is at normal capacity.

4:In order to calculate break-even sales units, fixed costs are divided by the:

Multiple Choice

• contribution margin percentage.
• sales volume.
• target operating income.
• contribution margin per unit.

5:The dollar amount by which sales can decline before an operating loss is incurred is called the:

Multiple Choice

• contribution margin.
• relevant range.
• contribution margin ratio.
• margin of safety.

6:A company that mass-produces identical products is best suited for a:

Multiple Choice

• Process costing system.
• Production costing system.
• No cost system is required when jobs are similar.
• Job order system.

7:Equivalent units are usually computed for:

Multiple Choice

• Only factory overhead.
• Only direct labor.
• Direct materials, direct labor, and factory overhead costs.
• Only direct materials.

8:Process costing systems:

Multiple Choice

• Are used when companies mass-produce identical units.
• Track costs to individual products.
• Do not have work in process accounts.
• Do not use equivalent units of production.

9:A summary of work completed with related unit and total costs in a process costing system is called a(n):

Multiple Choice

• Summary of conversion costs.
• Equivalent units of production form.
• Production cost report.
• Cost requisition form.

10:The Abrams Corporation incurred the following quality costs during the year:

Inspections	$ 36,000
Training	$ 17,000
Quality planning	$ 7,000
Maintenance	$ 11,700
Rework	$ 4,000
Warranty	$ 8,900
Testing of equipment	$ 8,300
Scrap	$ 8,000
Lost sales	$ 21,650
Downtime	$ 10,700
Repairs	$ 7,500

What are the total external failure costs for the Abrams Corporation?

Multiple Choice

• $44,300
• $22,700
• $38,050
• $35,700

11:The Abrams Corporation incurred the following quality costs during the year:

Inspections	$ 33,400
Training	$ 15,700
Quality planning	$ 7,000
Maintenance	$ 7,800
Rework	$ 3,350
Warranty	$ 7,990
Testing of equipment	$ 7,000
Scrap	$ 8,000
Lost sales	$ 17,100
Downtime	$ 9,400
Repairs	$ 6,200

What are the total internal failure costs for the Abrams Corporation?

Multiple Choice

• $20,750
• $40,400
• $30,500
• $31,290

12:The Abrams Corporation incurred the following quality costs during the year:

Inspections	$ 32,800
Training	$ 15,400
Quality planning	$ 7,000
Maintenance	$ 6,900
Rework	$ 3,200
Warranty	$ 7,780
Testing of equipment	$ 6,700
Scrap	$ 8,000
Lost sales	$ 16,050
Downtime	$ 9,100
Repairs	$ 5,900

What are the total appraisal costs for the Abrams Corporation?

Multiple Choice

• $29,300
• $39,500
• $29,730
• $20,300

13:The Abrams Corporation incurred the following quality costs during the year:

Inspections	$ 33,200
Training	$ 15,600
Quality planning	$ 7,000
Maintenance	$ 7,500
Rework	$ 3,300
Warranty	$ 7,920
Testing of equipment	$ 6,900
Scrap	$ 8,000
Lost sales	$ 16,750
Downtime	$ 9,300
Repairs	$ 6,100

What are the total prevention costs for the Abrams Corporation?

Multiple Choice

• $40,100
• $30,100
• $30,770
• $20,600

14:If 6,000 units were in beginning inventory, 18,000 units were started, and 5,000 units were in the ending inventory, how many units were transferred out?

Multiple Choice

• 29,000 units
• 18,000 units
• 19,000 units
• 17,000 units

15:Summit Products, Incorporated is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $98 for such a widget and that 58,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $58.

Summit has learned that a competitor plans to introduce a similar widget at a price of $88. In response, Summit may reduce its selling price to $88. If Summit requires a 25% return on sales, what is the target cost for the new widget?

Multiple Choice

• $22.00
• $88.00
• $66.00
• $24.50

16:Starbright manufactures child car seats, strollers, and baby swings. Starbright’s manufacturing costs are budgeted as follows:

Factory utilities: $95,000

Factory foremen salaries: $94,000

Machinery setup costs: $38,000

Total manufacturing overhead: $227,000

The company uses activity-based costing to allocate its manufacturing overhead costs to products based on the following schedule:

Overhead Cost	Allocation Base	Estimated Activity Level
Factory Utilities	Direct labor-hours	15,140
Factory foremen salaries	Machine hours	19,650
Setup costs	Number of production runs	179

During the current month, the following levels of activities were incurred:

	Car Seats	Strollers	Baby Swings	Total
Direct Labor Costs	$ 41,040	$ 71,100	$ 24,120	$ 136,260
Direct Labor Hours	4,560	7,900	2,680	15,140
Machine Hours	5,850	9,600	4,200	19,650
Production Runs	45	78	56	179
Units Produced	1,000	3,800	1,130	5,930

What are the factory foremen salaries allocated to Car Seats during the current month? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

Multiple Choice

• $20,091
• $94,000
• $45,924
• $27,985

17:Capri Boat Corporation uses a job order cost system and applies overhead based on a percentage of direct labor cost. Cost flows through the Work in Process Inventory account during March are given below:

Work in Process
Debit		Credit
Beginning Balance	0	Transferred Out	134,000
Direct Materials	42,000
Direct Labor	81,000
Overhead	97,200
Ending Balance	86,200

Only Job #007 was still in process at the end of March and this job had been charged with $18,000 in direct materials cost.

The amount of direct materials cost charged to completed jobs during March was:

Multiple Choice

• $86,200.
• $24,000.
• $40,500.
• $9,000.

18:Riverview Company’s budget for the coming year includes $7,600,000 for manufacturing overhead, 40,000 hours of direct labor, and 280,000 hours of machine time.

If Riverview applies overhead using a predetermined rate based on labor-hours, what amount of overhead will be assigned to a unit of output which requires 0.7 machine hours and 0.70 labor hours to complete?

Multiple Choice

• $72.00
• $133.00
• $27.00
• $7.00

19:Riverview Company’s budget for the coming year includes $7,400,000 for manufacturing overhead, 50,000 hours of direct labor, and 200,000 hours of machine time.

If Riverview applies overhead using a predetermined rate based on machine-hours, what amount of overhead will be assigned to a unit of output which requires 0.6 machine hours and 0.30 labor hours to complete?

Multiple Choice

• $44.00
• $22.20
• $148.00
• $37.00

20:Marty’s Metal Shop uses a job order cost system. It applies overhead to jobs at a rate of 130% of direct labor costs. Job No. 2617 required $880 in direct labor costs. The job was initially budgeted to require $840 in direct labor costs. Overhead applied to Job No. 2617 during the period amounted to:

Multiple Choice

• $1,590.
• $940.
• $840.
• $1,144.

21:The following information is available about the August transactions of the Helpful Tool Company:

Invoices for product costs paid during the month	$ 493,000
Product costs charged to work in process	$ 737,000
Cost of finished goods manufactured	$ 718,000
Cost of goods sold	$ 739,000

The product costs to be deducted from revenue in August amount to:

Multiple Choice

• $737,000.
• $493,000.
• $718,000.
• $739,000.

22:Manufacturing costs do not include:

Multiple Choice

• Manufacturing overhead charged to work in process during the period.
• Direct materials used during the period.
• Selling expenses related to goods manufactured during the period.
• Direct labor applicable to production within the period.

23:Which of the following is not a product cost?

Multiple Choice

• Property tax on the factory building.
• Factory workers’ salaries.
• Indirect materials used in production.
• Advertising.

24:The placing of direct materials into the production process is recorded by an entry crediting:

Multiple Choice

• Finished Goods Inventory.
• Raw Materials Inventory.
• Materials Expense.
• Work in Process Inventory.

25:Which of the following is not a product cost?

Multiple Choice

• The leather seats of a motorcycle.
• Depreciation on a warehouse where raw materials are stored.
• An employee working directly on assembling a car.
• The real estate tax of the showroom.