QUIZ 3 – 1 A process cost system would be used for all of the following products except
QUIZ 31 A process cost system would be used for all of the following products exceptcomputer chips. chemicals. motion pictures. soft drinks.2 Differences between a job order cost system and a process cost system include all of the following except the point at which costs are totaled. unit cost computations. documents used to track costs. flow of costs.3 Hunten Manufacturing assigns overhead based on machine hours. The Milling Department logs 1,400 machine hours and Cutting Department shows 3,000 machine hours for the period. If the overhead rate is $5 per machine hour, the entry to assign overhead will show adebit to Manufacturing Overhead for $22,000.credit to Work in ProcessâCutting Department for $15,000.credit to Manufacturing Overhead for $22,000.debit to Work in Process for $15,000.4. A process with no beginning work in process, completed and transferred out 95,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were:1. 47,500 equivalent units. 2. 145,000 equivalent units. 3. 95,000 equivalent units. 4. 110,000 equivalent units.5 The Molding Department of Kenst Company has the following production data: beginning work in process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 690,000 units, and ending work in process 70,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are:1. 718,000. 2. 690,000. 3. 694,000. 4. 760,000.6. Conrad Company’s Assembly Department has materials cost at $5 per unit and conversion cost at $8 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to inventory?1. $182,800. 2. $260,000. 3. $112,000. 4. $212,000.7. A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 40,000 units were completed and transferred out; and there were 20,000 units in the ending work in process that were 40% complete. During July, $96,000 materials costs and $84,000 conversion costs were charged to the department.The unit production costs for materials and conversion costs for July wasMaterials Conversion Costs$2.00$1.40$2.40$2.13$1.60$1.40$1.60$1.758. A production cost report 1. is prepared from a job cost sheet. 2. will not identify a specific department if more than one department 3. is involved in the production process.4. is prepared for each product.will show quantity and cost data for a production department.9. Which of the following costs are variable?Cost10,000 Units30,000 Units1.$100,000$300,0002.40,000240,0003.90,00090,0004.50,000150,0001. 1 and 2 2. only 1 3.1 and 4 4.only 210 Why is identification of a relevant range important?Cost behavior outside of the relevant range is not linear, which distorts CVP analysis.It is required under GAAP.It is a cost that is incurred by a company that must be accounted for.It directly impacts the number of units of product a customer buys.11. In applying the high-low method, what is the unit variable cost?MonthMilesTotal CostJanuary80,000$144,000February50,000120,000March70,000141,000April90,000$180,0001. $2.00 2. $1.50 3. $2.40 4.Cannot be determined from the information given12. Which of the following is not an underlying assumption of CVP analysis?1. Changes in activity are the only factors that affect costs. 2. Cost classifications are reasonably accurate 3. Beginning inventory is larger than ending inventory. 4. Sales mix is constant.13 If a company had a contribution margin of $750,000 and a contribution margin ratio of 40%, total variable costs must have been1. $1,125,000. 2. $300,000. 3. $1,875,000 4. $450,00014 The following monthly data are available for Hepburn, Inc. which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June?1. $42,000 2. $126,000 3. $84,000 4. $1,00015. Klinc, Inc. wants to sell a sufficient quantity of products to earn a profit of $70,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $120,000, how many units must be sold to earn income of $70,000?1. 23,750 units 2.950,000 units 3. 70,000 units 4. 95,000 units16 Sivenchy Company sells 100,000 wrenches for $18 per unit. Fixed costs are $625,000 and net income is $375,000. What should be reported as variable expenses in the CVP income statement?1. $800,000 2. $1,000,000 3. $1,425,000 4. $117517 Why are budgets useful in the planning process?They enable the budget committee to earn their paycheck.They guarantee the company will be profitable if it meets its objectives.They provide management with information about the company’s past performance.They help communicate goals and provide a basis for evaluation.18 An unrealistic budget is more likely to result when it1. has been developed by all levels of management. 2. has been developed in a bottom up fashion. 3. is developed with performance appraisal usages in mind. 4. has been developed in a top down fashion.19 At January 1, 2014, Zella Company has beginning inventory of 2,000 DVD players. Zella estimates it will sell 10,000 units during the first quarter of 2014 with a 12% increase in sales each quarter. Zellaâs policy is to maintain an ending inventory equal to 25% of the next quarterâs sales. Each DVD player costs $100 and is sold for $140. How much is budgeted sales revenue for the third quarter of 2014?1. $12,544 2. $1,756,160 3. $420,000 4.$1,820,00020 Vonak Co. estimates its sales at 240,000 units in the first quarter and that sales will increase by 24,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.Cash collections for the third quarter are budgeted at1.$7,092,000. 2. $8,208,000. 3. $5,904,000. 4.$4,068,000.21 Niles Manufacturing estimates its sales at 220,000 units in the first quarter and that sales will increase by 20,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.Production in units for the third quarter should be budgeted at1. 260,000. 2. 330,000. 3. 275,000. 4. 265,000.22 Which of the following statements about a budgeted income statement is nottrue?The budgeted income statement can be prepared in a multiple-step format.The budgeted income statement is prepared using the individual operating budgets.The budgeted income statement is prepared after the financial budgets are prepared.The budgeted income statement is prepared on the accrual basis of accounting.23 Which one of the following items would never appear on a cash budget?1. Interest expense 2. Depreciation expense 3. Travel expense 4. Office salaries expense24 Company A is a manufacturer and Company B is a merchandiser. What is the difference in the budgets the two entities will prepare?Both companies will prepare the same types of budgets.Company B will prepare a production budget, and Company A will prepare a merchandise purchases budget.Company A will prepare a sales forecast, and Company B will prepare a sales budget.Company A will prepare a production budget, and Company B will prepare a merchandise purchases budget.25 A major element in budgetary control is1. the valuation of inventories. 2. approval of the budget by the stockholders. 3. the preparation of long-term plans. 4. the comparison of actual results with planned objectives.26 On the basis of the budget reports,1. management analyzes differences between actual and planned results. 2. management may modify the future plans. 3. all of these answer choices are correct. 4. management may take corrective action.27 A static budget reportmay be appropriate in evaluating a manager’s effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.is appropriate in evaluating a manager’s effectiveness in controlling variable costs.shows costs at only 2 or 3 different levels of activity.should be used when the actual level of activity is materially different from the master budget activity level.28 Top management’s reaction to a difference between budgeted and actual sales often depends on1. whether management anticipated the difference. 2. the materiality of the difference. 3. the personality of the top managers. 4. whether the difference is favorable or unfavorable.29 What is the primary difference between a static budget and a flexible budget?The static budget contains only fixed costs, while the flexible budget contains only variable costs.The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.30 Corrington Manufacturing Company prepared a fixed budget of 80,000 direct labor hours, with estimated overhead costs of $400,000 for variable overhead and $120,000 for fixed overhead. Corrington then prepared a flexible budget at 78,000 labor hours. How much is total overhead costs at this level of activity?1. $510,000 2.$440,000 3. $400,000 4. $520,00031 At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,600 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:1. $800 unfavorable. 2. $1,600 unfavorable. 3. $1,600 favorable. 4.$800 favorable.32 Which of the following would not be considered an aspect of budgetary control?It assists management in controlling operations.It provides a guarantee for favorable results.It assists in the determination of differences between actual and planned results.It provides feedback value needed by management to see whether actual operations are on course.