Question 1

The measure of activity that allows for routine variations in manufacturing activity is:

Accepted Answer

A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) expected capacity 
A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) expected capacity

Question 2

Hahn Corporation
Hahn Corporation produces a single product that sells for $7.00 per unit.Standard capacity is 100,000 units per year;100,000 units were produced and 80,000 units were sold during the year.Manufacturing costs and selling and administrative expenses are presented below.
There were no variances from the standard variable costs.Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold.
                    Fixed costs       Variable costs              Direct material        $0       $1.50 per unit produced               Direct labor       0       1.00 per unit produced               Manufacturing overhead       $150,000       0.50 per unit produced               Selling & Administration expense       80,000        0.50 per unit sold      
Hahn Corporation had no inventory at the beginning of the year.
Refer to Hahn Corporation.What is the net income under variable costing?

Accepted Answer

A) $50,000 
B) $80,000 
C) $90,000 
D) $120,000 
A) $50,000 
B) $80,000 
C) $90,000 
D) $120,000

Question 3

The measure of production that considers historical and estimated future production levels and cyclical fluctuations is referred to as:

Accepted Answer

A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) expected capacity 
A) theoretical capacity 
B) practical capacity 
C) normal capacity 
D) expected capacity

Question 4

Texoma Trucking Company is exploring different prediction models that can be used to forecast indirect labor costs.One independent variable under consideration is machine hours.Following are matching observations on indirect labor costs and machine hours for the past six months:
             Month       Machine hours       Indirect labor costs               1       300       $20,000               2       400       $24,000               3       240       $17,000               4       370       $22,000               5       200       $13,000               6       225       $14,000      
In a high-low model,which months' observations would be used to compute the model's parameters?

Accepted Answer

A) 2 and 5 
B) 1 and 6 
C) 2 and 6 
D) 4 and 5 
A) 2 and 5 
B) 1 and 6 
C) 2 and 6 
D) 4 and 5

Question 5

When using the high-low method,fixed costs are computed before the variable component is computed.

Accepted Answer

A) True 
 B)False

Question 6

List and explain the four alternative measures of capacity.

Accepted Answer

Theoretical capacity--This is the estima

Question 7

Richardson Company
The following information is available for Richardson Company for its first year of operations:
             Sales in units       5,000               Production in units       8,000               Manufacturing costs:                       Direct labor       $3 per unit                Direct material       $5 per unit                Variable overhead       $1 per unit                Fixed overhead       $100,000               Net income (absorption method)       $30,000               Sales price per unit       $40      
Refer to Richardson Company.If Richardson Company were using variable costing,what would it show as the value of ending inventory?

Accepted Answer

A) $120,000 
B) $64,500 
C) $27,000 
D) $24,000 
A) $120,000 
B) $64,500 
C) $27,000 
D) $24,000

Question 8

In a normal cost system,which of the following is used?
Actual direct materials          	Actual direct labor          	Actual overhead

Accepted Answer

A) yes no yes 
B) yes yes yes 
C) yes yes no 
D) no yes no 
A) yes no yes 
B) yes yes yes 
C) yes yes no 
D) no yes no

Question 9

In relationship to changes in activity,variable overhead changes
in total	      per unit

Accepted Answer

A) no no 
B) no yes 
C) yes yes 
D) yes no 
A) no no 
B) no yes 
C) yes yes 
D) yes no

Question 10

Variable costing has an advantage over absorption costing for which of the following purposes?

Accepted Answer

A) analysis of profitability of products,territories,and other segments of a business 
B) determining the CVP relationship among the major factors of selling price,sales mix,and sales volume 
C) minimizing the effects of inventory changes on net income 
D) all of the above 
A) analysis of profitability of products,territories,and other segments of a business 
B) determining the CVP relationship among the major factors of selling price,sales mix,and sales volume 
C) minimizing the effects of inventory changes on net income 
D) all of the above

Question 11

If actual overhead exceeds applied overhead,factory overhead is said to be underapplied.

Accepted Answer

A) True 
 B)False

Question 12

Wyatt Corporation
Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products:
             Direct material      $3.00 per unit                Direct labor       2.50 per unit               Variable manufacturing overhead       1.80 per unit               Fixed manufacturing overhead       4.00 per unit (based on an estimate of 50,000 units per year)               Variable selling expenses       .25 per unit               Fixed SG&A expense       $75,000 per year      
During its first year of operations Wyattmanufactured 51,000 units and sold 48,000 . The selling price per unit was $ \$ 25 $. All costswere equal to standard.

Refer to Wyatt Corporation.Under absorption costing,the standard production cost per unit for the current year was

Accepted Answer

A) $ 7.30. 
B) $11.30. 
C) $11.55. 
D) $13.05. 
A) $ 7.30. 
B) $11.30. 
C) $11.55. 
D) $13.05.

Question 13

If underapplied or overapplied factory overhead is material,it is prorated among ________________________________________,________________________________________,and ___________________________________.

Accepted Answer

Work in Process Inve

Question 14

Which of the following costs will vary directly with the level of production?

Accepted Answer

A) total manufacturing costs 
B) total period costs 
C) variable period costs 
D) variable product costs 
A) total manufacturing costs 
B) total period costs 
C) variable period costs 
D) variable product costs

Question 15

If sales exceed production,absorption costing net income is less than variable costing net income.

Accepted Answer

A) True 
 B)False

Question 16

Why do managers frequently prefer variable costing to absorption costing for internal use?

Accepted Answer

Managers may prefer variable costing bec

Question 17

An observation that is found outside the relevant range is referred to as a(n)____________________.

Accepted Answer

The answer of An observation that is found outside the...

Question 18

In an actual cost system,factory overhead is assigned directly to products and services.

Accepted Answer

A) True 
 B)False

Question 19

If a company used two overhead accounts (actual overhead and applied overhead),the one that would receive the most debits would be

Accepted Answer

A) actual overhead. 
B) applied overhead. 
C) both would receive an equal number of debits. 
D) impossible to determine without additional information. 
A) actual overhead. 
B) applied overhead. 
C) both would receive an equal number of debits. 
D) impossible to determine without additional information.

Question 20

Temporary profits that result when absorption costing is used and production exceeds sales are referred to as _________________________.

Accepted Answer

The answer of Temporary profits that result when absorption costing...

The measure of activity that allows for routine variations in manufacturing activity is:

The measure of production that considers historical and estimated future production levels and cyclical fluctuations is referred to as:

When using the high-low method,fixed costs are computed before the variable component is computed.

List and explain the four alternative measures of capacity.

In a normal cost system,which of the following is used? Actual direct materials Actual direct labor Actual overhead

In relationship to changes in activity,variable overhead changes in total per unit

Variable costing has an advantage over absorption costing for which of the following purposes?

If actual overhead exceeds applied overhead,factory overhead is said to be underapplied.

If underapplied or overapplied factory overhead is material,it is prorated among ______,,and _.

Which of the following costs will vary directly with the level of production?

If sales exceed production,absorption costing net income is less than variable costing net income.

Why do managers frequently prefer variable costing to absorption costing for internal use?

An observation that is found outside the relevant range is referred to as a(n)____________________.

In an actual cost system,factory overhead is assigned directly to products and services.

If a company used two overhead accounts (actual overhead and applied overhead),the one that would receive the most debits would be

Temporary profits that result when absorption costing is used and production exceeds sales are referred to as _________________________.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

	Fixed costs	Variable costs
Direct material	$0	$1.50 per unit produced
Direct labor	0	1.00 per unit produced
Manufacturing overhead	$150,000	0.50 per unit produced
Selling & Administration expense	80,000	0.50 per unit sold

Month	Machine hours	Indirect labor costs
1	300	$20,000
2	400	$24,000
3	240	$17,000
4	370	$22,000
5	200	$13,000
6	225	$14,000

Sales in units	5,000
Production in units	8,000
Manufacturing costs:
Direct labor	$3 per unit
Direct material	$5 per unit
Variable overhead	$1 per unit
Fixed overhead	$100,000
Net income (absorption method)	$30,000
Sales price per unit	$40

Direct material	$3.00 per unit
Direct labor	2.50 per unit
Variable manufacturing overhead	1.80 per unit
Fixed manufacturing overhead	4.00 per unit (based on an estimate of 50,000 units per year)
Variable selling expenses	.25 per unit
Fixed SG&A expense	$75,000 per year

Exam 3: Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

The measure of activity that allows for routine variations in manufacturing activity is:

The measure of production that considers historical and estimated future production levels and cyclical fluctuations is referred to as:

When using the high-low method,fixed costs are computed before the variable component is computed.

List and explain the four alternative measures of capacity.

In a normal cost system,which of the following is used? Actual direct materials Actual direct labor Actual overhead

In relationship to changes in activity,variable overhead changes in total per unit

Variable costing has an advantage over absorption costing for which of the following purposes?

If actual overhead exceeds applied overhead,factory overhead is said to be underapplied.

If underapplied or overapplied factory overhead is material,it is prorated among ________________________________________,________________________________________,and ___________________________________.

Which of the following costs will vary directly with the level of production?

If sales exceed production,absorption costing net income is less than variable costing net income.

Why do managers frequently prefer variable costing to absorption costing for internal use?

An observation that is found outside the relevant range is referred to as a(n)____________________.

In an actual cost system,factory overhead is assigned directly to products and services.

If a company used two overhead accounts (actual overhead and applied overhead),the one that would receive the most debits would be

Temporary profits that result when absorption costing is used and production exceeds sales are referred to as _________________________.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

If underapplied or overapplied factory overhead is material,it is prorated among ______,,and _.