6. Which of the following would be considered a product cost forexternal financial reporting purposes? A) Cost of a warehouse usedto store finished goods. B) Cost of guided public tours through thecompany's facilities. Cost of travel necessary to sell themanufactured product. Cost of sand spread on the factory floor toabsorb oil from manufacturing machines. 7. Manufacturing overheadconsists of: A) indirect materials but not indirect labor. B)indirect labor but not indirect materials. C) all manufacturingcosts. D) all manufacturing costs, except direct materials anddirect labor. 8. Which of the following statements regarding pullmanufacturing is false? A) Pull manufacturing maintains lowerinventory levels than push manufacturing B) Pull manufacturingoften uses Kanban. C) Lean manufacturing is based on pullmanufacturing, instead of push manufacturing. D) Pull manufacturingis always superior to push manufacturing E) The Theory ofConstraints is a technique used in pull manufacturing that is notuseful in push manufacturing 9. Which of the following industriesis more suitable for using a process costing system? A) auto repairshop. B) automobile manufacturing. C) medical clinics. D) publicaccounting firm. E) custom furniture maker. 13. TEB estimated thefollowing production cost for 1,000 units of product for job 588during 2022: Direct materials: 600 pounds at $5 per pound = $3,000Direct labor: 2,000 hours at $10 per hour = $20,000 Manufacturingoverhead ($65,000 estimated for the year divided by 6,000 estimatedmachine hours = $10.8333 per machine hour): 1,500 hours at $10.8333per machine hour = $16,250 TEB, Inc. incurred the following actualcosts for job 588: Direct materials: 620 pounds at $4.50 per pound= $2,790 Direct labor: 1,970 hours at $9.90 per hour = $19,503Manufacturing overhead: $68,733 actual for the year; 6,300 actualmachine hours; 1,475 actual machine hours used on job 588 Usingactual costing, the total product cost for the following jobrounded to the nearest dollar would be __________? 14. The journalentry required to record factory depreciation includes: A) a debitto Cost of Goods Manufactured account. B) a debit to FactoryOverhead account. C) a debit to Depreciation Expense account. D) adebit to Accumulated Depreciation account. E) none of the above.15. All of the following are debited to the Work-in-ProcessInventory account, except A) cost of the completed goods beingtransferred out of the plant. B) direct labor costconsumed/incurred. C) direct materials cost consumed/used. D)applied factory overhead cost. E) none of the above. Use thefollowing to answer questions 30-31: Advanced Company is installingan ABC system and needs to know the level of a few activities.Advanced has already determined which costs are directly traceableto product and customers. Only those costs left to beallocated/assigned are of concern here. Advanced Company producestwo productsâhigh-tech global positioning systems (GPS) andlow-tech compassesâusing portions of the same assembly line. Onedesign department handles the design of both products. The GPSs aremade in batches of 50, while the compasses are made in batches of5,000. GPSs each require a one-hour inspection, while compasseseach require a one-minute inspection. Indicate whether thefollowing two activities are: A. Unit level B. Batch level C.Product level D. Customer level E. Facility sustaining orOrganization sustaining 30. Setup machines (see answer choicesimmediately above) 31. Have the annual financial statements audited(see answer choices immediately above) 32. Which one of thefollowing is a true statement about activity-based costing? A)There is generally one and only one cost driver for each activity.B) The activity driver (used to assign the overhead to the costobjects) must be a cost driver. C) There is no such thing as aresource driver. D) Process mapping is a good way to identifyactivities for activity-based costing. E) Every activity-basedcosting system will have the same activities, as long as thecompanies are in the same industry. 33. The master budget processusually begins with the: A) production budget. B) selling andadministrative expense budget. C) sales budget. D) cash budget. 34.Holdren Company expects the following credit sales for the firstfour months of the year: January, $13,500; February, $18,000;March, $16,000; April, $19,000. Experience has shown that paymentfor the credit sales is received as follows: 10% in the month ofsale, 60% in the first month after sale, 20% in the second monthafter sale, and 10% is uncollectible. How much cash can HoldrenCompany expect to collect in March as a result of credit sales?_________ Use the following to answer questions 36-38: ChickenNuggets, LLC, provides chicken nuggets to fast food restaurants.The standard cost card for chicken nuggets indicates each nuggettakes two ounces of chicken meat at $0.03 per ounce, 30 seconds ofdirect labor at $12.00 per hour, and 30 seconds of overhead at$6.00 per hour, for a total standard cost of $0.21 per nugget.Current production cost for 200,000 nuggets show material cost of$11,024 for 440,960 ounces of chicken at $0.025 per ounce; $19,380for 1,675 hours of direct labor at $11.57 per hour; and $10,050 ofoverhead applied for 1,675 hours at $6.00 per hour. Legend: U =Unfavorable F = Favorable (Include U or F, after the amount) 36.(10) The direct material quantity (usage) variance is calculated tobe ________? 37. (10) The direct labor efficiency variance iscalculated to be ________? 38. (10) The direct labor rate varianceis calculated to be ________? 39. A cost that is often overlooked,because it is not recorded on the books, is called a (an): A) sunkcost B) fixed cost C) missing cost D) opportunity cost E) variablecost 40. A study has been conducted to determine if Product Ashould be dropped. Sales of the product total $200,000 per year;variable expenses total $140,000 per year. Fixed expenses chargedto the product total $90,000 per year. The company estimates that$50,000 of these fixed expenses will saved if the product isdropped. These data indicate that if Product A is dropped, thecompany's overall net operating income would: A) decrease by$20,000 per year. B) increase by $20,000 per year. C) decrease by$10,000 per year. D) increase by $30,000 per year. 41. ManorCompany plans to discontinue a department that has a contributionmargin of $25,000 and $50,000 in fixed costs. Of the fixed costs,$21,000 cannot be eliminated. The effect on the profit of ManorCompany of discontinuing this department would be: A) an increaseof $4,000. B) a decrease of $4,000. C) a decrease of $25,000. D) anincrease of $25,000. 42. Products A, B, and C are produced from asingle raw material input. The raw material costs $90,000, fromwhich 5,000 units of A, 10,000 units of B, and 15,000 units of Ccan be produced each period. Product A can be sold at the split-offpoint for $2 per unit, or it can be processed further at a cost of$5,500 and then sold for $6 per unit. Product A should be: A) soldat the split-off point, since further processing would result in aloss of $0.75 per unit. B) processed further, since this willincrease profits by $14,500 each period. C) processed further,since this will increase profits by $5,500 each period. D) sold atthe split-off point, since further processing will result in a lossof $5,500 each period. 50 and 51 use the following information:TEB, Inc., which manufactures video games, consists of twodivisions, each operating as a profit center. Division A makes acomponent that is needed by Division B; however, if the price fromDivision A is too high, Division B has indicated it would purchasethe component from an outside supplier. Additional informationrelated to the divisions is: Division Bâs annual needs forcomponent 10,000 units Division Aâs capacity 40,000 units DivisionAâs current sales at $170 per unit 30,000 units Division As totalcost per unit ($140 variable and $10 fixed) $150 Division Aâsannual fixed cost $1,500,000 Price per unit to buy from outsidesupplier $160 Assume Division A has an offer from a foreign buyerto purchase 10,000 units at $150 per unit. Assume the companymanagement (Vice-President above the two divisions) wants DivisionA to supply/transfer 10,000 units to Division B. 50. The mostlogical minimum acceptable transfer price is __________? 51. Themost logical maximum acceptable transfer price is __________?
6. Which of the following would be considered a product cost forexternal financial reporting purposes? A) Cost of a warehouse usedto store finished goods. B) Cost of guided public tours through thecompany's facilities. Cost of travel necessary to sell themanufactured product. Cost of sand spread on the factory floor toabsorb oil from manufacturing machines. 7. Manufacturing overheadconsists of: A) indirect materials but not indirect labor. B)indirect labor but not indirect materials. C) all manufacturingcosts. D) all manufacturing costs, except direct materials anddirect labor. 8. Which of the following statements regarding pullmanufacturing is false? A) Pull manufacturing maintains lowerinventory levels than push manufacturing B) Pull manufacturingoften uses Kanban. C) Lean manufacturing is based on pullmanufacturing, instead of push manufacturing. D) Pull manufacturingis always superior to push manufacturing E) The Theory ofConstraints is a technique used in pull manufacturing that is notuseful in push manufacturing 9. Which of the following industriesis more suitable for using a process costing system? A) auto repairshop. B) automobile manufacturing. C) medical clinics. D) publicaccounting firm. E) custom furniture maker. 13. TEB estimated thefollowing production cost for 1,000 units of product for job 588during 2022: Direct materials: 600 pounds at $5 per pound = $3,000Direct labor: 2,000 hours at $10 per hour = $20,000 Manufacturingoverhead ($65,000 estimated for the year divided by 6,000 estimatedmachine hours = $10.8333 per machine hour): 1,500 hours at $10.8333per machine hour = $16,250 TEB, Inc. incurred the following actualcosts for job 588: Direct materials: 620 pounds at $4.50 per pound= $2,790 Direct labor: 1,970 hours at $9.90 per hour = $19,503Manufacturing overhead: $68,733 actual for the year; 6,300 actualmachine hours; 1,475 actual machine hours used on job 588 Usingactual costing, the total product cost for the following jobrounded to the nearest dollar would be __________? 14. The journalentry required to record factory depreciation includes: A) a debitto Cost of Goods Manufactured account. B) a debit to FactoryOverhead account. C) a debit to Depreciation Expense account. D) adebit to Accumulated Depreciation account. E) none of the above.15. All of the following are debited to the Work-in-ProcessInventory account, except A) cost of the completed goods beingtransferred out of the plant. B) direct labor costconsumed/incurred. C) direct materials cost consumed/used. D)applied factory overhead cost. E) none of the above. Use thefollowing to answer questions 30-31: Advanced Company is installingan ABC system and needs to know the level of a few activities.Advanced has already determined which costs are directly traceableto product and customers. Only those costs left to beallocated/assigned are of concern here. Advanced Company producestwo productsâhigh-tech global positioning systems (GPS) andlow-tech compassesâusing portions of the same assembly line. Onedesign department handles the design of both products. The GPSs aremade in batches of 50, while the compasses are made in batches of5,000. GPSs each require a one-hour inspection, while compasseseach require a one-minute inspection. Indicate whether thefollowing two activities are: A. Unit level B. Batch level C.Product level D. Customer level E. Facility sustaining orOrganization sustaining 30. Setup machines (see answer choicesimmediately above) 31. Have the annual financial statements audited(see answer choices immediately above) 32. Which one of thefollowing is a true statement about activity-based costing? A)There is generally one and only one cost driver for each activity.B) The activity driver (used to assign the overhead to the costobjects) must be a cost driver. C) There is no such thing as aresource driver. D) Process mapping is a good way to identifyactivities for activity-based costing. E) Every activity-basedcosting system will have the same activities, as long as thecompanies are in the same industry. 33. The master budget processusually begins with the: A) production budget. B) selling andadministrative expense budget. C) sales budget. D) cash budget. 34.Holdren Company expects the following credit sales for the firstfour months of the year: January, $13,500; February, $18,000;March, $16,000; April, $19,000. Experience has shown that paymentfor the credit sales is received as follows: 10% in the month ofsale, 60% in the first month after sale, 20% in the second monthafter sale, and 10% is uncollectible. How much cash can HoldrenCompany expect to collect in March as a result of credit sales?_________ Use the following to answer questions 36-38: ChickenNuggets, LLC, provides chicken nuggets to fast food restaurants.The standard cost card for chicken nuggets indicates each nuggettakes two ounces of chicken meat at $0.03 per ounce, 30 seconds ofdirect labor at $12.00 per hour, and 30 seconds of overhead at$6.00 per hour, for a total standard cost of $0.21 per nugget.Current production cost for 200,000 nuggets show material cost of$11,024 for 440,960 ounces of chicken at $0.025 per ounce; $19,380for 1,675 hours of direct labor at $11.57 per hour; and $10,050 ofoverhead applied for 1,675 hours at $6.00 per hour. Legend: U =Unfavorable F = Favorable (Include U or F, after the amount) 36.(10) The direct material quantity (usage) variance is calculated tobe ________? 37. (10) The direct labor efficiency variance iscalculated to be ________? 38. (10) The direct labor rate varianceis calculated to be ________? 39. A cost that is often overlooked,because it is not recorded on the books, is called a (an): A) sunkcost B) fixed cost C) missing cost D) opportunity cost E) variablecost 40. A study has been conducted to determine if Product Ashould be dropped. Sales of the product total $200,000 per year;variable expenses total $140,000 per year. Fixed expenses chargedto the product total $90,000 per year. The company estimates that$50,000 of these fixed expenses will saved if the product isdropped. These data indicate that if Product A is dropped, thecompany's overall net operating income would: A) decrease by$20,000 per year. B) increase by $20,000 per year. C) decrease by$10,000 per year. D) increase by $30,000 per year. 41. ManorCompany plans to discontinue a department that has a contributionmargin of $25,000 and $50,000 in fixed costs. Of the fixed costs,$21,000 cannot be eliminated. The effect on the profit of ManorCompany of discontinuing this department would be: A) an increaseof $4,000. B) a decrease of $4,000. C) a decrease of $25,000. D) anincrease of $25,000. 42. Products A, B, and C are produced from asingle raw material input. The raw material costs $90,000, fromwhich 5,000 units of A, 10,000 units of B, and 15,000 units of Ccan be produced each period. Product A can be sold at the split-offpoint for $2 per unit, or it can be processed further at a cost of$5,500 and then sold for $6 per unit. Product A should be: A) soldat the split-off point, since further processing would result in aloss of $0.75 per unit. B) processed further, since this willincrease profits by $14,500 each period. C) processed further,since this will increase profits by $5,500 each period. D) sold atthe split-off point, since further processing will result in a lossof $5,500 each period. 50 and 51 use the following information:TEB, Inc., which manufactures video games, consists of twodivisions, each operating as a profit center. Division A makes acomponent that is needed by Division B; however, if the price fromDivision A is too high, Division B has indicated it would purchasethe component from an outside supplier. Additional informationrelated to the divisions is: Division Bâs annual needs forcomponent 10,000 units Division Aâs capacity 40,000 units DivisionAâs current sales at $170 per unit 30,000 units Division As totalcost per unit ($140 variable and $10 fixed) $150 Division Aâsannual fixed cost $1,500,000 Price per unit to buy from outsidesupplier $160 Assume Division A has an offer from a foreign buyerto purchase 10,000 units at $150 per unit. Assume the companymanagement (Vice-President above the two divisions) wants DivisionA to supply/transfer 10,000 units to Division B. 50. The mostlogical minimum acceptable transfer price is __________? 51. Themost logical maximum acceptable transfer price is __________?
