5TH QUIZ _ ACCTG 1206 _ CHAPTER 6

Question 1. Under which of the following Question 9. Each of the following is a

conditions will the first-in, first-out method of method by which to allocate joint costs
process costing produce the same cost of except:
goods manufactured amount as the average
cost method? Relative advertising costs.

When there is no beginning inventory

Question 10. An example of a process
where all of the materials would be added at
Question 2. If two or more products share the beginning of the process
a common process before they are
separated, the joint costs should be allocated A bakery where the ingredients for bread are
in a manner that: combined and left to rise.

Assigns a proportionate amount of the total

cost to each product equitably. Question 11. Budde Chemicals produces
Two industrial chemical compounds, X15 and
224, from the same process, which last year
Question 3. Which of the following cost $800,000 Budde produced 10.000
statements best describes a by-product? gallons of X15, which bells for $40 per gallon
and 40,000 gallons of 224, which sells for
A product that usually produces a small $10 per gallon. Using the relative sales
amount of revenue when compared to the method, how much of the joint cost should
main product revenue. be allocated to X157
$150,000
Question 4. Normal losses that occur in the $400,000
manufacturing process are properly classified
as: $200,000
Product costs. $120,000

Question 5. The following losses affect the Question 12. Regina Manufacturing uses
recorded cost of inventories, except: the FIFO method of process costing. The
production report for the During Department,
Abnormal losses where the materials are added at the
beginning of the period for September was
as follows
Question 6. Which of the following is NOT
true of joint costs? in process,

They are incurred after the point where the beginning of the period 3,000 units
joint products split off from each other. Stage of completion 30 %
Transferred to stockroom
Question 7. An example of a process where during period 12,000 units
all of the materials would be added at the
end of the process would be: in process; end of the period 6,000 units
The second process of a snack factory where Stage of completion 40 %
snack chips coming from the frying process
are cooled and dried for an hour, then The number of units started and
bagged. completed during the period was:
6,000

Question 8. Which of the following is not an 15,000

acceptable method for accounting for by 12,000
products in a joint manufacturing process?
9,000
Costs before the split-off point are allocated
to by-products. The value of by-products is
included in an account called "By-products
Inventory."
Question 13. Materials are added at the Materials are added at the end of the
end of the process in a company's curing process in the Second department. Using the
department, the second stage of the average cost method, what are the
production cycle. The following information equivalent units of production for materials
is available for the month of July: for the month of April?
Units 304,000
Work in process, July 1 50,000 290,000
(50% complete as to 280,000
conversion costs) 340,000
Transferred from
the previous department 200.000 Question 15. Regina Manufacturing uses
the FIFO method of process costing. The
Transferred to the production report for the Curing Department,
next department 195,000 where the materials are added at the
beginning of the period, for September was
Lost in production 10,000 as follows
Work in process July 31 45.000 In process, beginning of the period 3,000
(00% complete as to conversion costa) units
Stage of completion 30 %
Transferred to stockroom
Under the cost accounting system, the costs
incurred on the last units are absorbed by the during period 12,000
remaining good units. Using the average cost units
method, what are the equivalent units for the
materials unit cost calculation? In process, and of the period 6,000
units
210,000
Stage of completion 40 %
235,000
195,000
The number of equivalent units for
250,000 conversion costs during the period was:
12,300
Question 14. The following information is 13, 500
available for the month of April from the
Second department of the Armque 16,500
Corporation: 14,700
Units
Work in process. April 1 Question 16. The following information is
(50% complete) 90,000 available for the month of October from the
First department of the Vaughn Corporation
Transferred from First
Units
Department in April 250,000
Work in process. October 1
Transferred out of Second
(40% complete) 6,500
Department in April 290,000
Started in October 32,000
Work in process, April 30
Transferred to Second
(40% complete) 50,000
Department in October 31,000
Work in process, October 31
(70% complete) 7,500
 Materials are added in the beginning Using the FIFO method, what is the
of the process in the First department. Using materials cost of the work in process at
the average cost method, what are the August 31 (rounded to nearest dollar)?
equivalent units of production for the month
of October for conversion? $25,358

34,300 $29,40

36,250 $28.000

39.500 $29,639

38,200
Question 19. During June: Birch Bay
Company's Department B equivalent unt
Question 17. Boron Refiners had 50, 000 product costs computed under the average
gallons started in its process in June. At June cost method were as
30, 35,000 gallons were completed and
transferred to finished goods and 10,000 Materials $2
gallons were still in process, one-fourth Conversion $3
completed as to materials, labor and
overhead. The remaining 5, 000 units were Transferred-in $5
lost to evaporation, a normal result of the Materials are introduced at the end of
process. Costs of production during the the process in Department B. There were 4,
month were 575, 000 \$50,000, and 525,
000 units (50 % complete as to conversion
000 for material, labor and overhead, costs) in work in process at June 30, The
respectively. What is the cost per equivalent total costs assigned to the June 30 work in
unit in June? process inventory should be:
$4.00 $35.200
$3.53
$20,000
$3.75 $26.000
$3.33 $32,000

Question 18. Klug Industries adds materials

at the beginning of the process in the
molding department, which is the first of two
stages of as production cycle, Information
concerning the materials used in the molding
department in August follows:
Units Materials
Cost
Work in process
at August 1 8,000 $11,550
Units started
during August 20,000 $72.450
Units completed
and transferred
to next department
during August 21.000
Question 20. Van Pelt Company uses the
average cost method of process costing. The
production report for the Mixing department
follows
In process, beginning of period 1,000 units
800 units - materials 50% complete;
conversion costs 40% complete
200 units - materials 25% complete;
conversion costs 15% complete

Placed in process during period 5,000

units
Transferred to packing department 4,800
units
In process, end of period 1,200
units

700 units - materials 75% complete;

conversion costs 50% complete
500 units - materials 25% complete;
conversion costs 25% complete
Compute the equivalent units for
materials.
5,400
5,450
5,650
5,275
 6TH QUIZ _ ACCTG 1206 _ CHAPTER 7
Question 1. Expense A is a fixed cost Question 8. Which of the following is not
expense 5 is a variable cost. During the true about budgeting?
current year the activity level has increased,
but is still within the relevant range. In terms It should rely mainly to historical data.
of cost per unit of activity, we would expect
that:
Question 9. Producing goods evenly
Expense A has decreased throughout the year despite having a
seasonal sales pattern could lead to:

Question 2. The purpose of a flexible The potential for inventory obsolescence.

budget is to:
Compare actual and budgeted results at Question 10. The budget that is used as a
virtually any level of production. basis for preparing all other budgets is the:
Sales budget.
Question 3. Consider the following budgets:
(1) Production Question 11. Julia Industries produces
(2) Cost of goods sold cookware The master budget called for
production of 5, 00 units this year. The
(3) Direct materials budget at that level of production follows:
(4) Income statement
In what order should these budgets be Sales $1,200,000
prepared?
Direct materials 300, 000
1, 3, 2, 4
Direct labor 150,000
Variable factory overhead 225,000
Question 4. When using a flexible budget,
what occurs to fixed costs (on a per unit Fixed factory overhead 262,500
basis) as production increases? Fixed selling and
Fixed costs per unit will decrease administrative expense 112,500
Operating income $150,000
Question 5. Which of the following is not a
requirement of budgeting?
Due to the popularity of cooking
The budget must not be changed under any shows on television, Julia Industries now
circumstances. estimates sales will be 77,500 units What is
budgeted operating income at this level?

Question 6. The level of production that is $185.000

used by most firms for budget development $230,000
because it represents a logical balance
between maximum production capacity and $167,500
the capacity demanded by actual sales $160.000
volume is:
Normal capacity
Question 12. Shaw Corporation has
developed the following flexible budget
Question 7. Amounts from all of the formula for annual indirect labor cost:
following budgets feed into the pro-forma Total cost = $9, 600 + $0.50 per machine
income statement except the: hour Operating budgets for the current year
Cash budget. are based upon 30,000 hours of planned
machine time.
 Indirect labor costs included in this
planning budget are:
Question 16. The normal capacity of Yule
$15,800 Company is 5,000 units per month. At this
volume, budgeted fixed and variable factory
$15,000 overhead are $22.500 and $20,000,
$189,600 respectively. In December, actual production
was 4.500 units and actual overhead
$24,600 incurred was $48,300.
What is the factory overhead
application rate at the actual level of
Question 13. O'Reilly Outfitters Inc. has
forecasted sales of 32,000 tents for the production (rounded to the nearest penny)?
upcoming year. The anticipated finished $8.50
goods inventory at January 1 is 5,000 units,
but management desires this inventory level $10.28
to be reduced by 20% on December 31. $9.00
Compute the production budget for $9.21
the upcoming year.
30,000
Question 17. How much will be the cast of
31,000 goods sold budget for the S Company for the
33,000 upcoming year from the following estimates?

34,000 Inventories:
Direct Work in Finished

Question 14. Cooper Carriers has budgeted Materials Process Goods

production of 180,000 units this fiscal year. January 1 22,600 32,500 50,200
There were 10, 000 units on hand in finished
goods inventory on January 1 and the December 31, 31,400 30,400 48,300
company's desired inventory at the end of
the year is 15.000 units.
Cooper's sales budget in units is: Totals from other budgets

183,000 Direct materials purchased $234,500

165,000 Direct labor 192,600

192.000 Factory overhead 185,700

177,000 $614,700
$608,000

Question 15. Hola Company has the $612,800

following totals from its operating budgets $616,800
for the month:
Cost of goods sold $1,967,000
Question 18. Pinecroft Company
Sales 2,530,000 manufactures one product that requires 4
Selling and administrative hours of machining direct labor and 3 hours
of assembly direct labor. The standard labor
expenses 322,000 rate is $20.00 per direct labor hour in the
Machining Department and $16.00 per direct
How much is the budgeted income labor hour in the Assembly Department The
for the month assuming a 30% income tax product has forecasted sales of 3, 000 units
rate? in July The estimated finished goods
$241,000 inventory at July 1 is 300 units and the
desired ending inventory at July 31 is 400
$168,700 units.
$172,143
$563,000
 Compute for the direct labor budget
for the month.
$384.000
$396,800
$730,800
$371,200

Question 19. Brazil Co. plans to produce

100,000 toy cars during June. Planned
production for July is 125,000 cars Sales are
forecasted at 90,000 toy cars for June and
120,000 toy cars for July. Each toy car
requires four wheels Brazil's policy is to
maintain a 10% of the next month's
production in inventory at the end of the
month. How many wheels should Brazil
purchase during June?
390,000
410,000
400,000
360.000

Question 20. Lunchco inc produces picnic

tables in a two-step process. Pretreated
wood in cut in the Cutting Department and
then the lumber is assembled into tables in
the Assembly Department. It takes 10
minutes of direct labor time to cut the lumber
and the standard hourly labor rate in the
Cutting Department is $12. The tables take
one hour to assemble and the standard
hourly rate in the Assembly Department is
$11. If Lunchco's production budget is
20,000 what is the company's direct labor
budget?
$240,000
$260,000
$340,000
$320.000
 7TH QUIZ _ CH1 AND 2 _ SCM

Question 1. Cost-volume-profit analysis Question 9. The rate or amount that sales

includes some simplifying assumptions. may decline before losses are incurred is
Which of the following is not one of these called
assumptions?
Margin of Safety
Sales mix changes are irrelevant.

Question 10. CVP is a key factor in many

Question 2. At the break-even-point, fixed decisions, including choice of product lines,
cost is always pricing of products, marketing strategy, and
utilization of product facilities. A calculation
equal to the contribution margin used in CVP Analysis is the break-even point.
Once the break-even point has been
reached, operating income will increase by
Question 3. A technique that uses the the:
degrees of cost variability to measure the
effect of changes in volume on resulting contribution margin per unit for each
profits is; additional unit sold

Cost-volume-profit analysis
Question 11. Under variable manufacturing
overhead is:
Question 4. Which of the following
assumptions does not pertain to cost- expensed immediately when incurred
volume-profit analysis?
sales mix may vary during the related period Question 12. The excess of revenue over
variable costs, including manufacturing
selling and administrative costs, is called:
Question 5. Which of the following is
involved in studying cost-volume-profit Contribution margin
relationship?
variable costs Question 13. If the selling price and the
fixed costs variable cost per unit both increase 10
percent and fixed costs do not change, what
product mix is the effect on the contribution margin per
all of the given choices unit?
Contribution margin per unit increases

Question 6. Following are the uses of CVP

analysis, except: Question 14. What costs are treated as
product costs under direct costing?
Analyze cash flows
Only variable manufacturing costs

Question 7. The indicator that results in

total revenues being equal to total cost is Question 15. What is the difference
called the? between competition?
break-even point In perfect competition, firms produce
identical goods, while in monopolistic
competition, firms produce slightly different
Question 8. Each of the following would goods.
affect the break-even point except a change
in the:
Number of units sold
Question 16. Which of the following is true Question 22. Ayo Corporation has sales of
about absorption costing? $200,000, a contribution margin of 20%, and
a margin of safety of $80,000 What is Ayo's
Income is higher if the production is greater fixed cost?
than the sales
$16,000
$80,000
Question 17. What factor related to
manufacturing costs causes the difference in $96,000
net earnings computed using absorption
costing and net earnings computed using $24,000
variable costing?
Absorption costing allocates fixed Question 23.
manufacturing costs between cost of goods
sold and inventories, and variable costing Question 24. The Blue Saints Band is
considers all fixed costs to be period costs. holding a concert in Toronto. Fixed costs
relating to staging a concert are $350,000.
Variable costs per patron are $10.00. The
Question 18. What is the pricing method selling price for a tickets $30.00. The Blue
that focuses on eliminating non-value-added Saints Band has sold 23,000 tickets so far.
costs? How many tickets does the Blue
Target costing Saints Band need to sell to break even?
17,500

Question 19. The contribution margin 14,000

format income statement is organized by 23,000
cost behavior classifications 20,000

Question 20. Net income reported under Question 25. A company has fixed costs of
variable costing will exceed net income $700,000. The selling price and variable cost
reported under absorption costing for a given per unit are $50.,00, and $10.00,
period if: respectively.
Sales exceed production for that period. How many units does the company
need to sell to achieve net income of
$100,000 after income tax, assuming the
Question 21. Vandenberg, Inc. produces income tax rate is 50%?
and sell two products: a ceiling fan and a
table fan Vandenberg plans to sell 30,000 2,500
ceiling fans and 70, 000 table fans in the 17,500
coming year. Product price and cost
information includes 25,000

Ceiling Fan Table Fan 22,500

Price $60 $15

Unit variable cost $12 $7 Question 26. Consider the following
information about the Gumm Company:
Direct fix cost $23,600 $45,000
Budgeted Unit Sales Unit Variable
Common fixed selling and administrative
expenses total $85,000. Sales Price Cost
Mint gum 6,000 $5.00 $3.00

How many ceiling fans are sold at cases

break-even? Bubble gum 4,000 $6.00 $3.50
192.000 units
cases
29,500 units
5,376 units
2,304 units
 Budgeted fixed costs are $550,000 Question 30. Using the following data as
Compute the break-even units for bubble follows
gum.
Direct materials $ 90,000
125,000 cases
Direct labor 120,000
100,000 cases
Variable factory overhead 60,000
150,000 cases
Fixed factory overhead 150,000
250,000 cases
Fixed marketing and
administrative expense 180.000
Question 27. Kehler Corporation wished to
market a new product for $2.00 a unit Fixed The factory produced 80,000 units
costs to manufacture this product are during the period and 70,000 units were sold
$100,000. The contribution margin is 40 for $700,000. How much is the contribution
percent. How many units must be sold to margin?
realize net income of $140,000 from this $463,750
product?
$380,000
450,000
$332,500
300,000
$430,000
250,000
600,000
Question 31. Using the following data as
follows
Question 28. Consider the income Direct materials $ 90,000
statement for Pickbury Farm:
Direct labor 120,000
Sales $500,000
Variable factory overhead 60,000
Variable costs 350,000
Fixed factory overhead 150,000
Contribution
Fixed marketing and
margin 150,000
administrative expense 180.000
Fized costs 80,000
The factory produced 80,000 units
Net income $70,000 during the period and 70,000 units were sold
What is the margin of safety ratio (to for $700,000. How much is the net income
the nearest percentage point)? using absorption costing?

88% $100,000

70% $152,500

47% $133,750

30% $175,000

Question 29. Queen, Ltd. has one product.

Its sales price and variable cost per unit are
$25 and $20, respectively. Last year, Queen
sold 25,000 units. which was 5,000 more
than the break-even point. What were
Queen's fixed expenses?
$125,000
$300.000
$100,000
There is not enough information to answer
the question
Question 32. Banwood Company has the Question 34. The following production data
following for 2019: come from the records of Olympic
Enterprises for the year ended December 31,
Selling price $150 per unit 2019.
Variable production Direct materials $ 480,000
costs $40 per unit produced Direct labor 260,000
Variable selling and Variable factory overhead 44,000
admin expenses $16 per unit sold Fixed factory overhead 36,800
Fixed production Fixed selling expense 35,000
costs $200,000 During the year 40, 000 units were
Fixed selling and manufactured but only 35,000 units were
sold for $25 each. How much is the gross
admin expenses $140,000 profit?
Units produced 10,000 units $117,200
Units sold 8.000 units $121,800
What is the mark up based on cost of $156,800
goods sold?
$189,000
250%
100%
Question 35. A company had income of
150% $50,000 using variable costing for a given
50% period. Beginning and ending inventories for
the period were 18,000 units and 13, 000
units, respectively. If the fixed overhead
application rate was $2 per unit, what was
Question 33. Mobile, Inc., manufactured the net income, using absorption costing?
700 units of Product A, a new product, during
the year. Product A's variable and fixed $60.000
manufacturing costs per unit were $6.00 and
$2.00, respectively. The inventory of Product $45,000
A on December 31 of the year consisted of $55,000
100 units. There was no inventory of Product
A on January 1 of the year. What would be $40,000
the change in the dollar amount of inventory
on December 31 it variable costing were
used instead of absorption costing?
$800 decrease
$600 decrease
$200 decrease
$200 increase