55 MCQ Which one of the following is an example of a period cost

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Question 1 (2 points)

Which one of the following is an example of a period cost?
Question 1 options:
A box cost associated with computers.
A change in benefits for the union workers who work in the New York plant of a Fortune 500 manufacturer.
Workers’ compensation insurance of factory workers’ wages allocated to the factory.
A manager’s salary for work that is done in the corporate head office.
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Question 2 (2 points)

Debbie Company manufactures a product requiring 2 pounds of direct material. During 2009, Debbie purchases 24,000 pounds of material for $74,400 when the standard price per pound is $3. During 2009, Debbie uses 22,000 pounds to make 12,000 products. The standard direct material cost per unit of finished product is
Question 2 options:
$6.40
$6.76
$6.20
$6.00
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Question 3 (2 points)

A company projects an increase in net income of $90,000 each year for the next 5 years if it invests $450,000 in new equipment. The new equipment has a 5 year life and an estimated salvage value of $150,000. What is the annual rate of return on this investment?
Question 3 options:
30%
20%
25%
50%
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Question 4 (2 points)

Which one of the following is not a manufacturing cost?
Question 4 options:
direct labor
advertising costs
direct labor
manufacturing overhead
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Question 5 (2 points)

The job cost sheets represent which account?
Question 5 options:
work in process inventory
cost of goods manufactured
cost of goods sold
finished goods inventory
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Question 6 (2 points)

Which of the following is not part of managerial accounting?
Question 6 options:
Controlling costs
Calculating product costs
Determining whether planned goals are being met
Reporting financial information to the shareholders
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Question 7 (2 points)

The following information is available for completed job #402: direct materials, $60000; direct labor, $90000; manufacturing overhead applied, $45000; units produced 5000 units; units sold 4000 units. The cost of the finished goods on hand from this job is
Question 7 options:
39000
156000
30000
195000
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Question 8 (2 points)

Hardigan Manufacturing Company reported the following year-end information: beginning work in process inventory, $80000, cost of goods manufactured, $980000, beginning finished goods inventory, $50000, ending work in process inventory, $70000, and ending finished goods inventory, $40000. How much is Hardigan’s cost of goods sold for the year?
Question 8 options:
970000
980000
990000
1000000
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Question 9 (2 points)

At the beginning of the year, Monroe Company estimates annual overhead cost to be $1,500,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is
Question 9 options:
1050000
1575000
1500000
1428572
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Question 10 (2 points)

Which one of the following is an important feature of a job order cost system?
Question 10 options:
Each consists of features which distinguish it from the next.
Each job uses similar processes to produce.
Each must be completed before a new product order is accepted.
Each job has characteristics similar to the next.

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Question 11 (2 points)

At the high level of activity in November 7,000 machine hours were run and power costs were $12,000. In April a month of low activity 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, the estimated fixed cost element of power cost is
Question 11 options:
3600
6000
12000
8400
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Question 12 (2 points)

If a company had a contribution margin of $500,000 and contribution margin ratio of 40%, total variable costs must have been
Question 12 options:
300000
200000
750000
1250000
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Question 13 (2 points)

A company sells a product which has a unit sales price of $5.00, unit variable cost of $3.00 and total fixed costs of $120,000. The number of units the company must sell to break-even is
Question 13 options:
240000 units
24000 units
60000 units
40000 units
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Question 14 (2 points)

Kone Company sells two types of computer chips. The sales mix is 30% (Q-chip) and 70% (Q-chip +). Q-chip has variable cost per unit of $30 and a selling price of $50. Q-chip + has variable cost per unit of $35 and a selling price of $65. The weighted average unit contribution margin for Kone is

Question 14 options:
$50
$23
$27
$25
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Question 15 (2 points)

Vektek Inc. thinks machine hours is the best the activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $615000. The company used 1,000 hours of processing on job #B12 during the period and incurred overhead costs totaling $630000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to job #B12?
Question 15 options:
31500
630
30750
615
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Question 16 (2 points)

Forde Company sales is $500,000, variable expenses are $310,000, and fixed expenses are $140,000. Forde’s contribution margin ratio is
Question 16 options:
62%
10%
28%
38%
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Question 17 (2 points)

Which of the following is not typical of traditional costing systems?
Question 17 options:
Assumption of correlation between direct labor and incurrence of overhead costs.
Use of direct labor hours or direct labor cost to assign overhead.
Use of multiple cost drivers to allocate overhead.
Use of a single predetermined overhead rate.
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Question 18 (2 points)

In 2008, Micdougal sold 3,000 units at $500 each. Variable expenses were $350 per unit and fixed expenses were $195,000. The same variable expenses per unit and fixed expenses are expected for 2009. If Micdougal cuts selling price by 4%, what is Micdougal’s break-even point in units for 2009?
Question 18 options:
1500
1444
1354
1300
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Question 19 (2 points)

Which one of the following accounts would not appear in the cost of goods manufactured statement?
Question 19 options:
ending work in process inventory
ending finished goods inventory
direct labor
raw materials inventory
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Question 20 (2 points)

What are the two compenents of a predetermined overhead rate?
Question 20 options:
estimated annual costs and actual activity
estimated annual costs and expected annual activity
actual monthly costs and actual annual activity
estimated monthly costs and actual monthly activity
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Question 21 (2 points)

Burhler’s CVP income statement includes sales of 2000 units, a selling price of $100 per unit, variable expenses of $60 per unit and fixed expenses of $44,000. Net income is
Question 21 options:
80000
200000
76000
36000
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Question 22 (2 points)

Which would be an appropriate cost driver for the ordering and receiving activity cost pool?
Question 22 options:
inspections
machine setups
machine hours
purchase orders

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Question 23 (2 points)

An activity that has a direct cause-effect relationship with the resources consumed is a(n)
Question 23 options:
cost pool
overhead rate
cost driver
product activity
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Question 24 (2 points)

Which one of the following is a cost which remains constant in total at various levels of activity?
Question 24 options:
a contribution margin
a fixed cost
a mixed cost
a variable cost
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Question 25 (2 points)

Which statement below describes a variable cost?
Question 25 options:
It varies directly per unit with changes in the level of activity. It varies opposite in total with changes in the level of activity. It remains constant in total over different levels of activity. It varies per unit with changes in the level of activity.

None of the above are correct:
Variable Cost per unit remains constant.
It varies in total (directly) with changes in the level of activity.

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Question 26 (2 points)

Which one of the following describes the break-even point?
Question 26 options:
It is the point where total sales equals total variable plus total fixed costs.
It is the point where the contribution margin equals zero.
It is the point where total sales equals total fixed costs.
It is the point where total variable costs equal total fixed costs.
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Question 27 (2 points)

Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one time opportunity to sell an additional 2,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order?
Question 27 options:
$10000
$84000
$26000
$40000
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Question 28 (2 points)

A company has a process that results in 15,000 pounds of Product X that can be sold for $8 per pound. An alternative would be to process Product X further at a cost of $100,000 and then sell it for $14 per pound. Should management sell Product X now or should Product X be processed further and then sold?
Question 28 options:
Sell now, the company will be better off by $100,000.
Process further, the company will be better off by $10,000.
Process further, the company will be better off by $90,000.
Sell now, the company will be better off by $10,000.
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Question 29 (2 points)

Which one of the following is not a benefit of budgeting?
Question 29 options:
It requires all levels of management to plan ahead on a recurring basis.
It facilitates the coordination of activities.
It provides assurance that the company will achieve its objectives.
It provides definite objectives for evaluation performance.
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Question 30 (2 points)

Which one of the following items would never appear on a cash budget?
Question 30 options:
depreciation expense
cash received from customers
delivery expense
cost of material purchases
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Question 31 (2 points)

Cola Company manufactures a product with a standard direct labor cost of 2 hours at $24 per hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor quantity variance was
Question 31 options:
4880 F
4800 U
3280 U
4880 U

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Question 32 (2 points)

A company budgeted unit sales of 102,000 units for January 2008 and 120,000 units for February 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month’s budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January 2008 in order for the company to meet its goal?
Question 32 options:
96600 units
138000 units
102000 units
107400 units
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Question 33 (2 points)

Reed Merchandising Company expects to purchase $90,000 of materials in July and $105,000 of materials in August. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for the month following the month of purchase. How much will August’s cash disbursements for material purchases be?
Question 33 options:
$101250
$105000
$78750
$67500
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Question 34 (2 points)

What exists when budgeted costs exceed actual results?
Question 34 options:
an excess profit
an unfavorable difference
a favorable difference
a budgeting error
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Question 35 (2 points)

The Srane Company has contacted Trell with an offer to sell it 5,000 wickets for $36 each. If Trell makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Trell make or buy the wickets?
Question 35 options:
Buy; savings is $20,000.
Buy; savings is $50,000.
Make; savings is $40,000.
Make; savings is $20,000.
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Question 36 (2 points)

Why is the sales budget the single most important source in preparing budgets?
Question 36 options:
It is the only budget that requires estimates.
It enables the company to determine the unit cost of products.
It is the best determination of profitability of a company.
All the other budgets depend on it.
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Question 37 (2 points)

Trip Manufacturing Company prepared a static budget of 40,000 direct labor hours, with estimated overhead cost of $200,000 for variable overhead and $60,000 for fixed overhead. Trip then prepared a flexible budget at 38,000 labor hours. How much is total overhead cost at this level of activity
Question 37 options:
$190000
$250000
$247000
$260000

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Question 38 (2 points)

Womgh Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is: $48,000 variable and $135,000 fixed. IF Womgh had actual overhead cost of $187,500 for 9,000 units produced, what is the difference between actual and budgeted costs?
Question 38 options:
$1500 favorable
$6000 favorable
$1500 unfavorable
$4500 unfavorable
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Question 39 (2 points)

A standard cost is
Question 39 options:
the average cost in an industry.
the current cost of producing a product.
a cost which is paid for a group of similar products.
a predetermined cost.
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Question 40 (2 points)

An unfavorable materials quantity variance would occur if
Question 40 options:
actual pounds of materials used were greater than the standard pounds allowed.
actual pounds of materials used were less than the standard pounds allowed.
actual labor hours used were greater than the standard labor hours allowed.
more materials are purchased than are used.

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Question 41 (2 points)

CIB Inc. produces a product requiring 4 pounds of material costing $2.50 per pound. During December, CIB purchased 4,200 pounds of material for $10,080 and used the material to produce 500 products. What was the materials price variance for December?
Question 41 options:
480 U
80 U
400 F
420 F
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Question 42 (2 points)

Labor efficiency is measured by the
Question 42 options:
labor rate variance
labor quantity variance
total labor variance
materials quantity variance
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Question 43 (2 points)

Sorrento Company’s plant is operating at less than full capacity. The company just received a one-time opportunity to accept an order to a special price below its usual price. The special price exceeds its variable costs. Which statement is true?
Question 43 options:
Sorrento should expand its plant capacity before accepting the order.
The order will be rejected.
The order will be accepted.
Fixed cost are relevant.
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Question 44 (2 points)

Which statement is true of an opportunity cost?
Question 44 options:
It is the potential benefit as a result of following an alternative course of action.
It is the cost of a special order option.
It is a variable cost.
It reduces the possibility of accepting a particular course of action.
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Question 45 (2 points)

Capital budgeting is the process
Question 45 options:
of making capital expenditure decisions.
of eliminating unprofitable product lines.
of determining how much capital stock to issue.
used in sell or process further decisions.
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Question 46 (2 points)

The primary capital budgeting method that uses discounted cash flow techniques is the
Question 46 options:
cash payback technique.
annual rate of return method.
profitability index method.
net present value method.
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Question 47 (2 points)

The internal rate of return is the interest rate that results in a
Question 47 options:
negative net present value.
either a positive or negative net present value.
positive net present value.
zero net present value.
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Question 48 (2 points)

Bark Company is considering buying a machine for $180,000 with an estimated life of 10 years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $12,000 each year. The cash payback period on this investment is
Question 48 options:
6 years
15 years
10 years
3 years
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Question 49 (2 points)

A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $75,000 and is expected to generate cash inflows of $30,000 at the end of each year for 3 years. The profitability index for this project is
Question 49 options:
.99
1.00
1.20
1.01
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Question 50 (2 points)

A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for 3 years. The net present value of this project is
Question 50 options:
$17718
$35000
$177170
$2170
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Question 51 (2 points)

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?
Question 51 options:
direct labor cost
variable manufacturing overhead
indirect labor cost
fixed manufacturing overhead
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Question 52 (2 points)

Cola Company manufactures a product with a standard direct labor cost of 2 hours at $24 per hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor price variance was
Question 52 options:
6480 U
4800 U
1680 U
6480 F
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Question 53 (2 points)

Hazel Company has just purchased equipment that requires annual payments of $20,000 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15%. What is the present value of the payments?
Question 53 options:
$57,099.60
$80,000.00
$23,478.28
$75,067.12
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Question 54 (2 points)

The amount you must deposit now in your savings account, paying 5% interest, in order to accumulate $4,000 for your first tuition payment when you start college in 3 years is
Question 54 options:
$3400.00
$3455.35
$3132.00
$3543.84
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Question 55 (2 points)

If $10,000 is deposited in a saving account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years?
Question 55 options:
$16,288.92
$105,000.00
$150,000.00
$125,788.92
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