1. When Dimock Construction’s Designer House #10 is completed, Dimock’s
A) work in process is increased.
B) total assets are increased.
C) work in process is decreased.
D) total assets are decreased.
2. The total of the dollar amounts on the job order cost cards that have not been completed would be equal to the
A) cost of goods completed.
B) balance in the Finished Goods Inventory account.
C) Cost of Goods Sold account.
D) balance in the Work in Process Inventory account.
3. Costs assigned to the building of a house should appear on the income statement when
A) the house is completed.
B) the house is sold.
C) the purchase order to manufacture the house is received.
D) cash is collected for the sale of the house.
4. The basic document for keeping track of costs in a job order costing system is a
A) job order cost card.
B) labor time card.
C) process cost report.
D) materials requisition form.
5. Under a job order costing system, the dollar amount of the entry involved in the transfer of goods from work in process to finished goods is the total of the costs charged to all jobs
A) started during the period.
B) completed and sold during the period.
C) completed during the period.
D) started and completed during the period.
6. The balance in the Work in Process Inventory account on April 1 was $27,600, and the balance on April 30 was $22,600. Costs incurred during the month were as follows: direct materials, $41,250; direct labor, $21,300; and overhead, $32,600. What amount was transferred to the Finished Goods Inventory account for April?
7. Actual overhead during the year was more than applied overhead. If the amount is immaterial, what is the journal entry to close the Overhead account for the difference?
A) Overhead XX
Cost of Goods Sold XX
B) Cost of Goods Sold XX
C) Overhead XX
Finished Goods Inventory XX
D) Cost of Goods Sold XX
Finished Goods Inventory XX
Use the following to answer questions 8-12:
The following partially completed T accounts summarize the transactions of Carlton Company for last year:
Beg Bal 5,000 20,000 (2)
Work in Process Inventory
Beg Bal 9,000 64,700 (7)
(2) 7,000 29,000 (6)
Cost of Goods Sold
Finished Goods Inventory
Beg Bal 16,000
End Bal 13,000
5,000 Beg Bal
Sales Salaries Expense
Accumulated Depreciation (Factory)
80,000 Beg Bal
At the end of the year, the company closes out the balance in the Overhead account to Cost of Goods Sold.
8. The indirect labor cost is
9. The cost of goods manufactured is
10. The cost of goods sold (after adjusting for under- or overapplied overhead) is
11. The applied overhead is
12. The cost of direct materials used in production is
13. Which of the following activities would be part of the value chain of a manufacturer?
A) Inventory control
B) Product engineering
C) Cost accounting
D) Materials storage
14. According to the just-in-time philosophy,
A) maintaining inventories wastes resources and frequently covers up poor work or other problems.
B) push-through manufacturing flows are the most efficient.
C) inventories of finished goods should always be available to meet customer demand.
D) long production runs and large production lot sizes take advantage of economies of scale.
15. Backflush costing aims at reducing waste in the
A) accounting system.
B) cost of goods sold.
C) storage of raw materials.
D) production process.
16. For work done during August, Printing Press Company incurred direct materials costs of $120,000 and conversion costs of $260,000. The company employs a just-in-time operating philosophy and backflush costing. At the end of August, it was determined that the Work in Process Inventory account had been assigned $1,080 of costs, and the ending balance of the Finished Goods Inventory account was $1,220. There were no beginning inventory balances. What was the ending balance of the Cost of Goods Sold account for August?
17. The typical relationship between variable costs and volume may be described best as follows:
A) Costs increase in an erratic, unpredictable fashion with changes in volume.
B) Costs stay fairly constant with changes in volume.
C) Costs increase with changes in volume up to a certain point and then remain constant.
D) Costs increase in direct proportion to increases in volume.
**Assuming that costs mean total variable costs.
18. For work done during August, Printing Press Company incurred direct materials costs of $130,000 and conversion costs of $237,000. The company employs a just-in-time operating philosophy and backflush costing. At the end of August, it was determined that the Work in Process Inventory account had been assigned $1,000 of costs, and the ending balance of the Finished Goods Inventory account was $3,000. There were no beginning inventory balances. What is the Cost of Goods Sold account’s ending balance for August?
19. Which of the following costs is a variable manufacturing cost?
A) Depreciation costs computed using the straight-line method
B) Factory rent
C) President’s salary
D) Direct labor costs
20. Suppose a company rents a building for $250,000 a year for the purpose of manufacturing between 80,000 and 140,000 units (the relevant range of activity). The rental cost per unit of production will __________ as production levels increase.
A) behave in a nonlinear fashion
D) remain fixed
21. As production increases, what should you expect to happen to the fixed costs per unit?
C) Remain the same
D) Either increase or decrease, depending on the variable cost
22. Given the following cost and activity observations for Leno Enterprises’ utilities, use the high-low method to calculate Leno’s variable utilities cost per machine hour.
Cost Machine Hours
September $4,100 22,000
October 3,700 18,000
November 3,900 19,000
December 4,500 28,000
23. You have calculated, using the high-low method, a variable cost per machine hour of $0.80 for your production power costs. Power costs at 6,000 machine hours are $5,400; at 9,000 machine hours, they are $7,800. What are the total fixed costs that you would use to estimate production power costs for your company at any level within your relevant range?
24. Given the following cost and activity observations for Notwen Company’s maintenance costs, use the high-low method to calculate Notwen’s monthly fixed costs for maintenance.
Cost Units Produced
January $130,000 25,000
February 180,500 35,000
March 151,100 28,000
25. Dapper Hat Makers is in the business of designing and producing specialty hats. The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-time employees $250 per week. If the employees make 50 derbies in one week, what is the fixed cost per derby? (Round to two decimal places where necessary.)
26. Which of the following is a fixed cost?
A) Direct materials
B) Personnel manager’s salary
C) Operating supplies
D) Telephone expense
E) Direct labor
27. Retleb Manufacturing Company noticed that, during its busiest month of 20xx, maintenance costs totaled $15,400, resulting from the production of 32,000 units. During its slowest month, $12,600 in maintenance costs were incurred, resulting from the production of 24,000 units. Using the high-low method, what maintenance cost would the company expect to incur at a volume of 20,000 units?
28. During this past year, a small publishing company sold 60,000 copies of Super Travel paperbacks (its only product) at $5 per book; total fixed costs were $21,000; and total variable costs were $3 per book. What is this company’s breakeven point in units?
A) 14,700 units
B) 10,500 units
C) 42,000 units
D) 21,000 units
29. How many total dollars of sales must BAC Company sell to break even if the selling price per unit is $8.50, variable costs are $4.00 per unit, and fixed costs are $9,000?
30. How many units must BAC Company sell to break even if the selling price per unit is $8.50, variable costs are $4.00 per unit, and fixed costs are $9,000?
31. Field Legal Services is trying to determine the variable and fixed elements of its service overhead. The following data have been collected from recent activity:
Total Service Overhead Cases Worked
March $22,900 112
April 20,800 98
May 26,400 138
The formula for total service overhead costs is
A) $5,600 + $140 per case.
B) $5,600 + $40 per case.
C) $7,823 + $134.62 per case.
D) $7,080 + $140 per case.
32. Dilly LLC, wants to make a profit of $30,000. It has variable costs of $85 per unit and fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold?
33. Walton’s Warehouse reported sales of $640,000, a contribution margin of $8 per unit, fixed costs of $314,000, and a profit of $70,000. How many units did Walton’s Warehouse sell?
A) 8,750 units
B) 28,375 units
C) 48,000 units
D) 67,625 units
34. For every unit that a company produces and sells above the breakeven point, its profitability is improved (ignoring taxes) by the unit’s
A) gross margin.
B) selling price minus fixed cost.
C) variable cost.
D) contribution margin.
35. Excerpts from a cost-volume-profit analysis indicate fixed costs of $50,000, a contribution margin per unit of $35, a selling price of $90, and a sales level of 4,000 units. What must be the targeted level of profit?
36. Dick Sports, Inc.’s, income statement data for last year is as follows:
Sales revenue $200,000
Variable costs 140,000
Fixed costs 30,000
Operating income 18,000
What is Dick’s breakeven point in dollars?
Use the following to answer questions 37-38:
SHARE is trying to determine how many clients must be serviced in order to cover its monthly service overhead. Using the high-low method, it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000.
37. Assuming an average fee of $1,200 per client, the breakeven point per month is
A) 35 clients.
B) 80 clients.
C) 70 clients.
D) 55 clients.
38. Assuming an average fee of $1,400 per client and a targeted profit of $26,000, the number of clients to be serviced is
A) 80 clients.
B) 120 clients.
C) 47 clients.
D) 90 clients.
39. Excerpts from a cost-volume-profit analysis indicate fixed costs of $30,000, a variable cost per unit of $36, a selling price of $60, and a sales level of $125,000. The targeted level of profit must be
40. If fixed costs are $80,000, the contribution margin is $25 per unit, and the targeted profit is $30,000, then the required unit sales are
A) 4,400 units.
B) 2,000 units.
C) 4,500 units.
D) 2,500 units.