ink pens custom boot maker soda pop horse saddles question 3 B u s i n e s s F i n a n c e

Which cost is a period cost?
(Points : 5)
Depreciation of factory equipment
Transportation-in for raw material
Patent amortization for the company’s product
Depreciation of office equipment

Question 2.
2.
(TCO 2) Which product would use job-order costing?
(Points : 5)

Ink pens
Custom boot maker
Soda pop
Horse saddles

Question 3.
3.
(TCO 3) In a process costing system, which would be TRUE?
(Points : 5)

There is no need to use time tickets to assign costs to processes.
There is no need to track materials to processes.
A process costing system is more expensive to maintain because it has more work-in-process accounts.
All of the above

Question 4.
4.
(TCO 8) A
company keeps 60 days of materials inventory on hand to avoid shutdowns
due to materials shortages. Carrying costs average $5,000 per day. A
competitor keeps 30 days of inventory on hand, and the competitor’s
carrying costs average $2,000 per day. The non-value-added costs for the
company are
(Points : 5)

$300,000.
$150,000.
$60,000.
$0.

Question 5.
5.
(TCO 8) Which is an example of a non-value-added manufacturing activity?
(Points : 5)

Assembly
Scheduling
Finishing
All of the above are value-added activities.

Question 6.
6.
(TCO 1) The break-even point is
(Points : 5)

the volume of activity where all fixed costs are recovered.
where fixed costs equal total variable costs.
where total revenues equal total costs.
where total costs equal total contribution margin.

Question 7.
7.
(TCO 1) Lewis Production Company had the following projected information for 2010.
Selling price per unit $150
Variable cost per unit $90
Total fixed costs $300,000

Which is the break-even point in units?
(Points : 5)

2,000 units
5,000 units
3,333 units
60,000 units

Question 8.
8.
(TCO 7) Which cost category would most likely use the number of employees or new hires as its activity driver?
(Points : 5)

Maintenance
Purchasing
Personnel
Accounting

Question 9.
9.
(TCO 7)
Yo Department Store incurred $8,000 of indirect advertising costs for
its operations. The following data have been collected for 2013 for its
three departments.

Shoes	Cosmetics	Crafts
Sales	$120,000	$100,000	$100,000
Direct advertising costs	$9,000	$7,000	$4,000
Newspaper ad space	60%	20%	20%

How much of the indirect advertising costs will be
allocated to the Crafts Department if newspaper ad space is the activity
driver?
(Points : 5)

$8,000
$1,600
$800
$6,400

Question 10.
10.
(TCO 5) When budgets are used for control,
(Points : 5)

budgeted amounts from different years are compared.
actual amounts from different years are compared.
budgeted amounts are compared to actual amounts.
None of the above

Question 11.
11.
(TCO 5)
Canceco Company produces and sells pillows. It expects to sell 10,000
pillows in the year 2014 and had 1,000 pillows in finished goods
inventory at the end of 2013. Canceco would like to complete operations
in the year 2014 with at least 1,250 completed pillows in inventory.
There is no ending work-in-process inventory. The pillows sell for $5
each.
How many pillows would be produced in the year 2014?
(Points : 5)

10,000 pillows
11,000 pillows
11,250 pillows
10,250 pillows

Question 12.
12.
(TCO 4) Which is the primary difference between variable and absorption costing?
(Points : 5)

Inclusion of fixed selling expenses in product costs
Inclusion of variable factory overhead in period costs
Inclusion of fixed selling expenses in period costs
Inclusion of fixed factory overhead in product costs

Question 13.
13.
(TCO6) Which factor would cause an UNFAVORABLE material quantity variance?
(Points : 5)

Using poorly maintained machinery
Using higher quality materials
Using more highly skilled workers
Receiving discounts for purchasing larger-than-normal quantities

Question 14.
14.
(TCO 6) Which equation measures the direct labor rate variance?
(Points : 5)

(SR * AH) – (SR * SH).
(AR * SH) – (SR * AH).
(AR * AH) – (SR * AH).
None of the above

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