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Question 1. 1.
(TCO 5) Flipping Tidley Works’ production budget for the year ended November 2012 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total O/H was budgeted at $900,000 for the year, and the fixed O/H rate was estimated to be $3.00 per unit. Both fixed and variable O/H are assigned to the product on the basis of direct labor hours. Moreover, Flipping analyzes O/H variances on a four-way basis. The actual data for the year ended November 30, 2012 are presented below.
Actual production in units198,000
Actual direct labor hours440,000
Actual variable O/H$352,000
Actual fixed O/H$575,000
Flipping’s variable O/H efficiency variance for the year is
(Points : 11)
$33,000 unfavorable.
$35,520 favorable.
$66,000 unfavorable.
$33,000 favorable.
Question 2. 2. (TCO 5) Multiple or departmental manufacturing overhead rates are considered preferable to a single or plant-wide overhead rate when (Points : 11)
manufacturing is limited to a single product flowing through identical departments in a fixed sequence.
various products are manufactured that do not pass through the same departments or use the same manufacturing techniques.
individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships.
the single or plant-wide rate is related to several identified cost drivers.
Question 3. 3.
(TCO 1) An examination of Boener Company’s past maintenance records disclosed the following costs and volume measures the following.
HighestLowest
Cost per month$39,200$32,000
Machine hours24,00015,000
Using the high-low technique, estimate the annual fixed cost for maintenance expenditures.
(Points : 11)
$447,360
$384,000
$240,000
$230,400
Question 4. 4.
(TCO 1) Serendipity Co. uses regression analysis to develop a model for prediction overhead costs. Two different cost drivers (machine hours and direct materials weight) are under consideration as the independent variable. Relevant data were run on a computer using one of the standard regression programs, with the following results.
Machine hoursCoefficient
Y intercept2,500
B5.0
r-squared = .70
Direct materials weight
Y intercept4,600
B2.6
r-squared = .50
Which regression equation should be used?
(Points : 11)
y = 2.500 + 5.0x
y = 2500 + 3.5x
y = 4,600 + 2.6x
y = 4,600 + 1.3x
Question 5. 5. (TCO 2) Relevant or differential cost analysis (Points : 11)
takes all variable and fixed costs into account to analyze decision alternatives.
considers only variable costs as they change with each decision alternative.
considers the change in reported net income for each alternative to arrive at the optimum decision for the company.
considers all variable and fixed costs as they change with each decision alternative.
Question 6. 6. (TCO 2) When only differential manufacturing costs are taken into account for special-order pricing, an essential assumption is that (Points : 11)
manufacturing fixed and variable costs are linear.
selling and administrative fixed and variable costs are linear.
acceptance of the order will not affect regular sales.
acceptance of the order will not cause unit selling and administrative variable costs to increase.
Question 7. 7.
(TCO 5) Janice Foeld Company manufactures part Z for use in its production cycle. The costs per unit for 10,000 units of part Z are as follows.
Direct materials$3
Direct labor15
Variable overhead6
Fixed overhead8
TOTAL$32
Baloney Company has offered to sell Janice Foeld 10,000 units of part Z for $30 per unit. If Janice Foeld accepts Baloney’s offer, the released facilities can be used to save $45,000 in relevant costs in the manufacture of part A. In addition, $5 per unit of the fixed overhead applied to part Z would be totally eliminated.
The total relevant costs to buy part Z are
(Points : 11)
$320,000.
$300,000.
$290,000.
$255,000.
Question 8. 8. (TCO 2) Bieber Company has excess capacity on two machines, 24 hours on Machine 105 and 16 hours on Machine 107. To use this excess capacity, the company has two products, known as Product D and Product F, that must use both machines in manufacturing. Both have excess product demand, and the company can sell as many units as it can manufacture. The company’s objective is to maximize profits.
Product D has an incremental profit of $6 per unit, and each unit utilizes 2 hours of time on Machine 105 and then 2 hours of time on Machine 107. Product F has an incremental profit of $7 per unit, and each unit utilizes 3 hours of time on Machine 105 and then 1 hour of time on machine 107. Let D be the number of units for Product D, F be the number of units for product F, and P be the company’s profit.
The objective function for Bieber Company is (Points : 11)
P = 4D + 4F < 40.
P = 2D + 3F < 24.
P = 2D + F < 16.
P = $6D + $7F.
Question 9. 9. (TCO 4) Which of the following criteria would be most useful to a sales department manager in evaluating the performance of the manager’s customer service group? (Points : 11)
The customer is always right.
Customer complaints should be processed promptly.
Employees should maintain a positive attitude when dealing with customers.
All customer inquiries should be answered within 7 days of receipt.
Question 10. 10. (TCO 6) The market share variance equals (Points : 11)
actual units x (budgeted weighted-average unit contribution margin for planned mix – budgeted weighted-average UCM for actual mix).
(actual units – master budget units) x budgeted weighted-average UCM for the planned mix.
budgeted market share percentage x (actual market size in units – budgeted market size in units) x budgeted weighted-average UCM.
(actual market share percentage – budgeted market share percentage) x actual market size in units x budgeted weighted-average UCM.
Question 11. 11.
(TCO 6) The following are relevant data for calculating sales variances for Lumber Co., which sells its sole product in two countries.
John Quincy Total
Budgeted selling price per unit$6.00$10.00NA
Budgeted variable cost per unit 3.007.50NA
Budgeted contribution margin per unit$3.00$ 2.50NA
Budgeted unit sales300200500
Budgeted mix percentage60%40%100%
Actual units sold260260520
Actual selling price per unit$6.00$9.50NA
The sales mix variance for John and Quincy is
(Points : 11)
$156 U.
$26 U.
$56 F.
$150 F.
Question 12. 12. (TCO 4) In a quality control program, which of the following is (are) categorized as internal failure costs?
I. Rework
II. Responding to customer complaints
III. Statistical quality control procedures (Points : 11)
I only
II only
III only
I, II, and III
Question 13. 13. (TCO 6) For a single-product company, the sales volume variance is (Points : 11)
the difference between actual and master budget sales volume, times actual unit contribution margin.
the difference between flexible budget and actual sales volume, times master budget unit contribution margin.
the difference between flexible budget and master budget sales volume, times actual budget unit contribution margin.
the difference between flexible budget and master budget sales volume, times master budget unit contribution margin.
Question 14. 14. (TCO 5) Variable factory overhead is applied on the basis of standard direct labor hours. If, for a given period, the direct labor efficiency variance is unfavorable, the variable factory overhead efficiency variance will be (Points : 11)
favorable.
unfavorable.
zero.
the same amount as the labor efficiency variance.
Question 15. 15. (TCO 1) Which of the following may be scheduled in production planning by the use of learning curves? (Points : 11)
Purchase of materials
Subassembly production
Delivery dates of finished products
All of the answers are correct.
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