ACCT Quiz 4 – 45 Questions

Question 1 (1 point)

A responsibility center that incurs costs (and expenses) and generates revenues is classified as a(n):

profit center.

cost center.

revenue center.

investment center.

Question 2 (1 point)

The most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center is:

controllable margin.

contribution net income.

contribution gross profit.

contribution margin.

Question 3 (1 point)

Marley Corporation desires to earn target net income of $180,000. If the selling price per unit is $30, unit variable cost is $24, and total fixed costs are $720,000, the number of units that the company must sell to earn its target net income is:

90,000.

60,000.

150,000.

120,000.

Question 4 (1 point)

Oscar Corporation uses a process cost accounting system. Given the following data, compute the number of units transferred out during the current period.

Beginning Work in process 10,000 units (½ complete)

Ending Work in Process 12,500 units (? complete)

Started into Production 75,000 units

85,000.

62,500.

72,500.

75,000.

Question 5 (1 point)

Pilgrim Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:

Estimated annual overhead cost $1,200,000

Actual annual overhead cost $1,150,000

Estimated machine hours 300,000

Actual machine hours 280,000

$1,200,000 applied and $30,000 overapplied.

$1,120,000 applied and $30,000 underapplied.

$1,150,000 applied and neither under- nor overapplied.

$1,120,000 applied and $30,000 overapplied.

Question 6 (1 point)

The following data has been collected for use in analyzing the behavior of maintenance costs of Sterling Corporation:

Month	Maintenance Costs	Machine Hours
January	$121,000	20,000
February	125,000	23,000
March	128,000	24,000
April	159,000	34,000
May	168,000	36,000
June	178,000	38,000
July	181,000	40,000

Using the high-low method to separate the maintenance costs into their variable and fixed cost components, these components are:

$5 per hour plus $30,000.

$5 per hour plus $20,000.

$4 per hour plus $41,000.

$3 per hour plus $61,000.

Question 7 (1 point)

Given the following data for Carlson Company, compute (A) total manufacturing costs and (B) costs of goods manufactured:

Direct materials used	$120,000	Beginning work in process	$20,000
Direct labor	50,000	Ending work in process	10,000
Manufacturing overhead	150,000	Beginning finished goods	25,000
Operating expenses	175,000	Ending finished goods	15,000

Question 7 options:

(A)	(B)
$310,000	$330,000
(A)	(B)
$330,000	$340,000
(A)	(B)
$320,000	$330,000

Question 8 (1 point)

The production cost report shows both quantities and costs. Costs are reported in three sections: (1) costs accounted for, (2) unit costs, and (3) costs charged to department. The sections are listed in the following order:

(2), (3), (1).

(2), (1), (3).

(1), (3), (2).

(1), (2), (3).

Question 9 (1 point)

The starting point of a master budget is the preparation of the:

production budget.

budgeted balance sheet.

cash budget.

sales budget.

Question 10 (1 point)

The most useful measure for evaluating the performance of the manager of an investment center is:

controllable margin.

contribution margin.

income from operations.

return on investment.

Question 11 (1 point)

The cost classification scheme most relevant to responsibility accounting is:

fixed vs. variable.

controllable vs. uncontrollable.

semivariable vs. mixed.

direct vs. indirect.

Question 12 (1 point)

Carter Company estimates its sales at 30,000 units in the first quarter and that sales will increase by 6,000 units each quarter over the year. It has, and desires, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at:

$738,000.

$508,500.

$1,023,000.

$886,500.

Question 13 (1 point)

Carter Company estimates its sales at 30,000 units in the first quarter and that sales will increase by 6,000 units each quarter over the year. It has, and desires, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Production in units for the third quarter should be budgeted at:

36,000.

43,500.

34,500.

45,750.

Question 14 (1 point)

Kemp Company incurs the following costs in producing 50,000 units of product:

Direct materials $200,000

Direct labor 100,000

Variable manufacturing overhead 200,000

Fixed manufacturing overhead 600,000

An outside supplier has offered to supply the 50,000 units at $14.00 each. All of Kemp's related variable costs, but only $400,000 of the fixed costs would be eliminated if the offer is accepted. Acceptance will result in a:

loss of $400,000.

savings of $200,000.

loss of $200,000.

savings of $400,000.

Question 15 (1 point)

To be classified as a short-term investment, an investment must meet the following criteria:

Readily Marketable	No Loss On Disposal	Intent to Convert within One Year or Operating Cycle, whichever is longer
No	No	Yes
Readily Marketable	No Loss On Disposal	Intent to Convert within One Year or Operating Cycle, whichever is longer
Yes	No	Yes
Readily Marketable	No Loss On Disposal	Intent to Convert within One Year or Operating Cycle, whichever is longer
Yes	Yes	Yes
Readily Marketable	No Loss On Disposal	Intent to Convert within One Year or Operating Cycle, whichever is longer
No	Yes	No

Question 16 (1 point)

Lyndon Company has a production process where two products result from a joint processing procedure; both can be sold immediately or processed further. Given the following additional per unit information, determine which of the products should be processed further.

Product	Allocated Joint Cost	Selling Price	Additional Processing Cost	New Selling Price
A	$50	$100	$90	$200
B	$30	$50	$25	$80

Only A.

Both A and B.

Only B.

Neither A nor B.

Question 17 (1 point)

A flexible budget:

typically uses an activity index different from that used in developing the predetermined overhead rate.

is also called a static budget.

can be prepared for sales or production budgets, but not for an operating expense budget.

can be considered a series of related static budgets.

Question 18 (1 point)

Leah Company's equipment account increased $400,000 during the period; the related accumulated depreciation increased $30,000. New equipment was purchased at a cost of $700,000 and used equipment was sold at a loss of $20,000. Depreciation expense was $100,000. Proceeds from the sale of the used equipment were:

$210,000.

$250,000.

$280,000.

$320,000.

Question 19 (1 point)

Which of the following would not be included in the operating activities section of a statement of cash flows?

Cash outflows to governments for taxes.

Cash inflows from returns on equity securities (i.e., dividends).

Cash inflows from returns on loans (i.e., interest).

Cash outflows to reacquire treasury stock.

Question 20 (1 point)

The concept of significant influence must be satisfied before which accounting method can be used by an investor?

Consolidated financial statements.

All of these answers are correct.

Cost.

Equity.

Question 21 (1 point)

Which of the following pairs of terms in the area of financial statement analysis are synonymous?

Vertical — Ratio

Ratio — Trend

Horizontal — Trend

Horizontal — Ratio

Question 22 (1 point)

Which of the following statements is true?

Trading securities are debt securities that the investor has the intent to hold to maturity.

Trading securities are reported at cost in the balance sheet.

Trading securities are securities that are not intended to be sold in the future.

Trading securities are securities bought and held primarily for sale in the near term.

Question 23 (1 point)

Dividends received are credited to what account under the equity method and cost method, respectively?

Equity Method	Cost Method
Stock Investments	Dividend Revenue
Equity Method	Cost Method
Dividend Revenue	Dividend Revenue
Equity Method	Cost Method
Stock Investments	Stock Investments
Equity Equity	Cost Method
Dividend Revenue	Stock Investments

Question 24 (1 point)

In accounting for available-for-sale securities, the Unrealized Loss on Available-for-Securities account should be classified as a:

loss on the income statement.

contra asset on the balance sheet.

liability on the balance sheet.

deduction in the stockholders' equity section of the balance sheet

Question 25 (1 point)

Reporting investments at fair value is applicable to:

trading securities only.

both available-for-sale and trading securities.

available-for-sale securities only.

held-to-maturity securities.

Question 26 (1 point)

Sailor Corporation has the following stock outstanding:

6% Preferred, $100 par $1,000,000

Common Stock, $50 par 2,000,000

No dividends were paid the previous 2 years. If Sailor declares $250,000 of dividends in the current year, how much will common stockholders receive if the preferred stock is cumulative?

$60,000.

$70,000.

$180,000.

$190,000.

Question 27 (1 point)

The statement of cash flows is a(n):

required basic financial statement.

required supplemental financial statement.

optional basic financial statement.

optional supplementary statement.

Question 28 (1 point)

The directors of Bennett Corp. are trying to decide whether they should issue par or no par stock. They are considering three alternatives for their new stock, which they are assuming will be issued at $8 per share. The alternatives are: (A) $5 par value, (B) no par with a $1 stated value, and (C) no par, no stated value. If 60,000 shares are issued, what amount will be credited to the common stock account in each of these cases?

(A)	(B)	(C)
$480,000	$480,000	$480,000
(A)	(B)	(C)
$60,000	$300,000	$480,000
(A)	(B)	(C)
$300,000	$60,000	$480,000
(A)	(B)	(C)
$60,000	$480,000	$480,000

Question 29 (1 point)

Victor Corp. reacquired, but did not retire, 20,000 shares of its $2 par common stock at a cost of $13 per share on April 30, 2014. The stock was originally issued at $11 per share. On January 10, 2015, the 20,000 shares were sold at $16 per share. The sales entry should include a credit to Paid-in Capital from Treasury Stock for:

$280,000.

$180,000.

$100,000.

$60,000.

Question 30 (1 point)

What is the effect on total paid-in capital of a stock dividend and a stock split, respectively?

Question 30 options:

Stock Dividend	Stock Split
Decrease	No effect
Stock Dividend	Stock Split
Decrease	Decrease
Stock Dividend	Stock Split
No effect	No effect
Stock Dividend	Stock Split
Increase	No effect

Question 31 (1 point)

Which of the following is reported in the retained earnings statement as an adjustment to the beginning balance?

Extraordinary items.

Discontinued operations.

Other revenues and expenses.

Prior period adjustments.

Question 32 (1 point)

Which of the following should be classified as an extraordinary item?

Effects of major casualties not infrequent in the area.

Write-off of a significant amount of receivables.

Losses due to a bitter, lengthy labor strike.

Loss from the expropriation of facilities by a foreign government.

Question 33 (1 point)

Bonds that mature in installments are called:

callable bonds.

serial bonds.

registered bonds.

term bonds.

Question 34 (1 point)

A Discount on Bonds Payable account:

is an adjunct account to Bonds Payable.

will cause interest expense to be less than cash interest payable.

is increased over the life of the bond until it equals the bond's face value.

is a contra account to Bonds Payable.

Question 35 (1 point)

Dina Corp. had 500,000 shares of common stock outstanding throughout the year. Dina reported net income of $2,400,000 and declared preferred stock dividends of $400,000 during the year. Dina should present earnings per share of:

$0.80.

$4.00.

$4.80.

$6.00.

Question 36 (1 point)

In order to be considered extraordinary, an item must be:

infrequent and unusual.

unusual and uninsured.

uninsured and infrequent.

infrequent and uninsured.

Question 37 (1 point)

If the market rate of interest is lower than the stated rate, bonds will sell at an amount:

equal to face value.

not determinable from the given information.

higher than face value.

lower than face value.

Question 38 (1 point)

Which of the following combinations presents correct examples of liquidity, profitability, and solvency ratios, respectively?

Liquidity	Profitability	Solvency
Receivables turnover	Return on operating assets	Times interest earned
Liquidity	Profitability	Solvency
Current ratio	Inventory turnover	Debt to equity
Liquidity	Profitability	Solvency
Inventory turnover	Inventory turnover	Times interested earned
Liquidity	Profitability	Solvency
Quick ratio	Payout ratio	Return on operating assets

Question 39 (16 points)

Match the term that best represents the definition or statement given below. No term should be used more than once, and not all terms will be used.

Events and transactions that are unusual in nature and infrequent in occurrence.	1.	Accounts receivable
The net income earned by each share of outstanding common stock.	2.	Book value per share
Standards based on optimum levels of performance under perfect operating conditions.	3.	Capital lease
An accounting method in which the investment in stock is initially recorded at cost and cash dividends are credited to Dividend Revenue.	4.	Contribution margin
The differences between actual costs and standard costs.	5.	Contribution margin ratio
The amount of revenue remaining after deducting variable costs.	6.	Controllable costs
The disposal of a significant segment of a business.	7.	Cost accounting
Costs that a manager has the authority to incur within a given period of time.	8.	Cost method
The correction of an error in previously issued financial statements.	9.	Discontinued operations
The portion of retained earnings that is currently unavailable for dividend declarations.	10.	Earnings per share
Measures the ability of the company to survive over a long period of time.	11.	Equity method
A pro rata distribution of the corporation's own stock to stockholders.	12.	Extraordinary items
The difference between actual overhead and budgeted overhead at actual production level.	13.	Fixed costs
Measures of the short-term ability of an enterprise to pay its maturing obligations and to meet unexpected needs for cash.	14.	Held-to-maturity securities
Debt securities that the investor has the intent and ability to hold to maturity.	15.	Horizontal analysis
Costs that vary in total directly and proportionately with changes in the activity level.	16.	Ideal standards
	17.	Liquidity ratios
	18.	Noncontrollable costs
	19.	Normal standards
	20.	Operating lease
	21.	Overhead budget variance
	22.	Overhead volume variance
	23.	Parent company
	24.	Period costs
	25.	Prior period adjustment
	26.	Product costs
	27.	Retained earnings appropriation
	28.	Solvency ratios
	29.	Stock dividend
	30.	Stock split
	31.	Variable costs
	32	Variances

Question 40 (1 point)

Matthew Corporation manufactures paper shredding equipment. Each paper shredder has a standard materials cost of 20 pounds at $7.50 per pound or $150.00 in total. 40,000 pounds of materials were purchased for $320,000 during the period and 39,000 pounds were used in the production of 2,000 good units. What is the direct materials price variance?

Use "U" or "F" to indicate whether the variance is unfavorable or favorable. Do not show your work or include any additional text with your answer. For example, if your answer is $100,000 unfavorable, you should enter $100,000 U.

Question 41 (1 point)

Question 42 (1 point)

Matthew Corporation manufactures paper shredding equipment and uses a process costing system. 2,000 units were in process at the beginning of the period, 60% complete. 20,000 units were started into production during the period; 1,000 were in process at the end of the period, 60% complete. What are the equivalent units for conversion costs?

Do not show your work or include any additional text with your answer. For example, if your answer is 10,000, you should enter10,000.

Question 43 (1 point)

Matthew Corporation manufactures paper shredding equipment and sells each unit for $500. Variable costs per unit equal $300. Total fixed costs equal $800,000. Matthew is currently selling 5,000 units per period and would like to earn net income of $400,000. What is the breakeven point in dollars?

Do not show your work or include any additional text with your answer. For example, if your answer is $10,000, you should enter$10,000.

Question 44 (1 point)

Do not show your work or include any additional text with your answer. For example, if your answer is 10,000, you should enter10,000.

Question 45 (1 point)

Express your answer as a percentage, and do not show your work or include any additional text with your answer. For example, if your answer is 60%, you should enter 60%.

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