Question 1.1. An example of a period cost is

Question 1.1.  An example of a period cost is 

        insurance on factory machines.

        a controller’s salary. 

        property taxes on factory building.

        wages of factory maintenance employees.

Question 2.2.  Which product would use job-order costing?

        Ink pens

        Custom boot maker

        Soda pop

        Horse saddles

Question 3.3.  In a process costing system, which would be TRUE? 

        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.  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 

        $300,000.        

        $150,000.

        $60,000.

        $0.

Question 5.5. Non-value-added activities 

        are unnecessary inputs.

        are valued outputs to internal users.

        are valued outputs to external users.

        help meet the organization's needs, not the product needs.

Question 6.6.  The break-even point is 

        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.  The income statement for Thomas Manufacturing Company for 2011 is as follows.

Sales (10,000 units)                                                 $120,000

Variable expenses                                                   $72,000

Contribution margin                                                 $48,000

Fixed expenses                                                       $36,000

Operating income                                                    $12,000

Which is the contribution margin per unit? 

        $7.20

        $1.20

        $4.80         

        $120,000

Question 8.8.  Which cost category would most likely use machine hours as its activity driver? 

        Personnel

        Maintenance

        Purchasing

        Payroll 

Question 9.9.  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 Shoes Department if newspaper ad space is the activity driver? 

        $8,000

        $4,800       

        $5,400

        $3,200 

Question 10.10.  A budget that is developed around one particular level of activity is 

        a static budget.

        a continuous budget.

        an incremental budget.

        None of the above 

Question 11.11.  Amy Company produces and sells bikes. It expects to sell 15,000 bikes in March 2014 and had 1,200 bikes in finished goods inventory at the end of February 2014. Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory. The bikes sell for $100 each.  How many bikes would be produced in March? 

        15,300 bikes       

        15,000 bikes

        14,700 bikes

        13,800 bikes 

Question 12.12.  When monthly production volume is constant and sales volume is more than production, net income determined with variable costing procedures will 

        always be greater than net income determined using absorption costing.

        always be less than net income determined using absorption costing.

        be equal to net income determined using absorption costing.

        be equal to contribution margin per unit times units sold 

Question 13.13.  Which factor would cause an UNFAVORABLE material quantity variance? 

        Using poorly maintained machinery

        Using higher quality materials

        Using more highly skilled workers

        Receiving discounts for purchasing larger-than-normal quantities

Question 14.14.  Which equation measures a price variance? 

        AQ x (AP - SP).

        SP x (AQ - SQ).

        SQ x (AP - SP).

        (AQ - SQ) x (AP - SP).