Question 1
0 out of 2.5 points
The loan
department of a
financial
corporation makes
loans to
businesses. The
costs of
processing these
loans are often
several thousand
dollars. All loans
are initially
evaluated using
the same financial
analysis software,
but some require
outside services
such as appraisals
and legal services.
Which is the most
appropriate
costing system for
the loan
department?
Answer
Selected
Answer: job-order costing
Response
Feedback: Operation costing because outside services would vary but the
evaluation costs would be standardized.
AACSB: Analytic
AICPA: FN-Measurement
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 06 #42
Learning Objective: 6
Topic Area: Different Companies, Different Production and Costing
Systems
Question 2
2.5 out of 2.5 points
Lo-crete produces
quick setting
concrete mix.
Production of
200,000 tons was
started in April,
190,000 tons were
completed.
Material costs
were $3,152,000
for the month
while conversion
costs were
$591,000. There
was no beginning
work-in-process;
the ending work-
in-process was
70% complete.
What is the cost of
the product that
was completed
and transferred to
finished goods?
Answer
Selected
Answer: $3,610,000
Response
Feedback: Equivalent production = 190,000 + [70% × (200,000 - 190,000)] =
197,000 tons. Cost per unit = ($3,152,000 + 591,000)/197,000 = $19;
costs transferred = 190,000 × $19 = $3,610,000
AACSB: Analytic
AICPA: FN-Measurement
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 06 #77
Learning Objective: 3
Topic Area: Costing in a Single Product, Continuous Process Industry
Question 3
2.5 out of 2.5 points
According to the
Institute of
Management
Accountants
(IMA), the first
step in resolving
an ethical
dilemma is to
Answer
Selected Answer:
Response
Feedback:
Question 4
0 out of 2.5 points
A hybrid costing
system that is
often used when
manufacturing
goods that have
some common
characteristics
plus some
individual
characteristics is
called:
Answer
Selected Answer:
Response
Feedback:
Question 5
2.5 out of 2.5 points
Which field of
accounting
emphasizes
relevancy over
comparability?
Answer
Selected
Answer: Cost accounting.
Response
Feedback:
Question 6
2.5 out of 2.5 points
Benchmarks are
used to evaluate
the performance
of an activity or
operation relative
to other
organizations or
other parts of one's
own organization.
Which of the
following is not a
guideline for using
benchmarks to
evaluate
performance?
Answer
Selected Answer:
Response
Feedback:
Question 7
2.5 out of 2.5 points
XYZ Company
manufactures a
single product.
The product's
prime costs
consist of
Answer
Selected Answer:
Response
Feedback:
Question 8
0 out of 2.5 points
Classifying a cost
as either direct or
indirect depends
upon
Answer
Selected Answer:
Response
Feedback:
Question 9
2.5 out of 2.5 points
A system that
mass-produces a
single,
homogenous
output in a
continuous
process is:
Answer
Selected Answer:
Response
Feedback:
Question 10
0 out of 2.5 points
Which of the
following costs is
both a prime cost
and a conversion
cost?
Answer
Selected
Answer: direct materials
Response
Feedback:
Question 11
0 out of 2.5 points
The predetermined
overhead rate for
manufacturing
overhead for 2008
is $4.00 per direct
labor hour.
Employees are
expected to earn
$5.00 per hour and
the company is
planning on
paying its
employees
$100,000 during
the year. However,
only 75% of the
employees are
classified as
"direct labor."
What was the
estimated
manufacturing
overhead for
2008?
Answer
Selected
Answer: $75,000
Response
Feedback:
Question 12
2.5 out of 2.5 points
The basic cost
flow model is:
Answer
Selected Answer:
Response
Feedback:
Question 13
2.5 out of 2.5 points
For which of the
following
businesses would
the job order cost
system be
appropriate?
Answer
Selected
Answer: Auto repair shop
Response
Feedback:
Question 14
2.5 out of 2.5 points
A cost allocation
rule is the method
or process used to
assign the costs in
the to
the
.
Answer
Selected Answer:
Response
Feedback:
Question 15
0 out of 2.5 points
In the balanced
scorecard, the
financial
perspective
addresses which
of the following
questions?
Answer
Selected Answer:
Response
Feedback:
Question 16
0 out of 2.5 points
If materials are
carried in the
direct materials
inventory account
at standard cost,
then it is
reasonable to
assume that the
Answer
Selected Answer:
Response
Feedback:
Question 17
0 out of 2.5 points
If a manager
wants to assess
performance
relative to the
industry, it is best
to use
Answer
Selected Answer:
Response
Feedback:
Partial productivity measures include only one aspect of productivity
while total factor productivity attempts to view the bigger picture.
AACSB: Analytic
AICPA: FN—Decision Making
Bloom's: Comprehension
Difficulty: Medium
Lanen - Chapter 18 #52
Learning Objective: 6
Topic Area: Productivity
Question 18
0 out of 2.5 points
The Work-in-
Process Inventory
account of a
manufacturing
firm has a balance
of $2,400 at the
end of an
accounting period.
The job cost
sheets of two
uncompleted jobs
show charges of
$400 and $200 for
materials used,
and charges of
$300 and $500 for
direct labor used.
Overhead is
applied as a
percentage of
direct labor costs.
The predetermined
rate is
Answer
Selected
Answer: 41.7%.
Response
Feedback: Overhead = $2,400 − (400 + 200) − (300 + 500) = $1,000; Overhead
rate = $1,000/(300 + 500) = 125.0%
AACSB: Analytic
AICPA: FN-Measurement
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 07 #51
Learning Objective: 3
Topic Area: Manufacturing Overhead
Question 19
0 out of 2.5 points
Managers do not
make decisions
about future
events based on:
Answer
Selected Answer:
Response
Feedback:
Question 20
0 out of 2.5 points
Costs that change
in response to a
particular course
of action are
Answer
Selected
Answer: cost drivers
Response
Feedback:
Question 21
2.5 out of 2.5 points
The predetermined
manufacturing
overhead rate for
the year was
$14.00 per direct
labor hour;
employees were
paid $17.50 per
hour. If the
estimated direct
labor cost was
$315,000, what
was the estimated
manufacturing
overhead?
Answer
Selected
Answer: $252,000
Response
Feedback:
Question 22
0 out of 2.5 points
Which of the
following
accounts would be
a period cost
rather than a
product cost?
Answer
Selected Answer:
Response
Feedback:
Question 23
0 out of 2.5 points
Which of the
following
nonfinancial
measures would
not be used to
evaluate a middle
manager's
performance?
Answer
Selected Answer:
Response
Feedback:
Question 24
0 out of 2.5 points
The beginning
Finished Goods
Inventory plus the
cost of goods
manufactured
equals
Answer
Selected Answer:
Response
Feedback:
Question 25
0 out of 2.5 points
Lo-crete produces
quick setting
concrete mix.
Production of
200,000 tons was
started in April,
190,000 tons were
completed.
Material costs
were $3,152,000
for the month
while conversion
costs were
$591,000. There
was no beginning
work-in-process;
the ending work-
in-process was
70% complete.
What is the
material cost of
the product that
remains in work-
in-process?
Answer
Selected
Answer: $157,600
Response
Feedback: Equivalent production = 190,000 + [70% × (200,000 - 190,000)] =
197,000 tons. Material cost per unit = $3,152,000/197,000 = $16; costs
remaining in WIP = [70% × (200,000 - 190,000)] × $16 = $112,000
AACSB: Analytic
AICPA: FN-Measurement
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 06 #79
Learning Objective: 3
Topic Area: Costing in a Single Product, Continuous Process Industry
Question 26
0 out of 2.5 points
The amount of
direct materials
issued to
production is
found by
Answer
Selected Answer:
Response
Feedback:
Question 27
0 out of 2.5 points
Manufacturing
overhead applied
on the basis of
direct labor hours
was $120,000,
while actual
manufacturing
overhead incurred
was $124,000 for
the month of
April. Which of
the following is
always true given
the statement
above?
Answer
Selected Answer:
Response
Feedback:
Question 28
0 out of 2.5 points
The Redrock
Company uses
flexible budgeting
for cost control.
Redrock produced
10,800 units of
product during
October, incurring
indirect material
costs of $13,000.
Its master budget
for the reflected
indirect material
costs of $180,000
at a production
volume of 144,000
units. What was
the flexible budget
variance for the
indirect material
costs in October?
Answer
Selected
Answer: $1,100 favorable
Response
Feedback:
Question 29
2.5 out of 2.5 points
A product cost is
deducted from
revenue when
Answer
Selected Answer:
Response
Feedback:
Question 30
2.5 out of 2.5 points
Excess direct
labor wages
resulting from
overtime premium
will be disclosed
in which type of
variance? (CPA
adapted)
Answer
Selected
Answer: Labor rate.
Response
Feedback: Overtime just changes the wage rate so it would be the labor rate.
Workers are not necessarily more or less efficient when working
overtime.
AACSB: Analytic
AICPA: FN-Decision Making
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 16 #94
Learning Objective: 5
Topic Area: Direct Labor
Question 31
0 out of 2.5 points
The cost of the
direct labor will be
treated as an
expense on the
income statement
when the
resulting:
Answer
Selected Answer:
Response
Feedback:
Question 32
2.5 out of 2.5 points
Which of the
following events
or transactions
will not result in
manufacturing
overhead being
applied to
production?
Answer
Selected Answer:
Response
Feedback:
Question 33
0 out of 2.5 points
In the balanced
scorecard, the
customer
perspective
addresses which
of the following
questions?
Answer
Selected Answer:
Response
Feedback:
Question 34
2.5 out of 2.5 points
Which of the
following is a total
factor productivity
measure?
Answer
Selected Answer:
Response
Feedback:
Sales value/total cost is a total factor productivity measure. All others
are using a single input factor to compute a partial productivity.
AACSB: Analytic
AICPA: FN—Decision Making
Bloom's: Comprehension
Difficulty: Easy
Lanen - Chapter 18 #55
Learning Objective: 6
Topic Area: Productivity
Question 35
2.5 out of 2.5 points
Moving of
inventory is an
example of a(n)
Answer
Selected Answer:
Response
Feedback:
Question 36
2.5 out of 2.5 points
Which of the
following is the
most probable
reason a company
would experience
an unfavorable
labor rate variance
and a favorable
labor efficiency
variance?
Answer
Selected Answer:
Response
Feedback: The average pay rate is higher than standard, but more experienced
workers are more efficient since they have more experience.
AACSB: Analytic
AICPA: FN-Decision Making
Bloom's: Application
Difficulty: Medium
Lanen - Chapter 16 #42
Learning Objective: 5
Topic Area: Direct Labor
Question 37
2.5 out of 2.5 points
Which of the
following is not a
key financial
manager in an
organization?
Answer
Selected
Answer: External auditor
Response
Feedback:
Question 38
2.5 out of 2.5 points
The process of
first allocating
costs to
intermediate cost
pools and then to
the individual cost
objects using
different
allocation bases is:
Answer
Selected Answer:
Response
Feedback:
Question 39
2.5 out of 2.5 points
Functional
performance
measures differ
from customer
satisfaction
performance
measures in that
they are used
primarily to
evaluate
Answer
Selected Answer:
Response
Feedback:
Most customer service measures focus on external relations while
functional measures focus on internal operations.
AACSB: Analytic
AICPA: FN—Decision Making
Bloom's: Comprehension
Difficulty: Medium
Lanen - Chapter 18 #41
Learning Objective: 6
Topic Area: Some Common Nonfinancial Performance Measures
Question 40
2.5 out of 2.5 points
Which of the
following is a
nonvalue-added
activity?
Answer
Selected Answer:
Response
Feedback:
