1.
A company is building a widget. During the
current year, a widget requires direct materials with a cost of $300. The
company must also spend $200 for direct labor. Finally, factory overhead
related to the production of a widget is $100. What is the prime cost
associated with a widget?

A.
100

B.
400

C.
300

D.
500

2.
A company is building a widget. During
the current year, a widget requires direct materials with a cost of $500. The
company must also spend $600 for direct labor. Finally, factory overhead
related to the production of a widget is $100. What is the conversion cost
associated with a widget?

A.
600

B.
900

C.
700

D.
800

3.
Nash accounting
services pays $2,500 a month for a tax preparation software license. In addition, variable charges incurred
average $50 for every tax return the firm prepares. Determine the cost per unit if the firm expects to prepare 150 tax returns. Round to nearest Cent.

A.
$70.50

B.
$66.67

C.
$55.00

D.
$52.50

4.
For 2013, Lorenzo
Auto has a monthly overhead cost formula of $44,000 + $8 per direct labor
hour. The firm’s 2013 annual capacity is
70,000 direct labor hours to be incurred evenly each month. What is the total overhead to be applied per
unit of product in 2013?

A.
$560,000

B.
$885,000

C.
$1,088,000

D.
$1,000,500

5.
The W Hotel has
gathered the following information on its utility cost for the past 6 months.

Machine Hours Utility
Cost

1300
$940

1700
$1075

1250
$900

1800
$1132

1900
$1160

1500
$990

Using the high-low method and considering there are NO outliers,
determine the cost formula for utility cost.

A.
y = $400 + .40X

B.
y = $400 + .60X

C.
y = $600 + .40X

D.
y = $600 + .60X

6.
Using the formula
from Question #11, what would be the total cost if the hotel used 1200 Machine
hours for the month of March?

A.
$1000

B.
$880

C.
$420

D.
$950

7.
Cuisinart
manufactures tea pots. In 2013, fixed
overhead was applied to products at a rate of $5 per unit. Variable cost per unit remained constant
throughout the year. In July 2013, income
under variable costing was $152,000.
July’s beginning and ending inventories were 10,000 and 6,500 units
respectively. Calculate income under
absorption costing.

A.
$152,000

B.
$112,500

C.
$134,500

D.
$212,000

8.
Marisa’s Furniture
manufactures wooden chairs for outdoor use.
In May 2013, the company manufactured 15,000 and sold 12,500
chairs. There were no beginning
inventories for May and no work in process at the end of May. The cost per unit for the 15,000 chairs
produced was as follows:

Direct material $ 8.00

Direct
Labor 5.00

Variable Overhead 2.00

Fixed Overhead 4.00

Total 19.00

What is the value of ending
finished goods inventory using absorption costing?

A.
$37,500

B.
$35,000

C.
$25,000

D.
$47,500

9.
Assuming the same
information as Question #14, what is the value of ending finished goods
inventory using variable costing?

A.
$37,500

B.
$35,000

C.
$25,000

D.
$47,500

10. Vitamin water makes flavored water and performs the
following tasks in the beverage manufacturing process:

Hours

Receive and transfer ingredients
to storage 7.0

Store ingredients
260.0

Transfer ingredients from
storage to production 5.5

Mix and cook ingredients
8.5

Bottle Water
2.0

Transfer bottles to
warehouse 3.0

Calculate the total cycle time of this manufacturing process?

A.
292.5 hours

B.
286 hours

C.
272 hours

D.
286.5 hours

11.
Sheera Company is a design shop
that produces jobs to customer specifications.
During March, Job #351 was worked on and the following information was
available.

Direct Material Used
$2,150

Direct Labor Hours worked 10

Machine Time used
8

Direct Labor Rate per Hour $4

Overhead application rate per hour of machine
time $15

What
was the total cost of Job #351 for March?

A.
$2,015

B.
$2,310

C.
$2,300

D.
$1,992

12.
Havana Company uses a weighted
average process costing system and started 32,000 units this month. Winters had 12,000 units that that were 25%
complete as to conversion costs in beginning WIP inventory and 5,000 units that
were 30% complete as to conversion costs in ending WIP inventory. What are the equivalent units for conversion
costs?

A.
43,250

B.
45,100

C.
42,900

D.
40,500

13.
Marx Company applies Overhead
to jobs at a rate of 30% of direct labor cost.
Direct Material of $1,150 and direct labor of $1,500 were expended on
job #12 during September. On August 31^st,
the balance of job #12 was $2,500. The
balance on September 30^th is?

A.
$4,550

B.
$5,600

C.
$5,450

D.
$6,050

14.
The following information is
for Patterson Company’s July production:

Standards:

Material 3 feet per unit @ 4.00
per foot

Labor 2.5 hours per unit
@ $7.60 per hour

Actual:

Production 2,500 units produced during
this month

Material 8,100 feet used; 9,000 feet purchased at $4.50 per foot

Labor 6,000 direct labor hours @
$7.70 per hour

What is the Material
Quantity Variance? (round to the nearest
dollar)

A.
$2,400 Favorable

B.
$2,150 Favorable

C.
$2,400 Unfavorable

D.
$2,150 Unfavorable

15.
Using the information from
Question #14, what is the labor rate variance? (round to the nearest dollar)

A.
$600 Unfavorable

B.
$850 Favorable

C.
$850 Unfavorable

D.
$600 Favorable

16.
Chronologically, the first part
of the master budget prepared would be the:

A.
Sales budget

B.
Production budget

C.
Cash budget

D.
Pro forma financial statements

17.
Soho Company is preparing its
Manufacturing Overhead budget for the second quarter of the year. Budgeted variable factory overhead is $2 per
unit produced; budgeted fixed factory overhead is $54,000 per month, with $18,000
of this amount being factory depreciation.

If the budgeted
production for May is 4,500 units, then the total budgeted factory overhead per
unit is:

A.
$14

B.
$18

C.
$12

D.
$15

18.
Using the information from #19,
if the budgeted cash disbursements for factory overhead for June are $70,000,
then the budgeted production for June must be:

A.
13,040 units

B.
16,200 units

C.
17,000 units

D.
16,500 units

19.
Which is the best cost
accumulation procedure to use by companies that make relatively small
quantities of distinct products or perform unique services that conform to the
specifications designated by the purchaser?

A.
Actual

B.
Standard

C.
Job order

D.
Process

20.
Solarte Company uses a job
order costing system and the following information is available from its
records. The company currently has 3
jobs in process #7, #11, and #13.

Raw Material
$120,000

DL per hour
$8.50

Overhead applied based on DL
cost
125%

Direct
material was requisitioned as follows for each job respectively: 25%, 30%, and
30%; the balance of the requisitions was considered indirect. Direct labor hours per job are 2,200, 3,100,
and 3,700, respectively. Indirect labor
is $55,000. Other actual Overhead costs
totaled $50,000.

How much
overhead was applied to Work in Process?

A. $95,625

B. $99,235

C. $100,885

D. $90,665

21. McKenzie Enterprises has the following revenue and cost functions:

Revenue = $60
per unit

Cost =
$80,000 + $35 per unit

What is the
break-even point in units?

A. 3,000

B. 4,100

C. 4,000

D. 3,200

22. Using the information from Question #21, what is the break-even
point in units?

A. 200,000

B. 195,000

C. 192,000

D. 205,000

23. Jacoby Sports Wear has designed a new athletic suit. The company plans to produce and sell 25,000
units of the new product in the coming year.
Annual fixed costs are $700,000, and variable costs are 50% of selling
price. If the company wants a pre-tax
profit of $200,000, at what minimum price must it sell its product?

A. 2,800,000

B. 1,800,000

C. 1,500,000

D. 2,500,000

24. A cost incurred in the past
and not relevant to any future courses of action is known as:

A. Relevant cost

B. Sunk cost

C. Opportunity cost

D. Incremental cost

25. A potential benefit that is foregone because one course of action is
chosen over another is known as:

A. Relevant cost

B. Sunk cost

C. Opportunity cost

D. Incremental cost

26. Assume that you are about to graduate from your university and are
deciding whether to apply for graduate school or enter the job market. To help make the decision, you gathered the
following information:

Costs incurred for the bachelor’s
degree
$163,000

Out of
pocket costs for a master’s degree $104,000

Estimated starting
salary with B.A. $56,500

Estimated
starting salary with M.A.
$66,800

Estimated time to complete master’s degree 2 years

Estimated time from the present to retirement 40 years

Room
& Board
$24,000

Books and
education materials to obtain master’s $5,500

What is the opportunity cost
associated with earning the master’s degree?

A.
113,000

B.
125,000

C.
188,000

D.
326,000

27.
Using the information from
Question #26, what is the out of pocket cost to obtain the master’s degree?

A.
128,000

B.
109,500

C.
133,500

D.
192,500

28.
An incidental output of a joint
process is also known as:

A.
Scrap

B.
Waste

C.
Split-off

D.
Garbage

29.
The total cost incurred for the
material, labor and overhead during a joint process is called:

A.
Separate costs

B.
Incremental costs

C.
Unknown costs

D.
Joint costs

30.
Almond breeze produces milk and
sour cream from a joint process. During
June, the company produced 240,000 quarts of milk and 190,000 pints of sour
cream (there are 2 pints in a quart).
Sales value at split-off point was $377,400 for the milk and $177,600
for the sour cream. The milk was
assigned $125,800 of the joint cost.
Using the sales value at split-off approach, determine the total joint
cost for June.

A.
$180,000

B.
$185,000

C.
$195,000

D.
$205,000

Short Answers: For each question below, please show as much
work as possible as the you can receive partial credit for your work and the
answers you give.

1.
Ralph Lauren makes
summer dresses for women. The following
information was gathered from the company records for 2013, the first year of
company operations. Work in process
inventory at the end of 2013 was $15,500.

Direct Material purchased on account $
650,000

Direct Material issued to
production 440,000

Direct Labor payroll accrued 305,500

Indirect labor payroll accrued 92,000

Prepaid factory insurance expired 6,000

Factory utilities paid 21,500

Depreciation on factory equipment
recorded
35,500

Factory rent paid 155,000

Sales 1,250,000

The company’s gross profit rate for the year was 25 percent of sales.

A.
Compute the cost of goods sold
for 2013?

B.
What was the total cost of
goods manufactured for 2013?

C.
What is the Finished Goods
Inventory at December 31, 2013?

D.
If Net Income was $105,000,
what were total selling and administrative expenses for the year?

2. In July 2013, Zing Corporation purchased 18,000 gallons of Numerol
for $55,000 to use in the production of product MR57. During July, Zing Inc. manufactured 3,700
units of product for MR57. The following
information is available about standard and actual quantities and costs: (Round
to the nearest penny) Make Sure to list if the variance is favorable or
unfavorable.

Standard for 1 Unit Actual Usage for
July

Direct Material 4.2
Gallons @ $3/gallon
16,550 Gallons

Direct Labor 20
minutes @ $8 per DLH 1,250 DLHs @ $8.02 per
DLH

A. Compute the Material price variance

B. Compute the Material quantity variance

C. Compute the Labor Rate Variance

D. Compute the Labor Efficiency Variance

E. Compute the total labor Variance

3. Caputo Automotive sells an auto accessory for $180 per unit. The company’s variable cost per unit is $30
for direct material, $25 per unit for direct labor, and $17 per unit for
overhead. Annual fixed production
overhead is $37,400, and fixed selling and administrative overhead is $25,240.

A. What is the contribution margin per unit?

B. What is the contribution margin ration?

C. What is the break-even point?

D. Using the contribution margin ration, what is the break-even point
in sales dollars?

E. If Caputo Automotive wants to earn an after-tax profit of $135,800,
how many units must the company sell?

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