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1) Indiana
Company incurred the following costs during the past year when planned
production and actual production each totaled 20,000 units:
a. Direct
material used
$280,000
b. Direct
labor
$120,000
c. Variable
manufacturing overhead $160,000
d. Fixed
manufacturing overhead
$100,000
e. Variable
selling and administrative costs $60,000
f. Fixed
selling and administrative costs
$90,000
g. If Indiana
uses variable costing, the total inventorial costs for the year would be:
h. $400,000.
$460,000
$560,000.
$620,000.
$660,000.
2) Garage
Specialty Corporation manufactures joint products P and Q. During a recent
period, joint costs amounted to
$80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q.
Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon,
respectively. Alternatively, both products can be processed beyond the
split-off point, as follows:
i. P Q
Separable
processing costs
$15,000 $35,000
Sales price (per gallon) if processed beyond split-off
$3 $4
The joint cost allocated to Q under the relative-sales-value
method would be:
b. $40,000
$62,400.
$64,000.
$65,600.
Some other amount.
3) When
allocating joint costs, Weinberg calculates the final sales value of the
various products manufactured and
subtracts appropriate separable costs. The company is using the:
a. Gross
margin at split-off method.
Reciprocal-accounting
method.
relative-sales-value
method.
physical-units
method.
net-realizable-value
method.
4) Which of the
following statements pertain to both variable costing and absorption costing?
a. The income
statement discloses the amount of gross margin generated during the reporting
period.
Fixed selling and
administrative expenses are treated in the same manner as fixed manufacturing
overhead.
Both variable and
absorption costing can be used for external financial reporting.
Variable selling
costs are written-off as expenses of the accounting period.
Fixed manufacturing
overhead is attached to each unit produced.
5) The point in
a joint production process where each individual product becomes separately
identifiable is commonly called the:
a. decision
point.
separation point.
individual product
point.
split-off point.
joint product point.
6) Herbster
manufactures A, B, and C, all of which are joint products, and D, which is
classified as a by-product. If joint manufacturing costs amount to $450,000 and
the company is using a popular accounting method, the firm will:
a. allocate
$450,000 among A, B, and C.
allocate $450,000
among A, B, C, and D.
increase $450,000 by
the net realizable value of D and then allocate the total among A, B, and C.
decrease $450,000 by
the net realizable value of D and then allocate the total among A, B, and C.
7) Martina,
Inc. has two service departments (Human Resources and Building Maintenance) and
two production departments (Machining and Assembly). The company allocates
Building Maintenance cost on the basis of square footage and believes that
Building Maintenance provides more service than Human Resources. The square
footage occupied by each department follows.
Human Resources
6,000
Building Maintenance 13,000
Machining 18,000
Assembly 26,000
Assuming use of the direct method, over how many square feet
would the Building Maintenance cost be allocated (i.e., spread)?
a. 19,000.
44,000.
50,000.
63,000.
8) Consider the
following comments about absorption- and variable-costing income statements:
I. A
variable-costing income statement discloses a firm's contribution margin.
II. Cost of
goods sold on an absorption-costing income statement includes fixed costs.
III. The amount
of variable selling and administrative cost is the same on absorption- and
variable-costing income statements.
Which of the above statements is (are) true?
b. I only.
II only.
I and II.
II and III.
I, II, and III.
9) Under
variable costing, fixed manufacturing overhead is:
a. treated in
the same manner as variable manufacturing overhead.
expensed immediately
when incurred.
applied directly to
Finished-Goods Inventory.
applied directly to
Work-in-Process Inventory.
never expensed.
10) Which of the
following product-costing systems is/are required for tax purposes?
a. Absorption
costing.
Variable costing.
Throughput costing.
Either absorption or
variable costing.
Either absorption,
variable costing, or throughput costing.
11) Lone Star has
computed the following unit costs for the year just ended:
Direct material used
$12
Direct labor $18
Variable manufacturing overhead $25
Fixed manufacturing overhead $29
Variable selling and administrative cost $10
Fixed selling and administrative cost $17
Under variable costing, each unit of the company's inventory
would be carried at:
a. $35.
$55.
$65.
$84.
some other amount.
12) Rocky
Mountain Company produces two products (X and Y) from a joint process. Each
product may be sold at the split-off point or processed further. Additional
processing requires no special facilities, and production costs of further
processing are entirely variable and traceable to the products involved. Joint
manufacturing costs for the year were $60,000. Sales values and costs were as
follows:
I. If
Processed Further
Product Units
Made Sales Value at Split-Off Sales Value
Separable Costs
X
9,000 $40,000 $78,000 $10,500
Y 6,000 80,000 90,000 7,500
If the joint production costs are allocated based on the
physical-units method, the amount of joint cost assigned to product X would be:
$20,000.
$24,000.
$30,000.
$36,000.
$40,000.
13) Which of the
following methods recognizes some (but not all) of the services that occur
between service departments?
a. Direct
method.
Step-down method.
Indirect method.
Reciprocal method.
Dual-cost allocation
method.
14) Lone Star has
computed the following unit costs for the year just ended:
Direct material used $12
Direct labor $18
Variable manufacturing overhead $25
Fixed manufacturing overhead $29
Variable selling and administrative cost $10
Fixed selling and administrative cost $17
Under absorption costing, each unit of the company's
inventory would be carried at:
a. $65.
$84.
some other amount.
$55.
$35.
15) The
joint-cost allocation method that recognizes the revenues at split-off but does
not consider any further processing costs is the:
a.
relative-sales-value method.
net-realizable-value
method.
physical-units
method.
reciprocal-accounting
method.
gross margin at split-off
method.
16) Martina, Inc.
has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building
Maintenance cost on the basis of square footage and believes that Building
Maintenance provides more service than Human Resources. The square footage
occupied by each department follows.
Human Resources
6,000
Building Maintenance 13,000
Machining 18,000
Assembly 26,000
Assuming use of the step-down method, over how many square
feet would the Building Maintenance cost be allocated (i.e., spread)?
a. 19,000.
44,000.
50,000.
63,000
More information is
needed to judge.
17) Which of the
following situations would cause variable-costing income to be lower than
absorption-costing income?
a. Units sold
equaled 39,000 and units produced equaled 42,000.
Sales prices
decreased by $7 per unit during the accounting period.
Selling expenses
increased by 10% during the accounting period.
Units sold equaled
55,000 and units produced equaled 49,000.
Units sold and units
produced were both 42,000.
18) Indiana
Company incurred the following costs during the past year when planned
production and actual production each totaled 20,000 units:
Direct material used $280,000
Direct labor $120,000
Variable manufacturing overhead $160,000
Fixed manufacturing overhead $100,000
Variable selling and administrative costs $60,000
Fixed selling and administrative costs $90,000
Indiana's per-unit inventoriable cost under variable costing
is:
a. $9.50.
$25.00.
$28.00.
$33.00.
$40.50.
19) The process
of allocating fixed and variable costs separately is called:
a. diverse
allocation
reciprocal-cost
allocation.
common-cost
allocation.
dual-cost allocation.
the separate
allocation procedure (SAP).
20) The
underlying difference between absorption costing and variable costing lies in
the treatment of:
a. direct
labor.
variable manufacturing
overhead.
fixed manufacturing
overhead.
variable selling and
administrative expenses.
fixed selling and
administrative expenses.
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