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acc-349-final-exam
ACC 349 FINAL EXAM 100% CORRECT
1) What is the bestway to handle manufacturing overhead costs in order to get the mosttimely job costinformation?
A. The companyshould add actual manufacturing overhead costs to jobs as soon as the overhead costs are
incurred.
B. The companyshould determine an allocation rate as soon as the actual costs are known,and then a pply
manufacturing overhead to jobs.
C. The companyshould applyoverhead using an estimated rate throughoutthe year. D. The companyshould
accountfor only the direct production costs.
2) At the end of the year, manufacturing overhead has been overapplied.Whatoccurred to create this situation?
A. The companyincurred more manufacturing overhead costs than the manufacturing overhead assigned to jobs
B. The actual manufacturing overhead costs were less than the manufacturing overhead assigned to jobs
C. The companyincurred more total job costs than the amountbudgeted for the job
D. Estimated manufacturing overhead was less than actual manufacturing overhead costs
3) Luca Companyoverapplied manufacturing overhead during 2006.Which one of the following is partof the year
end entry to dispose ofthe overapplied amountassuming the amountis material
A. A decrease to work in process inventory
B. A decrease to applied overhead
C. An increase to finished goods
D. An increase to cost of goods sold
4) Which of the following would be accounted for using a job order cost system?
A. The production oftextbooks
B. The production oftown homes
C. The pasteurization of milk
D. The production of cans of spinach
5) Which one of the following is NEVER part of recording the issuance ofraw materials in a job order cost system?
A. DebitManufacturing Overhead
B. DebitFinished Goods Inventory
C. Debit Work in Process Inventory
D. Credit Raw Materials Inventory
Finished Goods Inventory is debited when goods are transferred from work in process to finished goods,notwhen
raw materials are issued for a job.
6. What is unique aboutthe flow of costs in a job order cost system?
A. It involves accumulating material,labor,and manufacturing overhead costs as theyare incurred in order to
determine the job cost
B. Each job is costed separatelyin a Work in Process subsidiaryledger
C. Job costs cannotbe measured until all overhead costs are determined
D. There are no costs remaining in Work in Process atyear end
7) Which one of the following costs would be included in manufacturing overhead ofa lawn mower manufacturer?
A. The costof the fuel lines that run from the motor to the gas tank

2. B. The costof the wheels
C. Depreciation on the testing equipment
D. The wages earned by motor assemblers
Depreciation on testing equipmentwould be included in manufacturing overhead because itis indirectlyassociated
with the finished product.
8) What broad functions do the managementofan organization perform?
A. Planning,directing,and controlling
B. Directing,manufacturing,and controlling
C. Planning,directing,and selling
D. Planning,manufacturing,and controlling
9) Which of the following represents the correctorder in which inventories are reported on a manufacturer’s balance
sheet?
A. Work in process,finished goods raw materials
B. Raw materials,work in process,finished goods
C. Finished goods,work in process,raw materials
D. Work in process,raw materials,finished goods
10) In traditional costing systems,overhead is generallyapplied based on
A. machine hours
B. directlabor
C. direct material dollars
D. units of production
11) An activity that has a directcause-effectrelationship with the resources consumed is a(n)
A. overhead rate
B. productactivity
C. cost driver
D. cost pool
12) A well-designed activity-based costing system starts with
A. computing the activity-based overhead rate
B. analyzing the activities performed to manufacture a product
C. identifying the activity-cost pools
D. assigning manufacturing overhead costs for each activity cost pool to products
13) Which of the following factors would suggesta switch to activity-based costing?
A. Overhead costs constitute a significantportion oftotal costs
B. Production managers use data provided by the existing system.
C. Product lines similar in volume and manufacturing complexity
D. The manufacturing process has been stable
14) All of the following statements are correctEXCEPT that
A. the objective of installing ABC in service firms is differentthan it is in a manufacturing firm
B. the general approach to identifying activities and activity costpools is the same in a service companyas in a
manufacturing company
C. activity-based costing has been widelyadopted in service industries
D. a larger proportion of overhead costs are company-wide costs in service industries
15) What sometimes makes implementation ofactivity-based costing difficultin service industries is
A. identifying activities, activity costplus,and cost drivers

3. B. attempting to reduce or eliminate nonvalue-added activities
C. the labeling ofactivities as value-added
D. that a larger proportion ofoverhead costs are company-wide costs
16) One of Astro Company's activity cost pools is machine setups,with estimated overhead of$150,000. Astro
produces sparklers (400 setups) and lighters (600 setups).How much ofthe machine setup costpool should be
assigned to sparklers?
A. $60,000
B. $90,000
C. $150,000
D. $75,000
17) Poodle Companymanufactures two products,Mini A and Maxi B. Poodle's overhead costs consistofsetting up
machines,$800,000;machining,$1,800,000;and inspecting,$600,000.Information on the two products is:
Mini AMaxi B
Direct labor hours15,00025,000
Machine setups600400
Machine hours24,00026,000
Inspections800700
Overhead applied to Mini A using activity-based costing is
A. $1,536,000
B. $1,664,000
C. $1,920,000
D. $1,200,000
18) Poodle Companymanufactures two products,Mini A and Maxi B. Poodle's overhead costs consistofsetting up
machines,$800,000;machining,$1,800,000;and inspecting,$600,000.Information on the two products is:
Mini AMaxi B
Direct labor hours15,00025,000
Machine setups600400
Machine hours24,00026,000
Inspections800700
Overhead applied to Maxi B using activity-based costing is
A. $1,536,000
B. $1,664,000
C. $2,000,000
D. $1,280,000
19) Seran Companyhas contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel
makes the wickets,variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unitis avoidable.
Should Truckel make or buy the wickets?
A. Buy; savings = $10,000
B. Make; savings = $20,000
C. Make; savings = $10,000
D. Buy; savings = $25,000
20) Rosen,Inc. has 10,000 obsolete calculators,which are carried in inventory at a costof $20,000.If the calculators
are scrapped,they can be sold for $1.10 each (for parts).If they are repackaged,at a costof $15,000,they could be
sold to toy stores for $2.50 per unit. What alternative should be chosen,and why?

4. A. Repackage;revenue is $5,000 greater than cost
B. Scrap; incremental loss is $9,000
C. Repackage;receive profit of $10,000
D. Scrap; profit is $1,000 greater
21) The costto produce Part A was $10 per unitin 2005.During 2006,it has increased to $11 per unit. In 2006,
Supplier Companyhas offered to supplyPart A for $9 per unit. For the make-or-buydecision
A. incremental costs are $1 per unit
B. net relevant costs are $1 per unit
C. differential costs are $2 per unit
D. incremental revenues are $2 per unit
22) Hartley, Inc. has one product with a selling price per unitof $200,the unit variable cost is $75,and the total
monthlyfixed costs are $300,000.How much is Hartley’s contribution margin ratio?
A. 37.5%
B. 150%
C. 266.6%
D. 62.5%.
23. Which statementdescribes a fixed cost?
A. The amountper unitvaries depending on the activity level
B. It varies in total at every level of activity
C. It remains the same per unitregardless ofactivity level
D. Its total varies proportionallyto the level of activity
24) Disney’s variable costs are 30% of sales.The companyis contemplating an advertising campaign thatwill cost
$22,000.If sales are expected to increase $40,000,byhow much will the company's net income increase?
A. $28,000
B. $18,000
C. $6,000
D. $12,000
25) Variable costing
A. is required under GAAP
B. is used for external reporting purposes
C. is also known as full costing
D. treats fixed manufacturing overhead as a period cost
26) Which cost is NOT charged to the productunder variable costing?
A. Directlabor
B. Directmaterials
C. Fixed manufacturing overhead
D. Variable manufacturing overhead
27) Orbach Companysells its productfor $40 per unit. During 2005,it produced 60,000 units and sold 50,000 units
(there was no beginning inventory). Costs per unitare: direct materials $10,directlabor $6,and variable overhead
$2. Fixed costs are:$480,000 manufacturing overhead,and $60,000 selling and administrative expenses.The per
unit manufacturing costunder absorption costing is
A. $18
B. $16
C. $27

5. D. $26
28) Which of the following is NOTconsidered an advantage of using standard costs?
A. Standard costs can be useful in setting prices for finished goods
B. Standard costs can reduce clerical costs
C. Standard costs can make employees "cost-conscious."
D. Standard costs can be used as a means offinding faultwith performance
29) The difference between a budgetand a standard is that
A. a budgetexpresses management's plans,while a standard reflects whatactuallyhappened
B. standards are excluded from the cost accounting system,whereas budgets are generallyincorporated into the
costaccounting system
C. a budgetexpresses a total amountwhile a standard expresses a unitamount
D. a budgetexpresses whatcosts were,while a standard expresses whatcosts should be
30) If a companyis concerned with the potential negative effects of establishing standards,they should
A. offer wage incentives to those meeting standards
B. settight standards in order to motivate people
C. not employany standards
D. set loose standards thatare easy to fulfill
31) The per-unitstandards for directmaterials are 2 gallons at$4 per gallon.Lastmonth,11,200 gallons ofdirect
materials thatactuallycost $42,400 were used to produce 6,000 units of product.The direct materials quantity
variance for lastmonth was
A. $2,400 favorable
B. $5,600 unfavorable
C. $3,200 unfavorable
D. $3,200 favorable
32) The standard number ofhours that should have been worked for the output attained is 8,000 directlab or hours
and the actual number ofdirect labor hours worked was 8,400.If the directlabor price variance was $8,400
unfavorable,and the standard rate of pay was $18 per directlabor hour, what was the actual rate of pay for direct
labor?
A. $15 per directlabor hour
B. $18 per directlabor hour
C. $19 per direct labor hour
D. $17 per direct labor hour
33) The total variance is $10,000. The total materials variance is $4,000.The total labor variance is twice the total
overhead variance. What is the total overhead variance?
A. $2,000
B. $4,000
C. $3,000
D. $1,000
34) Manufacturing overhead costs are applied to work in process on the basis of
A. standard hours allowed
B. actual overhead costs incurred
C. ratio of actual variable to fixed costs
D. actual hours worked
35) The overhead volume variance relates only to

6. A. variable overhead costs
B. both variable and fixed overhead costs
C. all manufacturing costs
D. fixed overhead costs
36) If the standard hours allowed are less than the standard hours atnormal capacity
A. the overhead volume variance will be unfavorable
B. the overhead controllable variance will be favorable
C. variable overhead costs will be overapplied
D. variable overhead costs will be underapplied
37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April.Each mug requires 2 pounds
of resin and a half hour of direct labor. Resin costs $1 per pound and employees ofthe companyare paid $12.50 per
hour. Manufacturing overhead is applied ata rate of 120% of directlabor costs.Gottberg has 2,000 pounds ofresin
in beginning inventoryand wants to have 2,400 pounds in ending inventory. How much is the total amountof
budgeted directlabor for April?
A. $12,500
B. $25,000
C. $27,500
D. $13,750
38) Lewis Hats is planning to sell 600 straw hats.Each hat requires a halfpound of straw and a quarter hour of direct
labor.Straw costs $0.20 per pound and employees ofthe companyare paid $22 per hour.Lewis has 80 pounds of
straw and 40 hats in beginning inventoryand wants to have 50 pounds ofstraw and 60 hats in ending inventory. How
many units should Lewis Hats produce in April?
A. 600
B. 580
C. 630
D. 620
39) At January 1, 2004,Barry, Inc. has beginning inventoryof 4,000 widgets.Barry estimates itwill sell 35,000 units
during the firstquarter of 2004 with a 10% increase in sales each quarter.Barry’s policy is to maintain an ending
inventory equal to 25% of the next quarter’s sales.Each widgetcosts $1 and is sold for $1.50. How much is budgeted
sales revenue for the third quarter of 2004?
A. $57,525
B. $63,525
C. $42,350
D. $63,000
40) In mostcases,prices are setby the
A. customers
B. largestcompetitor
C. selling company
D. competitive market
41) A companymustprice its product to cover its costs and earn a reasonable profitin
A. all cases
B. its early years
C. the long run
D. the shortrun

7. 42) The cost-plus pricing approach's major advantage is
A. it considers customer demand
B. that sales volume has no effect on per unit costs
C. it is simple to compute
D. it can be used to determine a product’s targetcost
43) What does costaccounting measure,record,and report
A. Future costs
B. Productcosts
C. Managerial accounting decisions
D. Manufacturing processes
44) Why is factory overhead applied to products and jobs by manufacturing companies?
A. Because indirectcosts are easyto trace to products and jobs
B. It provides a more accurate cost of the job or products being processed
C. Total actual overhead costs can never be accurately determined for production
D. It allows managers more timelydetermination ofproductcosts during the manufacturing process
45) In a job order costaccounting system,the Work in Process accountis
A. a period cost
B. a control account
C. closed at year end
D. an expense
46) Managerial accounting
A. is governed by generallyaccepted accounting principles
B. places emphasis on special-purpose information
C. is concerned with costing products
D. pertains to the entity as a whole and is highly aggregated
47) A well-designed activity-based costing system starts with
A. computing the activity-based overhead rate
B. assigning manufacturing overhead costs for each activity costpool to products
C. identifying the activity-cost pools
D. analyzing the activities performed to manufacture a product
48) Which of the following is a value-added activity?
A. Machinery repair
B. Inventory storage
C. Engineering design
D. Inspections
49) Which of the following is a nonvalue-added activity?
A. Machining
B. Inspection
C. Engineering design
D. Packaging
50) Each of the following is a limitation ofactivity-based costing EXCEPT
A. It is more complexthan traditional costing
B. More cost pools are used
C. It can be expensive to use

8. D. Some arbitrary allocations continue
51) Ace Companysells office chairs with a selling price of$25 and a contribution margin per unitof $15. It takes 3
machine hours to produce one chair.How much is the contribution margin per unitof limited resource?
A. $3.33
B. $45
C. $10
D. $5
52) Walton, Inc. is unsure of whether to sell its productassembled or unassembled.The unitcost of the unassembled
productis $16, while the costof assembling each unitis estimated at$17.Unassembled units can be sold for $55,
while assembled units could be sold for $71 per unit. What decision should Walton make?
A. Sell before assembly;the companywill save $15 per unit
B. Process further;the companywill save $1 per unit
C. Process further;the companywill save $16 per unit
D. Sell before assembly;the company will save $1 per unit
53) Which cost is charged to the productunder variable costing?
A. Fixed manufacturing overhead
B. Variable manufacturing overhead
C. Fixed administrative expenses
D. Variable administrative expenses
54) Which of the following statements is FALSE?
A. A standard is a unit amount
B. A standard costis more accurate than a budgeted cost
C. The standard costof a product is equivalentto the budgeted costper unit of product
D. In concept,standards and budgets are essentiallythe same
55) If standard costs are incorporated into the accounting system
A. it can eliminate the need for the budgeting process
B. it may simplifythe costing of inventories and reduce clerical costs
C. approval of the stockholders is required
D. the accounting system will produce information which is less relevantthan the historical costaccounting system
56) A standard costis
A. the average cost in an industry
B. a costwhich is paid for a group of similar products
C. the historical costof producing a productlastyear
D. a predetermined cost
57) The per-unitstandards for directlabor are 2 directlabor hours at $12 per hour. If in producing 2,400 units,the
actual direct labor costwas $51,200 for 4,000 directlabor hours worked,the total direct labor variance is
A. $6,400 favorable
B. $6,400 unfavorable
C. $1,920 unfavorable
D. $4,000 unfavorable
58) If the standard hours allowed are less than the standard hours atnormal capacity,the volume variance
A. will be favorable
B. will be greater than the controllable variance
C. cannot be calculated

9. D. will be unfavorable
59) Which of the following statements is FALSE?
A. The costs thatcause the overhead volume variance are usuallycontrollable costs
B. The overhead volume variance is favorable if standard hours allowed for outputis greater than the standard hours
at normal capacity
C. The overhead volume variance indicates whether plantfacilities were used efficientlyduring the period
D. The overhead volume variance relates solelyto fixed costs
60) Looker Hats is planning to sell 600 felt hats,and 700 will be produced during June.Each hat requires a half yard
of felt and a quarter hour of direct labor.Felt costs $3.00 per yard and employees ofthe companyare paid $20 per
hour. How much is the total amountof budgeted directlabor for June?
A. $48,000
B. $3,500
C. $3,000
D. $2,400
61) In cost-plus pricing,the markup percentage is computed bydividing the desired ROI per unit by the
A. total costper unit
B. total manufacturing costper unit
C. fixed costper unit
D. variable costper unit
62) Which would be an appropriate costdriver for the ordering and receiving activity costpool?
A. Purchase orders
B. Inspections
C. Machine setups
D. Machine hours
63) The firststep in activity-based costing is to
A. identify the costdriver that has a strong correlation to the activity cost pool
B. compute the activity-based overhead rate per costdriver
C. assign manufacturing overhead costs for each activity cost pool to product
D. identify and classifythe major activities involved in the manufacture ofspecific products
64) Which one of the following is required in order for an activity base to be useful in costbehavior analysis?
A. The activity should always be based on the number ofunits produced
B. There should be a correlation between changes in the level of activity and changes in costs.
C. The activity should always be a fixed amount
D. The activity level should be an approved GAAP activity base
65) Which cost is NOT charged to the productunder absorption costing?
A. Fixed administrative expenses
B. Variable manufacturing overhead
C. Direct labor
D. Direct materials
66) A companydeveloped the following per-unitstandards for its product:2 pounds ofdirect materials at$6 per
pound.Lastmonth,2,000 pounds ofdirectmaterials were purchased for $11,400.The directmaterials price variance
for lastmonth was
A. $600 unfavorable
B. $11,400 favorable

10. C. $300 favorable
D. $600 favorable
67) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600 for 4,000 direct
labor hours worked,the directlabor price (rate) variance is
A. $500 favorable
B. $400 unfavorable
C. $500 unfavorable
D. $400 favorable
68) Waco’s Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco
keeps 10% of the next month’s sales as ending inventory. How many units should Waco produce during June?
A. 19,000
B. 18,900
C. 19,100
D. 21,000
69) In cost-plus pricing,the target selling price is computed as
A. variable costper unit + fixed manufacturing costper unit+ desired ROI per unit
B. variable costper unit + desired ROI per unit
C. total unit cost+ desired ROIper unit
D. fixed costper unit + desired ROI per unit
70) Which one of the following is an importantfeature of a job order costsystem?
A. Each mustbe completed before a new productorder is accepted
B. Each job uses similar processes to produce
C. Each consists offeatures which distinguish itfrom the next
D. Each job has characteristics similar to the next
71) Which of the following represents the two basic types of costaccounting systems?
A. Job order and process costsystems
B. Job order and batch systems
C. Job order and job accumulation systems
D. Process costand batch systems
72) Which one of the following is indirectlabor considered?
A. Productcost
B. Period cost
C. Nonmanufacturing cost
D. Raw material cost
73) Which of the following is an elementofmanufacturing overhead?
A. Factory workers wages
B. Plantmanager’s salary
C. Components used in calculators during production
D. Flour used in manufactured cake mixes
74) Which of the following is NOTtypical of traditional costing systems?
A. Use of a single predetermined overhead rate
B. Assumption ofcorrelation between directlabor and incurrence ofoverhead cost
C. Use of direct labor hours or direct labor cost to assign overhead
D. Use of multiple costdrivers to allocate overhead

11. 75) Max Companyuses 10,000 units ofPart A in producing its products.A supplier offers to make Part A for $7. Max
Companyhas relevantcosts of $8 a unit to manufacture PartA. If there is excess capacity, the opportunity costof
buying Part A from the supplier is
A. $80,000
B. $70,000
C. $0
D. $10,000
76) H55 Companysells two products,beer and wine.Beer has a 10 percentprofit margin and wine has a 12 percent
profit margin.Beer has a 27 percent contribution margin and wine has a 25 percentcontribution margin.If other
factors are equal,which product should H55 push to customers?
A. It should sell an equal quantityof both
B. Selling either results in the same additional income for the COMPANY
C. Beer
D. Wine
77) During December,the capital budgetindicates a $280,000 purchase ofequipment.The ending November cash
balance is budgeted to be $40,000.Cash receipts are $840,000,and cash disbursements are $610,000 during
December.The companywants to maintain a minimum cash balance of$20,000.What is the minimum cash loan
that mustbe planned to be borrowed from the bank during December?
A. $0
B. $50,000
C. $10,000
D. $30,000
78) Prices are setby the competitive marketwhen
A. a productis not easilydistinguished from competing products
B. a companycan effectively differentiate its productfrom others
C. there are no other producers capable ofmanufacturing a similar item
D. the product is speciallymade for a customer
79) The standards and rules thatare recognized as a general guide for financial reporting are called __________.
A. standards offinancial reporting
B. generallyaccepted accounting principles
C. generallyaccepted accounting standards
D. operating guidelines
80) Hess,Inc.sells a single productwith a contribution margin of$12 per unit and fixed costs of $74,400 and sales
for the current year of $100,000.How much is Hess’s break even point?
A. 2,133 units
B. 6,200 units
C. $25,600
D. 4,600 units
81) In what situations will a static budgetbe mosteffective in evaluating a manager's effectiveness?
A. The companyhas no fixed costs.
B. The planned activity levels match actual activity levels.
C. The companyhas substantial variable costs.
D. The companyhas substantial fixed costs.
82) The primarypurpose ofthe statementof cash flows is to __________.

12. A. facilitate banking relationships
B. provide information aboutthe cash receipts and cash payments during a period
C. prove that revenues exceed expenses ifthere is a net income
D. provide information aboutthe investing and financing activities during a period
83) The category that is generally considered to be the bestmeasure ofa company's abilityto
continue as a going concern is
A. cash flows from operating activities.
B. cash flows from investing activities.
C. cash flows from financing activities.
D. usuallydifferent from year to year.
84) Of the items below,the one that appears firston the statementofcash flows is
A. noncash investing and financing activities.
B. net increase (decrease) in cash.
C. cash at the end of the period.
D. cash at the beginning ofthe period.
85) Which of the following transactions does notaffect cash during a period?
A. Write-off of an uncollectible account
B. Collection ofan accounts receivable
C. Sale of treasury stock
D. Exercise of the call option on bonds payable
86) One of Lara Dole Company's activity cost pools is machine setups,with estimated overhead of$300,000.Dole
produces flares (400 setups) and health packs (600 setups).How much ofthe machine setup costpool should be
assigned to flares?
A. $0.
B. $120,000.
C. $150,000.
D. $180,000
87) As compared to a high-volume product,a low-volume product
A. usuallyrequires less special handling.
B. is usuallyresponsible for more overhead costs per unit.
C. requires relatively fewer machine setups.
D. requires use ofdirect labor hours as the primary costdriver to ensure proper allocation
of overhead