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1. The CJP Company produces 10,000 units

Price: $4.99

1. The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.

Direct materials $ 20,000
Direct labor 55,000
Variable overhead 45,000
Fixed overhead 70,000
Total $190,000

The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit. If CJP accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of CJP's facilities could be rented to a third party for $15,000 per year. At what price would CJP be indifferent to XYZ's offer? (Points : 1)

2. Which of the following costs would most likely be classified as variable assuming the account analysis method is used to determine cost behaviors? (Points : 1)
      indirect materials.
      supervisory salaries
      equipment maintenance
      annual Christmas party
      building occupancy costs.

3. Which of the following statements about the theory of constraints is (are) true?
(A) The theory of constraints focuses on determining the optimal product mix when one or more resources restrict the attainment of a goal or objective.
(B) The theory of constraints focuses on maximizing the rate of throughput contribution while minimizing investment and other operating costs. (Points : 1)
      only A.
      only B.
      neither A nor B is true.
      both A and B are true.

4. Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year:

Direct materials $150,000
Direct labor 200,000
Sales commissions 100,000
Indirect labor 50,000
Rent on office equipment 25,000
Depreciation – factory building 75,000
Utilities – factory 125,000

Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour? (Points : 1)

5. The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except (Points : 1)
      fixed overhead costs.
      production bottlenecks.
      investment in buildings.
      investment in inventories.

6. The Shapely Company uses the high-low method to determine its cost equation. The following information was gathered for 2008:

Machine Hours Direct Labor Costs
Busiest month (June) 14,000 $200,000
Slowest month (December) 6,000 $120,000

If Shapely expects to use 10,000 machine hours next month, what are the estimated direct labor costs? (Points : 1)

7. The Cost Flow Diagram for product costing includes all of the following costs except: (Points : 1)
      Selling expenses
      Direct materials
      Direct labor
      Fixed manufacturing overhead
      Variable manufacturing overhead

8. The Silver Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine hours basis in Department B. At the beginning of 2008, the company made the following estimates:

Dept. A Dept. B
Direct labor cost $60,000 $40,000
Factory overhead $90,000 $45,000
Direct labor hours 6,000 9,000
Machine hours 2,000 15,000
What predetermined overhead rate would be used in Department A and Department B respectively? (Points : 1)
      150% and 300%.
      150% and $3.00.
      $1.50 and 300%.
      $1.50 and $3.00.

9. The MNK Company has gathered the following information for a unit of its most popular product:

 Direct materials $6
Direct labor 3
Overhead (40% variable) 5
Cost to manufacture 14
Desired markup (50%) 7
Target selling price 21

The above cost information is based on 4,000 units. A foreign distributor has offered to buy 1,000 units at a price of $16 per unit. This special order would not disturb regular sales. Variable shipping and other selling expenses would be $1 per unit for the special order. If the special order is accepted, MNK's operating profits will increase by: (Points : 1)

10. Which of the following statements is (are) false regarding cost allocations and product costing?
(A) It is easier to determine the individual product cost for a manufacturer than it is for a wholesaler.
(B) In general, indirect costs are assigned, while direct costs are allocated. (Points : 1)
      Only A is false
      Only B is false.
      Both A and B are false.
      Neither A nor B is false.


1 comment:

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