Question 1

Using the absorption method, the net income for year is:

Accepted Answer

A)  $200,000 
B)  $180,000 
C)  $170,000 
D)  $16,000 
A)  $200,000 
B)  $180,000 
C)  $170,000 
D)  $16,000

Question 2

Data for a firm's first year of operation is given below. The firm uses absorption costing. $\begin{array} { l r } 
\text { Units produced (no work in process) } & 6,000 \
\text { Units sold } & 5,000 \
\text { Units in ending inventory of finished goods } & 1,000 \
\text { Sales price for each unit } & \$ 75 \
\text { Variable manufacturing costs for each unit manufactured } & \$ 30 \
\text { Variable selling and admin. expenses for each unit sold } & \$ 16 \
\text { Fixed manufacturing costs for the year } & \$ 90,000 \
\text { Fixed selling and admin. expenses for the year } & \$ 65,000
\end{array}$ 1. What is the cost of goods manufactured for the year?
2. What is the ending inventory of finished goods?
3. What is the cost of goods sold?
4. What is the net income (loss) for the year?

Accepted Answer

1. $270,000; 
2. $45

Question 3

Which of the following is NOT a consideration regarding a special order?

Accepted Answer

A)  If the company has sufficient capacity 
B)  If the special order jeopardized sales to existing customers 
C)  Federal laws regarding the price 
D)  Whether employee morale would be affected 
A)  If the company has sufficient capacity 
B)  If the special order jeopardized sales to existing customers 
C)  Federal laws regarding the price 
D)  Whether employee morale would be affected

Question 4

The inventory costing system not acceptable for financial reporting is ____________________ costing.

Accepted Answer

The answer of The inventory costing system not acceptable for...

Question 5

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

Accepted Answer

A) True 
 B)False

Question 6

The following information relates to a one-time special order from a flood relief organization for 200 of its book bags at $8.50. Current manufacturing costs are as follows. $\begin{array} { l r } 
\text { Direct Material per bag } & \$ 3.24 \
\text { Direct Labor } & 4.21 \
\text { Variable Manufacturing Overhead } & .55 \
\text { Variable Selling costs } & .76 \
\text { Fixed Manufacturing Overhead } & 1.25
\end{array}$ Fixed manufacturing overhead is based on capacity of 4,500 units per year. Normal sales are 4,000 book bags per year. Only $0.46 of the selling costs will be incurred for this special order. What are the relevant costs regarding this special order? Pose one nonfinancial consideration regarding the acceptance or rejection of this special offer.

Accepted Answer

Relevant costs are the variable costs wh

Question 7

In managerial decisions, nonmanufacturing costs can be ignored.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT a consideration when determining whether to continue making a part or to buy that part?

Accepted Answer

A)  the timing of the cash receipts and expenditures 
B)  the opportunity cost 
C)  the impact on employees 
D)  the sunk cost 
A)  the timing of the cash receipts and expenditures 
B)  the opportunity cost 
C)  the impact on employees 
D)  the sunk cost

Question 9

Which of the following is NOT a step in the decision-making process?

Accepted Answer

A)  Explore workable alternatives 
B)  Determine relevant cost and revenue data 
C)  Consider appropriate nonfinancial factors 
D)  Make a decision 
A)  Explore workable alternatives 
B)  Determine relevant cost and revenue data 
C)  Consider appropriate nonfinancial factors 
D)  Make a decision

Question 10

Direct costing differs from absorption costing in that

Accepted Answer

A)  under direct costing all fixed overhead is expensed in the current period. 
B)  under absorption costing all fixed manufacturing overhead is expensed in the current period. 
C)  under direct costing a portion of the fixed manufacturing overhead is included in the finished goods inventory. 
D)  under absorption costing an increase in finished goods inventory does not affect the amount of fixed costs expensed. 
A)  under direct costing all fixed overhead is expensed in the current period. 
B)  under absorption costing all fixed manufacturing overhead is expensed in the current period. 
C)  under direct costing a portion of the fixed manufacturing overhead is included in the finished goods inventory. 
D)  under absorption costing an increase in finished goods inventory does not affect the amount of fixed costs expensed.

Question 11

Income statements prepared on an absorption-costing basis normally are more useful for internal decision making than income statements prepared on a direct costing basis.

Accepted Answer

A) True 
 B)False

Question 12

A cost that has already been incurred and is irrelevant for decision-making purposes is called a(n) ____________________ cost.

Accepted Answer

The answer of A cost that has already been incurred...

Question 13

Companies often consider buying the parts for the products they make or making the parts they buy. List the factors management should consider when looking into making a part they have been purchasing.

Accepted Answer

1) Will the quality be the same?
2) Will

Question 14

Using direct costing, the value of ending inventory of finished goods is:

Accepted Answer

A)  $100,000 
B)  $120,000 
C)  $140,000 
D)  $220,000 
A)  $100,000 
B)  $120,000 
C)  $140,000 
D)  $220,000

Question 15

Tyro Manufacturing has a machine that requires frequent repairs. Production is stopped and as a result some shipment dates have not been met. The manager read in their industry's trade magazine about a new machine that has just been developed. Using the given headings, list the six steps of the decision making process. Relate each of the first five to this specific situation using the format provided. $\begin{array}{|l|l|}
\hline \text { Step\quad\quad\quad\quad\quad\quad\quad } & \text { Relationship to Situation } \
\hline & \
\hline & \
\hline & \
\hline & \
\hline & \
\hline & \
\hline
\end{array}$

Accepted Answer

The answer of Tyro Manufacturing has a machine that requires...

Question 16

Nabob Corporation is considering expanding into the Midwest. It is estimated that this new division would generate an average of $378,000 in sales per year. The variable manufacturing costs would be $187,000, variable selling costs would be $72,000, and controllable fixed costs would be $90,000. In addition, the company planned to allocate $85,000 of company common fixed costs to the new division. Is this a wise decision for Nabob Corporation? Why?

Accepted Answer

Yes, the company should open this divisi

Question 17

Which of the following cost amounts can be found in a firm's accounting records?

Accepted Answer

A)  opportunity costs 
B)  differential costs 
C)  incremental costs 
D)  sunk costs 
A)  opportunity costs 
B)  differential costs 
C)  incremental costs 
D)  sunk costs

Question 18

Bianca Jewel Box Manufacturing received an offer from a nonprofit organization for a one-time purchase of 2,000 of its Model RYA18261 at $20 each for distribution to flood victims in the South. Full capacity at Bianca is 25,000 units. Bianca currently expects to make 20,000 units in the current year and based all estimates on that expectation. There will be no delivery costs for this special order. The average costs to Bianca to produce one Model RYA18261 are $27 each as shown. $\begin{array}{lr}
\text { Variable manufacturing costs } & \$ 11 \
\text { Fixed manufacturing costs } & 7 \
\text { Variable Selling \& Administrative costs } & 6 \
\text { Fixed Selling and Administrative costs } & \underline{3} \
\quad \text { Total } &\underline{ \$ 27}
\end{array}$
 Should Bianca accept this special offer? Explain your decision.

Accepted Answer

Total variable costs are $17. Therefore,

Question 19

Costs that are not directly traceable to a segment of a business are called

Accepted Answer

A)  sunk costs. 
B)  common costs. 
C)  fixed costs. 
D)  incremental costs. 
A)  sunk costs. 
B)  common costs. 
C)  fixed costs. 
D)  incremental costs.

Question 20

Which is the final step in the decision-making process?

Accepted Answer

A)  Consider appropriate nonfinancial factors 
B)  Make a decision 
C)  Identify workable alternatives 
D)  Evaluate the cost and revenue data 
A)  Consider appropriate nonfinancial factors 
B)  Make a decision 
C)  Identify workable alternatives 
D)  Evaluate the cost and revenue data

Using the absorption method, the net income for year is:

Which of the following is NOT a consideration regarding a special order?

The inventory costing system not acceptable for financial reporting is ____________________ costing.

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

In managerial decisions, nonmanufacturing costs can be ignored.

Which of the following is NOT a consideration when determining whether to continue making a part or to buy that part?

Which of the following is NOT a step in the decision-making process?

Direct costing differs from absorption costing in that

Income statements prepared on an absorption-costing basis normally are more useful for internal decision making than income statements prepared on a direct costing basis.

A cost that has already been incurred and is irrelevant for decision-making purposes is called a(n) ____________________ cost.

Companies often consider buying the parts for the products they make or making the parts they buy. List the factors management should consider when looking into making a part they have been purchasing.

Using direct costing, the value of ending inventory of finished goods is:

Which of the following cost amounts can be found in a firm's accounting records?

Costs that are not directly traceable to a segment of a business are called

Which is the final step in the decision-making process?

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Filters

Exam 30: Cost-Revenue Analysis for Decision Making

Using the absorption method, the net income for year is:

Which of the following is NOT a consideration regarding a special order?

The inventory costing system not acceptable for financial reporting is ____________________ costing.

A cost that does not change regardless of the option selected need not be considered in the decision-making process.

In managerial decisions, nonmanufacturing costs can be ignored.

Which of the following is NOT a consideration when determining whether to continue making a part or to buy that part?

Which of the following is NOT a step in the decision-making process?

Direct costing differs from absorption costing in that

Income statements prepared on an absorption-costing basis normally are more useful for internal decision making than income statements prepared on a direct costing basis.

A cost that has already been incurred and is irrelevant for decision-making purposes is called a(n) ____________________ cost.

Companies often consider buying the parts for the products they make or making the parts they buy. List the factors management should consider when looking into making a part they have been purchasing.

Using direct costing, the value of ending inventory of finished goods is:

Which of the following cost amounts can be found in a firm's accounting records?

Costs that are not directly traceable to a segment of a business are called

Which is the final step in the decision-making process?

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Filters