Question 8:
Assume
that actual overhead consisted of $30,000 for indirect labor, $20,000 for
indirect material, and $10,000 for depreciation of factory equipment.
Based on the preset rates, $65,000 of overhead was applied to work in process.
a. Overhead is
over applied.
b. This is viewed
as an unfavorable situation.
c. There will be a
$5,000 debit balance in Factory Overhead.
d. All of the
above.
e. None of these
Question 9:
The
contract interest rate for bonds:
A. must equal the
effective interest rate.
B. is greater than
the effective interest rate when bonds are issued at a discount.
C. has no relation
to the cash flow associated with a particular bond.
D. will fluctuate
over the life of a bond.
E. None of these.
Question 10:
Norman
Corporation issued $100,000 of 7%, 15-year bonds on January 1, 2014 at 102. The
proper entry to record issuance of the bonds includes a debit to Cash for:
a. $100,000.
b. $101,000.
c. $101,167.
d. $102,000..
e. None of these.
Question 11:
Which
of the following statements about treasury stock is true?
a. Excess of the
sales price over cost should be credited to retained earnings.
b. Gains are not
recorded on treasury stock transactions but losses are.
c. Reacquiring treasury
stock causes stockholders equity to decrease.
d. Reacquiring
treasury stock causes stockholders equity to increase.
e. Losses on
treasury stock transactions are recorded in income.
Question 12:
Maxlo
Company has 100,000 shares of common stock outstanding. On April 15, the board
declared a $.30 dividend to be paid to stockholders of record on May 4.
The dividend was paid on May 15. The proper journal entry for Maxlo
Company on May 15 does include:
a. a debit to
Dividends Payable for $30,000.
b. a debit to
Dividends for $30,000.
c. a debit to Cash
for $30,000.
d. Both A and C,
above.
e. None of these.
Question 13:
Assume the following sales data for a company:
2010
$1,000,000
2009
900,000
2008
750,000
2007
600,000
If 2007 is the base year, what is the percentage increase in sales
from 2007 to 2009?
a. 100%
b. 150%
c. 50%
d. 66.7%
Question 14:
Alpha Corporation has cumulative preferred stock. If dividends
are not declared in a period, then those dividends are
a. considered a
liability.
b. called
dividends in arrears.
c. distributions
of earnings.
d. never paid.
Question 15:
Maloney
Company’s balance sheet included cash ($4,000,000), accounts receivable
($16,000,000), inventories ($10,000,000), prepaid expenses ($2,000,000),
accounts payable ($9,000,000), and accrued expenses ($7,000,000). These
are the only current items.
a. The quick ratio
is 2:1.
b. The quick ratio
is 1.25:1.
c. The current
ratio is 1.875:1.
d. Both A and C.
e. None of these.
Question 16:
Selected
information for 2014 is: cost of goods sold, $5,400,000; average inventory,
$1,800,000; net sales, $7,200,000; average receivables, $960,000; and net
income, $720,000. Assuming a 360-day year, what was the inventory
turnover ratio for 2014?
a. 333
b. 3
c. 7.5
d. 20
e. None of these.
Question 17:
On the
schedule of cost of goods manufactured:
a. beginning
work-in-process plus direct materials used equals manufacturing costs.
b. cost of goods
manufactured is the same thing as total manufacturing costs.
c. work-in-process
will necessarily increase if total manufacturing costs increase.
d. factory overhead
plus beginning work-in-process equals manufacturing costs.
e. None of these.
Question 18:
Which
costing method seems ideally suited to the production of homogenous products in
continuous throughput?
a. Activity-based
costing.
b. Job order costing.
c. Process
costing.
d. Absorption
costing.
e. None of these.
Question 19:
White
Company uses a job order cost system and applies overhead based on estimated
rates. The overhead application rate is based on total estimated overhead
costs of $200,000 and direct labor hours of 50,000. For job 836, direct
labor hours were 800.
a. Factory
Overhead should be debited for $3,200.
b. Factory
Overhead should be credited for $3,200.
c. Overhead
Expense should be debited for $3,200.
d. Overhead
Expense should be credited for $3,200.
e. None of these.
Question 20:
For
job 1838, there were 1,000 direct labor hours, and actual overhead was $500 for
depreciation and $1,400 for indirect labor. Overhead is applied at $2 per
direct labor hour. Which account should be debited for $1,900?
a. Work in
Process.
b. Cost of Goods
Sold.
c. Factory
Overhead.
d. Cost of Goods
Manufactured.
e. None of these.
Question 21:
7,000 units in a process that are 70% complete are
referred to as
a. 7,000
equivalent units of production.
b. 2,100
equivalent units of production.
c. 4,900
equivalent units of production.
d. 2,100
inequivalent units of production
Question 22:
A process cost system would be used for all of the following products except
a. chemicals.
b. computer chips.
c. soft drinks.
d. fur coats
Question 23:
Killox Company
makes units that each requires 2 pounds of material at $3 per pound. 500
and 700 units will be built in May and June, respectively. Frick keeps
material on hand at 20% of the next month’s production needs. How much is
the material cost for May’s output?
a. $2,400
b. $3,000
c. $3,240
d. $4,200
e. None of these.
Question 24:
Anticipated
unit sales are January, 5,000; February, 4,000; and March 8,000. Finished
goods are consistently maintained at 80% of the following month’s sales.
If units cost $10 each to produce, how much is February’s total cost of
production?
a. $0
b. $40,000
c. $72,000
d. $80,000
e. None of these.
Question 25:
Total
production of 1,000 units of finished goods required 3,900 actual hours at $12
per hour. The standard is 4 hours per unit of finished goods, at a
standard rate of $11 per hour. Which of the following statements is true?
a. The labor rate
variance is $3,900 favorable.
b. The labor rate
variance is $4,000 unfavorable.
c. The labor
efficiency variance is $1,100 unfavorable.
d. The labor
efficiency variance is $1,100 favorable.
e. None of these.
Question 26:
If
beginning work in process was 600 units, 1,400 additional units were put into
production, and ending work in process was 500 units, how many units were
completed?
a. 500
b. 900
c. 1,500
d. 2,000
e. None of these.
Question 27:
Cost of goods manufactured is calculated as follows:
a. Beginning WIP +
direct materials used + direct labor + manufacturing overhead + ending WIP.
b. Direct
materials used + direct labor + manufacturing overhead – beginning WIP + ending
WIP.
c. Beginning WIP + direct materials used
+ direct labor + manufacturing overhead – ending WIP.
d. Direct
materials used + direct labor + manufacturing overhead – ending WIP – beginning
WIP.
e. None of the
above
