Question

16. The formal documents that quantify a company’s plans for achieving its goals are called

A.        variance reports.

B.        budgets.

C.        exception logs.

D.        cost of production reports.

17.       Which of the following costs does not change when the level of business activity changes?
A.        total fixed costs
B.        total variable costs
C.        total direct materials costs
D.        fixed costs per unit

18.       When work is completed on a job, costs for the completed job are found in which of the following accounts?

1. Raw Materials Inventory
2. Work in Process Inventory
3. Finished Goods Inventory
4. Cost of Goods Sold

19.       In a process costing system, when raw materials are put into process, the cost of the items is moved from
A.        Work in Process to Finished Goods.

2. Finished Goods to Cost of Goods Sold.
3. Raw Materials to Work in Process.
4. Finished Goods to Work in Process

20.       Conversion costs are
            A.        often assumed to be added at the beginning of the production process in                             each department.
            B.        the sum of the direct materials and direct labor costs.
            C.        impossible to measure for any particular department.
            D.        often assumed to be added evenly throughout the process within the                                   department.

21.       Which of the following is a direct cost of a specific department in a retail store?
            A.        company president’s salary
          B.        rent on the store
            C.        utilities for the store
            D.        cost of the department’s inventory

22.       You have tickets to go to Mexico (Cancun specifically) over spring break. Just this week your best friend informs you that s/he is getting married over spring break and would like you to be in the wedding as an attendant. Which of the following is a sunk cost that should not be relevant to your decision as to whether be in the wedding or go on the trip to Mexico?

1. The cost of the airline tickets to Mexico
2. The amount of refund you could get on the airline tickets to Mexico
3. The cost of the clothing you will have to buy/rent to be in the wedding.
4. The fact that you have never been anywhere for Spring Break and were really looking forward to going to Mexico

23.       If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 360,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?

a.   300,000 pounds

b.   480,000 pounds

c.   240,000 pounds

d.   420,000 pounds

24.       In a production budget, total required production units are the budgeted sales units plus

a.   beginning finished goods units.

b.   desired ending finished goods units.

c.   desired ending finished goods units plus beginning finished goods units.

d.   desired ending finished goods units minus beginning finished goods units.

25.       In most cases, prices are set by the

a.   customers.

b.   competitive market.

c.   largest competitor.

d.   selling company.

Answer 1

16. Budgets

Budgets helps in planning, decision making and action plan. Its one of the important tool used for future actions

17. Total Fixed Costs.

Total Fixed Costs doesnt change with the change in volume. Variable cost changes with the change in Volume. Fixed Cost per unit will also change with the change in volume. DIrect Materials cost is variable cost

18. Finished Goods Inventory.

Its Starts from Raw materials then to work in Process and then to Finished Goods Inventory and if Sold then to Cost of Goods Sold.

19. Raw Materials to work in Process.

20. Often assumed to be added evenly throughtout the Process within the Department

21. Cost of the department inventory.

This is the direct cost which is easily identifiable with the department

22. The cost of the Airline tickets to mexico.

This cost is already incurred , so it will not matter in decision making,, Hence a sunk cost

23. 120,000 + 360,000 - 60,000 = 420,000

24. As Calculated above , the formula is Desired ending finished goods units minus beginning finished goods units

25. Competitive market

Nowadays there is so much of competition that Companies has to put their selling price as per the market in order to survive