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Edition MANAGERIAL 10th ACCOUNTING Warren/Reeve/Duchac Score Name Course % Section Chapters 13 NOTE: Each of the 40 correct answers is assigned a weight of 2 %. FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY50% Section Test 1 INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column. For Scoring 0. ____ 1. ____ 2. ____ 3. ____ STATEMENTS 0. 1. 2. 37. 3. The chief management accountant is called the ................................... A diagram of the operating structure of a business is known as a(n) . .. The vice-president of manufacturing of a manufacturing business occupies a (line or staff) position. .......................................................... The five basic phases in the management process are: ................................................................................................................. Answers controller 4. 5. 6. 7. 8. 911. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. A _________ cost system is best suited for a manufacturer of gasoline. ................................................................................................. The three categories of manufacturing costs comprising the cost of finished goods inventory are: 4. ____ 5. ____ 6. ____ 7. ____ 8. ____ 9. ................................................................................................................. 9. ____ 10. ................................................................................................................. 11. ................................................................................................................. 12. 13. 1416. The form used to record the amount of time spent by each employee and the labor cost incurred for each individual job is a(n) ..................... A predetermined factory overhead rate is determined by dividing the estimated total factory overhead costs by a(n) ...................................... The three inventory accounts of a manufacturing business are: 10. ____ 11. ____ 12. ____ 13. ____ 14. ____ 15. ____ 14. ................................................................................................................. 15. ................................................................................................................. 16. ................................................................................................................. 17. 18. 19. The amount of overapplied factory overhead at the end of a month is reported on the interim balance sheet as a(n) ....................................... The form used by a manufacturing department to request the issuance of materials is called a(n) ........................................................ The periodic report prepared for each processing department, summarizing (1) the units for which the department is responsible and their disposition and (2) the costs charged to the department and their allocation, is termed the ......................................................................... The business philosophy that focuses on reducing time and cost and eliminating poor quality within manufacturing and nonmanufacturing 16. ____ 17. ____ 18. ____ 19. ____ 20. processes is ........................................................................................... 20. ____ PROBLEM 1ANALYSIS OF TRANSACTIONS30% INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the selected transactions given below by inserting the letter or letters of the account titles listed in the appropriate columns. (Do not record the amounts.) ACCOUNTS A. B. C. D. Accounts Payable Accounts Receivable Cash Cost of Goods Sold E. F. G. H. Factory OverheadDepartment T Factory OverheadDepartment V Finished Goods Materials I. J. K. L. Sales Wages Payable Work in ProcessDepartment T Work in ProcessDepartment V TRANSACTIONS 0. 12. 34. 56. 78. Purchased materials on account, $19,500 ............................................ Paid cash for wages owed, $32,000 ...................................................... Materials requisitioned by Department T, $75,200, for use directly in the manufacture of the product .............................................................. Factory overhead applied to production in Department T, $2.50 per machine hour ......................................................................................... Factory overhead applied to production in Department V, $3.00 per Debit H For Scoring 0. ____ 1. ____ 3. ____ 5. ____ Credit A For Scoring 0. ____ 2. ____ 4. ____ 6. ____ machine hour ......................................................................................... 910. 1112. Goods finished in Department T and transferred to Department V, $88,300 .................................................................................................. Goods finished in Department V and transferred to finished goods, $90,750 .................................................................................................. 7. ____ 9. ____ 11. ____ 8. ____ 10. ____ 12. ____ PROBLEM 2CLASSIFICATION OF COSTS20% INSTRUCTIONS: Classify each of the following costs as either a product cost or a period cost. ITEM 0. 1. 2. 3. 4. 5. 6. Sugar for a candy manufacturer ............................................................ Salary of plant accountant ..................................................................... Production supervisors salary ............................................................... Production supplies ................................................................................ Interest cost on borrowings .................................................................... Insurance premiums on factory equipment ........................................... Oil used in manufacturing furniture ........................................................ Answers product cost For Scoring 0. ____ 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 6. ____ 7. 8. Work In Process warehouse rent ........................................................... Wages of office workers ......................................................................... ACHIEVEMENT TEST SOLUTIONSTEST 1 (Chapters 13) 7. ____ 8. ____ Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. organization chart line planning directing controlling improving decision making process direct materials direct labor 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. factory overhead time ticket estimated activity base Finished Goods Work in Process Raw Materials deferred credit materials requisition cost of production report just-in-time processing Problem 1 Analysis of Transactions Debit J K K L L G Credit C H E F K L 1. 3. 5. 7. 9. 11. 2. 4. 6. 8. 10. 12. Problem 2 Classification of Costs 1. 2. 3. 4. 5. 6. 7. 8. product cost product cost product cost period cost product cost product cost product cost period cost 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 1A Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. A FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column. For Scoring STATEMENTS 0. A type of information that management uses in conducting daily operations and in planning future operations and that includes both historical and estimated data is ............................................................. A department that provides services, assistance, and advice to other departments directly involved in the basic objectives of the Answers management accounting 0. ____ 1. organization is a(n) ................................................................................. 23. 2. 3. 4. 5. Managerial accounting reports use two types of information. These include: __________ data.................................................................................... __________ data.................................................................................... The Sales Department would be considered a (line or staff) department. ............................................................................................ The Machining Department would be considered a (line or staff) department. ............................................................................................ 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 67. 6. 7. 8. 911. 9. Manufacturing costs are classified into two categories in terms of the decision-making needs of management: ................................................................................................................. ................................................................................................................. The development of organizational objectives and the translation of these objectives into courses of action is called..................................... Work in process consists of three costs of resources that have entered the manufacturing process on unfinished products: ................................................................................................................. 9. ____ 6. ____ 7. ____ 8. ____ 10. 11. 12. 13. 14. 15. ................................................................................................................. ................................................................................................................. The term used to describe the cost of materials that are an integral part of total product cost is...................................................................... Overhead costs are (direct or indirect) costs. ........................................ Direct labor and factory overhead are considered __________ costs of the product.......................................................................................... Direct labor and direct materials are considered __________ costs of the product.............................................................................................. 10. ____ 11. ____ 12. ____ 13. ____ 14. ____ 15. ____ 16. The information that allows management to isolate significant departures from plans for further investigation and possible remedial action is called......................................................................................... The primary difference between the income statements of a merchandiser and manufacturer is ........................................................ continued 16. ____ 17. ____ 17. STATEMENTS 18. Indirect materials, indirect labor, and production-equipment Answers For Scoring depreciation expense are examples of................................................... 19. The cost of finished products on hand that have not been sold is ...................................................................................................... called ................................................................................................................. ................................................................................................................. The cost of a machine operators wages in a tool manufacturing plant would be a(n) (direct or indirect) cost. ................................................... Costs which make up the cost of manufacturing a product are called __________ costs. ................................................................................. Costs which are incurred in operating the selling and administrative 18. ____ 19. ____ 20. ____ 21. ____ 20. 21. 22. operations of a business are called __________ costs......................... 23. 24. The cost of the president of the company is part of the conversion cost for a manufactured product. (true or false)..................................... The accounting report that accumulates the product costs originating with inventory and ending with the cost of goods sold is the................. 22. ____ 23. ____ 24. ____ PROBLEMANALYSIS OF COSTS40% INSTRUCTIONS: For each of the following situations, identify the cost as either a direct cost (D) or an indirect cost (I) and indicate whether it is a product cost (Pt) or a period cost (Pd). ITEM 0. 12. 34. 56. 78. 910. 1112. Postage expense for a broom manufacturer ......................................... Materials used for specific jobs .............................................................. Factory materials incurred on non-specific jobs .................................... Cash paid for factory utilities costs incurred .......................................... Rental cost on a factory building............................................................. Design costs for a new product line........................................................ Cost Accounting Department salaries.................................................... Direct or Indirect I For Scoring 0. ____ 1. ____ 3. ____ 5. ____ 7. ____ 9. ____ 11. ____ Period or For Product Scoring Pd 0. ____ 2. ____ 4. ____ 6. ____ 8. ____ 10. ____ 12. ____ 1314. 1516. Factory labor incurred on specific jobs .................................................. Salary of vice-president of manufacturing ............................................. 13. ____ 15. ____ 14. ____ 16. ____ 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 1B Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. B FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column. For Scoring STATEMENTS 0. A type of information that management uses in conducting daily operations and in planning future operations and that includes both historical and estimated data is ............................................................. Answers management accounting 0. ____ 1. 2. 3. 48. 4. 5. A department or unit directly involved in the basic objectives of the organization is a(n) ................................................................................. The Roasting Department is a (line or staff) function at a coffee manufacturer. ......................................................................................... A payment of cash or its equivalent or the commitment to pay cash in the future for the purpose of generating revenues is termed ................ The five basic phases in the management process are: ................................................................................................................. ................................................................................................................. 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 6. 7. 8. 9. ................................................................................................................. ................................................................................................................. ................................................................................................................. Unlike financial accounting statements, managerial accounting reports do not have to follow generally accepted accounting procedures because they are used only by ........................................... Monitoring the operating results of implemented plans and comparing the actual results with the expected results is called ............................. The philosophy of controlling operations by comparing actual and expected results is called ....................................................................... 6. ____ 7. ____ 8. ____ 9. ____ 10. ____ 11. ____ 10. 11. 12. The measurement of a variety of issues including levels of emissions and their impact on product costs are the concerns of __________ accountants............................................................................................. The three stages of inventory for a manufacturing company are: ................................................................................................................. ................................................................................................................. ................................................................................................................. The Cost Accounting Department for a manufacturer would be a (line or staff) department. ............................................................................... 12. ____ 1315. 13. 14. 15. 16. 13. ____ 14. ____ 15. ____ 16. ____ 17. 18. Costs associated with manufacturing a product are called __________ costs. ................................................................................. In management accounting reports, selling and administrative expenses are classified as __________ costs. ..................................... continued 17. ____ 18. ____ STATEMENTS Answers For Scoring 19. 20. 2122. 21. 22. 23. 24. Costs that can be traced to a cost object are called __________ costs. ...................................................................................................... Costs that cannot be traced to a specific cost object are called __________ costs. ................................................................................. Prime costs are the sum of the following two costs for a manufacturer: ................................................................................................................. ................................................................................................................. The cost of the manufactured product sold is called ............................. The cost of windshields for an auto manufacturer would be a(n) 19. ____ 20. ____ 21. ____ 22. ____ 23. ____ 24. ____ (direct or indirect) cost. .......................................................................... PROBLEMANALYSIS OF COSTS40% INSTRUCTIONS: For each of the following situations, identify the cost as either a direct cost (D) or an indirect cost (I) and indicate whether it is a product cost (Pt) or a period cost (Pd). Direct or Indirect D For Scoring 0. ____ Period or For Product Scoring Pt 0. ____ ITEM 0. Sugar for a candy manufacturer ............................................................ 12. 34. 56. 78. 910. 1112. 1314. 1516. Materials used for general factory use ................................................... Factory labor incurred on specific jobs .................................................. Rental cost on a sales showroom .......................................................... Advertising costs for a new product line ................................................ Cost Accounting Department salaries ................................................... Shipping expense for goods sold FOB destination ............................... Cost of hard drives for a computer manufacturer .................................. Cost of health insurance for sales workers ............................................ 1. ____ 3. ____ 5. ____ 7. ____ 9. ____ 11. ____ 13. ____ 15. ____ 2. ____ 4. ____ 6. ____ 8. ____ 10. ____ 12. ____ 14. ____ 16. ____ ACHIEVEMENT TEST SOLUTIONSCHAPTER 1 TEST 1A Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. staff department historical estimated staff line direct indirect planning direct materials 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. direct labor factory overhead direct materials indirect conversion direct or prime feedback cost of goods manufactured factory overhead finished goods inventory direct product period 23. false 24. statement of goods manufactured Problem Analysis of Costs Direct or Indirect D I I I Period (Pd) or Product (Pt) Pt Pt Pt Pt 1. 3. 5. 7. 2. 4. 6. 8. 9. 11. 13. 15. I D D I 10. 12. 14. 16. Pt Pd Pt Pt TEST 1B Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. line department line cost planning directing controlling improving decision making management 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. controlling management by exception environmental (raw) materials work in process finished goods staff product period direct indirect direct materials direct labor 23. cost of goods sold 24. direct Problem Analysis of Costs Direct or Indirect I D D D Period (Pd) or Product (Pt) Pt Pt Pd Pd 1. 3. 5. 7. 2. 4. 6. 8. 9. 11. 13. 15. D D D I 10. 12. 14. 16. Pd Pd Pt Pt 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 2A Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. A FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amounts in the Answers column. For Scoring 0. ____ STATEMENTS 0. A(n) _________ accounting system is used by companies who make large quantities of items that are not distinguishable from each other. . Answers process cost 1. 2. 35. 3. 4. 5. A custom-furniture designer would probably use the _________ system of cost accounting. ..................................................................... The cost of finished products on hand that have not been sold is called ...................................................................................................... Work in process consists of these three costs that have entered the manufacturing process on unfinished products: ................................................................................................................. ................................................................................................................. ................................................................................................................. 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 6. 7. 8. 9. 10. The accounting system that measures, records, and reports product costs is called the _________ system. .................................................. The system best suited to industries that manufacture custom goods to fill special orders is referred to as a(n) _________ system. .............. The system that uses the department or process as the cost object is a(n) _________ system. ........................................................................ The Receiving Department document that shows the quantity received and its condition is the ............................................................. Materials are released from the storeroom to the factory in response to a(n) ..................................................................................................... 6. ____ 7. ____ 8. ____ 9. ____ 10. ____ 11. 12. 13. 14. The amount of time spent by an employee in the factory is usually recorded by a(n) ..................................................................................... In terms of manufacturing costs, indirect materials and indirect labor are examples of ...................................................................................... The costing method that accumulates and allocates factory overhead costs to products using many overhead rates is ................................... If estimated total factory overhead costs are $100,000 and direct labor hours are 20,000, the predetermined factory overhead rate is _________ per direct labor hour. ........................................................... The process of assigning factory overhead costs to a cost object is 11. ____ 12. ____ 13. ____ 14. ____ 15. ____ 15. termed .................................................................................................... 16. 17. In highly-automated factory settings, a widely-used activity base for predetermining a factory overhead rate is ............................................. The subsidiary ledger that contains cost data for the units manufactured, units sold, and units on hand is the ............................... continued 16. ____ 17. ____ STATEMENTS 18. 19. The direct labor and overhead costs of a service business are accumulated in a(n) _________ account. ............................................. If the actual factory overhead costs are less than the amount of factory overhead applied, the factory overhead account balance will be a (debit or credit). .............................................................................. The factory overhead in Question 19 is said to be ................................ The source of the data for debiting Work in Process for direct Answers For Scoring 18. ____ 19. ____ 20. ____ 20. 21. materials is a(n) ...................................................................................... 22. 23. 24. The accounting document that is used to accumulate the costs for each clients job in a service business is a(n) ........................................ The controlling account for the finished goods ledger is the _________ account. .............................................................................. The measure used to allocate overhead that reflects its consumption is called a(n) ........................................................................................... 21. ____ 22. ____ 23. ____ 24. ____ PROBLEMANALYSIS OF TRANSACTIONS40% INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the summarized operations presented below by inserting the letter or letters of the account titles listed in the appropriate columns. ACCOUNTS Factory Overhead Finished Goods Materials Sales A. B. C. D. Accounts Payable Accounts Receivable Cash Cost of Goods Sold E. F. G. H. I. Selling and Administrative Expenses J. Wages Payable K. Work in Process TRANSACTIONS 0. Cash paid on account ............................................................................ Debit A For Scoring 0. ____ Credit C For Scoring 0. ____ 12. 34. 56. 78. 910. 1112. 1314. Materials requisitioned for use on specific jobs and for general factory use .......................................................................................................... Factory labor incurred on specific jobs and for general factory use ...... Applied factory overhead to jobs ........................................................... Paid salary of vice-president of finance ................................................. Cash paid for overhead costs incurred .................................................. Transferred small balance of under-applied overhead .......................... Cost of jobs completed .......................................................................... 1. ____ 3. ____ 5. ____ 7. ____ 9. ____ 11. ____ 13. ____ 2. ____ 4. ____ 6. ____ 8. ____ 10. ____ 12. ____ 14. ____ 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 2B Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. B FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column. For Scoring 0. ____ Answers 0. 13. 1. The cost accounting system best suited for a building contractor would probably be a(n) _________ system. .......................................... What three kinds of costs make up total manufacturing cost? ................................................................................................................ job cost 1. ____ 2. 3. 45. 4. 5. 6. 7. ................................................................................................................ ................................................................................................................ The two main types of cost accounting systems for manufacturing operations are: ................................................................................................................. ................................................................................................................. The product costs that have entered into the manufacturing process but are associated with unfinished products are called ......................... The Receiving Department document that shows the quantity 2. ____ 3. ____ 4. ____ 5. ____ 6. ____ 7. ____ received and its condition is the.............................................................. 8. 9. 10. 11. 12. Materials are released from the storeroom to the factory in response to a(n) ..................................................................................................... The amount of time spent by an employee in the factory is usually recorded by a(n) ..................................................................................... The system used by many service firms to accumulate the costs associated with providing client services is a(n) _________ system. . .. The controlling account for the work in process ledger is the _________ account. .............................................................................. The measure used to allocate overhead that reflects its consumption 8. ____ 9. ____ 10. ____ 11. ____ is called a(n) ........................................................................................... 13. 1415. 14. 15. 16. As factory overhead costs are incurred, they are debited to a(n) _________ account. .............................................................................. The two variables involved in calculating predetermined factory overhead are: ................................................................................................................. ................................................................................................................. The cost of wages of employees who are directly involved in converting materials into the manufactured product is .......................... 12. ____ 13. ____ 14. ____ 15. ____ 16. ____ 17. 18. The cost of the completed product is transferred to .............................. The controlling account for the finished goods ledger is the _________ account. .............................................................................. continued 17. ____ 18. ____ STATEMENTS 1920. 19. 20. 21. The work-in-process account of a firm engaged in providing services is made up of: ................................................................................................................ ................................................................................................................ If the amount of factory overhead applied is less than the actual factory overhead costs, the factory overhead account balance will be a (debit or credit). ................................................................................... Answers For Scoring 19. ____ 20. ____ 21. ____ 22. 23. 24. The factory overhead in Question 21 is said to be ................................ At the end of the year, any balance in the factory overhead account is transferred to the _________ account. .................................................. The subsidiary ledger for the finished goods controlling account is called the ................................................................................................ 22. ____ 23. ____ 24. ____ PROBLEMANALYSIS OF TRANSACTIONS40% INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the summarized operations presented below by inserting the letter or letters of the account titles listed in the appropriate columns. ACCOUNTS A. B. C. D. Accounts Payable Accounts Receivable Cash Cost of Goods Sold E. F. G. H. Factory Overhead Finished Goods Materials Sales I. Selling and Administrative Expenses J. Wages Payable K. Work in Process TRANSACTIONS 0. 12. $14,000 cash received from cash sales ................................................ $7,500 of materials requisitioned for use on specific jobs and for general factory use ................................................................................. Debit C For Scoring 0. ____ 1. ____ Credit H For Scoring 0. ____ 2. ____ 34. 56. 78. 910. 1112. 1314. Factory labor of $25,000 incurred on specific jobs and for general factory use .............................................................................................. $19,250 cash paid for overhead costs incurred ..................................... Applied factory overhead of $13,425 to jobs ......................................... Transferred small balance of over-applied overhead ............................ Cost of jobs completed .......................................................................... Paid salary of vice-president of finance ................................................. 3. ____ 5. ____ 7. ____ 9. ____ 11. ____ 13. ____ 4. ____ 6. ____ 8. ____ 10. ____ 12. ____ 14. ____ ACHIEVEMENT TEST SOLUTIONSCHAPTER 2 TEST 2A Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. job order cost finished goods inventory direct materials direct labor factory overhead cost accounting job order cost process cost receiving report 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. materials requisition clock (in-and-out) card factory overhead activity-based costing $5.00 cost allocation machine hours finished goods ledger (stock ledger) work in process credit overapplied materials requisition job cost sheet 23. finished goods 24. activity base or driver Problem Analysis of Transactions Debit E, K E, K K I Credit G J E C 1. 3. 5. 7. 2. 4. 6. 8. 9. 11. 13. E D F 10. 12. 14. C E K TEST 2B Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. direct materials direct labor factory overhead job order system process cost system work in process receiving report materials requisition clock (in-and-out) card job cost work in process 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. activity base or driver factory overhead estimated factory overhead costs estimated activity base direct labor finished goods inventory finished goods direct labor overhead costs credit overapplied cost of goods sold finished goods ledger (stock ledger) Problem Analysis of Transactions Debit E, K E, K E K E F Credit G J C E D K 1. 3. 5. 7. 9. 11. 2. 4. 6. 8. 10. 12. 13. I 14. C 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 3A Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. A FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amounts in the Answers column. For Scoring STATEMENTS 0. The cost system best suited to industries that manufacture homogeneous units of products on a continuous basis is a(n) _________ system. ................................................................................ whether Identify a process cost or job order cost system would be Answers process 0. ____ 14. more appropriate for each of the following businesses: 1. 2. 3. 4. 5. 6. accounting firm ....................................................................................... gasoline producer .................................................................................. airplane manufacturer ............................................................................ pharmaceuticals company ..................................................................... computer chip manufacturer .................................................................. The complete number of units that could have been finished within a given accounting period with respect to direct materials and conversion costs is the ........................................................................... Direct labor and factory overhead are referred to as ............................ 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 6. ____ 7. ____ 7. 89. Oslo Manufacturing incurred $80,000 of direct materials costs, direct labor costs of $20,000, and factory overhead of $30,000. If 1,000 direct materials equivalent units and 900 conversion equivalent units were manufactured, then: The equivalent unit cost for direct materials is ...................................... The equivalent unit cost for conversion is ............................................. The periodic report prepared for each processing department, summarizing (1) the units for which the department is responsible and their disposition and (2) the costs charged to the department and their allocation, is termed the ......................................................................... The method of inventory costing that assumes the unit product costs $ $ 8. ____ 9. ____ 8. 9. 10. 10. ____ 11. should be determined separately for each period in the order in which the costs were incurred is ...................................................................... 12. 13. 14. 15. 16. A process manufacturer produces products that are indistinguishable from each other using a(n) _________ production process. ................. The number of units in production during a period, whether completed or not, are known as .............................................................................. Repair and maintenance of manufacturing equipment are _________ activities. ................................................................................................ Utility costs and depreciation on equipment are considered _________ costs. ................................................................................... The _________ is computed as the quantity of material output divided 11. ____ 12. ____ 13. ____ 14. ____ 15. ____ 16. ____ by the quantity of material input. ............................................................ continued STATEMENTS 1718. 17. 18. 1922. The transferred costs of completed production in Department A using a process cost system include: ................................................................................................................ ................................................................................................................ Department A had 10,000 units in work in process that were 30% converted at the beginning of the period at a cost of $10,000. During the period, 15,000 units of direct materials were added at a cost of Answers For Scoring 17. ____ 18. ____ $60,000, 16,000 units were completed, and 9,000 units were 40% completed. The first-in, first-out cost method is used and all materials are added at the beginning of the process. Direct labor was $30,000, and factory overhead was $60,000 during the period. 19. 20. 21. 22. 2324. The number of equivalent units of conversion for the period was ......... The total conversion costs for the period were ...................................... The conversion cost of the units started and completed during the period was .............................................................................................. The conversion cost of the 9,000 units in process at the end of the period was .............................................................................................. To compute equivalent units for conversion costs, it is necessary to $ $ $ 19. ____ 20. ____ 21. ____ 22. ____ know how which two variables enter the manufacturing process: 23. 24. ................................................................................................................. ................................................................................................................. 23. ____ 24. ____ PROBLEMANALYSIS OF TRANSACTIONS40% INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the selected transactions given below by inserting the letter or letters of the account titles listed in the appropriate columns. (Do not record the amounts.) ACCOUNTS A. B. C. D. Accounts Payable Accounts Receivable Cash Cost of Goods Sold E. F. G. H. Factory OverheadDepartment A Factory OverheadDepartment B Finished Goods Materials I. J. K. L. Sales Wages Payable Work in ProcessDepartment A Work in ProcessDepartment B For Scoring 0. ____ 1. ____ 3. ____ For Scoring 0. ____ 2. ____ 4. ____ TRANSACTIONS 0. 12. 34. Materials requisitioned for use in Department A, $40,000, of which $20,000 entered directly into the product............................................... Paid cash for wages owed, $47,000....................................................... Purchased materials on account, $50,000 ............................................ Debit E, K Credit H 56. 78. 910. 1112. 1314. 1516. Labor in Department A, $17,500, was used directly in the manufacture of the product .................................................................... Factory overhead applied to production in Department A, $10 per machine hour ......................................................................................... Factory overhead applied to production in Department B, $8.50 per machine hour ......................................................................................... Goods finished in Department A and transferred to Department B, $79,000 Goods finished in Department B and transferred to finished goods, $114,000 ................................................................................................ Cost of finished goods sold, $175,369 ................................................... 5. ____ 7. ____ 9. ____ 11. ____ 13. ____ 15. ____ 6. ____ 8. ____ 10. ____ 12. ____ 14. ____ 16. ____ 10th Edition MANAGERIAL ACCOUNTING Warren/Reeve/Duchac Chapter Test 3B Score Name Course % Section NOTE: Each of the 40 correct answers is assigned a weight of 2%. B TEST 1 (Concluded) FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY60% INSTRUCTIONS: Complete each of the following statements by writing the appropriate word or amounts in the Answers column. For Scoring 0. ____ Answers 0. 1. The cost system best suited to industries that manufacture products to fill special orders from customers is a(n) _________ cost system. . . The periodic report prepared for each processing department, job order TEST 1 (Concluded) summarizing (1) the units for which the department is responsible and their disposition and (2) the costs charged to the department and their allocation, is termed the ......................................................................... 2. Boston Manufacturing incurred $24,000 of direct materials costs. If 800 direct materials equivalent units were manufactured, the equivalent unit cost for direct materials is _________ per unit. ............ The transferred costs of completed production in Department A using a process system include: ................................................................................................................ ................................................................................................................ The objective of most manufacturers is to produce products with: 1. ____ $ 2. ____ 34. 3. 4. 57. 3. ____ 4. ____ TEST 1 (Concluded) 5. 6. 7. 8. 9. ................................................................................................................ ................................................................................................................ ................................................................................................................ The _________ is computed as the quantity of material output divided by the quantity of material input. ............................................................ The _________ for direct materials is calculated by dividing total direct materials cost for the period by total equivalent units of direct materials. ................................................................................................ In a(n) _________ cost system, the work in process at the end of the period is the sum of the job cost sheets for partially completed jobs. ... 5. ____ 6. ____ 7. ____ 8. ____ 9. ____ 10. ____ 10. TEST 1 (Concluded) 1114. Department A had 15,000 units in work in process that were 50% converted at the beginning of the period at a cost of $30,000. During the period, 20,000 units of direct materials were added at a cost of $60,000, 30,000 units were completed, and 5,000 units were 40% completed. The first-in, first-out cost method is used and all materials are added at the beginning of the process. Direct labor was $25,000, and factory overhead was $75,000 during the period. The number of equivalent units of conversion for the period was ......... The total conversion costs for the period were ...................................... The conversion cost of the units started and completed during the period was .............................................................................................. $ $ 11. ____ 12. ____ 13. ____ 11. 12. 13. TEST 1 (Concluded) 14. The conversion cost of the 5,000 units in process at the end of the period was .............................................................................................. $ continued 14. ____ TEST 1 (Concluded) Answers 15. The business philosophy that focuses on reducing time and cost and eliminating poor quality within manufacturing and non-manufacturing processes is ........................................................................................... In innovative manufacturing systems, processing functions are combined into work centers, which are also known as ......................... In a JIT manufacturing system, production information is passed between departments on cards called ................................................... The entry to record the cost of finished products sold to customers is: For Scoring 15. ____ 16. ____ 17. ____ 16. 17. 1819. TEST 1 (Concluded) 18. 19. 20. 2124. 21. 22. 23. 24. Debit: ...................................................................................................... Credit: ..................................................................................................... The primary objective of JIT systems is to increase the efficiency of operations. (true or false) ....................................................................... Identify whether a process cost or job order cost system would be more appropriate for each of the following businesses: airplane manufacturer ............................................................................ law firm ................................................................................................... paper manufacturer ................................................................................ video game designer ............................................................................. 18. ____ 19. ____ 20. ____ 21. ____ 22. ____ 23. ____ 24. ____ TEST 1 (Concluded) PROBLEMANALYSIS OF TRANSACTIONS40% INSTRUCTIONS: Indicate the titles of the accounts to be debited and credited in recording the selected transactions given below by inserting the letter or letters of the account titles listed in the appropriate columns. (Do not record the amounts.) ACCOUNTS Factory OverheadCutting Department Factory OverheadPolishing Department Finished Goods Materials A. B. C. D. Accounts Payable Accounts Receivable Cash Cost of Goods Sold E. F. G. H. I. J. K. L. Sales Wages Payable Work in ProcessCutting Department Work in ProcessPolishing Department TEST 1 (Concluded) TRANSACTIONS 0. 12. 34. 56. 78. Materials requisitioned by the Cutting Department, $60,000, for use directly in the manufacture of the product.............................................. Paid cash for wages owed, $109.000 .................................................... Purchased materials on account, $42,000 ............................................ Labor used in the Cutting Department, $30,000, of which $25,000 was used directly in the manufacture of the product ............................. Factory overhead applied to production in the Cutting Department, $2.45 per machine hour ......................................................................... Debit E, K For Scoring 0. ____ 1. ____ 3. ____ 5. ____ 7. ____ Credit H For Scoring 0. ____ 2. ____ 4. ____ 6. ____ 8. ____ TEST 1 (Concluded) 910. 1112. 1314. 1516. Factory overhead applied to production in the Polishing Department, $3.75 per machine hour ......................................................................... Goods finished in the Cutting Department and transferred to the Polishing Department, $75,897 Goods finished in the Polishing Department and transferred to finished goods, $67,000 ......................................................................... Cost of finished goods sold, $234,123 ................................................... 9. ____ 11. ____ 13. ____ 15. ____ 10. ____ 12. ____ 14. ____ 16. ____ ACHIEVEMENT TEST SOLUTIONSCHAPTER 3 TEST 1 (Concluded) TEST 3A Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. job order process job order process process equivalent units of production conversion costs $80.00 TEST 1 (Concluded) 9. $55.55 10. cost of production report 11. first-in, first-out (FIFO) 12. continuous 13. whole units 14. service 15. factory overhead 16.yield 17. direct materials costs 18. conversion costs 19. 22,600 20. $70,000 21. $18,600 TEST 1 (Concluded) 22. $11,160 23. direct labor 24. factory overhead Problem Analysis of Transactions Debit J H K K Credit C A J E 1. 3. 5. 7. 2. 4. 6. 8. TEST 1 (Concluded) 9. 11. 13. 15. L L G D 10. 12. 14. 16. F K L G TEST 1 (Concluded) TEST 3B TEST 1 (Concluded) Fill-in-the-Blank Principles and Terminology 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. cost of production report $30.00 direct materials costs conversion costs high quality low cost instant availability yield cost per equivalent unit job order TEST 1 (Concluded) 13. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24,500 $130,000 $79592 $10,612 just-in-time processing manufacturing cells Kanban Cost of Goods Sold Finished Goods true process job order process TEST 1 (Concluded) 24. job order Problem Analysis of Transactions Debit J H K K L L Credit C A H E F K 1. 3. 5. 7. 9. 11. 2. 4. 6. 8. 10. 12. TEST 1 (Concluded) 13. 15. G D 14. 16. L G Which of the following would be most likely to use process costing? A. A custom furniture manufacturer. B. An auto body repair shop. C. A law firm. D. A lawn fertilizer manufacturer. 2. Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory? A. Job order cost system B. General cost system C. Replacement cost system D. Process cost system 3. The source of the data for debiting Work-in-Process for direct materials is the: A. purchase order B. purchase requisition C. materials requisition D. receiving report 4. In a job order cost accounting system, the entry to record the flow of direct materials TEST 1 (Concluded) into production is: A. debit Work in Process, credit Materials B. debit Materials, credit Work in Process C. debit Factory Overhead, credit Materials D. debit Work in Process, credit Supplies 5. The entry to record direct labor costs into production in a job order cost accounting system is: A. debit Factory Overhead, credit Work in Process B. debit Finished Goods, credit Wages Payable C. debit Work in Process, credit Wages Payable D. debit Factory Overhead, credit Wages Payable 6. The recording of the jobs shipped and customers billed would include a credit to: A. Accounts Payable B. Cash C. Finished Goods D. Cost of Goods Sold 7. All of the following are examples of activity bases except: A. salaries of supervisors B. quality inspections of products C. number of machine setups D. raw materials storage 8. Which of the following entries would probably not be found on the books of a service provider? A. Debit Work in Process; credit Materials B. Debit Work in Process; credit Wages TEST 1 (Concluded) Payable C. Debit Work in Process; credit Overhead D. Debit Cost of Services; credit Work in Process 9. For which of the following businesses would a process cost system be appropriate? A. Auto repair service B. Paint manufacturer C. Specialty printer D. Custom furniture manufacturer 10. Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total cost of units completed during the period were: A. $117,000 B. $143,400 C. $121,000 D. $127,450 11. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for TEST 1 (Concluded) Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for direct labor is: A. Work in Process-Department 1 60,000 Wages Payable 60,000 B. Wages Payable 125,000 Work in Process--Department 1 125,000 C. Work in Process--Department 1 125,000 Wages Payable 125,000 D. Wages Payable 60,000 Work in Process--Department 1 60,000 12. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and TEST 1 (Concluded) $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for applied overhead is: A. Factory Overhead--Department 1 150,000 Work in Process-Department 1 150,000 B. Work in Process--Department 1 125,000 Factory Overhead--Department 1 125,000 C. Work in Process--Department 1 70,000 Factory Overhead--Department 1 70,000 D. Work in Process--Department 1 150,000 Factory Overhead--Department 1 150,000 13. The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: April 1, work in process: Materials cost, 3,000 units $ 7,500 Conversion costs, 3,000 units, 2/3 TEST 1 (Concluded) completed 6,000 Materials added during April, 10,000 units 26,000 Conversion costs during April 31,000 Goods finished during April, 11,500 units --- April 30 work in process, 1,500 units, 1/2 completed --- All direct materials are placed in process at the beginning of the process and the average cost method is used to cost inventories. The materials cost per equivalent unit (to the nearest cent) for April is: A. $2.60 B. $2.58 C. $3.02 D. $2.26 14. Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. Of the $12,500, $8,000 was for material and $4,500 was for conversion costs. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. If the average cost method is used the material cost per TEST 1 (Concluded) unit (to the nearest cent) would be: A. $2.04 B. $1.59 C. $1.91 D. $2.00 15. For purposes of analysis, mixed costs are generally: A. classified as fixed costs B. classified as variable costs C. classified as period costs D. separated into their variable and fixed cost components 16. Phipps Co. sells two products, Arks and Bins. Last year, Phipps sold 12,000 units of Arks and 28,000 units of Bins. Related data are: Product Unit Selling Price Unit Variable Cost Unit Contribution Margin Arks $120 $80 $40 Bins 80 60 20 What was Phipps Co.'s overall unit variable cost? A. $140 B. $ 70 C. $ 66 D. $ 60 17. Cost-volume-profit analysis cannot be used if which of the following occurs? A. Costs cannot be properly classified into fixed and variable costs B. The total fixed costs change C. The per unit variable costs change D. Per unit sales prices change 18. A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials $ TEST 1 (Concluded) 90,000 Direct labor 120,000 Variable factory overhead 140,000 Fixed factory overhead 50,000 $400,000 Operating expenses: Variable operating expenses $ 65,000 Fixed operating expenses 25,000 90,000 If 800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet? A. $32,000 B. $28,000 C. $33,200 D. $34,000 19. A formal written statement of management's plans for the future, expressed in financial terms, is a: A. gross profit report B. responsibility report C. budget D. performance report 20. McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible budget would show: A. variable costs of $49,500 and $25,875 of fixed costs B. variable costs of $44,000 and $23,000 of fixed costs C. variable costs of $49,500 and $23,000 of fixed costs D. variable and fixed costs totaling TEST 1 (Concluded) $75,375 21. Management accountants usually provide for a minimum cash balance in their cash budgets for which of the following reasons: A. stockholders demand a minimum cash balance B. it is an important way of effectively managing cash C. it provides a safety buffer for variations in estimates D. to have funds available for major capital expenditures 22. Standards that represent levels of operation that can be attained with reasonable effort are called: A. theoretical standards B. ideal standards C. variable standards D. normal standards 23. The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct materials 2,500 kilograms @ $8 Actual Costs Direct materials 2,600 kilograms @ $8.75 The amount of the direct materials quantity variance is: A. $875 favorable B. $800 unfavorable C. $800 favorable D. $875 unfavorable 24. The following data is given for the Walker Company: Budgeted TEST 1 (Concluded) production............................................... 1,000 units Actual production.......................................................980 units Materials: Standard price per lb.......................................................$2.00 Standard pounds per completed unit.................................12 Actual pounds purchased and used in production.........11,800 Actual price paid for materials..................................$23,000 Labor: Standard hourly labor rate.....................................$14 per hour Standard hours allowed per completed unit...............4.5 Actual labor hours worked.....................................4,560 Actual total labor costs........................................$62,928 Overhead: Actual and budgeted fixed overhead.....................$27,000 Standard variable overhead rate.........................$3.50 per standard labor hour Actual variable overhead costs........................... $15,500 Overhead is applied on standard labor hours. The direct labor rate variance is: A. 912U B. 912F TEST 1 (Concluded) C. 2100U D. 2100F 25. The following data is given for the Walker Company: Budgeted production............................................... 26,000 units Actual production.......................................................27,500 units Materials: Standard price per oz......................................................$6.50 Standard ounces per completed unit.................................8 Actual ounces purchased and used in production.........228,000 Actual price paid for materials..................................$1,504,800 Labor: Standard hourly labor rate.....................................$22 per hour Standard hours allowed per completed unit...............6.6 Actual labor hours worked.....................................183,000 Actual total labor costs........................................$4,020,000 Overhead: Actual and budgeted fixed overhead.....................$1,029,600 Standard variable overhead rate.........................$24.50 per standard labor hour Actual variable overhead costs........................... TEST 1 (Concluded) $4,520,000 Overhead is applied on standard labor hours. The direct labor time variance is: A. 6,000F B. 6,000U C. 33,000U D. 33,000F 26. Income from operations for Division B is $150,000, total service department charges are $400,000 and operating expenses are $2,266,000. What are the revenues for Division B? A. $550,000 B. $3,216,000 C. $2,816,000 D. $2,666,000 27. What is the term used to describe expenses that are incurred for the benefit of a specific department? A. Indirect expenses B. Margin expenses C. Departmental expenses D. Direct expenses 28. The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31: Software Division Hardware Division Corporate Total Cost of goods sold $47,200 $30,720 Direct operating expenses 27,200 20,040 Net sales 95,000 64,000 Interest expense $ 2,040 General overhead 18,160 Income tax 4,700 The gross profit for the Software Division is: A. $47,800 B. $20,600 C. TEST 1 (Concluded) $13,240 D. $33,280 29. A factor in determining the rate of return on investment--the ratio of sales to invested assets--is called: A. profit margin B. indirect margin C. investment turnover D. cost ratio 30. Materials used by Bristol Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 30,000 units of material are transferred, with no reduction in Division A's current sales. How much would Division C's income from operations increase? A. $0 B. $90,000 C. $15,000 D. $60,000 31. Materials used by Bristol Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can TEST 1 (Concluded) produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 30,000 units of material are transferred, with no reduction in Division A's current sales. How much would Bristol's total income from operations increase? A. $45,000 B. $120,000 C. $60,000 D. $150,000 32. A business is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year. If alternative investments are available which yield a 21% return, the opportunity cost of the purchase of the land is: A. $105,000 B. $ 40,000 C. $ 65,000 D. $ 8,400 33. What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the "cost" amount to which the markup is added? A. Variable cost concept B. Total cost concept C. Product cost concept D. Opportunity cost concept 34. Mendoza Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale TEST 1 (Concluded) of 45,000 units of its sole product. Mendoza desires a profit equal to a 10.8% rate of return on invested assets of $900,000. Fixed factory overhead cost $72,000.00 Fixed selling and administrative costs 45,000.00 Variable direct materials cost per unit 4.50 Variable direct labor cost per unit 7.65 Variable factory overhead cost per unit 2.25 Variable selling and administrative cost per unit .90 The unit selling price for the company's product is: A. $17.73 B. $15.75 C. $22.05 D. $20.06 35. Niva Co. Manufactures three products: Bales; Tales and Wales. The selling prices are: 55; 78; and 32 respectively. The variable costs for each product are: 20; 50; and 15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. What is the contribution margin per machine hour for Tales? A. $7 B. $5 C. $28 D. $35 36. The method of analyzing capital investment proposals that divides the estimated TEST 1 (Concluded) average annual income by the average investment is: A. cash payback method B. net present value method C. internal rate of return method D. average rate of return method 37. An analysis of a proposal by the net present value method indicated that the present value of future cash inflows exceeded the amount to be invested. Which of the following statements best describes the results of this analysis? A. The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis. B. The proposal is desirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis. C. The proposal is undesirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis. D. The proposal is undesirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis. 38. The expected average rate of return for a proposed investment of $4,800,000 in a TEST 1 (Concluded) fixed asset, using straight line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $12,000,000 is: A. 25% B. 18% C. 40% D. 12.5% 39. The present value factor for an annuity of $1 is determined using which of the following formulas? A. Amount to be invested/Annual average net income B. Annual net cash flow/Amount to be invested C. Annual average net income/Amount to be invested D. Amount to be invested/Annual net cash flow 40. All of the following qualitative considerations may impact upon capital investments analysis except: A. time value of money B. employee morale C. the impact on product quality D. manufacturing flexibility 41. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 5 .747 .621 .567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 1.833 1.736 1.69 3 TEST 1 (Concluded) 2.673 2.487 2.402 4 3.465 3.17 3.037 5 4.212 3.791 3.605 Using the tables above, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 12%)? A. $20,352 B. $352 C. $24,296 D. $4,296 42. Hoskins Co. uses a plant-wide factory overhead rate based on direct labor hours. Overhead costs would be overcharged to which of the following departments? A. A labor-intensive department B. A capital-intensive department C. A materialsintensive department D. None of the above 43. Which of the following is an example of value-added time? A. Processing time B. Wait time during inspection C. Wait time in inventory D. Both B and C 44. Preferred stock issued in exchange for land would be reported in the statement of cash flows in: A. the cash flows from financing activities section B. the cash flows from investing activities section C. a TEST 1 (Concluded) separate schedule D. the cash flows from operating activities section 45. A statement of cash flows would not disclose the effects of which of the following transactions? A. stock dividends declared B. bonds payable exchanged for capital stock C. purchase of treasury stock D. capital stock issued to acquire fixed assets 46. A company purchases equipment for $29,000 cash. This transaction should be shown on the statement of cash flows under: A. investing activities B. financing activities C. noncash investing and financing activities D. operating activities 47. A building with a book value of $ 45,000 is sold for $50,000 cash Using the indirect method, this transaction should be shown on the statement of cash flows as follows: A. an increase of $45,000 from investing activities B. an increase of $50,000 and a deduction from net income of $5,000 C. an increase of $50,000 from investing activities D. an increase of $45,000 from investing activities and an addition to net income of $5,000 48. On the TEST 1 (Concluded) statement of cash flows, the cash flows from financing activities section would include: A. receipts from the sale of investments B. payments for the acquisition of investments C. receipts from a note receivable D. receipts from the issuance of capital stock 49. The relationship of $225,000 to $125,000, expressed as a ratio, is: A. 2.0 to 1 B. 1.8 to 1 C. 1.5 to 1 D. .56 to 1 50. A company with working capital of $400,000 and a current ratio of 2.5 pays a $75,000 short-term liability. The amount of working capital immediately after payment is: A. $475,000 B. $325,000 C. $400,000 D. $75,000 TEST 1 (Concluded) ... View Full Document

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