Setups: 100,000/500 = 200 per setup
Ordering costs: 40,000/3,200 = 12.50 per order
Maintenance: 200,000/4,000 = 50 per machine hour
Power: 20,000/80,000 = 0.25 per kilowatt hour
Allocate Building Department first, therefore, 50/140
REF: Appendix 3.1
36. Oaks Company has two support departments, Maintenance Department (MD) and Personnel
Department (PD), and two producing departments, P1 and P
Other variable overhead
Variable product costs per unit:
Variable product costs per un
From requirement a, produce widgets first.
20,000 units 1.5 DLH per unit = 30,000 DLH to produce widgets
Use remaining 10,000 DLH available to produce gadgets.
10,000 DLH/1.2 DLH per unit = 8,333 units of gadgets
(20,000 units 90)
Unit cost (24,500/500)
Activity-based costing produces more accurate cost information because overhead
incurrence is often related to many different activities rather than to a single
volume-based cost driver.
REF: 3.7| 3.8
5. Rounders Co
8. Majestic Company manufactures a product that has the following unit costs: direct materials, 5;
direct labour, 7; variable overhead, 3; and fixed overhead, 5. Fixed selling costs are 200,000
per year. Variable selling costs of 1 per unit cover the tran
9. The following budget estimates have been prepared by Flowers Company:
The company likes to maintain a minimum cash balance of 50,000.
Any excess cash is
Work in progress, May 1 (10% complete)
Started in May
Work in progress, May 31 (20% complete)
Materials and conversion are incurred uniformly throughout the progress.
23. Refer to Figure 5-3. Units started and completed
e. no change in profits.
1,000 [240 - (270 - 120,000/2,000)] = 30,000 increase
41. Refer to Figure 9-7. Assuming Meco Company is operating at capacity and accepting the order
would require an offsetting redu
Chapter 1 - Introduction to management accounting
1. _ is devoted to providing information for external users.
a. Management accounting
b. Financial accounting
c. Internal accounting
d. Cost accounting
Decrease in operating costs
Increase in on-time deliveries
The system will cost 400,000 and will last ten years. The system would have a salvage value of
30,000 at the end of ten years. The company's cost of capital is 8 per cent.
c. Price skimming
d. Target costing
16. _ is where a higher price is charged at the beginning of a product's life cycle.
a. Penetration pricing
b. Predatory pricing
c. Price skimming
d. Target costing
43. Bronco Company sells a product for 10. Budgeted sales for the first quarter of the current year are
The company wants to maintain an inventory of finished unit
d. mixed cost.
7. Which of the following statements is TRUE about fixed and variable costs?
a. Both costs are constant when considered on a per-unit basis.
b. Both costs are constant when considered on a total basis.
c. Fixed costs
2,900 + 10,560 = 13,460
11. Refer to Figure 16-1. The flexible budget for rent in 2011 is
100 is given.
12. Refer to Figure 16-1. The flexible budget var
Chapter 13 - Capital investment decisions: appraisal methods
1. Projects that, if accepted, preclude the acceptance of competing projects are
a. priority projects.
b. mutually exclusive projects.
c. independent projects.
d. equity projects
26. Continuous budgeting requires managers to
a. add a future month as the current month expires.
b. constantly update the budget to include new information.
c. continuously refer to the budget when making decisions.
d. assign budgeting responsibilities t
39. Assuming all other things are the same, variable cost per unit must have _ if there was an
increase in the break-even point.
a. remained the same
b. increased first, then decreased
d. depends on the circumstances
Chapter 17 - Standard costing and variance analysis 1
1. To determine the unit standard cost for a particular input, a company must decide how much
a. input should be used per unit of output and how much should be paid for the quantity of
The following results for the year pertain to the Maddox Division of Ryan Ltd.:
The weighted average cost of capital is 12 per cent. The firm's minimum required rate of return is
14 per cent.
Decentralization is the delegation of decision-making authority to successively lower management
levels in an organization. The lower in the organization that authority is delegated, the greater is
the decentralization. Centralization exists when top mana
1. Chantilly Industries has two divisions: the Triangle Division and the Square Division. The Triangle
Division produces a component that is used by the Square Division. Information about that
component is as follows:
Variable manufacturing costs
The following information was extracted from the accounting records of Noelle Company:
STANDARD COST CARD
8 pounds 1.20 per pound
3 hours 20 per hour
3 hours 6 per hour
c. 0.56 hours per unit.
d. 0.50 hours per unit.
1,000 hours/1,800 units = 0.56 hours per unit
38. Refer to Figure 21-5. Sammie's theoretical cycle time for this year would be
a. 2.00 hours per unit.
Brad Company developed the following budgeted life-cycle income statement for two proposed
products. Each product's life cycle is expected to be two years.
Cost of goods sold
(600 + 1,200 + 300) = 2,100
Pautner Company had the following historical accounting data per unit:
4,000 20 days = 80,000
19. Refer to Figure 21-2. The value-added costs would be
The costs of carrying inventory ar
cover all fixed costs this period.
Pipe would accept no less than 25 if operating at capacity because for every unit sold
internally to Equipment, it foregoes the opportunity to sell the fitting for 25 on the open
REF: 20.1| 20.5