ACCT Quiz 4 – 45 Questions
Question 1 (1 point)
A responsibility center that incurs costs (and expenses) and
generates revenues is classified as a(n):
profit
center.
cost center.
revenue center.
investment center.
Question 2 (1 point)
The most useful measure for evaluating a manager's performance in
controlling revenues and costs in a profit center is:
controllable
margin.
contribution net income.
contribution gross profit.
contribution margin.
Question 3 (1 point)
Marley Corporation desires to earn target net income of $180,000.
If the selling price per unit is $30, unit variable cost is $24, and total
fixed costs are $720,000, the number of units that the company must sell to
earn its target net income is:
90,000.
60,000.
150,000.
120,000.
Question 4 (1 point)
Oscar Corporation uses a process cost accounting system. Given the
following data, compute the number of units transferred out during the current
period.
Beginning Work in process 10,000
units (½ complete)
Ending Work in Process 12,500
units (? complete)
Started into Production 75,000
units
85,000.
62,500.
72,500.
75,000.
Question 5 (1 point)
Pilgrim Company applies overhead on the basis of machine hours.
Given the following data, compute overhead applied and the under- or
overapplication of overhead for the period:
Estimated annual overhead cost $1,200,000
Actual annual overhead cost $1,150,000
Estimated machine hours 300,000
Actual machine hours 280,000
$1,200,000 applied and $30,000 overapplied.
$1,120,000
applied and $30,000 underapplied.
$1,150,000 applied and neither under- nor overapplied.
$1,120,000 applied and $30,000 overapplied.
Question 6 (1 point)
The following data has been collected for use in analyzing the
behavior of maintenance costs of Sterling Corporation:
|
Month
|
Maintenance Costs
|
Machine Hours
|
|
January
|
$121,000
|
20,000
|
|
February
|
125,000
|
23,000
|
|
March
|
128,000
|
24,000
|
|
April
|
159,000
|
34,000
|
|
May
|
168,000
|
36,000
|
|
June
|
178,000
|
38,000
|
|
July
|
181,000
|
40,000
|
Using the high-low method to separate the maintenance costs into
their variable and fixed cost components, these components are:
$5 per hour plus $30,000.
$5 per hour plus $20,000.
$4 per hour plus $41,000.
$3
per hour plus $61,000.
Question 7 (1 point)
Given the following data for Carlson Company, compute (A) total
manufacturing costs and (B) costs of goods manufactured:
|
Direct materials used
|
$120,000
|
Beginning work in process
|
$20,000
|
|
Direct labor
|
50,000
|
Ending work in process
|
10,000
|
|
Manufacturing overhead
|
150,000
|
Beginning finished goods
|
25,000
|
|
Operating expenses
|
175,000
|
Ending finished goods
|
15,000
|
Question 7 options:
|
(A)
|
(B)
|
|
$310,000
|
$330,000
|
|
(A)
|
(B)
|
|
$330,000
|
$340,000
|
|
(A)
|
(B)
|
|
$320,000
|
$330,000
|
Question 8 (1 point)
The production cost report shows both quantities and costs. Costs
are reported in three sections: (1) costs accounted for, (2) unit costs, and
(3) costs charged to department. The sections are listed in the following
order:
(2), (3), (1).
(2), (1), (3).
(1), (3), (2).
(1), (2), (3).
Question 9 (1 point)
The starting point of a master budget is the preparation of the:
production budget.
budgeted balance sheet.
cash budget.
sales
budget.
Question 10 (1 point)
The most useful measure for evaluating the performance of the
manager of an investment center is:
controllable margin.
contribution margin.
income from operations.
return
on investment.
Question 11 (1 point)
The cost classification scheme most relevant to responsibility
accounting is:
fixed vs. variable.
controllable
vs. uncontrollable.
semivariable vs. mixed.
direct vs. indirect.
Question 12 (1 point)
Carter Company estimates its sales at 30,000 units in the first
quarter and that sales will increase by 6,000 units each quarter over the year.
It has, and desires, a 25% ending inventory of finished goods. Each unit sells
for $25. 40% of the sales are for cash. 70% of the credit customers pay within
the quarter. The remainder is received in the quarter following sale. Cash
collections for the third quarter are budgeted at:
$738,000.
$508,500.
$1,023,000.
$886,500.
Question 13 (1 point)
Carter Company estimates its sales at 30,000 units in the first
quarter and that sales will increase by 6,000 units each quarter over the year.
It has, and desires, a 25% ending inventory of finished goods. Each unit sells
for $25. 40% of the sales are for cash. 70% of the credit customers pay within
the quarter. The remainder is received in the quarter following sale.
Production in units for the third quarter should be budgeted at:
36,000.
43,500.
34,500.
45,750.
Question 14 (1 point)
Kemp Company incurs the following costs in producing 50,000 units
of product:
Direct materials $200,000
Direct labor 100,000
Variable manufacturing overhead 200,000
Fixed manufacturing overhead 600,000
An outside supplier has offered to supply the 50,000 units at
$14.00 each. All of Kemp's related variable costs, but only $400,000 of the
fixed costs would be eliminated if the offer is accepted. Acceptance will
result in a:
loss of $400,000.
savings
of $200,000.
loss of $200,000.
savings of $400,000.
Question 15 (1 point)
To be classified as a short-term investment, an investment must
meet the following criteria:
|
Readily Marketable
|
No Loss On Disposal
|
Intent to Convert within
One Year or Operating Cycle, whichever is longer |
|
No
|
No
|
Yes
|
|
Readily Marketable
|
No Loss On Disposal
|
Intent to Convert within
One Year or Operating Cycle, whichever is longer |
|
Yes
|
No
|
Yes
|
|
Readily Marketable
|
No Loss On Disposal
|
Intent to Convert within
One Year or Operating Cycle, whichever is longer |
|
Yes
|
Yes
|
Yes
|
|
Readily Marketable
|
No Loss On Disposal
|
Intent to Convert within
One Year or Operating Cycle, whichever is longer |
|
No
|
Yes
|
No
|
Question 16 (1 point)
Lyndon Company has a production process where two products result
from a joint processing procedure; both can be sold immediately or processed
further. Given the following additional per unit information, determine which
of the products should be processed further.
|
Product
|
Allocated
Joint Cost |
Selling
Price |
Additional
Processing Cost |
New
Selling Price |
|
A
|
$50
|
$100
|
$90
|
$200
|
|
B
|
$30
|
$50
|
$25
|
$80
|
Only A.
Both A and B.
Only B.
Neither A nor B.
Question 17 (1 point)
A flexible budget:
typically uses an activity index different from that used in
developing the predetermined overhead rate.
is also called a static budget.
can be prepared for sales or production budgets, but not for an
operating expense budget.
can
be considered a series of related static budgets.
Question 18 (1 point)
Leah Company's equipment account increased $400,000 during the period;
the related accumulated depreciation increased $30,000. New equipment was
purchased at a cost of $700,000 and used equipment was sold at a loss of
$20,000. Depreciation expense was $100,000. Proceeds from the sale of the used
equipment were:
$210,000.
$250,000.
$280,000.
$320,000.
Question 19 (1 point)
Which of the following would not be included in the operating
activities section of a statement of cash flows?
Cash outflows to governments for taxes.
Cash inflows from returns on equity securities (i.e., dividends).
Cash inflows from returns on loans (i.e., interest).
Cash
outflows to reacquire treasury stock.
Question 20 (1 point)
The concept of significant influence must be satisfied before
which accounting method can be used by an investor?
Consolidated financial statements.
All of these answers are correct.
Cost.
Equity.
Question 21 (1 point)
Which of the following pairs of terms in the area of financial
statement analysis are synonymous?
Vertical — Ratio
Ratio — Trend
Horizontal
— Trend
Horizontal — Ratio
Question 22 (1 point)
Which of the following statements is true?
Trading securities are debt securities that the investor has the
intent to hold to maturity.
Trading securities are reported at cost in the balance sheet.
Trading securities are securities that are not intended to be sold
in the future.
Trading
securities are securities bought and held primarily for sale in the near term.
Question 23 (1 point)
Dividends received are credited to what account under the equity
method and cost method, respectively?
|
Equity
Method
|
Cost
Method
|
|
Stock
Investments
|
Dividend
Revenue
|
|
Equity
Method
|
Cost
Method
|
|
Dividend Revenue
|
Dividend Revenue
|
|
Equity
Method
|
Cost
Method
|
|
Stock Investments
|
Stock Investments
|
|
Equity
Equity
|
Cost
Method
|
|
Dividend Revenue
|
Stock Investments
|
Question 24 (1 point)
In accounting for available-for-sale securities, the Unrealized
Loss on Available-for-Securities account should be classified as a:
loss on the income statement.
contra asset on the balance sheet.
liability on the balance sheet.
deduction
in the stockholders' equity section of the balance sheet
Question 25 (1 point)
Reporting investments at fair value is applicable to:
trading securities only.
both
available-for-sale and trading securities.
available-for-sale securities only.
held-to-maturity securities.
Question 26 (1 point)
Sailor Corporation has the following stock outstanding:
6% Preferred, $100 par $1,000,000
Common Stock, $50 par 2,000,000
No dividends were paid the previous 2 years. If Sailor declares
$250,000 of dividends in the current year, how much will common stockholders
receive if the preferred stock is cumulative?
$60,000.
$70,000.
$180,000.
$190,000.
Question 27 (1 point)
The statement of cash flows is a(n):
required
basic financial statement.
required supplemental financial statement.
optional basic financial statement.
optional supplementary statement.
Question 28 (1 point)
The directors of Bennett Corp. are trying to decide whether they
should issue par or no par stock. They are considering three alternatives for
their new stock, which they are assuming will be issued at $8 per share. The
alternatives are: (A) $5 par value, (B) no par with a $1 stated value, and (C)
no par, no stated value. If 60,000 shares are issued, what amount will be
credited to the common stock account in each of these cases?
|
(A)
|
(B)
|
(C)
|
|
$480,000
|
$480,000
|
$480,000
|
|
(A)
|
(B)
|
(C)
|
|
$60,000
|
$300,000
|
$480,000
|
|
(A)
|
(B)
|
(C)
|
|
$300,000
|
$60,000
|
$480,000
|
|
(A)
|
(B)
|
(C)
|
|
$60,000
|
$480,000
|
$480,000
|
Question 29 (1 point)
Victor Corp. reacquired, but did not retire, 20,000 shares of its
$2 par common stock at a cost of $13 per share on April 30, 2014. The stock was
originally issued at $11 per share. On January 10, 2015, the 20,000 shares were
sold at $16 per share. The sales entry should include a credit to Paid-in
Capital from Treasury Stock for:
$280,000.
$180,000.
$100,000.
$60,000.
Question 30 (1 point)
What is the effect on total paid-in capital of a stock dividend
and a stock split, respectively?
Question 30 options:
|
Stock Dividend
|
Stock Split
|
|
Decrease
|
No effect
|
|
Stock Dividend
|
Stock Split
|
|
Decrease
|
Decrease
|
|
Stock Dividend
|
Stock Split
|
|
No effect
|
No effect
|
|
Stock Dividend
|
Stock Split
|
|
Increase
|
No effect
|
Question 31 (1 point)
Which of the following is reported in the retained earnings statement
as an adjustment to the beginning balance?
Extraordinary items.
Discontinued operations.
Other revenues and expenses.
Prior
period adjustments.
Question 32 (1 point)
Which of the following should be classified as an extraordinary
item?
Effects of major casualties not infrequent in the area.
Write-off of a significant amount of receivables.
Losses due to a bitter, lengthy labor strike.
Loss
from the expropriation of facilities by a foreign government.
Question 33 (1 point)
Bonds that mature in installments are called:
callable bonds.
serial
bonds.
registered bonds.
term bonds.
Question 34 (1 point)
A Discount on Bonds Payable account:
is
an adjunct account to Bonds Payable.
will cause interest expense to be less than cash interest payable.
is increased over the life of the bond until it equals the bond's
face value.
is a contra account to Bonds Payable.
Question 35 (1 point)
Dina Corp. had 500,000 shares of common stock outstanding
throughout the year. Dina reported net income of $2,400,000 and declared
preferred stock dividends of $400,000 during the year. Dina should present
earnings per share of:
$0.80.
$4.00.
$4.80.
$6.00.
Question 36 (1 point)
In order to be considered extraordinary, an item must be:
infrequent
and unusual.
unusual and uninsured.
uninsured and infrequent.
infrequent and uninsured.
Question 37 (1 point)
If the market rate of interest is lower than the stated rate,
bonds will sell at an amount:
equal to face value.
not determinable from the given information.
higher
than face value.
lower than face value.
Question 38 (1 point)
Which of the following combinations presents correct examples of
liquidity, profitability, and solvency ratios, respectively?
|
Liquidity
|
Profitability
|
Solvency
|
|
Receivables turnover
|
Return on operating assets
|
Times interest earned
|
|
Liquidity
|
Profitability
|
Solvency
|
|
Current ratio
|
Inventory turnover
|
Debt to equity
|
|
Liquidity
|
Profitability
|
Solvency
|
|
Inventory turnover
|
Inventory turnover
|
Times interested
earned
|
|
Liquidity
|
Profitability
|
Solvency
|
|
Quick ratio
|
Payout ratio
|
Return on operating
assets
|
Question 39 (16 points)
Match the term that best represents the definition or statement
given below. No term should be used more than once, and not all terms will be
used.
|
Events and
transactions that are unusual in nature and infrequent in occurrence.
|
1.
|
Accounts receivable
|
|
The net income
earned by each share of outstanding common stock.
|
2.
|
Book value per
share
|
|
Standards based on
optimum levels of performance under perfect operating conditions.
|
3.
|
Capital lease
|
|
An accounting
method in which the investment in stock is initially recorded at cost and
cash dividends are credited to Dividend Revenue.
|
4.
|
Contribution margin
|
|
The differences
between actual costs and standard costs.
|
5.
|
Contribution margin
ratio
|
|
The amount of
revenue remaining after deducting variable costs.
|
6.
|
Controllable costs
|
|
The disposal of a
significant segment of a business.
|
7.
|
Cost accounting
|
|
Costs that a
manager has the authority to incur within a given period of time.
|
8.
|
Cost method
|
|
The correction of
an error in previously issued financial statements.
|
9.
|
Discontinued
operations
|
|
The portion of
retained earnings that is currently unavailable for dividend declarations.
|
10.
|
Earnings per share
|
|
Measures the
ability of the company to survive over a long period of time.
|
11.
|
Equity method
|
|
A pro rata
distribution of the corporation's own stock to stockholders.
|
12.
|
Extraordinary items
|
|
The difference
between actual overhead and budgeted overhead at actual production level.
|
13.
|
Fixed costs
|
|
Measures of the
short-term ability of an enterprise to pay its maturing obligations and to
meet unexpected needs for cash.
|
14.
|
Held-to-maturity
securities
|
|
Debt securities
that the investor has the intent and ability to hold to maturity.
|
15.
|
Horizontal analysis
|
|
Costs that vary in
total directly and proportionately with changes in the activity level.
|
16.
|
Ideal standards
|
|
|
17.
|
Liquidity ratios
|
|
|
18.
|
Noncontrollable
costs
|
|
|
19.
|
Normal standards
|
|
|
20.
|
Operating lease
|
|
|
21.
|
Overhead budget
variance
|
|
|
22.
|
Overhead volume
variance
|
|
|
23.
|
Parent company
|
|
|
24.
|
Period costs
|
|
|
25.
|
Prior period
adjustment
|
|
|
26.
|
Product costs
|
|
|
27.
|
Retained earnings
appropriation
|
|
|
28.
|
Solvency ratios
|
|
|
29.
|
Stock dividend
|
|
|
30.
|
Stock split
|
|
|
31.
|
Variable costs
|
|
|
32
|
Variances
|
Question 40 (1 point)
Matthew Corporation manufactures paper shredding equipment. Each
paper shredder has a standard materials cost of 20 pounds at $7.50 per pound or
$150.00 in total. 40,000 pounds of materials were purchased for $320,000 during
the period and 39,000 pounds were used in the production of 2,000 good units.
What is the direct materials price variance?
Use "U" or "F" to indicate whether the
variance is unfavorable or favorable. Do not show your work or include any
additional text with your answer. For example, if your answer is $100,000
unfavorable, you should enter $100,000
U.
Question 41 (1 point)
Matthew Corporation manufactures paper shredding equipment. Each
paper shredder has a standard materials cost of 20 pounds at $7.50 per pound or
$150.00 in total. 40,000 pounds of materials were purchased for $320,000 during
the period and 39,000 pounds were used in the production of 2,000 good units.
What is the direct materials usage variance?
Use "U" or "F" to indicate whether the
variance is unfavorable or favorable. Do not show your work or include any
additional text with your answer. For example, if your answer is $100,000
unfavorable, you should enter $100,000
U.
Question 42 (1 point)
Matthew Corporation manufactures paper shredding equipment and
uses a process costing system. 2,000 units were in process at the beginning of
the period, 60% complete. 20,000 units were started into production during the
period; 1,000 were in process at the end of the period, 60% complete. What are
the equivalent units for conversion costs?
Do not show your work or include any additional text with your
answer. For example, if your answer is 10,000, you should enter10,000.
Question 43 (1 point)
Matthew Corporation manufactures paper shredding equipment and
sells each unit for $500. Variable costs per unit equal $300. Total fixed costs
equal $800,000. Matthew is currently selling 5,000 units per period and would
like to earn net income of $400,000. What is the breakeven point in dollars?
Do not show your work or include any additional text with your
answer. For example, if your answer is $10,000, you should enter$10,000.
Question 44 (1 point)
Matthew Corporation manufactures paper shredding equipment and
sells each unit for $500. Variable costs per unit equal $300. Total fixed costs
equal $800,000. Matthew is currently selling 5,000 units per period and would
like to earn net income of $400,000. How many sales units are necessary to
attain the desired income?
Do not show your work or include any additional text with your
answer. For example, if your answer is 10,000, you should enter10,000.
Question 45 (1 point)
Matthew Corporation manufactures paper shredding equipment and
sells each unit for $500. Variable costs per unit equal $300. Total fixed costs
equal $800,000. Matthew is currently selling 5,000 units per period and would
like to earn net income of $400,000. What is the margin of safety ratio for
current operations?
Express your answer as a percentage, and do not show your work or
include any additional text with your answer. For example, if your answer is
60%, you should enter 60%.
SOLUTION PREVIEW
Month Maintenance cost Machine Hours
High July 181,000 40,000
Low January 121,000 20,000
Difference
60,000 20,000
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