Principles of Accounting II
Final Exam Questions
Course Introduction
Principles of Accounting II builds upon the foundational concepts introduced in Principles of Accounting I, focusing on more advanced financial accounting topics and an introduction to managerial accounting. The course explores the preparation and analysis of corporate financial statements, accounting for liabilities and equities, and the use of accounting data for decision-making and performance evaluation within organizations. Students learn about the accounting cycle for corporations, statement of cash flows, financial statement analysis, and cost behavior, as well as budgeting and internal controls. Emphasis is placed on developing critical thinking and problem-solving skills necessary for interpreting and applying accounting information in real-world business scenarios.
Recommended Textbook
College Accounting Chapters 1 to 30 15th Edition by John Price
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Chapter 1: Accounting: The Language of Business
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Q1) A form of the partnerships business entity is A)DBA.
B)LLC.
C)LLP.
D)INP.
Answer: C
Q2) The owners of a corporation are called ________. Answer: stockholders or shareholders
Q3) An independent accountant who is licensed by the state and provides accounting services to the public for a fee is a A)CMA.
B)CIA.
C)CFE.
D)CPA.
Answer: D
Q4) Ownership in a corporation is evidenced by shares of ________.
Answer: stock
Q5) The three major legal forms of business entity are the sole proprietorship, the partnership, and the________.
Answer: corporation
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Chapter 2: Analyzing Business Transactions
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Q1) Which of the following equations is the Fundamental Accounting Equation?
A)Assets - Owner's Equity = Liabilities
B)Assets + Liabilities = Owner's Equity
C)Assets = Liabilities + Owner's Equity
D)Assets - Liabilities = Owner's Equity
Answer: C
Q2) If assets are $17,000 and owner's equity is $10,000, liabilities are ________.
Answer: $7,000
Q3) An Income Statement is all of the following except:
A)a profit and loss statement.
B)a formal report of business operations.
C)a statement of income and expenses.
D)a statement of revenues less withdrawals and expenses.
Answer: D
Q4) If assets are $8,000 and liabilities are $2,000, owner's equity is $10,000.
A)True
B)False
Answer: False
Q5) Purchased a computer for cash
Answer: plus Equipment; minus Cash
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Chapter 3: Analyzing Business Transactions Using T Accounts
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Q1) Using the information shown, prepare an income statement, statement of owner's equity, and balance sheet for Paw Prints Pet Sitters for the month ended November 30, 2019.
Answer: 11ee7e6b_7252_4a03_8b3a_395b151c0c67_TB3077_11
PAW PRINTS PET SITTERS
Statement of Owner's Equity Month Ended November 30, 2019
11ea7d89_88ee_46c9_8568_db78b23cc4b2_TB3077_00
PAW PRINTS PET SITTERS
Balance Sheet November 30, 2019
Total Assets
11ea7d89_88ee_46ca_8568_1fc4ec1ba6dd_TB3077_00
11ea7d89_88ee_46cb_8568_a998916060b8_TB3077_00
Q2) A decrease in a liability is recorded on the ________ side of the account.
Answer: debit or left
Q3) When an owner invests assets in a business, the capital account is debited. A)True
B)False
Answer: False
Page 5
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Chapter 4: The General Journal and the General Ledger
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Q1) Posting references are part of the audit trail.
A)True
B)False
Q2) The______ is referred to as the record of final entry.
Q3) The process of recording transactions in a journal is referred to as ________.
Q4) Which of the following statements is CORRECT?
A)Accounts being debited should always follow the accounts being credited in a compound entry.
B)Compound entries affect more than one debit and/or more than one credit.
C)All transactions require compound entries.
D)Compound entries include only debits.
Q5) A company purchased equipment costing $15,000. They paid $1,000 right away and agreed to pay the balance in 30 days, the journal entry to record the purchase of equipment would include:
A)a debit to Equipment for $14,000 and a credit to Accounts Payable for $14,000.
B)a debit to Equipment for $15,000 and a credit to Cash for $15,000.
C)a debit to Equipment for $1,000 and a credit to Cash for $1,000.
D)a debit to Equipment for $15,000, a credit to Cash for $1,000 and a credit to Accounts Payable for $14,000.
Q6) The ________ is recorded in the Posting Reference column of the ledger account.
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Chapter 5: Adjustments and the Worksheet
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Q1) The adjusting entry to account for the expiration of prepaid advertising consists of:
A)a debit to Prepaid Advertising and a credit to Accumulated Depreciation.
B)a debit to Prepaid Advertising and a credit to Advertising Expense.
C)a debit to Advertising Expense and a credit to Accumulated Depreciation.
D)a debit to Advertising Expense and a credit to Prepaid Advertising.
Q2) The process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as ________.
Q3) On November 1, 2019, Peaches Consulting Service paid $4,800 for 12 months of advance rent on its office space. The correct adjusting entry on December 31, 2019, to show the amount of rent that had expired would include:
A)debit Rent Expense
$4,800; credit Prepaid Rent $4,800
B)debit Rent Expense $800; credit Prepaid Rent $800
C)debit Rent Expense $400; credit Prepaid Rent $400
D)debit Prepaid Rent $4,000; credit Rent Expense $4,000
Q4) If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the ledger.
A)True
B)False
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Chapter 6: Closing Entries and Teh Postclosing Trial Balance
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Q1) Identify the accounts below that are ALL permanent accounts.
A)Accounts Receivable, Depreciation Expense, Fees Income
B)Accounts Receivable, Accumulated Depreciation, Accounts Payable
C)Accounts Payable, Owner's Capital, Income Summary
D)Accounts Payable, Wages Expense, Income Summary
Q2) Which of the following accounts has a normal credit balance?
A)T) Stark, Drawing
B)Accounts Payable
C)Supplies Expense
D)Accounts Receivable
Q3) One purpose of closing entries is to:
A)reduce the owner's capital account balance to zero so that the account is ready for the next period.
B)transfer the results of operations to owner's equity.
C)adjust the ledger account balances to provide complete and accurate figures for use on financial statements.
D)close all accounts so that the ledger is ready for the next accounting period.
Q4) The trial balance is prepared to make sure that the general ledger is in balance after adjusting and closing entries have been recorded and posted.
Page 8
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Chapter 7: Accounting for Sales and Accounts Receivable
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Q1) Collected sums on account from credit customers
A)CR for cash receipts journal
B)CP for cash payments journal
C)S for sales journal
D)P for purchases journal
E)G for general journal.
Q2) Sold merchandise on credit
A)CR for cash receipts journal
B)CP for cash payments journal
C)S for sales journal
D)P for purchases journal
E)G for general journal.
Q3) The abbreviation S1 in the Posting Reference column of an account shows that the data was posted from page 1 of the sales journal.
A)True
B)False
Q4) To indicate that an amount has been posted from the sales journal to the accounts receivable subsidiary ledger, a(n)________ is placed in the Posting Reference column of the journal.
Q5) The quantity of goods kept on hand to sell to consumers is called ________.
Page 9
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Chapter 8: Accounting for Purchases and Accounts Payable
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Q1) Credit terms of 1/10, n/30 means that:
A)payment in full is due 10 days after date of the invoice.
B)a 1% discount may be taken for up to 30 days.
C)if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 20 days.
D)if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days.
Q2) The amount of the purchases for a period is presented as:
A)an asset on the balance sheet.
B)an expense on the income statement.
C)an expense on the cost of purchases statement.
D)contra revenue on the income statement.
Q3) Issued a check to a supplier as a payment on account.
A)CR for cash receipts journal
B)CP for cash payments journal
C)S for sales journal
D)P for purchases journal
E)G for general journal.
Q4) Purchases of merchandise on credit should be recorded in the ________ journal.
Page 10
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Chapter 9: Cash Receipts, Cash Payments, and Banking Procedures
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Q1) The monthly bank statement should be received and reconciled by the same employee who deposits cash receipts and writes the checks.
A)True
B)False
Q2) To arrive at an accurate balance on a bank reconciliation statement, a credit memorandum from the bank for the collection of a note and interest should be:
A)deducted from the bank statement balance.
B)added to the book balance.
C)deducted from the book balance.
D)added to the bank statement balance.
Q3) Merchandise costing $5,600 with terms of 1/10, n/30, with transportation costs of $320 included on the invoice (not included in the $5,600)is sold on account. If the bill is paid within ten days, the amount of the purchase discount is:
A)$56.00.
B)$59.20.
C)$3.20.
D)$52.80.
Q4) The Petty Cash Fund account has a(n)________ balance.
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Chapter 10: Payroll Computations, Records, and Payment
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Q1) The maximum base for the social security tax is the same as that for the Medicare tax.
A)True
B)False
Q2) The employer records the amount of federal income tax withheld from employees as
A)Social Security Tax Expense.
B)Social Security Tax Payable.
C)Income Tax Expense.
D)Employee Federal Income Tax Payable.
Q3) The column totals in a payroll register
A)are used in the journal entry to record the payroll.
B)are posted directly to the general ledger accounts.
C)are used at the end of the year to record payroll taxes owed to the IRS.
D)are unnecessary.
Q4) <i>Publication 15, Circular E </i>contains withholding information
A)for federal and state income taxes.
B)for social security and Medicare taxes only.
C)for federal income taxes only.
D)for social security, Medicare, and federal income tax taxes.
Q5) FICA tax is commonly referred to as ________ tax.
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Chapter 11: Payroll Taxes, Deposits, and Reports
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Q1) A firm must issue a Form ________ to each employee by January 31 of the year following the year during which the wages were earned.
Q2) The entry to record the Social security and Medicare taxes paid by a business includes a debit to Payroll Taxes Expense.
A)True B)False
Q3) The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is determined by the amount owed.
A)True
B)False
Q4) Samantha Rodriguez had gross earnings for the pay period ending 10/15/19 of $5,785. Her total gross earnings as of 9/30/19 were $116,700. Social Security taxes are 6.2% on a maximum earnings of $122,700 per year. The Social Security tax due by her employer from her 10/15/19 paychecks is:
A)$61.07
B)$372.00
C)$358.67
D)$442.55
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Chapter 12: Accruals, Deferrals, and the Worksheet
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Q1) The adjusting entry for uncollectible accounts requires a A)a debit to Accounts Receivable and a credit to Uncollectible Accounts Expense.
B)debit to Allowance for Doubtful Accounts and a credit to Uncollectible Accounts Expense.
C)a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.
D)a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
Q2) When the accrual basis of accounting is used, expenses are recognized only in the period during which they are paid.
A)True
B)False
Q3) Depreciation Expense has a debit balance in the Trial Balance section of the worksheet of $2,200 and a debit of $200 in the adjustments section of the worksheet, the balance of Depreciation Expense in the Adjusted Trial Balance section of the worksheet is a
A)$200 debit.
B)$2,400 credit.
C)$2,000 debit.
D)$2,400 debit.
Q4) Uncollectible Accounts Expense is a(n)________ account.
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Chapter 13: Financial Statements and Closing Procedures
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Q1) Which of the following is not a selling expense:
A)Delivery Expense
B)Rent Expense on the office
C)Sales Salaries Expense
D)Advertising Expense
Q2) For the current fiscal year, Purchases were $187,000, Purchase Returns and Allowances were
$4,200 and Freight In was $10,500. If the beginning merchandise inventory was $98,000 and the ending merchandise inventory was $103,000, the Cost of Goods Sold is:
A)$ 167,300
B)$196,700
C)$193,300
D)$188,300
Q3) Inventory turnover is calculated by
A)dividing average inventory by cost of goods sold.
B)dividing cost of goods sold by average inventory.
C)dividing average inventory by the ending inventory.
D)adding beginning inventory to ending inventory and dividing by 2.
Q4) Each reversing entry is the exact opposite of the related________ entry.
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Chapter 14: Accounting Principles and Reporting Standards
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Q1) Each year there was an increase in the market value of some of the stock owned by the Mudstream Company, but the accountant did not record the increase in the asset's value and equity until the stock was sold. In this situation, the accountant
A)followed the realization principle.
B)violated the accrual principle.
C)followed the matching principle.
D)violated the matching principle.
Q2) Which of the following statements is NOT true?
A)The SEC has authority to accept or reject financial accounting principles and standards developed by the FASB.
B)The Sarbanes-Oxley Act places great emphasis on internal controls and fraud prevention.
C)Because of the Sarbanes-Oxley Act, it is probable that the FASB's conceptual framework will become less important in developing accounting principles and standards.
D)The American Institute of CPA's has in the past had strong influence on the development of accounting principles.
Q3) What is meant by the concept of neutrality in accounting?
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Chapter 15: Accounts Receivable and Uncollectible Accounts
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Q1) On December 31, prior to adjustments, the balance of Accounts Receivable is $32,000 and Allowance for Doubtful Accounts has a credit balance of $290. The firm estimates its losses from uncollectible accounts to be 5.5% of accounts receivable at the end of the year. The adjusting entry needed to record the estimated losses from uncollectible accounts is
A)$290.
B)$1,470.
C)$1,310.
D)$1,760.
Q2) If the direct charge-off method of accounting for uncollectible receivables is used, what general ledger account is debited to<u> write off</u> a customer's account as uncollectible?
A)Accounts Receivable
B)Allowance for Doubtful Accounts
C)Uncollectible Accounts Expense
D)Uncollectible Accounts Payable
Q3) The entry to record the write-off of a specific uncollectible account using the allowance method includes a debit to ________.
Q4) The longer an account is past due, the ________ likely it is to be collected.
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Chapter 16: Notes Payable and Notes Receivable
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Q1) Interest Income is classified as a current asset.
A)True
B)False
Q2) The amount of cash received at maturity for a $5,000, 90-day, 6 percent note receivable is $75.
A)True
B)False
Q3) Compute the maturity value of a 90-day, 8 percent note with a face value of $6,000.
Q4) The Hernandez Company had the following transactions involving notes receivable during 2019. Record the transactions on page 6 of a general journal. Omit descriptions.
July 1 Received a 3 month, 8 percent note for $9,000 from Lincoln Company, a customer whose account was overdue.
October 1 The note issued by Lincoln Company was dishonored today.
Q5) If a note payable overlaps financial reporting periods (years), Interest Expense is recorded only in the year the note is paid.
A)True
B)False
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Chapter 17: Merchandise Inventory
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Q1) When the replacement cost of an item is below its original purchase cost, it is necessary to value the inventory at net realizable value in order to reflect the lower current value in the firm's financial records.
A)True
B)False
Q2) What is the specific identification method for valuing inventory? What types of businesses are likely to use this method? Why?
Q3) The weighted average cost of an inventory item is calculated by
A)dividing the sum of the unit cost on the purchase invoices by the number of units purchased.
B)dividing the cost of goods available for sale by the number of units on the ending inventory.
C)dividing the cost of goods available for sale by the number of units available during the period.
D)dividing the cost of goods sold by the number of units available during the period.
Q4) The lower the ending inventory valuation, the--------- the reported net income.
Q5) What is RFID? What is the benefit to RFID?
Q6) The lower the ending inventory valuation, the---------- the cost of goods sold.
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Chapter 18: Property, Plant, and Equipment
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Q1) Tangible personal property is depreciated but real property is not depreciated.
A)True
B)False
Q2) If a depreciable asset is sold for an amount that is less than the asset's book value, a(n)------------is recognized.
Q3) The salvage value is the asset's expected value at the end of its useful life.
A)True
B)False
Q4) To calculate declining-balance depreciation, the-------------- of an asset is multiplied by a predetermined appropriate rate.
Q5) Under federal income tax rules, neither gains or losses are recognized on trade-ins. A)True
B)False
Q6) All costs incurred to purchase an asset and get it in proper working condition, such as net purchase price, transportation costs, installation costs, and costs of adjustments or modifications are referred to as------------- .
Q7) The normal balance of Accumulated Depreciation is a(n)----------- .
Q8) Patents, trademarks, and copyrights are examples of --------------assets.
Page 20
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Chapter 19: Accounting for Partnerships
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Q1) Janice Miller operates a sole proprietorship business that sells camping equipment. On January 1, 2019, Miller has agreed to transfer her assets and liabilities to a partnership that will operate The Camping Company. Miller will own a two-thirds interest in the capital of the partnership. The agreed upon values of assets and liabilities to be transferred are as follows:
Accounts receivable of $52,000 (of which approximately $2,500 is estimated to be uncollectible)
Merchandise inventory, $110,000
Furniture and fixtures, $55,000
Accounts payable, $38,000
Record the receipt of the assets and liabilities by the partnership on page 1 of a general journal. Om the description.
Q2) Antonio Bandala wishes to sell half of his partnership interest for $70,000 to Phillips. His capital balance is $120,000. Prepare the journal entry to record this transaction in the partnership records.
Q3) Investments by a partner are credited to that partner's capital account.
A)True
B)False
Q4) Each general partner has--------- liability for the debts of a partnership.
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Chapter 20: Corporations: Formation and Capital Stock Transactions
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Q1) The Common Stock Subscribed account has a(n)----------balance.
Q2) The Lilac Corporation was organized on January 1, 2019. The firm is authorized to issue 160,000 shares of no-par-value common stock with a stated value of $40 per share and 40,000 shares of $100 par-value, 12 percent preferred stock. Record the selected transactions on page 1 of a general journal. Omit descriptions.
Jan. 1 Issued 1,200 shares of common stock to Jane Doe for $40 a share.
1 Issued 900 shares of preferred stock to Ben Boston at par value.
6 Issued 600 shares of common stock to Maddie Bohne for $48 a share.
10 Received a subscription for 1,600 shares of preferred stock from Lance Davies for $110 a share, payable in two installments due on the 15th and 31st of January.
15 Received payment of stock subscription installment due from Lance Davies (one-half of the purchase price).
31 Received the balance due on the stock subscription of January 10 from Lance Davies. Issued the stock.
Q3) Common Stock Subscribed is an equity account. A)True B)False
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Chapter 21: Corporate Earnings and Capital Transactions
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Q1) A(n)---------dividend will decrease Retained Earnings but will not decrease total stockholders' equity.
Q2) The Dividends Payable account appears on the balance sheet as a(n)------- .
Q3) When the cumulative taxable income is higher than that reported on the financial statements, this gives rise to:
A)a deferred income tax asset.
B)a deferred income tax liability.
C)Either of these.
D)Neither of these.
Q4) Cash dividends decrease total stockholder's equity but stock dividends have a net zero effect on total stockholder's equity.
A)True
B)False
Q5) The cost of treasury stock is deducted from the ------------section of the balance sheet.
Q6) Corporations are required to make quarterly estimated tax payments based on estimated net income and tax expense.
A)True
B)False
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Chapter 22: Long-Term Bonds
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Q1) When bonds are sold by a company, the company assumes debt. The principal of which is the amount of the face value of the bonds sold. Cash to pay this debt must be available when the bonds become due. Discuss things a company can do in order to have the funds available to pay the bond debt on the due date.
Q2) Retained earnings may be appropriated for bond retirement by order of the board of directors, by the bond contract, or by vote of the shareholders.
A)True B)False
Q3) Bonds with a face value of $400,000 were issued at 98. The entry to record the issuance will include a credit to the Bonds Payable account for A)$408,000.
B)$400,000.
C)$398,000.
D)$392,000.
Q4) The balance of the Bonds Payable account plus the balance of the Premium on Bonds Payable account or minus the balance of the Discount on Bonds Payable account is called the--------- of the bonds.
Q5) In the interest formula (I = Prt)the Prt stands for---------- .
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Chapter 23: Financial Statement Analysis
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Q1) On a comparative income statement, gross revenues were $310,000, sales returns and allowances were $14,000 and sales discounts amounted to $2,200. Selling expenses of $54,000 were incurred during the year. The vertical analysis would show current year selling expenses as 18.4%.
A)True
B)False
Q2) In 2019, net sales were $672,000 and cost of goods sold was $450,000. In 2018, net sales amounted to $600,000 and cost of goods sold was $400,000. In a comparative income statement, using vertical analysis, the 12% increase in net sales will be presented in the percentage column.
A)True
B)False
Q3) A decrease in cost of goods sold from 46.5% to 45.0% from year 1 to year 2 indicates a favorable long-term trend.
A)True
B)False
Q4) The current ratio is a measure of profitability.
A)True
B)False
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Chapter 24: The Statement of Cash Flows
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Q1) The statement of cash flows assumes that the----------- basis of accounting is used when recording transactions and preparing the balance sheet and income statement.
Q2) A decrease in merchandise inventory is:
A)a use of cash under operating activities.
B)a source of cash under operating activities.
C)not reported on the statement of cash flows.
D)a source of cash under investing activities.
Q3) Why are depreciation expense and amortization expense added to Net Income under the indirect method?
Q4) A gain on the sale of equipment is reported in the -------------section of the statement of cash flows.
Q5) Doff Manufacturing Co. sold equipment that cost $13,300 and accumulated depreciation of $11,000 for $3,000 cash. How is the Cash Flows from Operating Activities affected?
A)The book value of $2,300 is added to Net Income
B)The gain of $700 is deducted from Net Income
C)The gain of $700 is added to Net Income
D)The $3,000 cash received from the sale is added to Net Income
Q6) Why is the Statement of Cash Flows important?
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Chapter 25: Departmentalized Profit and Cost Centers
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Q1) Using the information provided, determine and present in good form, the Cost of Goods Sold section of the Income Statement for Cody's Conundrums.
Q2) When total revenues equal total expenses, a business is said to----------- .
Q3) Max and Morris operate a restaurant and bakery. They share some basic accounting, information systems and office space. Max runs the restaurant with sales of $63,000 and direct expenses of 60% of his sales while Morris runs the bakery with sales of $127,000 and direct expenses of 55% of his sales. With fixed costs of $25,000 allocated evenly between the two, what is the net income earned by Max and Morris for the prior year.
Q4) Departments that provide services to other departments of the firm are often organized as------------centers.
Q5) Departmental financial statements are internal assessment tools used to assign responsibility for profits or losses.
A)True
B)False
Q6) CDs and Tapes Department
A)Cost
B)Profit
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Chapter 26: Accounting for Manufacturing Activities
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Q1) Total manufacturing cost is the sum of direct materials used, direct labor incurred and manufacturing overhead applied.
A)True
B)False
Q2) Labor costs in manufacturing can be:
A)direct or indirect.
B)indirect or sunk.
C)direct or operating expense.
D)indirect or operating expense.
Q3) From the information given, determine total direct and total indirect costs.
Q4) The Cost of Goods Sold section of the income statement for a manufacturing business shows the balance of the work in process inventory.
A)True
B)False
Q5) The three components of total manufacturing cost are:
A)cost of goods manufactured, cost of goods sold, and work in process.
B)raw materials, direct labor, and cost of goods sold.
C)selling expenses, administrative expenses, and manufacturing overhead.
D)raw materials, direct labor, and manufacturing overhead.
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Chapter 27: Job Order Cost Accounting
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Q1) When a cost accounting system is used, perpetual inventory records are kept for raw materials, work in process, and ----------.
Q2) When a perpetual inventory system is used, the balance of the Raw Materials Inventory account at the end of an accounting period should reflect the cost of materials on hand.
A)True
B)False
Q3) Utilizing standard costing systems enables management to evaluate manufacturing efficiencies.
A)True
B)False
Q4) Workers who perform direct labor prepare a series of------------ to account for all time spent in the plant.
Q5) The manufacturing overhead recorded in the Work in Process Inventory account is not necessarily the actual overhead incurred.
A)True
B)False
Q6) Record the necessary entries on page 8 of a general journal. Omit descriptions.
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Chapter 28: Process Cost Accounting
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Q1) The Finishing department began the period with 3,350 units of a product. During the month, Assembly completed and transferred-out 6,400 units to Finishing. Ending in process quantities and percentage completion for Assembly and Finishing are as follows: 400 units 35 percent complete and 560 units 20 percent complete, respectively. The equivalent production for Assembly and Finishing for the month is:
A)6,400 assembly and 3,350 finishing units.
B)6,540 assembly and 9,302 finishing units.
C)6,400 assembly and 9,750 finishing units.
D)6,800 assembly and 10,310 finishing units.
Q2) During the month, 8,000 units of a product were completed and transferred out and 3,000 units were 1/3 complete at the end of the period. The direct material cost was $115.00 per unit and the combined labor and overhead cost was $227.00 per unit. What is the cost of the completed units?
A)$2,762,000.
B)$2,736,000.
C)$3,078,000.
D)$3,420,000.
Q3) Prepare the Quantity Schedule for Department J for October 2019 in good format from the information given.
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Chapter 29: Controlling Manufacturing Costs: Standard Costs
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Q1) Costs that reflect what costs should be for the units of product manufactured during the period under normal efficient operating conditions are known as
A)semi-variable costs.
B)variable costs.
C)fixed costs.
D)standard costs.
Q2) Which variance is controllable by the production manager?
A)standard overhead variance.
B)labor usage variance.
C)labor rate variance.
D)material price variance.
Q3) The material quantity variance for Trim used in January is:
A)$5,640 favorable.
B)$1,440 favorable.
C)$5,640 unfavorable.
D)$1,440 unfavorable.
Q4) Semi-variable costs are sometimes called mixed costs.
A)True
B)False
Q5) The---------- cost per unit does not change as output changes.
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Chapter 30: Cost-Revenue Analysis for Decision Making
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Q1) Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green the part for $48 a unit. If the part was purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of the manufacturing overhead cost per unit. Product cost information for the part under review is as follows:
\(\begin{array}{lr}
\text { Direct Materials}&\$18\\
\text { Direct Labor}&\$24\\
\text { Manufacturing overhead}&\$16\\
\text { Unit product cost}&\$58\\
\end{array}\)
How much of the unit product cost is relevant in the decision of whether to make or buy the part?
A)$58.
B)$42.
C)$47.
D)$40.
Q2) The difference in cost between two alternatives is called a(n)------------cost.
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Page 32