1. (TCO 2) An example of a period cost is (Points : 5)        insurance on factory machines.        a controller’s salary.         property taxes on factory building.        wages of factory maintenance employees. Question 2.2. (TCO 2) Which product would use job-order costing? (Points : 5)        Ink pens        Custom boot maker        Soda pop        Horse saddles Question 3.3. (TCO 3) In a process costing system, which would be TRUE? (Points : 5)        There is no need to use time tickets to assign costs to processes.        There is no need to track materials to processes.        A process costing system is more expensive to maintain because it has more work-in-process accounts.        All of the above Question 4.4. (TCO 8) A company keeps 60 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 30 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The non-value-added costs for the company are (Points : 5)        $300,000.        $150,000.        $60,000.        $0. Question 5.5. (TCO 8) Non-value-added activities (Points : 5)        are unnecessary inputs.        are valued outputs to internal users.        are valued outputs to external users.        help meet the organization's needs, not the product needs. Question 6.6. (TCO 1) The break-even point is (Points : 5)        the volume of activity where all fixed costs are recovered.        where fixed costs equal total variable costs.        where total revenues equal total costs.        where total costs equal total contribution margin. Question 7.7. (TCO 1) The income statement for Thomas Manufacturing Company for 2011 is as follows.   Sales (10,000 units)                                                 $120,000 Variable expenses                                                   $72,000 Contribution margin                                                 $48,000 Fixed expenses                                                       $36,000 Operating income                                                    $12,000   Which is the contribution margin per unit? (Points : 5)        $7.20        $1.20        $4.80        $120,000 Question 8.8. (TCO 7) Which cost category would most likely use machine hours as its activity driver? (Points : 5)        Personnel        Maintenance        Purchasing        Payroll Question 9.9. (TCO 7) Yo Department Store incurred $8,000 of indirect advertising costs for its operations. The following data have been collected for 2013 for its three departments.   Shoes   Cosmetics   Crafts Sales $120,000 $100,000 $100,000 Direct advertising costs   $9,000 $7,000  $4,000 Newspaper ad space 60% 20%    20%   How much of the indirect advertising costs will be allocated to the Shoes Department if newspaper ad space is the activity driver? (Points : 5)        $8,000        $4,800        $5,400        $3,200 Question 10.10. (TCO 5.

1. 1. (TCO 2) An example of a period cost is (Points : 5)
insurance on factory machines.
a controller’s salary.
property taxes on factory building.
wages of factory maintenance employees.
Question 2.2. (TCO 2) Which product would use job-order
costing? (Points : 5)
Ink pens
Custom boot maker
Soda pop
Horse saddles
Question 3.3. (TCO 3) In a process costing system, which would
be TRUE? (Points : 5)
There is no need to use time tickets to assign costs to
processes.
There is no need to track materials to processes.
A process costing system is more expensive to maintain
because it has more work-in-process accounts.
All of the above
Question 4.4. (TCO 8) A company keeps 60 days of materials
inventory on hand to avoid shutdowns due to materials
shortages. Carrying costs average $5,000 per day. A competitor
keeps 30 days of inventory on hand, and the competitor's
carrying costs average $2,000 per day. The non-value-added
costs for the company are (Points : 5)
$300,000.
$150,000.
$60,000.

2. $0.
Question 5.5. (TCO 8) Non-value-added activities (Points : 5)
are unnecessary inputs.
are valued outputs to internal users.
are valued outputs to external users.
help meet the organization's needs, not the product needs.
Question 6.6. (TCO 1) The break-even point is (Points : 5)
the volume of activity where all fixed costs are recovered.
where fixed costs equal total variable costs.
where total revenues equal total costs.
where total costs equal total contribution margin.
Question 7.7. (TCO 1) The income statement for Thomas
Manufacturing Company for 2011 is as follows.
Sales (10,000 units) $120,000
Variable expenses $72,000
Contribution margin $48,000
Fixed expenses $36,000
Operating income $12,000
Which is the contribution margin per unit? (Points : 5)
$7.20
$1.20
$4.80
$120,000
Question 8.8. (TCO 7) Which cost category would most likely
use machine hours as its activity driver? (Points : 5)
Personnel

3. Maintenance
Purchasing
Payroll
Question 9.9. (TCO 7) Yo Department Store incurred $8,000 of
indirect advertising costs for its operations. The following data
have been collected for 2013 for its three departments.
Shoes
Cosmetics
Crafts
Sales
$120,000
$100,000
$100,000
Direct advertising costs
$9,000
$7,000
$4,000
Newspaper ad space
60%
20%
20%
How much of the indirect advertising costs will be allocated to
the Shoes Department if newspaper ad space is the activity
driver? (Points : 5)
$8,000
$4,800
$5,400
$3,200
Question 10.10. (TCO 5) A budget that is developed around one

4. particular level of activity is (Points : 5)
a static budget.
a continuous budget.
an incremental budget.
None of the above
Question 11.11. (TCO 5) Amy Company produces and sells
bikes. It expects to sell 15,000 bikes in March 2014 and had
1,200 bikes in finished goods inventory at the end of February
2014. Amy Company would like to complete operations in
March with at least 1,500 completed bikes in inventory. The
bikes sell for $100 each.
How many bikes would be produced in March? (Points : 5)
15,300 bikes
15,000 bikes
14,700 bikes
13,800 bikes
Question 12.12. (TCO 4) When monthly production volume is
constant and sales volume is more than production, net income
determined with variable costing procedures will (Points : 5)
always be greater than net income determined using
absorption costing.
always be less than net income determined using absorption
costing.
be equal to net income determined using absorption
costing.
be equal to contribution margin per unit times units sold
Question 13.13. (TCO6) Which factor would cause an
UNFAVORABLE material quantity variance? (Points : 5)
Using poorly maintained machinery
Using higher quality materials

5. Using more highly skilled workers
Receiving discounts for purchasing larger-than-normal
quantities
Question 14.14. (TCO 6) Which equation measures a price
variance? (Points : 5)
AQ x (AP - SP).
SP x (AQ - SQ).
SQ x (AP - SP).
(AQ - SQ) x (AP - SP).
Essays
1. (TCO 1) George Corporation has an estimated monthly sales
of 3,200 units for $70 per unit. Variable costs include
manufacturing costs of $36 and distribution costs of $14. Fixed
costs are $40,000 per month.
Required:
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume
Create a contribution margin-based income statement. (Points :
30)
2. (TCO 7) Darling Manufacturing Inc. manufactures two
products, A and B, from a joint process. A single production
costs $5,000 and results in 200 units of A and 800 units of B.
To be ready for sale, both products must be processed further,
incurring seperable costs of $3 per unit for A and $4 per unit
for B. The market price for Product A is $15 and for Product B

6. is $10.
Required: Allocate joint production costs to each product using
the physical units method. (Points : 30)
3. (TCO 6) Santa Inc. manufactures toys based on the following
information.
Standard costs
Materials (4 ounces at $4)
$16
Direct labor (1 hour per unit)
$7
Variable overhead (based on direct labor hours)
$3.50
Fixed overhead budget

7. $16,000
Actual results and costs
Materials purchased
Units
10,000
Cost

8. $38,500
Materials used in production
Finished product units
2,200
Raw material (ounces)
9,500
Direct labor hours
2,200
Direct labor cost

9. $18,000
Variable overhead costs
$8,400
Fixed overhead costs
$16,200
Required:
Compute the following variances (show calculations).

10. a. Materials usage variance
b. Labor rate variance
-c. Fixed overhead budget variance
(Points : 30)
4.(TCO 4) Toshi Company incurred the following costs in
manufacturing desk calculators.
Direct materials $14
Indirect materials (variable) 4
Direct labor 8
Indirect labor (variable) 6
Other variable factory overhead 10
Fixed factory overhead 28
Variable selling expenses 20
Fixed selling expenses 14
During the period, the company produced and sold 1,000 units.
a. What is the inventory cost per unit using absorption costing?
b. What is the inventory cost per unit using variable
costing? (Points : 30)
5. (TCO 8) Musical Instruments Company manufactures two
products (trumpets and trombones). Overhead costs ($175,000)

11. have been divided into three cost pools that use the following
activity drivers.
Product
Number of setups
Machine hours
Packing orders
Trumpets
50
1,500
150
Trombones
50
4,500
250
Cost per pool
$60,000
$90,000
$25,000
Required (show all calculations)

12. a. What is the allocation rate for trumpets per setup using activi
ty-based costing?
b. What is the allocation rate for trumpets per machine hours usi
ng activity-based costing?
c. What is the allocation rate for trumpets per packing order usi
ng activity-based costing?
(Points : 30)
6. (TCO 5) The Baxter Corporation has the following budgeted
and actual results.
Budgeted data
Actual results
Unit sales
35,000
Unit sales
36,000
Unit production
35,000
Unit production
37,000
Fixed overhead
Fixed overhead

13. Supervision
$25,000
Supervision
$23,500
Depreciation
$40,000
Depreciation
$40,000
Rent
$20,000
Rent
$20,000
Variable costs per unit
Variable costs
Direct materials
$25.00
Direct materials

14. $900,000
Direct labor
$26.00
Direct labor
$950,000
Supplies
$0.25
Supplies
$9,000
Indirect labor
$1.30
Indirect labor
$50,000
Electricity
$0.20
Electricity
$7,500
Required:

15. Prepare a performance report for all costs, showing flexible
budget variances (indicate F or U).
1.
(TCO 2) An example of a period cost is
(Points : 5)
insurance on factory machines.
a controller’s salary.
property
taxes on factory building.
wages of factory maintenance employees.
Question 2.
2.
(TCO 2) Which product would use job

16. -
order costing?
(Points : 5)
Ink pens
Custom boot maker
Soda pop
Horse saddles
Question 3.
3.
(TCO 3) In a process costing system, which would be TRUE?
(Points : 5)
There is no need to use time tickets to assign costs to processes.

17. There is no need to track materials to processes.
A process costing system is more expensive to maintain because
it has more work
-
in
-
process
accounts.
All of the above
Question 4.
4.
(TCO 8) A company keeps 60 days of materials inventory on
hand to avoid shutdowns
due to materials shortages. Carrying costs average $5,000 per
day. A competitor keeps 30 days of
inventory on hand, and the competitor's carrying costs average
$2,000 per day
. The non
-
value
-
added
costs for the company are
(Points : 5)

18. $300,000.
$150,000.
$60,000.
$0.
Question 5.
5.
(TCO 8) Non
-
value
-
added activities
(Points : 5)
are unnecessary inputs.
are valued outputs to internal users.

19. are valued outputs to external users.
help meet the organization's needs, not the product needs.
Question 6.
6.
(TCO 1) The break
-
even point is
(Points : 5)
1. (TCO 2) An example of a period cost is (Points : 5)
insurance on factory machines.
a controller’s salary.
property taxes on factory building.
wages of factory maintenance employees.
Question 2.2. (TCO 2) Which product would use job-order
costing? (Points : 5)
Ink pens
Custom boot maker
Soda pop
Horse saddles
Question 3.3. (TCO 3) In a process costing system, which would

20. be TRUE? (Points : 5)
There is no need to use time tickets to assign costs to
processes.
There is no need to track materials to processes.
A process costing system is more expensive to maintain
because it has more work-in-process
accounts.
All of the above
Question 4.4. (TCO 8) A company keeps 60 days of materials
inventory on hand to avoid shutdowns
due to materials shortages. Carrying costs average $5,000 per
day. A competitor keeps 30 days of
inventory on hand, and the competitor's carrying costs average
$2,000 per day. The non-value-added
costs for the company are (Points : 5)
$300,000.
$150,000.
$60,000.
$0.
Question 5.5. (TCO 8) Non-value-added activities (Points : 5)
are unnecessary inputs.
are valued outputs to internal users.
are valued outputs to external users.
help meet the organization's needs, not the product needs.
Question 6.6. (TCO 1) The break-even point is (Points : 5)