2. (TCO 2) Process costing would be most applicable for a
cookie maker.
sign manufacturer.
custom home construction company.
tax preparation firm.

Question 3. 3. (TCO 3) As production occurs, materials, direct labor, and applied manufacturing overhead are recorded in 
cost of goods sold.
work-in-process.
materials.
finished goods.

Question 4. 4. (TCO 8) A company keeps 30 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $2,000 per day. A competitor keeps 15 days of inventory on hand, and the competitor's carrying costs average $1,000 per day. The value-added costs are
$60,000.
$30,000.
$15,000.
$0.
Question 5. 5. (TCO 8) Non-value-added activities
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 contribution margin at the break-even point
equals total fixed costs.
is zero.
plus total fixed costs equals total revenues.
is greater than variable costs.

Question 7. 7. (TCO 1) Sarah Smith, a sole proprietor, has the following projected figures for next year.

Selling price per unit $150.00
Contribution margin per unit $45.00
Total fixed costs $630,000

How many units must be sold to obtain a target before-tax profit of $270,000?
6,000 units
20,000 units
8,572 units
14,000 units


Question 8. 8. (TCO 7) Which cost category would most likely use purchase orders as its activity driver?
Maintenance
Shipping
Purchasing
Engineering


Question 9. 9. (TCO 7) Yo Department Store incurred $4,000 of indirect advertising costs for its operations. The following data have been collected for 2013 for its three departments.


Shoes Cosmetics Crafts
Sales $160,000 $120,000 $120,000
Direct advertising costs $7,000 $10,000 $3,000
Newspaper ad space 62% 20% 18%

How much of the indirect advertising costs will be allocated to the Shoes Department if newspaper ad space is the activity driver? Newspaper ad space
$4,000
$2,480
$4,340
$1,520


Question 10. 10. (TCO 5) A flexible-based budgeting system
uses functional-based line items.
splits costs into variable and fixed components.
prepares budgets for a range of activity levels.
All of the above


Question 11. 11. (TCO 5) Canceco Company produces and sells pillows. It expects to sell 20,000 pillows in the year 2014 and had 3,000 pillows in finished goods inventory at the end of 2013. Canceco would like to complete operations in the year 2014 with at least 2,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each.
How many pillows would be produced in the year 2014?
20,000 pillows
23,000 pillows
22,250 pillows
19,750 pillows


Question 12. 12. (TCO 4) What is the primary difference between variable and absorption costing? 
Inclusion of fixed selling expenses in product costs
Inclusion of variable factory overhead in period costs
Inclusion of fixed selling expenses in period costs
Inclusion of fixed factory overhead in product costs


Question 13. 13. (TCO 6) Which factor would cause a FAVORABLE labor rate variance?
Using higher quality materials
Using high-efficiency workers
Using more unskilled workers
Using more highly skilled workers


Question 14. 14. (TCO 6) Which equation measures the direct labor rate variance? 
(SR * AH) - (SR * SH).
(AR * SH) - (SR * AH).
(AR * AH) - (SR * AH).
None of the above