ACT 2

Which of the following is not an important element of JIT (just in time) processing?

The number of purchase orders would be an appropriate cost driver for

The primary benefit of activity-based costing is that it leads to

The first step in activity-based costing is to

A cost reconciliation schedule is prepared to assign total costs to units transferred out and in ending work in process.

Nonvalue-added activities are production-related activities that add cost to a product without increasing its market value.

Variable costs, as activity increases, will

A cost that increases in total, but not proportionately with increases in the activity level, is a(n)

Given the following costs for Bently Company, classify each cost as either variable, fixed, or mixed. Total Cost at 2,000 Units 3,000 Units Cost A $12,900 $19,350 Cost B 12,300 16,650 Cost C 13,000 13,000

The assumptions that underlie basic CVP analysis include all of the following except

Brooke Company desires net income of $720,000 when it has $2,000,000 of fixed costs and variable costs of 60% of sales. Required sales equals

A company's break-even point can be decreased by decreasing

Brooke Company desires net income of $720,000 when it has $2,000,000 of fixed costs and variable costs of 60% of sales. Contribution margin equals

Fixed costs

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and fixed and variable factory overhead cost?

Which of the following is included in the cost of goods manufactured under absorption costing but not under variable costing?

Under absorption costing, which of the following costs would not be included in finished goods inventory?

Under variable costing, which of the following costs would not be included in finished goods inventory?

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured

1. Which statement is true of an opportunity cost?

Hermantic, Inc. Can produce 100 units of a component part with the following costs: Direct Materials $30,000 Direct Labor 13,000 Variable Overhead 32,000 Fixed Overhead 22,000 2. If Hermantic Industries purchase the units externally for $80,000, by what amount will its total costs change? a. An increase of $80,000 c. An increase of $17,000 b. A increase of $5,000 d. A decrease of $22,000

3. If Hermantic, Inc. Can purchase the component externally for $88,000 and only $8,000 of the fixed costs can be avoided, what is the correct "make or buy decision"?

A relevant cost

It costs Harmon Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. Harmon would incur special shipping costs of $1 per scale if the order were accepted. Harmon has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?

Adler Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

An opportunity cost

Hungry Bites produces corn chips. The cost of one batch is below: Direct materials $18.00 Direct labor 13.00 Variable overhead 11.00 Fixed overhead 14.00 An outside supplier has offered to produce the corn chips for $25 per batch. How much will Hungry Bites save if it accepts the offer?

Which of the following is not relevant information in a decision whether old equipment presently being used should be replaced by new equipment?