Acc310 Cost Accounting: Week 2 Quiz (10 MCQs) – Version 1

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Acc310 Cost Accounting
Week 2 Quiz (10 MCQs) – Version 1

1. Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year:
Direct materials 150,000
Direct labor 200,000
Sales commissions 100,000
Indirect labor 50,000
Rent on office equipment 25,000
Depreciation – factory building 75,000
Utilities – factory 125,000

Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour?
$24.00
$15.00
$14.00
$10.00

2. Which of the following costs are irrelevant for a special order that will allow an organization to utilize some of its present idle capacity?
Direct materials
Indirect materials
Variable overhead
Unavoidable fixed overhead
Differential sales commission

3. The MNK Company has gathered the following information for a unit of its most popular product:
Direct materials 6
Direct labor 3
Overhead (40% variable) 5
Cost to manufacture 14
Desired markup (50%) 7
Target selling price 21
The above cost information is based on 4,000 units. A foreign distributor has offered to buy 1,000 units at a price of $16 per unit. This special order would not disturb regular sales. Variable shipping and other selling expenses would be $1 per unit for the special order. If the special order is accepted, MNK's operating profits will increase by:
$1,000
$1,600
$2,000
$4,000

4. Determining the fixed and the variable components of a mixed cost can be accomplished by several methods. The cost of each method varies in direct relation to its degree of accuracy. Which of the following methods finds the fixed portion of a mixed cost before calculating the variable portion?
Scattergraph.
High low method.
Account analysis.
Linear regression.
Engineering approach.

5. The statistic used to determine if the total cost function is significantly different from the fixed cost function is the
t-value of the b-coefficient.
coefficient of determination.
standard error of the estimate.
coefficient of correlation.
standard error of the a-coefficient.

6. The Cost Flow Diagram includes all of the following costs except:
Selling expenses
Direct materials
Direct labor
Fixed manufacturing overhead
Variable manufacturing overhead

7. Which of the following costs would most likely be classified as variable assuming the account analysis method is used to determine cost behavior?
indirect materials.
supervisory salaries
equipment maintenance
annual Christmas party
building occupancy costs.

8. The Blade Division of Axe Company produces hardened steel blades. One-third of Blade's output is sold to the Forestry Products Division of Axe; the remainder is sold to outside customers. Blades' estimated operating profit for the year is:
Forestry Division Outside Customers
Sales 15,000 40,000
Variable costs 10,000 20,000
Fixed costs 3,000 6,000
Operating profits. 2,000 14,000
Unit sales 10,000 20,000

The Forestry Division has an opportunity to purchase 10,000 blades of the same quality from an outside supplier on a continuing basis. If the Blade Division is now operating at full capacity and can sell all its units to outside customers at the present selling price, what is the differential cost to Axe of requiring that the blades be made internally for the Forestry Division?
A. $2,500
B. $5,000
C. $7,500
D. $10,000

9. The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except
A. fixed overhead costs.
B. production bottlenecks.
C. investment in buildings.
D. investment in inventories.

10. Which cost estimation method does not use the company records as its primary source of information about the relationship between total costs and activity levels?
engineering estimates
high-low
account analysis
regression analysis
scattergraph
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