AMIS 212 Managerial Accounting

This set of 28 questions, taken from prior examinations, covers topics in

Chapters 1, 2, 3, 4, and 5.
The purpose of sample multiple choice questions is to acquaint ou !ith the
stle and su"stance of tpical exam questions over this material.
#lease "e a!are that$
1. multiple choice format questions are onl one of man resources
availa"le to prepare for testin% events & readin% text"ook chapters and
!orkin% throu%h chapter examples, studin% the end'of'chapter revie!
pro"lem and accompanin% solution, and revie!in% assi%ned home!ork
items and the pu"lished solutions ma "e more po!erful methods to
increase our understandin% of the topics covered in the course.
2. the exam questions used this quarter !ill "e similar "ut different from
these example questions & understandin% the main concepts in each
chapter is critical to success on the testin% events( remem"erin% a
sample question ma "e of some help "ut the format of a question on the
same topic often differs renderin% memor a distant second choice to
understandin%.
The )uestions$
*. Scheney Company uses the weighted-average method in its process costing system. The
company's wor in process inventory on March !1 consisted o" 2#$### units. The units in
the ending wor in process inventory were 1##% complete with respect to materials and
&#% complete with respect to la'or and overhead. I" the cost per e(uivalent unit "or
March was )2.*# "or materials and )+.&* "or la'or and overhead$ the total cost in the
March !1 wor in process inventory was,
+, )1#1$*##. -, )11-$*##. C, )&.$*##. ., )1+*$###.
/0am 11 2ractice 3uestions 2age 1
AMIS 212 Managerial Accounting
/se the follo!in% to ans!er questions 8'10$
4und Company applies manu"acturing overhead to 5o's using a predetermined overhead rate o"
&*% o" direct la'or cost. Any under- or overapplied overhead cost is closed out to Cost o" 6oods
Sold at the end o" the month. 7uring March$ the "ollowing transactions were recorded 'y the
company,
8. The 'alance on March 1 in the 8aw Materials inventory account was,
+, )-$*##. -, )&$*##. C, )9$*##. ., ).$*##.
1. The entry to dispose o" the under- or overapplied overhead cost "or the month would
include,
+, a credit o" )2$### to the Manu"acturing :verhead account.
-, a de'it o" )*$### to the Manu"acturing :verhead account.
C, a credit o" )2$### to Cost o" 6oods Sold.
., a de'it o" )*$### to the Cost o" 6oods Sold.
10. The Cost o" 6oods Manu"actured "or March was,
+, )-!$###. -, )-1$*##. C, )--$*##. ., )*9$*##.
/0am 11 2ractice 3uestions 2age 2
8aw materials ;all direct materials<,
2urchased during the month...................................... )2&$###
=sed in production .................................................... )2.$###

4a'or,
7irect la'or hours wored during the month ............ 2$*##
7irect la'or cost incurred.......................................... )2#$###
Indirect la'or cost incurred........................................ )*$*##

Manu"acturing overhead costs incurred ;total<............... )1&$###

Inventories,
8aw materials ;all direct< March !1.......................... )&$*##
>or in process$ March 1 ......................................... )1#$*##
>or in process$ March !1 ....................................... ?)1+$###

?contains )*$### o" direct la'or cost

AMIS 212 Managerial Accounting
/se the follo!in% to ans!er questions 11'14$
@arer Corporation uses the weighted-average method in its process costing system. This month$
the 'eginning inventory in the "irst processing department consisted o" !## units. The costs and
percentage completion o" these units in 'eginning inventory were,
The ending inventory was .*% complete with respect to materials and 2#% complete with
respect to conversion costs.
11. The cost per e(uivalent unit "or materials "or the month in the "irst processing department
is closest to,
+, )2*.*- -, )2-.!* C, )2*..* ., )2-.-*
12. Aow many units are in ending wor in process inventory in the "irst processing
department at the end o" the monthB
+, &## -, 9## C, +## ., .$.##
13. >hat are the e(uivalent units "or conversion costs "or the month in the "irst processing
departmentB
+, .$.+# -, .$&## C, 9$+## ., 1+#
14. The total cost trans"erred "rom the "irst processing department to the ne0t processing
department during the month is closest to,
+, )+&*$22& -, )+9*$### C, )+.2$&## ., )*1!$+--
/0am 11 2ractice 3uestions 2age !

Cost
Percent
Complete
Materials costs ............. )&$+## .*%
Conversion costs ..........

)+$9##

**%

A total o" 9$1## units were started and .$&## units were trans"erred to the second
processing department during the month. The "ollowing costs were incurred in the
"irst processing department during the month,

Materials costs ........... )2+#$!##
Conversion costs ........ )2+2$+##

AMIS 212 Managerial Accounting
15. The property ta0es on the "actory 'uilding "or a manu"acturer would 'e an e0ample o",
Prime Cost Conversion Cost
+, Ces Ces
-, Do Do
C, Ces Do
., Do Ces
1*. 2arsons Co. uses a predetermined overhead rate 'ased on direct la'or hours to apply
manu"acturing overhead to 5o's. 4ast year 2arsons incurred )2*#$### in actual
manu"acturing overhead cost. The Manu"acturing :verhead account showed that
overhead was overapplied in the amount o" )12$### "or the year. I" the predetermined
overhead rate was )..## per direct la'or hour$ how many hours were wored during the
yearB
+, 29$&*# hours -, !#$2*# hours C, !1$2*# hours ., !2$&*# hours
12. In a 5o'-order cost system$ the application o" manu"acturing overhead usually would 'e
recorded as a de'it to,
+, Einished 6oods inventory. C, >or in 2rocess inventory.
-, Cost o" 6oods Sold. ., Manu"acturing :verhead.
/se the follo!in% to ans!er question 11$
Cory Company produces re"rigerators. /ach re"rigerator contains a small thermostat that costs
)*. 7uring Fune$ -## thermostats were drawn "rom the supply room and installed in re"rigerators
that were in the production process. Seventy percent o" these units were completed and
trans"erred into "inished goods warehouses. :" the units completed$ twenty percent were still
unsold at the end o" the month. There were no 'eginning inventories.
11. The cost o" thermostats in wor in process at the end o" the month would 'e,
+, )9##. -, )2$+##. C, )2$1##. ., )!$###.
23. The process o" ensuring that the plan is 'eing "ollowed is called,
+, directing. -, decision maing. C, controlling. ., planning.
24. In a 5o' order cost system using predetermined manu"acturing overhead rates$ indirect
materials issued into production usually are recorded as an increase in,
+, Einished 6oods inventory. C, Manu"acturing :verhead.
-, 8aw Materials inventory. ., >or in 2rocess inventory.
25. 7uring the month o" Fuly$ Mc/lroy Company's direct la'or cost totaled )!-$### and
direct la'or cost was -#% o" prime cost. I" total manu"acturing costs during Fuly were
).*$###$ the manu"acturing overhead was,
/0am 11 2ractice 3uestions 2age +
AMIS 212 Managerial Accounting
+, )2+$###. -, )-#$###. C, )2*$###. ., )+9$###.
2*. /(uivalent units "or a process costing system using the weighted-average method would
'e e(ual to,
+, units started during the period plus e(uivalent units in the ending wor in process
inventory.
-, units completed during the period plus e(uivalent units in the ending wor in process
inventory.
C, units completed during the period less e(uivalent units in the 'eginning inventory$
plus e(uivalent units in the ending wor in process inventory.
., units completed during the period and trans"erred out.
30. The Collins Company uses predetermined overhead rates to apply manu"acturing
overhead to 5o's. The predetermined overhead rate is 'ased on materials cost in 7ept. A
and on machine hours in 7ept. @. At the 'eginning o" the year$ the company made the
"ollowing estimates,
>hat predetermined overhead rates would 'e used in 7ept A and 7ept @$ respectivelyB
+, 1+#% and )+..# -, &1% and )+..# C, &1% and )+.## ., 1+#% and )+.##
32. A company should use process costing$ rather than 5o' order costing$ i",
+, the product is composed o" mass-produced homogeneous units.
-, the product goes through several steps o" production.
C, production is only partially completed during the accounting period.
., the product is manu"actured in 'atches only as orders are received.
34. 4ast month a manu"acturing company had the "ollowing operating results,
>hat was the cost o" goods manu"actured "or the monthB
+, )+92$### -, )+**$### C, )+29$### ., )++2$###
35. Stover Company uses the weighted-average method in its process costing system.
In"ormation concerning 7epartment A "or the month o" Fune "ollows,
/0am 11 2ractice 3uestions 2age *
Dept A Dept B
Materials cost ..................... )-*$### )+2$###
Manu"acturing overhead ........ 91$### +.$###
7irect la'or hours................... .$### 1#$###
Machine hours........................ !$### 12$###

AMIS 212 Managerial Accounting
M a t e r i a l s
U n i t s C o s t s
> o r i n p r o c e s s $ ' e g i n n i n g . . . . . . . 1 & $ # # # ) 1 2 $ . # #
S t a r t e d i n F u n e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 $ # # # - 9 $ & # #
= n i t s c o m p l e t e d . . . . . . . . . . . . . . . . . . . . . . . . . . * $ # # #
> o r i n p r o c e s s $ e n d i n g . . . . . . . . . . . . . 1 + $ # # #

/nding >I2 is 1##% complete as to materials and -#% complete as to conversion. The
cost per e(uivalent unit "or materials costs is closest to,
+, )#..9. -, )#.9&. C, )1.#1. ., )#..!.
3ore )uestions$
/se the follo!in% to ans!er questions 3'4$
Eran Company operates a ca"eteria "or its employees. The num'er o" meals served each wee
over the last seven wees$ along with the total costs o" operating the ca"eteria are given 'elow,
W e e k M e a l s s e r v e d C a f e t e r i a c o s t s
1 1 $ * # # ) + $ . # #
2 1 $ - # # ) * $ # . #
! 1 $ . # # ) * $ 2 . #
+ 1 $ + * # ) + $ 9 # #
* 1 $ 2 # # ) + $ # # #
- 1 $ - * # ) * $ 1 # #
& 1 $ 9 # # ) * $ + # #

Assume that the relevant range includes all o" the activity levels mentioned in this pro'lem.
3. =sing the high-low method o" analysis$ the varia'le cost per meal served in the ca"eteria
would 'e estimated to 'e,
+, )1.##. -, )2..#. C, )1.*#. ., )2.##.
4. Assume that the ca"eteria e0pects to serve 1$.*# meals during >ee .. =sing the high-
low method$ the e0pected total cost o" the ca"eteria would 'e,
+, )*$!##. -, )*$!+#. C, )+$!&*. ., )*$1.#.
5. I" a company decreases the varia'le e0pense per unit while increasing the total "i0ed
e0penses$ the total e0pense line relative to its previous position will,
+, shi"t upward and have a "latter slope.
-, shi"t upward and have a steeper slope.
C, shi"t downward and have a "latter slope.
., shi"t downward and have a steeper slope.
33. Stott Company re(uires one dochand "or every *## pacages loaded daily. The wages
/0am 11 2ractice 3uestions 2age -
AMIS 212 Managerial Accounting
"or these dochands would 'e classi"ied as,
+, mi0ed. -, varia'le. C, curvilinear. ., step-varia'le.
35. Earac Corporation has provided the "ollowing production and total cost data "or two
levels o" monthly production volume. The company produces a single product.
2 r o d u c t i o n v o l u m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + $ # # # u n i t s * $ # # # u n i t s
7 i r e c t m a t e r i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 2 # . $ . # # ) 2 - 1 $ # # #
7 i r e c t l a ' o r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 1 1 9 $ 2 # # ) 1 + 9 $ # # #
M a n u " a c t u r i n g o v e r h e a d . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) ! 1 9 $ 2 # # ) ! 2 9 $ * # #

The 'est estimate o" the total cost to manu"acture +$!## units is closest to,
A< )-9*$&+# @< )-!*$9&# C< )--*$.** 7< )-&+$.9#
/se the follo!in% to ans!er questions 20'21$
An income statement "or Sam's @oostore "or the "irst (uarter o" the year is presented 'elow,
S a m ' s @ o o s t o r e
I n c o m e S t a t e m e n t
E o r 3 u a r t e r / n d e d M a r c h ! 1

S a l e s ) 9 # # $ # # #
C o s t o " 6 o o d s S o l d - ! # $ # # #
6 r o s s M a r g i n 2 & # $ # # #
4 e s s : p e r a t i n g / 0 p e n s e s
S e l l i n g ) 1 # # $ # # #
A d m i n i s t r a t i o n 1 # + $ # # # 2 # + $ # # #
D e t : p e r a t i n g I n c o m e ) - - $ # # #

:n average$ a 'oo sells "or )*#. Garia'le selling e0penses are )* per 'oo with the remaining
selling e0penses 'eing "i0ed. The varia'le administrative e0penses are +% o" sales with the
remainder 'eing "i0ed.
20. The contri'ution margin "or Sam's @oostore "or the "irst (uarter is,
+, )&*-$###. -, )1++$###. C, )&&+$###. ., )1.#$###.
21. The cost "ormula "or operating e0penses with HIH e(ual to the num'er o" 'oos sold is,
+, C J )&.$### K )9I. C, C J )1#2$### K )*I.
-, C J )1#2$### K )&I. ., C J )&.$### K )&I.
22. >ithin a relevant range$ the amount o" varia'le cost per unit,
+, decreases as activity increases. C, di""ers at each activity level.
-, increases as activity increases. ., remains constant at each activity level.
/0am 11 2ractice 3uestions 2age &
AMIS 212 Managerial Accounting
The +ns!ers$
-. @
.. 7
9. A
1#. 7
11. 7
12. A
1!. A
1+. A
1*. 7
1-. 7
1&. C
19. A
2!. C
2+. C
2*. C
2-. @
!#. 7
!2. A
!+. C
!*. 7
3ore +ns!ers$
!. 7
+. A
*. A
!!. 7
!*. 7
2#. @
21. 7
22. 7
/0am 11 2ractice 3uestions 2age .