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 you with the
style and substance of typical exam questions over this material.
Please be aware that:
1. multiple choice format questions are only one of many resources
available to prepare for testing events – reading textbook chapters and
working through chapter examples, studying the end-of-chapter review
problem and accompanying solution, and reviewing assigned homework
items and the published solutions may be more powerful methods to
increase your understanding of the topics covered in the course.
2. the exam questions used this quarter will be similar but different from
these example questions – understanding the main concepts in each
chapter is critical to success on the testing events; remembering a
sample question may be of some help but the format of a question on the
same topic often differs rendering memory a distant second choice to
understanding.
The Questions:
6. Scheney Company uses the weighted-average method in its process costing system. The
company's work in process inventory on March 31 consisted of 20,000 units. The units in
the ending work in process inventory were 100% complete with respect to materials and
70% complete with respect to labor and overhead. If the cost per equivalent unit for
March was $2.50 for materials and $4.75 for labor and overhead, the total cost in the
March 31 work in process inventory was:
A) $101,500.
B) $116,500. C) $78,500.
Exam #1
D) $145,000.
Practice Questions
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AMIS 212
Managerial Accounting
Use the following to answer questions 8-10:
Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of
75% of direct labor cost. Any under- or overapplied overhead cost is closed out to Cost of Goods
Sold at the end of the month. During March, the following transactions were recorded by the
company:
Raw materials (all direct materials):
Purchased during the month ......................................
Used in production ....................................................
$27,000
$28,000
Labor:
Direct labor hours worked during the month ............
Direct labor cost incurred ..........................................
Indirect labor cost incurred........................................
2,500
$20,000
$5,500
Manufacturing overhead costs incurred (total) ...............
$17,000
Inventories:
Raw materials (all direct) March 31 ..........................
Work in process, March 1 .........................................
Work in process, March 31 .......................................
$7,500
$10,500
*$14,000
*contains $5,000 of direct labor cost
8. The balance on March 1 in the Raw Materials inventory account was:
A) $6,500.
B) $7,500.
C) $9,500.
D) $8,500.
9. The entry to dispose of the under- or overapplied overhead cost for the month would
include:
A)
B)
C)
D)
a credit of $2,000 to the Manufacturing Overhead account.
a debit of $5,000 to the Manufacturing Overhead account.
a credit of $2,000 to Cost of Goods Sold.
a debit of $5,000 to the Cost of Goods Sold.
10. The Cost of Goods Manufactured for March was:
A) $63,000.
B) $61,500.
C) $66,500.
Exam #1
D) $59,500.
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AMIS 212
Managerial Accounting
Use the following to answer questions 11-14:
Barker Corporation uses the weighted-average method in its process costing system. This month,
the beginning inventory in the first processing department consisted of 300 units. The costs and
percentage completion of these units in beginning inventory were:
Percent
Cost Complete
85%
Materials costs ............. $7,400
55%
Conversion costs .......... $4,900
A total of 9,100 units were started and 8,700 units were transferred to the second
processing department during the month. The following costs were incurred in the
first processing department during the month:
Materials costs ...........
Conversion costs ........
$240,300
$242,400
The ending inventory was 85% complete with respect to materials and 20% complete with
respect to conversion costs.
11. The cost per equivalent unit for materials for the month in the first processing department
is closest to:
A) $25.56
B) $26.35
C) $25.85
D) $26.65
12. How many units are in ending work in process inventory in the first processing
department at the end of the month?
A) 700
B) 900
C) 400
D) 8,800
13. What are the equivalent units for conversion costs for the month in the first processing
department?
A) 8,840
B) 8,700
C) 9,400
D) 140
14. The total cost transferred from the first processing department to the next processing
department during the month is closest to:
A) $475,227 B) $495,000 C) $482,700
Exam #1
D) $513,466
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Managerial Accounting
15. The property taxes on the factory building for a manufacturer would be an example of:
Prime Cost
A)
B)
C)
D)
Conversion Cost
Yes
No
Yes
No
Yes
No
No
Yes
16. Parsons Co. uses a predetermined overhead rate based on direct labor hours to apply
manufacturing overhead to jobs. Last year Parsons incurred $250,000 in actual
manufacturing overhead cost. The Manufacturing Overhead account showed that
overhead was overapplied in the amount of $12,000 for the year. If the predetermined
overhead rate was $8.00 per direct labor hour, how many hours were worked during the
year?
A) 29,750 hours
B) 30,250 hours
C) 31,250 hours
D) 32,750 hours
17. In a job-order cost system, the application of manufacturing overhead usually would be
recorded as a debit to:
A) Finished Goods inventory.
B) Cost of Goods Sold.
C) Work in Process inventory.
D) Manufacturing Overhead.
Use the following to answer question 19:
Cory Company produces refrigerators. Each refrigerator contains a small thermostat that costs
$5. During June, 600 thermostats were drawn from the supply room and installed in refrigerators
that were in the production process. Seventy percent of these units were completed and
transferred into finished goods warehouses. Of the units completed, twenty percent were still
unsold at the end of the month. There were no beginning inventories.
19. The cost of thermostats in work in process at the end of the month would be:
A) $900.
B) $2,400.
C) $2,100.
D) $3,000.
23. The process of ensuring that the plan is being followed is called:
A) directing.
B) decision making.
C) controlling.
D) planning.
24. In a job order cost system using predetermined manufacturing overhead rates, indirect
materials issued into production usually are recorded as an increase in:
A) Finished Goods inventory.
B) Raw Materials inventory.
C) Manufacturing Overhead.
D) Work in Process inventory.
25. During the month of July, McElroy Company's direct labor cost totaled $36,000 and
direct labor cost was 60% of prime cost. If total manufacturing costs during July were
$85,000, the manufacturing overhead was:
Exam #1
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AMIS 212
A) $24,000.
Managerial Accounting
B) $60,000.
C) $25,000.
D) $49,000.
26. Equivalent units for a process costing system using the weighted-average method would
be equal to:
A) units started during the period plus equivalent units in the ending work in process
inventory.
B) units completed during the period plus equivalent units in the ending work in process
inventory.
C) units completed during the period less equivalent units in the beginning inventory,
plus equivalent units in the ending work in process inventory.
D) units completed during the period and transferred out.
30. The Collins Company uses predetermined overhead rates to apply manufacturing
overhead to jobs. The predetermined overhead rate is based on materials cost in Dept. A
and on machine hours in Dept. B. At the beginning of the year, the company made the
following estimates:
Materials cost .....................
Manufacturing overhead ........
Direct labor hours...................
Machine hours ........................
Dept A Dept B
$65,000 $42,000
91,000 48,000
8,000 10,000
3,000 12,000
What predetermined overhead rates would be used in Dept A and Dept B, respectively?
A) 140% and $4.80
B) 71% and $4.80
C) 71% and $4.00
D) 140% and $4.00
32. A company should use process costing, rather than job order costing, if:
A) the product is composed of mass-produced homogeneous units.
B) the product goes through several steps of production.
C) production is only partially completed during the accounting period.
D) the product is manufactured in batches only as orders are received.
34. Last month a manufacturing company had the following operating results:
What was the cost of goods manufactured for the month?
A) $492,000
B) $455,000 C) $429,000
D) $442,000
35. Stover Company uses the weighted-average method in its process costing system.
Information concerning Department A for the month of June follows:
Exam #1
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Managerial Accounting
Units
17,000
82,000
85,000
14,000
Work in process, beginning .......
Started in June ............................
Units completed .........................
Work in process, ending.............
Materials
Costs
$12,800
69,700
Ending WIP is 100% complete as to materials and 60% complete as to conversion. The
cost per equivalent unit for materials costs is closest to:
A) $0.89.
B) $0.97.
C) $1.01.
D) $0.83.
More Questions:
Use the following to answer questions 3-4:
Frank Company operates a cafeteria for its employees. The number of meals served each week
over the last seven weeks, along with the total costs of operating the cafeteria are given below:
Week Meals served Cafeteria costs
1
1,500
$4,800
2
1,600
$5,080
3
1,800
$5,280
4
1,450
$4,900
5
1,200
$4,000
6
1,650
$5,100
7
1,900
$5,400
Assume that the relevant range includes all of the activity levels mentioned in this problem.
3. Using the high-low method of analysis, the variable cost per meal served in the cafeteria
would be estimated to be:
A) $1.00.
B) $2.80.
C) $1.50.
D) $2.00.
4. Assume that the cafeteria expects to serve 1,850 meals during Week 8. Using the highlow method, the expected total cost of the cafeteria would be:
A) $5,300.
B) $5,340.
C) $4,375.
D) $5,180.
5. If a company decreases the variable expense per unit while increasing the total fixed
expenses, the total expense line relative to its previous position will:
A)
B)
C)
D)
shift upward and have a flatter slope.
shift upward and have a steeper slope.
shift downward and have a flatter slope.
shift downward and have a steeper slope.
33. Stott Company requires one dockhand for every 500 packages loaded daily. The wages
Exam #1
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Managerial Accounting
for these dockhands would be classified as:
A) mixed.
B) variable.
C) curvilinear.
D) step-variable.
35. Farac Corporation has provided the following production and total cost data for two
levels of monthly production volume. The company produces a single product.
Production volume ..................................... 4,000 units 5,000 units
Direct materials ..........................................
$208,800
$261,000
Direct labor ................................................
$119,200
$149,000
Manufacturing overhead ............................
$319,200
$329,500
The best estimate of the total cost to manufacture 4,300 units is closest to:
A) $695,740
B) $635,970
C) $665,855
D) $674,890
Use the following to answer questions 20-21:
An income statement for Sam's Bookstore for the first quarter of the year is presented below:
Sam's Bookstore
Income Statement
For Quarter Ended March 31
Sales
Cost of Goods Sold
Gross Margin
Less Operating Expenses
Selling
Administration
Net Operating Income
$900,000
630,000
270,000
$100,000
104,000
204,000
$ 66,000
On average, a book sells for $50. Variable selling expenses are $5 per book with the remaining
selling expenses being fixed. The variable administrative expenses are 4% of sales with the
remainder being fixed.
20. The contribution margin for Sam's Bookstore for the first quarter is:
A) $756,000. B) $144,000. C) $774,000. D) $180,000.
21. The cost formula for operating expenses with "X" equal to the number of books sold is:
A) Y = $78,000 + $9X.
B) Y = $102,000 + $7X.
C) Y = $102,000 + $5X.
D) Y = $78,000 + $7X.
22. Within a relevant range, the amount of variable cost per unit:
A) decreases as activity increases.
B) increases as activity increases.
Exam #1
C) differs at each activity level.
D) remains constant at each activity level.
Practice Questions
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AMIS 212
Managerial Accounting
The Answers:
6.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
19.
23.
24.
25.
26.
30.
32.
34.
35.
B
D
A
D
D
A
A
A
D
D
C
A
C
C
C
B
D
A
C
D
More Answers:
3.
4.
5.
33.
35.
20.
21.
22.
D
A
A
D
D
B
D
D
Exam #1
Practice Questions
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