29 Jun True or False: Please ind
Question
True or False: Please indicate whether each statement is true or false. (2 points per question)
1. The standard cost is how much a product should cost to manufacture.
2. Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.
3. An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.
4. A centralized business organization is one in which all major planning and operating decisions are made by top management.
5. The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.
6. Property tax expense for a department store’s store equipment is an example of a direct expense.
7. Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.
8. The product cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.
9. When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.
10. Care must be taken involving capital investment decisions, since normally a long-term commitment of funds is involved and operations could be affected for many years.
11. Average rate of return equals average investment divided by estimated average annual income.
12. Managers depend on product costing to make decisions regarding continuing operations, advertising, and product mix.
13. The single plantwide overhead rate method is very expensive to apply.
14. In the just-in-time (JIT) philosophy, unexpected downtime is the result of unreliable processes.
15. In a just-in-time (JIT) system, the work in process account will show more transactions than in a traditional cost system.
Multiple Choice (2 points per question):
16. If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed:
a. controllable variance
b. price variance
c. quantity variance
d. rate variance
17. The Joyner Corporation purchased and used 126,000 board feet of lumber in production, at a total cost of $1,449,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.5 board feet per unit and a standard price of $12 per board foot. Actual production was 23,000 units.
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