CLO
CLO Questions
Corresponds to CLO 1(a)Which of the following does NOT affect the direct/indirect classification of a cost?
the level of budgeted profit next year
the materiality of the cost in question
available technology to gather information about the cost
the design of the operation
Question 2
Corresponds to CLO 1(b)Fixed costs depend on the:
amount of resources used
amount of resources acquired
volume of production
volume of sales
Question 3
Corresponds to CLO 1(c)A band of normal activity or volume in which specific cost-volume relationships are maintained is referred to as the:
average range
cost-allocation range
relevant range
cost driver range
Question 4
Corresponds to CLO 1(d)Christi Manufacturing provided the following information month:
Sales $10,000Variable costs 3,000Fixed costs 5,000Operating income $2,000
If sales double next month, what is the projected operating income?
$4,000
$7,000
$9,000
$12,000
Question 5
Corresponds to CLO 2(a) Which of the following items is NOT an assumption of CVP analysis?
Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.
When graphed, total costs curve upward.
The unit-selling price is known and constant.
All revenues and costs can be added and compared without taking into account the time value of money.
Question 6
Corresponds to CLO 2(b) Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs.Breakeven point in units is:
1,000 hams
1,200 hams
1,600 hams
None of these answers are correct.
Question 7
Corresponds to CLO 2(c) Fixed costs equal $12,000, unit contribution margin equals $20, and the number of units sold equal 1,600. Operating income is:$12,000
$20,000
$32,000
$40,000
Question 8
Corresponds to CLO 2(d) The breakeven point in CVP analysis is defined as:
when fixed costs equal total revenues
fixed costs divided by the contribution margin per unit
revenues less variable costs equal operating income
when the contribution margin percentage equals total revenues divided by variable costs
Question 9
Corresponds to CLO 3(a)Job costing:
can only be used in manufacturing
records the flow of costs customer
allocates an equal amount of cost to each unit made during a time period
is commonly used when each unit of output is identical
Question 10
Corresponds to CLO 3(b)Problems with accurate costing occur when:
incorrect job numbers are recorded on source documents
bar coding is used to record materials used on the job
a computer screen requests an employee number before that employee is able to work on information related to a specific job
All of these answers are correct.
Question 11
Corresponds to CLO 3(c)The law firm of Smith & Jones has a staff of 30 lawyers and administrative staff. Budgeted total costs of the firm total $2,100,000 of which $1,200,000 is direct-labor costs. Assuming that the remaining costs are indirect and direct-labor cost is the allocation base, calculate the budgeted indirect cost rate.
57% of direct-labor cost
75% of direct-labor cost
43% of direct-labor cost
175% of direct-labor cost
Question 12
Corresponds to CLO 3(d)A local accounting firm employs 20 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 500 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs year are $787,500, and the firm expects to have 90 clients during the coming year.What is the budgeted indirect-cost rate per hour?
$1,575.00 per hour
$78.75 per hour
$18.00 per hour
$17.50 per hour
Question 13
Corresponds to CLO 4(a)Budgeting is used to help companies:
plan to better satisfy customers
anticipate potential problems
focus on opportunities
All of these answers are correct.
Question 14
Corresponds to CLO 4(b)The order to follow when preparing the operating budget is:
revenues budget, production budget, and direct manufacturing labor costs budget
costs of goods sold budget, production budget, and cash budget
revenues budget, manufacturing overhead costs budget, and production budget
cash expenditures budget, revenues budget, and production budget.
Question 15
Corresponds to CLO 4(c)DeArmond Corporation has budgeted sales of 18,000 units, target ending finished goods inventory of 3,000 units, and beginning finished goods inventory of 900 units. How many units should be produced next year?
21,900 units
20,100 units
15,900 units
18,000 units
Question 16
Corresponds to CLO 4(d)Fiscal Company has the following sales budget last six months of 20X5:July 100,000 October $ 90,000August 80,000 November 100,000September 110,000 December 94,000
Historically, the cash collection of sales has been as follows:65% of sales collected in the month of sale,25% of sales collected in the month following the sale,8% of sales collected in the second month following the sale, and2% of sales are uncollectible.Cash collections are:
$71,500
$86,700
$99,500
$102,000
Question 17
Corresponds to CLO 5(a)The flexible budget contains:
budgeted amounts output
budgeted amounts output
actual costs output
actual costs output
Question 18
Corresponds to CLO 5(b)
JJ White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units.The flexible-budget amount is:$80,000
$82,000
$96,000
$98,400
Question 19
Corresponds to CLO 5(c)When actual input data from past periods is used to develop a budget:
past inefficiencies are excluded
expected future changes are incorporated
information is available at a low cost
audited financial information must be used
Question 20
Corresponds to CLO 5(d)
Robb Industries, Inc. (RII), developed standard costs material and direct labor. In 2004, RII estimated the following standard costs of their major products, the 10-gallon plastic container.Budgeted quantity Budgeted priceDirect materials 0.10 pounds $30 per poundDirect labor 0.05 hours $15 per hourDuring June, RII produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $32 and 250 direct manufacturing labor-hours at an average wage of $15.25 per hour.June's direct material flexible-budget variance is:
$980 unfavorable
$300 favorable
$680 unfavorable
None of these answers are correct.
Question 21
Corresponds to CLO 6(a)the costs of products and services, a standard costing system:
only requires a simple recording system
uses standard costs to determine the cost of products
does not have to keep track of actual costs
All of these answers are correct.
Question 22
Corresponds to CLO 6(b)Shimon Corporation manufactures industrial-sized water coolers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:
Budgeted output units 15,000 unitsBudgeted machine-hours 5,000 hoursBudgeted variable manufacturing overhead costs ,000 units $161,250
Actual output units produced 22,000 unitsActual machine-hours used 7,200 hoursActual variable manufacturing overhead costs $242,000
What is the flexible-budget amount manufacturing overhead?
$165,000
$236,500
$242,000
None of these answers is correct.
Question 23
Corresponds to CLO 6(c)Fearless Frank's Fertalizer Farm produces fertalizer and distributes the product by using his tanker trucks. Frank's uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data:
Budgeted output units 300 truckloadsBudgeted fleet hours 225 hoursBudgeted pounds of fertalizer 12,000,000 poundsBudgeted variable manufacturing overhead costs loads $37,500
Actual output units produced and delivered 315 truckloadsActual fleet hours 218 hoursActual pounds of fertalizer produced and delivered 12,600,000 poundsActual variable manufacturing overhead costs $38,250
What is the budgeted variable overhead cost rate per output unit?
$120.00
$125.00
$166.67
$175.00
Question 24
Corresponds to CLO 6(d)An unfavorable variable overhead efficiency variance indicates that:
variable overhead items were not used efficiently
the price of variable overhead items was less than budgeted
the variable overhead cost-allocation base was not used efficiently
the denominator level was not accurately determined
Question 25
Corresponds to CLO 7(a)Absorption costing is required of the following EXCEPT:
generally accepted accounting principles
determining a competitive selling price
external reporting to shareholders
income tax reporting
Question 26
Corresponds to CLO 7(b)Marie's Decorating produces and sells a mantel clock for $100 per unit. In 20X5, 100,000 clocks were produced and 80,000 were sold. Other information year includes:
Direct materials $30.00 per unitDirect manufacturing labor $ 2.00 per unitVariable manufacturing costs $ 3.00 per unitSales commissions $ 5.00 per partFixed manufacturing costs $25.00 per unitAdministrative expenses, all fixed $15.00 per unit
What is the inventoriable cost per unit using variable costing?
$32
$35
$40
$60
Question 27
Corresponds to CLO 7(c)When comparing the operating incomes between absorption costing and variable costing, and beginning finished inventory exceeds ending finished inventory, it may be assumed that:
sales increased during the period
variable cost per unit is less than fixed cost per unit
there is an unfavorable production-volume variance
variable costing operating income exceeds absorption costing operating income
Question 28
Corresponds to CLO 7(d)Greene Manufacturing incurred the following expenses during 20X5:
Fixed manufacturing costs $45,000Fixed nonmanufacturing costs $35,000Unit selling price $100Total unit cost $40Variable manufacturing cost rate $20Units produced 1,340 units
What will be the breakeven point in units if absorption costing is used?1,330 units
1,000 units
887 units
563 units
