Question 1

When a production process involves 10 steps, there is often a different maximum amount that it can be processed through each of these steps in a day. The theory of constraints focuses managers' attention on

Accepted Answer

The theory of constraints focuses on identifying the bottleneck, which is the slowest step in the production process. By doing so, managers can optimize the performance of the bottleneck and increase the overall productivity of the process. Therefore, the correct answer is C, which identifies the slowest step as the point of focus. The average and median amounts processed by the steps are less important in this context. The fastest step may not be a bottleneck and optimizing it further may not result in significant improvements in the overall process.

Question 2

Typically, "throughput" would be measured as the selling price of the amount of products processed through the binding constraint minus

Accepted Answer

Throughput is calculated as the selling price minus totally variable costs, which are the costs directly associated with producing a product.

Question 3

With regard to joint costs, economists generally believe that:

Accepted Answer

Economists generally believe that for product pricing decisions, the allocation of joint costs is not relevant. This is because prices are determined by the market (supply and demand), not by the costs incurred to produce the goods. Allocating joint costs does not affect the market price of the products.

Question 4

The Laino Corp. takes a single ingredient and makes it into three different products. The joint costs of buying the ingredient and dividing it into these three products are $10,000 per metric ton of the ingredient. From every metric ton of ingredients, the company produces 400 kilograms of Product A, 400 kilograms of Product B, and 200 kilograms of Product C. Product A can be sold at the split-off point for $10 per kilogram, B can be sold for $15 per kilogram, and C can be sold for $20 per kilog

Accepted Answer

The total revenue from selling the products at the split-off point is (400 kg * $10) + (400 kg * $15) + (200 kg * $20) = $4000.

Question 5

The Lake Corp. takes a single ingredient and makes it into three different products. The joint costs of buying the ingredient and dividing it into these three products are $10,000 per metric ton of the ingredient. From every metric ton of ingredients, the company produces 400 kilograms of Product A, 400 kilograms of Product B, and 200 kilograms of Product C. Product A can be sold at the split-off point for $10 per kilogram, B can be sold for $15 per kilogram, and C can be sold for $20 per kilogr

Accepted Answer

To determine the best choice, we need to use the net realizable value (NRV) method.

Product A:
400 kg x $10 = $4,000 NRV per metric ton

Product B:
400 kg x $15 = $6,000 NRV per metric ton

Product C:
200 kg x $20 = $4,000 NRV per metric ton

Total NRV per metric ton = $14,000

Subtracting joint costs of $10,000 per metric ton, we get $4,000 as the profit per metric ton.

Therefore, we should choose the product with the highest profit per metric ton, which is Product B with $6,000.

Thus, the best choice is D.

Question 6

Hazan Corp. started the year with $200,000 in inventory. During the year, it applied the following costs to inventory: direct labor of $1,000,000; raw materials of $2,000,000; and overhead of $1,000,000. The ending inventory had a cost of $300,000. Find the cost of goods sold. (Assume the cost of goods sold includes any shrinkage.)______

Accepted Answer

The answer of Hazan Corp. started the year with $200,000...

Question 7

Tabby Co. had beginning inventory of $200 and ending inventory of $300. Tabby Co. had cost of goods sold amounting to $800. Based on this information, Tabby Co. must have purchased inventory amounting to: $ _________

Accepted Answer

The answer of Tabby Co. had beginning inventory of $200...

Question 8

Ilyas Corp. started the year with $2,000,000 in inventory. During the year, it applied the following costs to inventory: direct labor of $6,000,000; raw materials of $2,000,000; and overhead of $10,000,000. The total cost of goods sold and shrinkage was $17,000,000. Find the ending inventory.______

Accepted Answer

The answer of Ilyas Corp. started the year with $2,000,000...

Question 9

Kovacs Corp. started the year with $3,000,000 in inventory. During the year, it applied the following costs to inventory: direct labor of $1,000,000; raw materials of $7,000,000; and overhead of $4,000,000. The ending inventory had a cost of $3,000,000. Find the cost of goods sold. (Assume the cost of goods sold includes any shrinkage.)______

Accepted Answer

The answer of Kovacs Corp. started the year with $3,000,000...

Question 10

Ontario Corp. has budgeted to spend $130,000 on manufacturing overhead in 2016. Compute the predetermined overhead rates per hour that it would use if the computation is based on budgeted direct labor hours of 65,000.______

Accepted Answer

The answer of Ontario Corp. has budgeted to spend $130,000...

Question 11

Explain what is meant by the terms. Give an example.

Accepted Answer

The answer of Explain what is meant by the terms....

Question 12

The text discusses both traditional full absorption costing methods, and activity-based costing ("ABC").

Accepted Answer

The answer of The text discusses both traditional full absorption...

Question 13

Explain why transfer prices between subsidiaries are, or are not, a problem from the perspective of:

Accepted Answer

The answer of Explain why transfer prices between subsidiaries are,...

Question 14

37 Assume that a car manufacturing company has two different suppliers, Rose and Garfield, for an ignition switch that it uses in its cars. Problems with the suppliers can cause two types of problems: warranty claims for defective products, and delay costs due to late shipments of parts from the suppliers. Some data related to the company is provided below:

Accepted Answer

The answer of 37 Assume that a car manufacturing company...

Question 15

40 The Lamb Corp. takes a single ingredient and makes it into three different products. The joint costs of buying the ingredient and dividing it into these three products are $10,000 per metric ton of the ingredient. From every metric ton of ingredients, the company produces 400 kilograms of Product A, 400 kilograms of Product B, and 200 kilograms of Product C. Product A can be sold at the split-off point for $10 per kilogram, B can be sold for $15 per kilogram, and C can be sold for $20 per kilogr

Accepted Answer

The answer of 40 The Lamb Corp. takes a single...

Question 16

A cheese-making factory buys milk, and turns the milk into two major products: cheese and butter. Here are some facts regarding its production during the year:
Pounds of cheese produced 3,000,000
Pounds of butter produced 3,000,000
Selling price per pound of butter $2
Selling price per pound of cheese $3
Joint costs of making the butter and the cheese $14,000,000

Accepted Answer

The answer of A cheese-making factory buys milk, and turns...

Question 17

Managerial costing should aid managers in their analysis and decision-making.

Accepted Answer

Managerial costing is a tool that helps managers analyze costs and make decisions that will benefit the organization. It provides information on costs associated with various activities, products, or services, so that managers can determine the best course of action to optimize performance and maximize profitability.

Question 18

In the cost hierarchy, examples of product level costs might include product design and development costs.

Accepted Answer

Product level costs are costs that are incurred to design, develop, and produce a specific product or product line. Therefore, product design and development costs are examples of product level costs.

Question 19

The amount of allocation effort needed to properly assign costs is lowest for the facility level costs, and greatest for the unit level costs.

Accepted Answer

Facility level costs are allocated to entire facilities or departments, which makes the allocation process relatively simple. Unit level costs, on the other hand, are associated with specific units or products, which requires a more detailed allocation process. Therefore, the amount of allocation effort needed is lowest for facility level costs and greatest for unit level costs.

Question 20

The amount of allocation effort needed to properly assign costs is highest for the facility level costs, and lowest for the unit level costs.

Accepted Answer

The answer of The amount of allocation effort needed to...

Quiz 10: Understanding Insurance