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BUS 475 100 Questions with ANSWERS 5 Set.doc

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1) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools
2) "Generally accepted" in the phrase generally accepted accounting principles
means that the principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
3) The income statement and balance sheet columns of Pine Company's worksheet
reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
A. not determinable
B. $10,000 loss
C. $10,000 income
D. $48,000 income
4) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Inventory 300,000
Equipment 675,000
Office Furniture 150,000
Accumulated Depreciation 450,000
What is the net amount of property, plant, and equipment that will appear on the
balance sheet?
A. $1,425,000
B. $1,950,000
C. $2,400,000

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D. $1,650,000
5) The first step in activity-based costing is to __________.
A. identify the cost driver that has a strong correlation to the activity cost pool
B. assign manufacturing overhead costs for each activity cost pool to products
C. identify and classify the major activities involved in the manufacture of specific
products
D. compute the activity-based overhead rate per cost driver
6) Hess, Inc. sells a single product with a contribution margin of $12 per unit and
fixed costs of $74,400 and sales for the current year of $100,000. How much is
Hess’s break even point?
A. 2,133 units
B. 4,600 units
C. 6,200 units
D. $25,600
7) Sam's Used Cars uses the specific identification method of costing inventory.
During March, Sam purchased three cars for $6,000, $7,500, and $9,750,
respectively. During March, two cars are sold for $9,000 each. Sam determines that
at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?
A. $8,250
B. $5,250
C. $750
D. $4,500
8) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the
balance sheet?
A. $950,000
B. $1,300,000
C. $1,600,000
D. $1,100,000
9) The income statement and balance sheet columns of Pine Company's worksheet
reflects the following totals:

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Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
Closing entries are necessary for __________.
A. permanent or real accounts only
B. permanent accounts only
C. both permanent and temporary accounts
D. temporary accounts only
10) As Plant Controller, you are trying to determine which costs over which you
have the most control on a day to day basis. Your goal is to achieve better
profitability. The Plant Operations Manager suggests that overhead is the easiest
area to directly reduce costs. Which of the following items would be classified as
manufacturing overhead?
A. The western division’s vice president’s salary
B. Factory janitor
C. Cost of landscaping the corporate office
D. General corporate liability insurance
11) The cost of an asset and its fair market value are __________.
A. the same on the date of acquisition
B. never the same
C. the same when the asset is sold
D. irrelevant when the asset is used by the business in its operations
12) One of Astro Company's activity cost pools is machine setups, with estimated
overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600
setups). How much of the machine setup cost pool should be assigned to sparklers?
A. $90,000
B. $150,000
C. $60,000
D. $75,000
13) The cost principle is the basis for preparing financial statements because it is
__________.
A. the most accurate measure of purchasing power
B. a conservative value
C. relevant and objectively measured, and verifiable
D. an international accounting standard

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Anonymous
I was having a hard time with this subject, and this was a great help.

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