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Accounting:AB Costing,Net income,inventory valuation,

1) 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. $1,100,000
B. $1,600,000
C. $1,300,000
D. $950,000

2) 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. $60,000
B. $75,000
C. $150,000
D. $90,000

3) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?
A. $28,000
B. $12,000
C. $18,000
D. $6,000

4) The first step in activity-based costing is to __________.
A. compute the activity-based overhead rate per cost driver
B. identify and classify the major activities involved in the manufacture of specific products
C. assign manufacturing overhead costs for each activity cost pool to products
D. identify the cost driver that has a strong correlation to the activity cost pool

5) 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

Closing entries are necessary for __________.
A. temporary accounts only
B. both permanent and temporary accounts
C. permanent accounts only
D. permanent or real accounts only

6) The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. generally accepted accounting principles
B. operating guidelines
C. generally accepted accounting standards
D. standards of financial reporting

7) 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. $10,000 income
B. $10,000 loss
C. $48,000 income
D. not determinable

8) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?
A. Wine
B. Selling either results in the same additional income for the company
C. Beer
D. It should sell an equal quantity of both

9) A well-designed activity-based costing system starts with __________.
A. computing the activity-based overhead rate
B. assigning manufacturing overhead costs for each activity cost pool to products
C. identifying the activity-cost pools
D. analyzing the activities performed to manufacture a product

10) The cost principle is the basis for preparing financial statements because it is __________.
A. relevant and objectively measured, and verifiable
B. an international accounting standard
C. a conservative value
D. the most accurate measure of purchasing power

11) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Comparative balance sheets
B. Current income statement
C. Additional information
D. Adjusted trial balance

12) What is the preparation of reports for each level of responsibility in the company's organization chart called?
A. Responsibility reporting
B. Exception reporting
C. Master budgeting analysis
D. Static reporting

13) If a company reports a net loss, it __________.
A. will not be able to pay cash dividends
B. will not be able to get a loan
C. will not be able to make capital expenditures
D. may still have a net increase in cash

14) Of the following companies, which one would not likely employ the specific identification method for inventory costing?
A. Farm implement dealership
B. Antique shop
C. Hardware store
D. Music store specializing in organ sales

Solution Summary

The problem set deals with questions on accounting topics:Activity based costing,inventory valuation,net income estimation,statement of cashflow etc.

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