Management Accounting

Management Accounting

1)The opportunity cost of making a component part in a factory with no excess capacity is the:
net benefit foregone from the best alternative use of the capacity required.
total manufacturing cost of the component.
fixed manufacturing cost of the component.
variable manufacturing cost of the component.
2) A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. A fixed manufacturing overhead volume variance will necessarily occur in a month in which there is a fixed manufacturing overhead budget variance.
True
False

3) Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for one unit of Teragram include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Teragram. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:
more materials were used than were purchased.
more materials were purchased than were used.
the actual usage of materials was less than the standard allowed.
the actual cost of materials was less than the standard cost.
4)The cost of a resource that has no alternative use in a make or buy decision problem has an opportunity cost of zero.
True
False
5)An unfavorable direct labor efficiency variance could be caused by:
an unfavorable variable overhead rate variance.
a favorable materials quantity variance.
an unfavorable materials quantity variance.
a favorable variable overhead rate variance.
6) The fixed manufacturing overhead volume variance will be unfavorable if production volume is less than sales volume.
True
False
7) If by dropping a product a firm can avoid more in fixed costs than it loses in contribution margin, then the firm is better off...