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.
3) Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for one ...view middle of the document...
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.
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.
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 economically if the product is dropped.
8) Joint costs are not relevant to the decision to sell a product at the split-off point or to process the product further.
9) When a company has a production constraint, the product with the highest contribution margin per unit of the constrained resource should be given highest priority.
10) An avoidable cost is a cost that can be eliminated (in whole or in part) as a result of choosing one alternative over another.
11) The Malcolm Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). The standards call for 4 hours of direct labor per unit produced. The following data pertain to the company's manufacturing overhead for the month of July:
Actual fixed manufacturing overhead costs incurred $28,460
Denominator activity 6,305 DLHs
Number of units produced 3,000 units
Budget variance $3,240 Unfavorable
The Fixed component of the predetermined overhead rate for June is: (Round your answer to 2 decimal places.)