1) If standard costs are incorporated into the accounting system A

1) If standard costs are incorporated into the accounting system

A.  it may simplify the costing of inventories and reduce clerical costs

B.  it can eliminate the need for the budgeting process

C.  the accounting system will produce information which is less relevant than the historical cost accounting system

D.  approval of the stockholders is required

2) Generally accepted accounting principles are

A.  income tax regulations of the Internal Revenue Service.

B.  standards that indicate how to report economic events.

C.  theories that are based on physical laws of the universe.

D.  principles that have been proven correct by academic researchers.

3) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?

A.  An increase to finished goods

B.  A decrease to applied overhead

C.  A decrease to work in process inventory

D.  An increase to cost of goods sold

4) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,

A.  incremental revenues are $2 per unit

B.  incremental costs are $1 per unit

C.  net relevant costs are $1 per unit

D.  differential costs are $2 per unit

5) 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.  $18,000

B.  $28,000

C.  $12,000

D.  $6,000

6) Kershaw Bookstore had 600 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:

Date Purchases Sales

Jan. 14  450 @ $28

17 300 @ $20

25 300 @ $22

29 300 @ $32

Kershaw does not maintain perpetual inventory records. According to a physical count, 450 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:

A.  $1,200.

B.  $8,100.

C.  $9,300.

D.  $9,600.