1. Ideal standards

	A.	reflect optimal performance under perfect operating conditions.
	B.	are the standards generally used in a master budget.
	C.	are rigorous but attainable.
	D.	will always motivate employees to achieve the maximum output.

2. Which is included in total manufacturing costs for the period?

		Administrative salaries
		Direct labor costs
		Shipping charges
		Advertising expenses

3. A company is considering purchasing a machine that costs $340,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100,000 and annual expenses are $73,000 including depreciation expense.

If the machine is purchased, the annual rate of return expected on this machine is?

4. To assign overhead costs using activity based costing to each product, the company

	A.	assigns the cost of each activity cost pool in total to one product line.
	B.	multiplies the overhead rate by the number of direct labor hours used on each product.
	C.	multiplies the activity-based overhead rates per cost driver by the number of cost drivers to be used per product.
	D.	multiplies the rate of cost drivers per estimated cost for the cost pool by the estimated cost for each cost pool.

5. An opportunity cost

	A.	is classified as manufacturing overhead.
	B.	is the potential benefit that may be obtained by following an alternative course of action.
	C.	is the cost of a new product proposal.
	D.	should be initially recorded as an asset.

6. Management by exception

	A.	means that only unfavorable differences will be investigated.
	B.	means that material differences will be investigated.
	C.	means that all differences will be investigated.
	D.	causes managers to be buried under voluminous paperwork.

7. Dolan Company's accounting records reflect the following inventories:

Dec. 31, 2020

Dec. 31, 2019

Raw materials inventory	$310,000	$260,000
Work in process inventory	300,000	160,000
Finished goods inventory	190,000	150,000

During 2020, $800,000 of raw materials were purchased, direct labor costs amounted to $670,000, and manufacturing overhead incurred was $640,000. Dolan Company's total manufacturing costs incurred in 2020 amounted to