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Young Company has a tax rate of 40 percent. Information for the company is as follows: What is the weighted cost of capital? A.0.1098 B.0.2480 C.0.0827 D.0.0366 Which of the following are the two costs of controlling quality? Answer: A […]

Operational uses of Activity Based Management allow for which of the following? A.Competitive cost advantage by focusing attention on activities. B.Competitive cost advantage by focusing attention on departments. C.Competitive cost advantage by focusing attention on plants. D.Competitive cost advantage by […]

What costs can be justified when managers initially set prices to cover the costs plus a profit and then subsequently adjusts the prices to reflect market conditions? A.Variable costs B.Fixed costs C.Full costs D.Absorption costs Which statement is true concerning […]

Bush Enterprises adopts Strategic activity-based costing and management techniques which would most likely shift the mix of activities and products away from A.less profitable to more profitable applications. B.less complex to more complex applications. C.high volume to low volume applications. […]

Which of the following reflects the simplest allocation method for a factory? A.The department allocation method. B.The unit cost allocation method. C.The plantwide allocation method. D.The use of activity-based costing. Three Dog Bite Company: Refer to Three Dog Bite Company. […]

The appropriate discount rate that analysts use in computing the present value of future cash flows is composed of a pure interest rate increased to reflect expected inflation. What is this pure rate called? A.risk-free rate. B.real interest rate. C.nominal […]

Doug’s Delivery Company Doug’s Delivery Company reports the following information for 2010: Actual: Standard: Refer to Doug’s Delivery Company. What is the variable overhead flexible budget for March 2010? A.$180.00 B.$198.00 C.$220.00 D.$240.00 Which of the following is a cost […]

Which of the following is management’s challenge when setting transfer prices? A.Ensuring the buyer has goal congruence with respect to the organization’s goals. B.Ensuring the seller has goal congruence with respect to the organization’s goals. C.Ensuring either the buyer or […]

Which of the following optimizes the use of scarce resources? A.Total quality management B.Linear programming C.Just-in-time inventory D.The economic order quantity If the profit margin percentage of 30% stayed the same and the investment turnover ratio of 5.0 increased by […]

Which of the following costs are capacity-sustaining activities in the product cost hierarchy? A.Product testing. B.Energy to run machines. C.Heat and lighting. D.Direct Materials. Different types of companies use different types of cost systems. An effective cost system must have […]

Using activity-based costing to analyze customer profitability requires the analyst to determine the cost to acquire customers, which includes such activities as A.process payments B.conduct campaign to win back lost customers C.issue refunds D.deliver products Which statement is true concerning […]

Which of the following is an example of direct materials cost for an automobile manufacturer? A.cost of wages of assembly workers B.cost of oil or lubricants for the factory machinery C.cost of the automobile windshield D.salary of the production supervisor […]

Which statement is true in an activity-based costing environment? A.Managers do not need to know product costs. B.Companies use departmental overhead rates. C.Companies compute the rate for each cost driver in each activity center. D.Companies compute the rate for up […]

Which of the following can be calculated using built-in functions in spreadsheet programs? A.external rate of return. B.internal rate of return. C.investment rate of return. D.international rate of return. A company manager intentionally commits fraud by overstating the ending balance […]

When there is an outside market for an intermediate product which is perfectly competitive, the most equitable method of transfer pricing is A.market price. B.production cost pricing. C.variable cost pricing. D.cost plus markup pricing. Managers are often correct that the […]

Patterson Division had sales revenue of $200,000, operating profit of $10,000, and a division investment of $300,000. Its profit margin percentage is A.66.7% B.150.0% C.3.3% D.5.0% Dropping a product line. Timepiece Products, a clock manufacturer, operates at capacity. Constrained by […]

Which of the following terms describes the systematic evaluation of all aspects of research and development, design of products and processes, production, marketing, distribution, and customer service? A.quality engineering. B.incremental engineering. C.systems engineering. D.value engineering. Gem Systems Gem Systems uses […]

The following information relates to the operating performance of two divisions of Sound Machine, Inc., for last year. Required: a. Compute the return on investment (ROI) of each division, using total assets at gross book value as the investment base. […]

Which statement is true concerning decentralization? A.Decentralization impedes local personnel response to a changing environment. B.Decentralization requires significant oversight from top management. C.Decentralization divides large, complex problems into manageable pieces. D.All of the answers are correct. Predatory pricing A.occurs when […]

In the joint production process, the point at which the identifiable products emerge is called the A.joint processing point. B.decision point. C.go-no-go point. D.splitoff point. Studies have shown that after activity-based costing has been implemented, the costs of A.high-volume, standard […]

Activity-based management reduces customer response time by identifying the activities that consume the most resources and making them more efficient, and by identifying __________ activities, which the firm can eliminate. A.value-added B.non-value-added C.inefficient D.ineffective A flexible budget is appropriate for […]

Parker Division had revenue of $250,000, operating profit of $10,000, and a division investment of $100,000. The investment turnover is A.0.04 B.2.50 C.4.00 D.0.25 Provide the missing data in the following situations: Answer: B Answer: Use the following information to […]

Which of the following does the cost variance model use to analyze differences between actual and budgeted profits? A.Flexible production budget. B.Fixed production budget. C.Prior period’s production budget. D.Generally accepted accounting principles. Which of the following is a strength of […]

Which of the following is the appropriate procedure to apply overhead to production using normal costing? A.Assign actual direct material and direct labor costs plus an amount representing “normal” manufacturing overhead to products. B.Assign “normal” direct material and direct labor […]

A company’s selling price is $12 per unit, variable cost is $3 per unit, and fixed costs are $25,000. What is the break-even point in sales dollars? A.$53,333 B.$44,444 C.$33,333 D.$1,333 Useful Tool Company Useful Tool Company has two service […]

In making long-term decisions about investing and financing, a firm should do which of the following? A.decide whether to make the investment, then decide how to raise the funds required for the investment. B.decide how to raise the funds required […]

Which of the following is a tool in quality control that defines the effect and list events that may be the cause of the problem? A.cause-and-effect analyses. B.Pareto charts. C.control charts. D.PERT charts. KF Company KF Company uses standard costing. […]

The methodology(ies) of allocating joint-process costs is(are) based on A.net realizable value, only. B.physical measures, only. C.both net realizable value and physical measures. D.None of the answers is correct. Java Gourmet Coffee Java Gourmet Coffee reports the following data for […]

When using the internal rate of return to evaluate investment alternatives, which rate would analysts specify? A.hurdle rate. B.Federal funds rate. C.prime interest rate. D.time-adjusted rate. Which of the following statements is true if a company overstates the ending balance […]

The annual award to Japanese companies created in 1950 by the Union of Japanese Scientists and Engineers that focuses on quality improvement is called the A.Baldrige Award. B.Deming Prize. C.ISO 9000 Award. D.UJSE Prize. What should a firm do to […]

Which of these is the perspective of the balanced scorecard that is at the top of the list for a company’s lenders and shareholders? A.financial perspective. B.internal business and production process perspective. C.learning and growth perspective. D.customer perspective. Which of […]

Which of the following is a key characteristic of divisional incentive compensation plans for rewarding short-term performance? A.Cash bonuses and profit sharing B.Deferred compensation C.Employee stock options D.Retirement plans Fred’s Fine Roasted Coffee Fred’s Fine Roasted Coffee reports the following […]

When using differential analysis to determine when to add or drop parts of operations, if the differential revenue from the sale of a product is less than the differential costs required to provide the product for sale, then A.the product […]

Multiple products make using financial models more complex. To deal with this, managers can do which of the following? A.assume that all products have the same contribution margin. B.assume that a particular product mix does not change. C.treat each product […]

ABC Company ABC Company reports the following information for the most recent period when 2,750 units were produced. Refer to ABC Company. Calculate the total direct materials variance. A.$7,500 U B.$7,850 U C.$7,150 U D.$7,000 U What are selling, general […]

Which term describes the interest rate used in computing the present value of future cash flows? A.applicable treasury rate B.discount rate C.income tax rate D.borrowing rate. KF Company KF Company uses standard costing. The company reported the following information for […]

Pauter Company Pauter Company had the following historical accounting data per unit: The units are normally transferred internally from Division A to Division B. The units also may be sold externally for $210 per unit. The minimum profit level accepted […]

How is differential analysis used to determine when to add or drop parts of an operation? A.If the differential costs required to provide the product for sale exceeds the differential revenue from the sale of a product, then the product […]

Which of the following is true about short-run and long-run pricing decisions? A.Short-run decisions include pricing for a special order with no long-term implications. B.Short-run decisions typically have a time horizon of two years or more. C.Short-run decisions include pricing […]

If the net present value of a proposed project is positive, then the actual rate of return A.is higher than the cost of capital. B.is lower than the cost of capital. C.is equal to the cost of capital. D.is negative. […]

Which cost can be cut for a period of time because their reduction presents no serious short-term threats to production and marketing? A.discretionary costs. B.committed costs. C.sunk costs. D.opportunity costs. When sales dollars are used as the measure of volume […]

Which of the following is activity for which cost-volume-profit analysis would not provide useful data? A.product pricing. B.market research for product distribution. C.reporting on income tax returns. D.assessing the level of labor needed in the production process. Which of the […]

High-pressure performance evaluation systems not only put pressure on people to perform well but also create incentives to A.be motivated. B.”manage earnings.” C.leave the company. D.None of the answers is correct. Which statement is true concerning negotiated transfer pricing? A.It […]

On a balanced scorecard, the measure of the product returns as percentage of sales would most likely be an example of a performance measure in the: A.financial dimension B.customer dimension C.internal business process dimension D.learning and growth dimension Correll Company […]

Break-even time. Hampton Corporation’s research and development department is presenting a proposal for new product research. The new product will require research, development, and design investments of $6 million (discounted cash flow). Sales will begin after four years and will […]

Young Company has a tax rate of 40 percent. Information for the company is as follows: What is the EVA if the before-tax operating income is $1,500,000? A.$1,134,000 B.$402,000 C.$534,000 D.$(198,000) KF Company KF Company uses standard costing. The company […]

Inventory management. Here are facts about inventory costs for Tops Shoes, a retailer: Required: Prepare a table like Exhibit 7.14 in the text. Find the costs of ordering and carrying inventory for each of the following number of annual orders: […]

What effect would an increase in fixed costs have on the break-even point and the contribution margin? Break-even Point Contribution Margin A. Increase Increase B. Increase Decrease C. Decrease Increase D. Decrease Decrease What is the objective of value engineering? […]

Dukes Computing Systems Dukes Computing Systems manufactures and sells various computer products and has two decentralized divisions: (1) Production and (2) Marketing. The Marketing Division has always purchased a particular motherboard from Production at $65 per unit. The Production Division […]

Transtech, Inc., processes silicon crystals into purified wafers and chips. Silicon crystals cost $60,000 per tank-car load. The process involves heating the crystals for 12 hours, producing 45,000 purified wafers with a market value of $20,000, and 15,000 chips with […]

What has spawned a major political issue concerning the estimated cost to the United States Treasury of as much as $9 billion to $13 billion per year in lost taxes that could presumably be collected if transfer prices were calculated […]

When is the only time an investment analysis needs working capital? A.when the firm must let cash sit idle as a condition of undertaking an investment. B.whenever a capital expenditure decision is made. C.when a firm makes cash payments D.when […]

Carson Company uses a cost of capital rate of 10 percent in making investment decisions. It currently is considering two mutually exclusive projects, each requiring an initial investment of $12 million. The first project has a net present value of […]

What transfer pricing mechanism is used when a company does not have a measure of differential or variable cost? A.Market price-based transfer pricing B.Full-absorption costing C.Activity-based costing D.Actual cost-based transfer pricing In using the budget for performance evaluation, accountants compare […]

Which of the following is a model based on four perspectives: (1) learning and growth, (2) internal business and production process efficiency, (3) customer, and (4) financial? A.Zero-based budgeting B.Planning programming and budgeting C.Management by objectives D.Balanced scorecard Which of […]

What is the term that describes the rate companies frequently use to apply fixed overhead costs to units produced? A.Actual overhead rate. B.Predetermined overhead rate. C.Post-determined overhead rate. D.Variable overhead rate. Which of the following statements is true concerning discretionary […]

If all the data points were on a line, the r-square would be A.zero. B.one. C.two. D.impossible to interpret. Which of the following is used to compute the present value of future cash flows when evaluating investments involving cash flows […]

Which of the following are the two costs of failing to control quality? A.prevention costs and appraisal costs. B.appraisal costs and internal failure. C.internal failure and external failure costs. D.prevention costs and external failure costs. Which of the following is […]

Estimating flexible selling expense budget and computing variances. Georgia Peaches estimates the following selling expenses next period: Required: a. Derive the cost equation (y = a + bx) for selling expenses. (Hint: y = a + bx + cy. b. […]

What would the initial cash flows associated with an investment project include? A.asset, freight and installation costs. B.cash proceeds from disposing of existing assets made redundant or unnecessary by the new project. C.income tax effect of gain(loss) on disposal of […]

Trade-offs must be made in and among the prevention, appraisal, internal failure, and external failure costs in order to reduce total costs of quality over time. Over the long-term, what should the targeted level of defective units? A.Zero B.Over zero […]

On a balanced scorecard, the measure of profit margin would most likely be an example of a performance measure in the: A.financial dimension B.customer dimension C.internal business process dimension D.learning and growth dimension What can be said of the relationship […]

TopSail Company TopSail Company produces one type of machine with the following costs and revenues for the year Refer to the TopSail Company. Calculate the selling price per unit. A.$ 8 B.$ 6 C.$ 2 D.$12 What is generally considered […]

For which types of operations do firms design operational planning and control systems? A.manufacturing operations only. B.marketing and manufacturing operations only. C.manufacturing and other activities but not marketing. D.manufacturing, marketing, and other activities. Which costing methodology derives a rate for […]

Which of the following statements is true concerning the fixed component of power cost? A.This would be categorized as a unit level activity. B.This is a cost that would be incurred regardless of the level of output. C.This would be […]

Marketing costs include expenditures for sales commissions (2% of sales dollars) and shipping costs (20 cents per unit) are variable marketing costs and considered to be which of the following? A.customer-level activities. B.facility-level activities. C.product-level activities. D.unit-level activities. What is […]

Three Dog Bite Company: Refer to Three Dog Bite Company. What are the total appraisal costs? A.$ 375,000 B.$1,550,000 C.$1,275,000 D.$2,025,000 Traditional cost allocation methods include which of the following? A.plantwide allocation, only. B.department allocation, only. C.activity-based costing. D.plantwide and […]

BLUE Company BLUE Company needs 10,000 units of a certain part to be used in production. If BLUE buys the part from RED Company instead of making it, BLUE could not use the present facilities for another manufacturing activity. Sixty […]

Break-even time, working backward. Montana Instruments is considering manufacturing the S-Card, a new type of sound card for personal computers. The new product development committee will not approve a new-product proposal if it has a break-even time of more than […]

Costs that will not vary with activity levels in the short run are known as: A.fixed costs. B.variable costs. C.sunk costs. D.opportunity costs. What is the study of the need for activities and whether they are operating efficiently called? A.direct […]

Which of the following statements concerning quality is true? A.Quality can be inspected into a product. B.Quality should be designed into a product. C.Quality is continual, once achieved. D.Quality means meeting management guidelines. Because the cost of capital includes a […]

Costs that donotrelate directly to a cost object are its A.marginal cost. B.indirect cost. C.sunk cost. D.target cost. Marlow Company The following information pertains to the three divisions of Marlow Company: Answer: B Refer to Marlow Company. What is the […]

How would income tax laws affect investment decisions? A.Through their effect on the discount rate allowed. B.Through their effect on the type of investments allowed. C.Through their effect on the internal rate of return allowed. D.Through their effect on the […]

Activity-based management can reduce customer response time by all of the following, except for A.identifying those activities that consume the most resources. B.making activities more efficient. C.identifying non-value added activities. D.identifying fraudulent activities. Audits that compare the estimates made in […]

Which of these falls under the responsibility of top management? A.assuring the integrity of financial information presented to outsiders. B.maintaining adequate internal control. C.unintentional errors in preparing financial statements. D.assuring the integrity of financial information presented to outsiders and maintaining […]

Which of the following statements best describes costs that increase in steps? A.curvilinear variable. B.curvilinear fixed. C.semi-variable. D.semi-fixed. What management technique focuses on increasing quality as perceived and defined by the customer? A.Theory of constraints. B.Benchmarking. C.Total quality management. D.Web […]

The value chain component related to the suppliers and production does not include costs for: A.Receipt of direct materials from suppliers. B.Production set-up. C.Direct production labor. D.Salaries for sales personnel. What is the formula for the Target Profit in Units? […]

What is the objective of economic order quantity? A.minimize the sum of carrying costs and order costs for the period. B.maximize the sum of carrying costs and order costs for the period. C.minimize carrying costs and maximize order costs for […]

A causal model of lead and lag indicators of performance based on financial and non-financial perspectives is known as which of the following? A.balanced scorecard. B.managerial report card. C.hierarchical scorecard. D.management by objectives. The objectives of the theory of constraints […]

Managers usually decide which cost driver to use based upon which of the following factors? A.Causal relation. B.Cost considerations. C.Generally accepted costing techniques. D.Uniform cost driver standards. The benefits of a just-in-time system usually include which of the following? A.elimination […]

Which of the following is an objective of inventory management? A.minimize the sum of ordering and carrying costs. B.minimize ordering costs and maximize carrying costs. C.maximize the sum of ordering and carrying costs. D.maximize the ordering costs and minimize carrying […]

Gem Systems Gem Systems uses an activity-based costing system. The company has gathered the following information concerning various cost pools and activity drivers; The following data was collected and is specific to Job 150. Refer to Gem Systems. Calculate the […]

The appropriate discount rate that analysts use in computing the present value of future cash flows is composed of a pure interest rate, a premium for the risk of the investment, an increase to reflect expected inflation. What is this […]

Managerial accounting information is used by which of the following managers? A.marketing managers to help price products and assess their profitability. B.production managers to manage quality and costs and to assure on-time delivery. C.general managers to measure employee performance and […]

The presence of the independent auditors and their review of a company’s internal controls A.encourages collusion. B.encourages consolidation of duties and responsibilities. C.helps to prevent fraud. D.totally prevent fraud. The minimum desired ROI rate A.is based on industry averages. B.is […]

Lydia’s Delivery Company Lydia’s Delivery Company reports the following information for 2010: Actual: Standard: Refer to Lydia’s Delivery Company. What is the variable overhead variance for fuel costs? A.$12.00 U B.$12.00 F C.$6.00 U D.$6.00 F In 1977, Congress addressed […]

Which statement is true concerning integrated information systems? A.Integrated information systems are not technically feasible. B.Integrated information systems violate generally accepted accounting principles. C.Integrated information systems are not commercially available. D.Integrated information systems tie together managerial accounting, financial reporting, customer […]

The economic order quantity is the square root of 2 times A.the demand for the period divided by the cost of carrying one unit in inventory for the period. B.order set up cost divided by the cost of carrying one […]

When substituting computerized equipment for direct labor, a firm should treat labor as which of the following? A.Fixed (or capacity) costs. B.Mixed costs. C.Opportunity costs. D.Variable costs. Julia Electronics LLC is preparing a flexible budget for the coming year and […]

Which of the following is notone of the three major manufacturing cost categories? A.Direct materials costs that can be easily traced to a product B.Direct labor costs of workers who transform materials into finished products and whose time can be […]