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Current assets minus current liabilities equals ___________________________. Ecology Solutions Corporation The Green Division of Ecology Solutions Co. has developed a wind generator that requires a special “S” ball bearing. The Ball Bearing Division of Ecology Solutions Co. has the capability […]

The economic production run quantity directly affects the a. order point for raw material inventories. b. safety stock for finished goods inventory. c. level of finished goods inventory. d. lead time for producing finished goods inventory. Griffith Corporation Griffith Corporation […]

A ____ is a document that reflects the revenues and/or costs that are under the control of a particular manager. a. quality audit report b. responsibility report c. performance evaluation report d. project report Actual fixed overhead minus budgeted fixed […]

The margin of safety would be negative if a company(‘s) a. was presently operating at a volume that is below the break-even point. b. present fixed costs were less than its contribution margin. c. variable costs exceeded its fixed costs. […]

Normal spoilage is considered a period cost. An organization’s discount rate should be equal to or exceed the organization’s cost of capital. Answer: T The Robinson-Patman Act prohibits companies from pricing products at different levels when there are no significant […]

An ending inventory valuation on an absorption costing balance sheet would a. sometimes be less than the ending inventory valuation under variable costing. b. always be less than the ending inventory valuation under variable costing. c. always be the same […]

Which of the following capital expenditure planning and control techniques has been criticized because it might mistakenly imply that earnings are reinvested at the rate of return earned by the investment? a. payback method b. accounting rate of return c. […]

A process that focuses only on factors that change from one course of action to another is referred to as ___________________________________. Why is it important for organizations to conduct post investment audits of capital projects? Answer: The post investment audit […]

A cost that remains constant on a per unit basis within the relevant range is a ____________________ cost. Discuss from where an organization receives information and what happens to information within an organization. Answer: An organization receives information from its […]

As projected net income increases the a. degree of operating leverage declines. b. margin of safety stays constant. c. break-even point goes down. d. contribution margin ratio goes up. A cost management system a. is finalized when the information currently […]

In a typical (conservative assumptions) after-tax discounted cash flow analysis, depreciation expense is assumed to accrue at a. the beginning of the period. b. the middle of the period. c. the end of the period. d. irregular intervals over the […]

An outlier is a. something that happens outside the organization that does not affect production. b. always used in analyzing a mixed cost. c. something that happens inside the organization that does not affect production. d. typically not used in […]

Which of the following capital budgeting techniques has been criticized because it fails to consider investment profitability? a. payback method b. accounting rate of return c. net present value method d. internal rate of return Wimberley Company Wimberley Company has […]

Feedback is reflected in which component of a management control system? a. sensor b. assessor c. effector d. detector Which of the following statements istrue? a. Management accounting is a subset of cost accounting. b. Cost accounting is a subset […]

A process map a. should indicate only value-added activities. b. is also known as a detailed flowchart. c. should indicate only those steps/processes that are obvious in the production of goods/services. d. is also known as a value chart. Austin […]

Ultimate Vision Corporation Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions. The company has budgeted the following production and overhead costs for the upcoming year: Refer to Ultimate Vision Corporation. If the company uses number of […]

If r is the discount rate, the formula [1/(1 + r)] refers to the a. future value interest factor associated with r for one period. b. present value of some future cash flow. c. present value interest factor associated with […]

The balanced scorecard perspective that addresses concerns about organizational growth is the ____________________ perspective. If incremental revenues beyond split-off are less than incremental costs, a product should be sold at the split-off point. Answer: T In a normal job-order costing […]

A hybrid costing system would be appropriate for a company that manufactures several varieties of jam. A judgment regarding an entity’s method of funding an investment is considered to be a(n) _______________________ decision. Answer: financing When non-value added time is […]

Direct costing conforms with generally accepted accounting principles. A mixed cost will be an effective cost driver. Answer: F In a manufacturing organization, the production budget is prepared immediately after the sales budget. Answer: T In an actual cost system, […]

Of the following, which is the best reason for using activity-based costing? a. to keep better track of overhead costs b. to more accurately assign overhead costs to cost pools so that these costs are better controlled c. to better […]

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company. What is the labor rate variance? a. $875 F b. $865 F c. $865 […]

Brewer Corporation would like to institute an activity-based costing system to allocate overhead to its products. The company’s Shipping Department incurs costs of $750,000 per year and has nine employees. The Shipping Department has determined that three major activities that […]

Saturn Corporation Material A is added at the start of production, while Material B is added uniformly throughout the process. Refer to Saturn Corporation Assuming a weighted average method of process costing, compute EUP for conversion. a. 2,600 b. 2,180 […]

When making a decision to discontinue an operating segment, allocated common costs are not considered. Market based transfer prices are most effective for common high-cost and high-volume standardized services. Answer: T In estimating factory overhead, it is necessary to separate […]

A company would be reducing its discretionary costs if it a. fired a production supervisor. b. closed its research and development department. c. successfully negotiated a reduction in its factory rent. d. reduced its direct labor costs by hiring temporary […]

Which of the following statements about management or financial accounting is false? a. Financial accounting must follow GAAP. b. Management accounting is not subject to regulatory reporting standards. c. Both management and financial accounting are subject to mandatory recordkeeping requirements. […]

When a CPA firm uses taped lectures rather than live presentations for continuing education, it is engaging in a cost reduction strategy. Information that is related to past events is relevant in the decision-making process. Answer: F The customer value […]

Romano Company The following information pertains to Romano Company for September: Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401. The total […]

A value chart indicates a. all steps in a process and the time it takes for them to be completed. b. the value-added steps in a process and the time it takes for them to be completed. c. the time […]

A budget that is developed by both top management and operating personnel is referred to as a(n) ______________________________. In a normal job-order costing system, factory overhead is applied using actual rates times actual input. Answer: F Accounting rate of return […]

In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignorethe a. estimated disposal value of the old machine. b. acquisition cost of the old machine. c. operating costs of the new […]

Riley Company Riley Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000. Refer to Riley Company. Using a physical measure, what amount of joint processing cost is allocated to […]

The balanced scorecard perspective that focuses on using a firm’s intellectual capital to adapt to the needs of the market through product or service innovations is the: a. learning and growth perspective b. internal business perspective c. customer value perspective […]

When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a a. combined price-quantity variance. b. price variance. c. quantity variance. d. mix variance. Disclosing detailed financial information to all employees […]

Carter Corporation has a target return of 15%. If a prospective investment has an estimated return on investment of 20%, and a residual income of $10,000, what is the estimated cost of the investment? a. $200,000 b. $ 66,667 c. […]

In the Du Pont model, profit margin is a ratio of a. income to sales. b. income to assets. c. sales to income. d. sales to assets. Transfer pricing is primarily incurred in a. foreign corporations exporting their products. b. […]

A project has an initial cost of $100,000 and generates a present value of net cash inflows of $120,000. What is the project’s profitability index? a. .20 b. 1.20 c. .80 d. 5.00 One major difference between financial and management […]

When a firm adopts the just-in-time method of management, a. employees are retrained on different equipment, but the plant layout generally remains unchanged. b. new machinery and equipment must be purchased from franchised JIT dealers. c. machinery and equipment are […]

Moore Company. Moore Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #6, #9, and #13. Direct material was requisitioned as follows for each job respectively: 30 […]

McCoy Corporation McCoy Corporation sells a product for $21 per unit, and the standard cost card for the product shows the following costs: Refer to McCoy Corporation. McCoy received a special order for 1,200 units of the product. The only […]

In evaluating the performance of a profit center manager, he/she should be evaluated on a. all revenues and costs that can be traced directly to the unit. b. all revenues and costs under his/her control. c. the variable costs and […]

Global competition has forced American industry to a. seek increased governmental regulation. b. improve product quality and customer service. c. narrow product lines. d. decrease its social responsibility. In joint-product costing and analysis, which of the following costs is relevant […]

The Pareto principle is important to consider when an organization is a. assessing whether to employ activity-based costing versus attribute-based costing. b. evaluating the number of activities that are value-added versus those that are non-value-added. c. deciding whether to offer […]

An administrative department provides services that benefit other internal units of an organization. The price variance reflects the difference between the price paid for inputs and the standard price for those inputs. Answer: T Why is absorption costing not used […]

The primary difference between the FIFO and weighted average methods of process costing is a. in the treatment of beginning Work in Process Inventory. b. in the treatment of current period production costs. c. in the treatment of spoiled units. […]

If the discount rate that is used to evaluate a project is equal to the project’s internal rate of return, the project’s ____ is zero. a. profitability index b. internal rate of return c. present value of the investment d. […]

Increasing the discount period on accounts receivable will increase an organization’s cash levels. Data mining employs statistical techniques to uncover answers to issues about business operations. Answer: T Cost flows and physical flows of units are identical. Answer: T Budgetary […]

Equivalent units are computed to assign costs to partially completed units. Aldrich Company Aldrich Company has the following information available for the current year: Refer to Aldrich Company. Compute the labor rate and efficiency variances. Answer: Answer: T A company […]

Beasley Company Beasley Company prepared a cash budget by quarters for the upcoming year. Missing data amounts are indicated with question marks or lower case letters; these lower case letters will be referred to in the questions that follow. Beasley […]

A firm estimates that it will sell 100,000 units of its sole product in the coming period. It projects the sales price at $40 per unit, the CM ratio at 60 percent, and profit at $500,000. What is the firm […]

The most accurate method for allocating service department costs is the a. step method. b. direct method. c. algebraic method. d. none of the above. Grant Corporation The following information is available for Grant Corporation for the current month: All […]

Holt Medical Corporation manufactures two models of a medical device: Model 101 and Model 102. Below is the current year production data for the company: The 210,000 units of material had a total cost of $1,365,000. Direct labor is $17 […]

Wyatt Corporation Wyatt Corporation has the following standard costs associated with the manufacture and sale of one of its products: Refer to Wyatt Corporation. The volume variance under absorption costing is a. $8,000 F. b. $4,000 F. c. $4,000 U. […]

Stillwater Corporation The following information is available for Stillwater Corporation for the current year: All materials are added at the start of production. Refer to Stillwater Corporation. Using FIFO, what are equivalent units for material? a. 75,000 b. 72,500 c. […]

Top management should be directly involved in strategic planning for an organization. Total fixed costs remain unchanged with levels of production. Answer: T Weighted average equivalent units of production (EUP) can be determined by adding EUP’s in ending work in […]

Wyman Corporation Wyman Corporation. has the following information for May: All material is added at the start of the process and all finished products are transferred out. Refer to Wyman Corporation. Assume that FIFO process costing is used. What is […]

What are some of the benefits of a well-prepared budget? Schmidt Company manufactures a single product. All material is added at the beginning of the process. Required:Find ending WIP inventory, abnormal loss, and COGM. Assume that, for conversion costs, abnormal […]

Pearce Company Pearce Company uses a standard cost system for its production process. Pearce Company applies overhead based on direct labor hours. The following information is available for July: Refer to Pearce Company Using the four-variance approach, what is the […]

Which of the following statements about job-order cost sheets is true? a. All job-order cost sheets serve as the general ledger control account for Work in Process Inventory. b. Job-order cost sheets can serve as subsidiary ledger information for both […]

Triumph Division of Traveling Fantasies, is evaluated based on residual income generated. In the most recent year, the Triumph Division generated a residual income of $2,000,000 and net income of $5,000,000. The target rate of return for all divisions of […]

Crosby Corporation Crosby Corporation has two service departments: Data Processing and Administration/Personnel. The company also has three divisions: X, Y, and Z. Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number […]

Quality inspection points should a. precede bottlenecks. b. follow bottlenecks. c. be placed at the end of all production processes. d. be placed at random points in the manufacturing process. For financial reporting to the IRS and other external users, […]

Shiny Floors Company Shiny Floors Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) If Shiny Floors sells the products after further processing, […]

Putnam Company Below is an income statement for Putnam Company: Refer to Putnam Company. What is Putnam’s degree of operating leverage? a. 1.33 b. 2.00 c. 3.00 d. 4.00 An important focus in product life cycle costing is a. the […]

StatPro Corporation StatPro Corporation is a manufacturer of a versatile statistical calculator. The following information is a summary of defective and returned units for the previous year. Refer to StatPro Corporation. The profit lost by selling defective units not reworked […]

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company. Using the four-variance […]

Discuss the various elements of the cost control process. The weighted average method combines beginning inventory and current production to compute cost per unit of production. Answer: T Answer: Cost understanding is one element of a cost control system. An […]

Which of the following is subtracted from weighted average EUP to derive FIFO EUP? a. beginning WIP EUP completed in current period b. beginning WIP EUP produced in prior period c. ending WIP EUP not completed d. ending WIP EUP […]