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 focusing attention on industry.
What occurs when applying expectancy theory to employees in nonprofit
organizations?
A.Cash awards are more attractive, and therefore more motivating than prizes.
B.Prizes are more attractive, and therefore more motivating than cash awards.
C.Stock options are more attractive, and therefore more motivating than cash awards.
D.Stock options are more attractive, and therefore more motivating than prizes.
How is target profit volume calculated?
A.The sum of fixed costs and target profit divided by contribution margin per unit.
B.The sum of fixed costs and target profit divided by variable cost per unit.
C.The sum of fixed costs and target profit divided by sales price per unit.
D.None of the answers is correct.
Which of the following are examples of product activities in the product cost hierarchy?
A.Product specifications and product testing.
B.Market research, customer records, and promotion.
C.Machine setups and quality inspections.
D.Energy to run machines and direct materials.
Which of these is the perspective of the balanced scorecard that is at the top of a
nonprofit organizations mission statement?
A.financial perspective.
B.internal business and production process perspective.
C.learning and growth perspective.
D.customer perspective.
Cost-volume-profit analysis. Patton Company produces one type of sunglasses with
the following costs and revenues for the year:
Required:
a. What is the selling price per unit?
b. What is the variable cost per unit?
c. What is the contribution margin per unit?
d. What is the break-even point in units?
e. Assume an income-tax rate of 40 percent. Assuming a relevant range, what quantity
of units is required for Patton Company to make an after-tax operating profit of
$6,000,000 for the year?
In what type of responsibility centers are the managers responsible for revenues, costs,
and assets?
A.Cost.
B.Revenue.
C.Profit.
D.Investment.
Colonial Computing Systems
Colonial 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 mouse from Production at $50 per unit. The
Production Division is considering raising the price to $60 per unit. The Production
Division’s costs related to the mouse production is as follows:
The Marketing Division handles the promotion and distribution of the mouse purchases
from the Production Division and sells each mouse for $100. Marketing Division incurs
monthly fixed costs of $5,000. Marketing Division sells 1,500 units per month.
Marketing Division can buy the same mouse from outside suppliers for $60. If the
Marketing Division purchases the mouse from outside suppliers, the facilities the
Production Division uses to manufacture the mouse would remain idle.
Refer to Colonial Computing Systems. The Production Division is operating below
capacity because of weak global demand for the product. What should be the mouse
transfer price between the Production Division and Marketing Division in order for
Colonial to optimize profits?
A.$ 50
B.$ 55
C.$ 60
D.$100
Which of the following is true regarding cost drivers?
A.Cost drivers are the allocation base for applying overhead to production.
B.Cost drivers cause an activity’s cost.
C.Cost drivers are the allocation base for applying overhead to production, and cost
drivers cause an activity’s cost.
D.None of the answers is correct.
What is true of companies that use relative performance evaluation?
A.Divisional performance is compared with that of other divisions in the same industry.
B.Managers are not shielded from the risk of managing a division in a poorly
performing industry.
C.Incentives are not provided for managers to move out of low-performing to
high-performing industries.
D.All of the answers are correct.
What modern production methodology emphasizes strengthening the weakest link of
the company to improve operations to become more efficient and effective?
A.Weakest link theory
B.Just-in-time
C.Total quality
D.Theory of constraints.
When sales dollars are used as the measure of volume in the cost-volume-profit
equation, the focus is on solving for total revenue required to break even or a target
profit rather than total units. Break-Even Point in Sales Dollars equals which of the
following?
A.total contribution margin divided by total sales.
B.unit contribution margin divided by unit sales price.
C.total fixed costs divided by the contribution margin ratio.
D.(sum of total fixed costs plus target profit) divided by the contribution margin ratio.
Explain how to use sales dollars as the measure of volume in performing
cost-volume-profit (CVP) analysis.
Leman Suitcase Company
The Leman Suitcase Company is trying to decide which independent variable would be
a better predictor of advertising expense. The following regressions were run using
sales dollars and units sold as the independent variables.
Regression Analysis #1
Dependent variable – Advertising Expense
Independent variable – Sales Dollars
Regression Analysis #2
Dependent variable – Advertising Expense
Independent variable – Units Sold
Refer to the Leman Suitcase Company. Using sales dollars as the independent variable,
what would be the prediction of advertising expense if sales are expected to be
$80,000?
The following information was received from Fort Sumner Coffee Co.:
REQUIRED:
Prepare a cost of quality report for the Fort Sumner Coffee Co. showing total
Prevention, Appraisal, Internal failure, and External failure costs.
Describe the characteristics found to exist in most divisional incentive compensations
plans.
Differentiate between traditional cost allocation methods and activity-based costing.
Donut, Inc. had 10,000 pounds of flour on hand at the beginning of the year. The
company plans to produce 100,000 boxes of donuts during the year. Each box of donuts
takes half a pound of flour. The company wants 8,000 pounds of flour on hand at the
end of the year. How many pounds of flour must be purchased during the year?
Identify the steps in activity based costing.
When implementing the balanced scorecard, why do some managers use a different
term to describe it?
Explain how to compute end-of-period inventory book value using equivalent units of
production.
Patricia Woodward and Ronald Smith are marketing managers for different products
within one company. Ms. Woodward argues that as a result of changes in technology,
the use of the current plantwide overhead allocation base unfairly burdens her product
costs. Ronald Smith recognizes the problem, but expects that a change to departmental
overhead allocations will result in higher costs for his products. What guidance does the
Institute of Management Accountant’s Standards of Ethical Conduct for Management
Accountants give the controller of the company in this situation?