The three primary inventory accounts in a manufacturing company are
A. Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory.
B. Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory.
C. Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory.
D. Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory.
In a CVP graph, the slope of the total revenue line indicates the
A. rate at which profit changes as volume changes.
B. rate at which the contribution margin changes as volume changes.
C. ratio of increase of total fixed costs.
D. total costs per unit.
Brazosport Pipe Corporation
The capital budgeting committee of the Brazosport Pipe Corporation is evaluating the
possibility of replacing its old pipe-bending machine with a more advanced model.
Information on the existing machine and the new model follows:
Refer to Brazosport Pipe Corporation. The major opportunity cost associated with the
continued use of the existing machine is
A. $30,000 of annual savings in operating costs.
B. $20,000 of salvage in 5 years on the new machine.
C. lost sales resulting from the inefficient existing machine.
D. $400,000 cost of the new machine.
Mapleton Company
Mapleton Company is considering an investment in a machine that would reduce
annual labor costs by $30,000. The machine has an expected life of 10 years with no
salvage value. The machine would be depreciated according to the straight-line method
over its useful life. The company’s marginal tax rate is 30 percent.
Refer to Mapleton Company. Assume the company pays $250,000 for the machine.
What is the expected internal rate of return on the machine? Present value tables or a
financial calculator are required.
A. between 8 and 9 percent
B. between 3 and 4 percent
C. between 17 and 18 percent
D. less than 1 percent
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.
Successful product development should include
A. kaizen costing.
B. value engineering.
C. kanban implementation.
D. all of the above.
Hunnicutt Company is a construction company that builds greenhouses on special
request. What is the proper classification of the cost of the cement building slab used?
A. no no
B. no yes
C. yes yes
D. yes no
The peak level of unit sales will occur in which stage of the product life cycle?
A. growth
B. maturity
C. decline
D. introduction
Which ethical standard is violated when an accountant uses information from a
financial statement he is preparing to advise a relative of a stock purchase?
A. Competence
B. Confidentiality
C. Integrity
D. Credibility
A committed fixed cost can
A. never be eliminated.
B. be eliminated in the short term and in the long term.
C. be eliminated in the long term but not in the short term.
D. be eliminated in the short term but not in the long term.
Simultaneous engineering can be used to
A. reduce both product and process complexity.
B. integrate activity-based costing with value chain analysis.
C. reduce the time-to-market of new products through elimination of batch-level
activities.
D. reduce manufacturing cycle efficiency by reducing process waste.
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 the revenues of the unit.
D. the same costs and revenues on which the unit is evaluated.
Industrial Solutions Company
Industrial Solutions Company produces three products from the same process that has
joint processing costs of $4,100. Products R, S, and T are produced in the following
quantities: 250 gallons, 400 gallons, and 750 gallons. Industrial Solutions Company
also incurred advertising costs of $60,000. The ad was used to run sales for all three
products. The three products occupy floor space in the following ratio: 5:4:9. (Round all
answers to the nearest dollar.)
Refer to Industrial Solutions Company. Assume that Industrial Solutions chooses to
allocate its advertising cost among the three products. What amount of advertising cost
is allocated to Product T using the floor space ratio?
A. $911
B. $14,244
C. $13,333
D. $30,000
The life cycles of many products are becoming shorter
A. causing companies to recognize that it may be more advantageous to confront, rather
than compete with, the competition.
B. making products in the maturity stage of their life cycle the basis on which firms
expect growth to be generated.
C. so companies spend less and less on product design and development because
products will not last as long as previously.
D. meaning that tools such as benchmarking and target costing become less important
in adapting to the competitive environment.
Total manufacturing costs for the year plus beginning Work in Process Inventory cost
equals
A. cost of goods manufactured in the year.
B. ending Work in Process Inventory.
C. total manufacturing costs to account for.
D. cost of goods available for sale.
Which of the following areas is not addressed by an organization’s mission statement?
A. the purpose for which the organization exists
B. what the organization wants to accomplish
C. the organization’s strategic plan for fulfilling its mission
D. how its products can uniquely meet the needs of its customers.
The term ‘œstandard hours allowed’ measures
A. budgeted output at actual hours.
B. budgeted output at standard hours.
C. actual output at standard hours.
D. actual output at actual hours.
The return on investment (ROI) ratio measures
A. only asset turnover.
B. only earnings as a percent of sales.
C. both asset turnover and earnings as a percent of sales.
D. asset turnover and earnings as a percent of sales, correcting for the effects of
differing depreciation methods.