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 just-in-time inventory systems?
A.Just-in-time systems deal only with defective and reworked units.
B.Just-in-time systems require the use of many suppliers.
C.Just-in-time systems keep inventory to a minimum by careful planning.
D.Just-in-time systems work better for small companies than for large companies.
Peters Retail, Inc.
Peters Retail, Inc. utilizes 8,000 square feet of floor space in departments A, B, and C.
Rental of $30,000 is incurred annually for this space. Department A occupied 1,000
square feet, Department B occupied 3,000 square feet, and Department C occupied
4,000 square feet.
Refer to Peters Retail, Inc. How much of the rent expense is allocated to Department C?
A.$30,000
B.$15,000
C.$11,250
D.$ 3,750
Cost-volume-profit; volume defined in sales dollars. An excerpt from the income
statement of the Dawson Company follows. Fixed costs in Year 1 are $660,000.
Dawson Company
Income Statement
Year ended December 31, year 1
Required:
a. What percentage of sales revenue is variable cost?
b. What is the break-even point in sales dollars for Dawson Company?
c. If sales revenue falls to $2,500,000, what will be the estimated amount of profit?
d. What amount of sales dollars produces a profit of $1,000,000?
The formula used in performing cost-volume-profit (CVP) analysis for the Target Profit
in Units, where t is the tax rate, is
A.(Total Fixed Costs + Before-Tax Target Profit) / Unit Contribution Margin.
B.(Total Fixed Costs + Before-Tax Target Profit) / Contribution Margin Ratio.
C.(Total Fixed Costs x t) / Unit Contribution Margin.
D.(Total Fixed Costs + (Target Profit x t))/ Unit Contribution Margin.
Framing Division
The Framing Division had the following data:
Refer to the Framing Division. What is the investment turnover ratio for Year 2009?
A.1.0
B.1.5
C.1.6
D.2.0
Costs of operating the human resources, accounting, computer support, and
maintenance departments are allocated to other departments. All are examples of which
of the following?
A.direct departments.
B.producing departments.
C.service departments.
D.common departments.
The income statement presentation that helps managers plan and make decisions shows
the distinction between
A.sunk and opportunity costs.
B.variable and fixed costs.
C.controllable and non-controllable costs.
D.discretionary and outlay costs.
Which of the following statements is true concerning decentralization?
A.Decentralization helps train managers.
B.Decentralization provides a basis for evaluating manager performance.
C.Decentralization motivates managers.
D.All of the answers are correct.
Solving for materials and labor. Clayton Company makes fireplace screens. Under the
flexible budget, when the firm uses 75,000 direct labor hours, budgeted variable
overhead is $75,000, whereas budgeted direct labor costs are $450,000. The company
applies variable overhead to production units on the basis of direct labor hours. All data
apply to the month of February. The following are some of the variances for February
(F denotes favorable; U denotes unfavorable):
During February, the firm incurred $400,000 of direct labor costs. According to the
standards, each fireplace screen uses one pound of materials at a standard price of $4.00
per pound. The firm produced 100,000 fireplace screens in February. The materials
price variance was $0.30 per pound, whereas the average wage rate exceeded the
standard average rate by $0.50 per hour.
Required:
Compute the following for February, assuming there are beginning inventories but no
ending inventories of materials:
a. pounds of materials purchased
b. pounds of material usage over standard
c. standard hourly wage rate
d. standard direct labor hours for the total February production
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 unit cost for the Material Handling activity cost
pool.
A.$5.00
B.$25.00
C.$10.00
D.$ 3.50
What behavioral issues are involved in capital budgeting?
Julianna Company
Julianna Company budgets on an annual basis for its fiscal year. The following
beginning and ending inventory levels (in units) are planned for the fiscal year of July
1, 20X1 through June 30, 20X2.
Two (2) units of raw material are needed to produce each unit of finished product.
Refer to Julianna Company. If Julianna plans to sell 480,000 units during the
20X1-20X2 fiscal year, what is the number of units it would have to manufacture
during the year?
Explain the difference between managerial and financial accounting.
ABC Company has the following cost relations:Sales price per unit $45
Variable costs per unit $20
Fixed costs per period $4,000 Calculate the operating profits if the company sells 150
units. If ABC wants to increase operating profits what are the options? Give reasons and
constraints for each option.
Discuss the steps that an internal auditor should take when fraud is suspected.
Describe how to use differential analysis to measure customer profitability.
Discuss the advantages of using spreadsheets including sensitivity analysis.
Leon Manufacturing Company
Leon Manufacturing Company uses a normal costing system. During the current year,
the following events took place:
Compare and contrast normal costing and actual costing.
An accounting employee notices that another employee in the Purchasing Department
has
been accepting gift cards from a company supplier, which is against company policy.
According to the Institute of Management Accountants’ code of conduct, what steps
should the accounting employee take to stop the practice?