Budget Taxi Service operates a transportation service from the local airport to the major
hotels in the area. All the hotels are located within a five mile radius of the airport. A
majority of Budget’s customers are business people who fly in and out of the city
frequently.
Required:
Identify one measure in each of the four perspectives of the balanced scorecard that
Budget’s managers should monitor. Explain your reasoning for each.
During November, Ironwood Manufacturing used 10,375 direct labor hours and paid
direct labor wages of $166,000. The company incurred manufacturing overhead of
$368,540 during this same time period. For the entire year, Ironwood estimated total
manufacturing overhead would be $4,410,000, direct labor hours would be 126,000,
and total direct labor wages would be $1,992,000. Company managers determined that
manufacturing overhead would be applied based on direct labor hours. For the month of
November, manufacturing overhead was
a. $1,040 overapplied
b. $5,415 underapplied
c. $5,415 overapplied
d. $1,040 underapplied
In evaluating the relevance of specific information, which of the following must the
decision maker know
a. The classification of any relevant costs.
b. The behavior of any relevant costs.
c. The context of the decision.
d. All of these answer choices are correct.
When using an activity-based costing system, which of the following is the formula for
allocating costs to products or services?
a. Activity cost pool resources divided by activity driver
b. Activity cost pool resources times activity driver
c. Activity rate divided by activity driver consumption
d. Activity rate times activity driver consumption
Which of the following strategies relate to the learning and growth perspective?
a. Develop trained workforce and develop reputation for quick turnaround
b. Develop trained workforce and infuse corporate culture of quality throughout
workforce
c. Develop trained workforce and achieve operational excellence
d. Develop trained workforce and retain and grow customer base
Before deciding whether a measure is a leading or lagging indicator, a manager should
be sure to know
a. What event the measure is related to.
b. Whether the measure is used by other companies in the industry.
c. Both What event the measure is related to and Whether the measure is used by other
companies in the industry.
d. Neither What event the measure is related to nor Whether the measure is used by
other companies in the industry.
Which of the following items would be subtracted from net income when using the
indirect method of calculating cash flows provided by operating activities?
a. A gain on the sale of equipment
b. Repayment of debt
c. Receipt of cash dividends
d. A gain on the sale of equipment and repayment of debt, but not receipt of cash
dividends
Which of the following is not a characteristic of a bottom-up budget environment?
a. Executive management creates the budget.
b. At each higher level of management, the budget is reviewed and may be altered.
c. The budget approach may also be referred to as participative budgeting.
d. All of these answer choices are characteristics of a bottom-up budget environment.
The actual return earned on a project is called the
a. Internal rate of return
b. Net future value
c. Payback amount
d. None of these answer choices are correct
Monroe Corporation produced 20,000 units during the last period. The company
incurred the following total costs to produce these units.
Required:
a. Under the absorption costing method, what is the average unit product cost?
b. Under the variable costing method, what is the average unit product cost?
Which of the following is least likely to be in a company ‘s code of ethics?
a.Access to information
b.Projected percentage of employees who act unethically
c.Development and fundraising
d.Clarity of information
In a responsibility accounting environment, upper managers evaluate the performance
of the unit managers based
a. On those items over which the unit managers have control.
b. Not only on cost, but also on revenues.
c. On the overall profit of the organization.
d. None of these answer choices of correct.
Match the following terms relating to a standard costing system to the appropriate
statement by placing the letter to the left of each statement. a. Direct labor efficiency
variance f. Fixed overhead volume variance
b. Direct labor rate variance g. Normal costing system
c. Direct material price variance h. Standard costing system
d. Direct material quantity variance i. Variable overhead efficiency variance
e. Fixed overhead spending variance j. Variable overhead spending variance
Avery Manufacturing has the following sales budgets for the fourth quarter.
The accounting manager has analyzed cash collections and determined that credit sales
are collected 70% in the month of sale, 20% in the month following the sale, and 10%
uncollectible. How much cash will Avery collect in November?
a. $865,600
b. $912,180
c. $787,830
d. $693,600
Which of the following is an example of direct labor for Toyota Motor Company?
a. Assembly line worker
b. Fork-lift driver
c. Line foreman
d. Company president
A company’s unearned revenue account increased by $1,000 during the year. Which of
the following would appear on the statement of cash flows prepared using the indirect
method?
a. An addition under financing activities
b. A deduction under financing activities
c. An addition under operating activities
d. A deduction under operating activities
From a customer’s perspective, the time lapse between receipt of an order and the point
when the product is pulled from inventory for a retailer is referred to as
a. Non-value added.
b. Wasted time.
c. Internal process time.
d. None of these answer choices are correct.
One of the activities managers like to engage in is called “what-if” analysis, or
sensitivity analysis.
Two ways to develop a competitive advantage is through product differentiation and
low-cost production. How does a company set itself apart from competitors under each
strategy?
For each statement below, indicate the management tool being implemented.
A relatively new tool that managerial accountants have developed to assist is the
balanced scorecard.
Bethel Corporation provided the following income statement for two of its divisions:
North and South.
Required:
The home office allocated common fixed costs of $18,000 to North and $2,000 to
South. Prepare a segment margin income statement.
When volume changes, total sales revenue, total variable costs, total contribution
margin, and total fixed cost all change.
What is a transfer price? List the four ways of determining a transfer price.