1) The central reservation office at MegaBus is most likely treated as a(n)
A) cost center
B) investment center
C) revenue center
D) profit center
2) Yellow Company’s variable expenses are 40% of sales and have monthly fixed
expenses of $15,000. The monthly target operating income is $3,750. What is Yellow
Company’s operating leverage factor at the target level of operating income?
A) 1.25
B) 0.20
C) (3.00)
D) 5.00
3) A potential disadvantage of decentralization is which of the following?
A) Benchmarking
B) Provides training
C) Provides feedback
D) Duplication of costs
4) Madden Corporation manufactures t-shirts, which is its only product. The standards
for t-shirts are as follows:
During the month of January, the company produced 1,250 t-shirts. Related production
data for the month follows:
What is the direct labor efficiency variance for the month?
A) $90 favorable
B) $90 unfavorable
C) $340 favorable
D) $340 unfavorable
5) Which of the following areas does not make significant use of time value of money
concepts?
A) Capital investment analysis
B) Lending and borrowing
C) Personal finance planning
D) Marketing research
6) Which term below best describes the quality cost category for “cost of warranty
repairs on juicers”?
A) Prevention costs
B) Appraisal costs
C) External failure costs
D) Internal failure costs
7) London Plastics has monthly fixed costs of $84,000, while its variable costs are
$4.00 per unit. If the sales price of a unit is $15.00 and London Plastics sell 14,000
units, the company’s average fixed costs per unit will be
A) $6.00 per unit
B) $10.00 per unit
C) $4.00 per unit
D) $11.00 per unit
8) LaComedia Dinner Theater sells tickets for dinner and a show for $40 each. The cost
of providing dinner is $26 per ticket and the fixed cost of operating the theater is
$100,000 per month. The company can accommodate 12,000 patrons each month. What
is the contribution margin ratio?
A) 65%
B) 35%
C) 14%
D) 286%
9) How do fixed costs per unit behave?
A) They remain the same throughout production levels within the relevant range
B) They decrease as production decreases
C) They increase as production decreases
D) They increase as production increases
10) The ________ ‘shows how well management has controlled overhead costs.”
A) overhead flexible budget variance
B) production volume variance
C) quantity variance
D) price variance
11) A lamp store purchased $3,800 of lamps in September. The store had $1,600 of
lamps on hand at the beginning of September, and expected to have $1,300 of lamps at
the end of September to cover part of anticipated October sales. What is the budgeted
cost of goods sold for September?
A) $5,400
B) $4,100
C) $6,700
D) $3,500
12) In a special sales order decision, the special price must exceed the variable cost of
filling the order. In other words, the special order must have ________.
A) sunk costs
B) a positive contribution margin
C) opportunity costs
D) a negative contribution margin
13) If total fixed costs are $455,000, the contribution margin per unit is $25.00, and
targeted operating income is $25,000, how many units must be sold to breakeven?
A) 11,375,000
B) 19,200
C) 18,200
D) 625,000
14) Ida Enterprises is considering replacing a machine that is presently used in its
production process. The following information is available:
Which of the information provided in the table is irrelevant to the replacement
decision?
A) The annual operating cost of the old machine
B) The original cost of the old machine
C) The current disposal value of the old machine
D) Both A and C
15) Star Corporation management has budgeted the following amounts for its next
fiscal year:
If Star Corporation spends an additional $20,000 on advertising, sales volume should
increase by 3,000 units. What effect will this have on operating income?
A) Increase of $75,000
B) Increase of $55,000
C) Decrease of $55,000
D) Decrease of $75,000
16) It would be a violation of which ethical standard to withhold relevant information?
A) Confidentiality
B) Competency
C) Integrity
D) Credibility
17) A(n) ________ cost is one whose total amount changes in direct proportion to a
change in volume.
A) fixed
B) irrelevant
C) variable
D) mixed
18) Presented are the income statements of Bostick and Stemple Publications
companies for the current year:
Which company has the better relationship between gross profit and net sales revenue?
A) Impossible to determine
B) Both have the same relationship
C) Bostick
D) Stemple
19) When used, raw materials
A) would be classified as direct materials
B) would be classified as direct labor
C) would be classified as indirect materials
D) cannot be determined with the information provided
20) The following information relates to Woolf Unlimited for the past two years.
What is the acid-test ratio for the current year?
A) 0.52
B) 0.75
C) 0.78
D) 2.30
21) James Industries uses departmental overhead rates to allocate its manufacturing
overhead to jobs. The company has two departments: Assembly and Sanding. The
Assembly Department uses a departmental overhead rate of $35 per machine hour,
while the Sanding Department uses a departmental overhead rate of $20 per direct labor
hour. Job 603 used the following direct labor hours and machine hours in the two
departments:
The cost for direct labor is $30 per direct labor hour and the cost of the direct materials
used by Job 603 is $1,400.
How much manufacturing overhead would be allocated to Job 603 using the
departmental overhead rates?
A) $450
B) $380
C) $715
D) $390
22) Simon Manufacturing is conducting preliminary research into installing a
geothermal heat pump to heat and cool its factories and offices. The initial cost of
installing the new system is $245,000; however, Simon will save $35,000 annually on
its heating and cooling costs. The system has an expected life of 15 years.
What is the payback period, in years, for the geothermal heat pump?
A) 7.00 years
B) 4.49 years
C) 25 years
D) 8.56 years
23) Beartowne Enterprises uses an activity-based costing system to assign costs in its
auto-parts division.
The following units were produced in December with the following information:
Total manufacturing costs for Part 001 is
A) $4,625
B) $1,500
C) $7,125
D) $4,000
24) Which of the following sections from the statement of cash flows includes activities
that increase and decrease long-term assets?
A) Investing section
B) Operating section
C) Financing section
D) None of the above
25) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to long-term liabilities?
A) Long-term liabilities increased by $6,000
B) Long-term liabilities decreased by 5.92%
C) Long-term liabilities increased by 6.21%
D) Long-term liabilities decreased by $1,500
26) Joe’s Bottling Company provided the following expense information for July:
What is the total cost for the marketing category of the value chain?
A) $71,000
B) $179,000
C) $186,000
D) $244,000
27) Hollinger Ceramics makes custom ceramic tiles. During March, the company
started and finished Job #755. The company’s records show the following direct
materials were requisitioned for Job #755.
Plain white tiles:1,200 units at $5.00 per unit
Specialty paint:9 quarts at $8.00 per quart
High gloss glaze:5 quarts at $12.00 per quart
Labor time records show the following employees worked on Job #755:
Steven Hightop:20 hours at $27 per hour
Andy Pickering:10 hours at $17 per hour
Hollinger Ceramics allocates manufacturing overhead at a rate of $14 per direct labor
hour.
A)Compute the total amount of direct materials, direct labor, and manufacturing
overhead that should be shown on Job #755’s job cost record.
B)Job #755 consists of 1,200 tiles. If each tile sells for $12.00, what is the gross profit
per tile?
28) The ________ technique asks what a result will be if a predicted amount is not
achieved or if an underlying assumption changes.
A) sensitivity analysis
B) ratio analysis
C) risk analysis
D) strategic analysis
29) The formula to compute accounts receivable turnover is
A) net credit sales/average net accounts receivable
B) net credit sales/average inventory
C) cost of goods sold/average inventory
D) average net accounts receivable/one day’s sales
30) The Warren Company is considering investing in two alternative projects:
What is the accounting rate of return for Project 2?
A) 33.67%
B) 3.00%
C) 18.00%
D) 2.33%
31) The following account balances at the beginning of January were selected from the
general ledger of Ocean City Manufacturing Company:
Additional data:
1> Actual manufacturing overhead for January amounted to $62,000.
2> Total direct labor cost for January was $63,000.
3> The predetermined manufacturing overhead rate is based on direct labor cost. The
budget for the year called for $250,000 of direct labor cost and $350,000 of
manufacturing overhead costs.
4> The only job unfinished on January 31 was Job No. 151, for which total direct labor
charges were $5,200 (800 direct labor hours) and total direct material charges were
$14,000.
5> Cost of direct materials placed in production during January totaled $123,000. There
were no indirect material requisitions during January.
6> January 31 balance in raw materials inventory was $35,000.
7> Finished goods inventory balance on January 31 was $34,500.
What is the predetermined manufacturing overhead rate?
A) 71%
B) 140%
C) 70%
D) 99%
32) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to net sales revenue?
A) There is a sales return of $10.23
B) There was an increase of 18.00% in net sales revenue
C) The cost of goods sold is 77.29% of net sales revenue
D) There is an accounts receivable turnover of 11.26 times
33) Silver Creations is evaluating a project that would require an initial investment of
$36,000. The present value of the net cash inflows associated with this project would be
$43,200. The profitability index for this project would be closest to
A) 0.83
B) 1.20
C) 0.20
D) 5.00
34) With regard to a static budget instead of a flexible budget, which of the following is
TRUE?
A) A static budget is adjusted for changes in the level of sales activity
B) A static budget is a budget that stays the same from one period to the next
C) A static budget is prepared for only one level of sales activity
D) A static budget is also known as a fixed budget
35) If a company uses the indirect method to prepare the statement of cash flows, how
will the adjustment to reflect the amount of cash received from customers be presented
on the statement?
A) The adjustment will be for the increase or decrease in inventory for the period and
will adjust net income in the operating activities section
B) The adjustment will be for the increase or decrease in accounts payable for the
period and will adjust net income in the operating activities section
C) The adjustment will be for the increase or decrease in accrued expenses for the
period and will adjust net income in the operating activities section
D) The adjustment will be for the increase or decrease in accounts receivable for the
period and will adjust net income in the operating activities section
36) Which of the following is not a factor in the success of a lean company?
A) Short production cycle times
B) Continuous flow of production without interruptions
C) Inflexible production operations
D) The focus on quality
37) An example of an industry that uses process costing might be a
A) custom printer
B) homebuilder
C) shipbuilder
D) company that makes cement