Implementing activity based costing (ABC) has a direct impact on reducing overhead
in an organization.
Activity-based costing conforms to GAAP with regard to which costs should be
expensed.
Effective cost control begins in the planning stage of the management cycle.
Accounting rate of return is based on cash flows.
For an ordinary annuity, the first cash flow occurs at the end of the period.
When management by exception is employed, favorable variances should not be
investigated.
If actual overhead exceeds applied overhead, factory overhead is said to be
underapplied.
When making a decision to discontinue an operating segment, allocated common costs
are not considered.
Most tactical plans are single use plans.
When multiple labor categories are used, the monetary impact of using a higher or
lower number of hours than a standard allows is referred to as a labor mix variance.
Which of the following is a measure of throughput?
A. Processing time/Total time
B. Good units/Total time
C. Good units/Processing time
D. Total units/Total time
Houston National Bank
Houston National Bank had the following activities, traceable costs, and
physical flow of driver units:
The above activities are used by the Memorial branch and the University branch:
Refer to Houston National Bank. What is the cost per driver unit for the deposit
activity?
A. $0.09
B. $0.075
C. $30.00
D. $50.00
Which of the following is not associated with absorption costing?
A. functional format
B. gross margin
C. period costs
D. contribution margin
ERP stands for
A. enterprise resource production.
B. enterprise resource purchasing.
C. enterprise resource planning.
D. enterprise resource processing.
The following items are used in tracing costs in an ABC system. In which order are
they used?
A. 1, 2, 3, 4
B. 2, 3, 4, 1
C. 2, 4, 3, 1
D. 4, 3, 1, 2
Which of the following capital budgeting techniques typically ignores the time value of
money?
A. payback period
B. net present value
C. internal rate of return
D. profitability index
An increase in a corporation’s target rate would result in a(n)
A. increase in residual income.
B. decrease in return on investment.
C. decrease in residual income.
D. decrease in both residual income and return on investment.
Which of the following are relevant in a make or buy decision?
A. yes yes yes
B. yes no yes
C. yes no no
D. no no yes
Approximately what percentage of future product costs is determined in the
development stage of the product life cycle?
A. 30%
B. 50%
C. 70%
D. 90%
Beasley Company
Beasley Company prepared a cash budget by quarters for the upcoming year. Missing
data amounts are indicated with question marks or lower case letters; these lower case
letters will be referred to in the questions that follow.
Beasley requires a minimum balance of $10,000 to start a quarter.
All data are in thousands.
Beasley Corporation
Cash Budget
Refer to Beasley Company. The borrowing required during the first quarter to meet the
minimum cash balance (item b) is:
A. $0
B. $7
C. $10
D. $ 3
A firm estimates that its annual carrying cost for material X is $.30 per lb. If the firm
requires 50,000 lbs. per year, and ordering costs are $100 per order, what is the EOQ
(rounded to the nearest pound)?
A. 5,774 lbs.
B. 4,082 lbs.
C. 1,732 lbs.
D. 1,225 lbs.
When using one of the discounted cash flow methods to evaluate the desirability of a
capital budgeting project, which of the following factors is generally not important?
A. method of financing the project under consideration
B. timing of cash flows relating to the project
C. impact of the project on income taxes to be paid
D. amounts of cash flows relating to the project
Chandler Industries has two departments. Department 1 uses FIFO costing and
Department 2 uses weighted average.
Units are introduced into the process in Department 1 (this is the only material added in
Department 1). Spoilage occurs continuously through the department and normal
spoilage should not exceed 10 percent of the units started.
Department 2 adds material (packaging) at the 75 percent completion point; this
material does not cause an increase in the number of units being processed. A quality
control inspection takes place when the goods are 80 percent complete. Spoilage should
not exceed 5 percent of the units transferred in from Department 1.
The following production cost data are applicable for operations for August of the
current year:
*This may not be the same amount determined for Department 1; ignore any difference
and use this figure.
Required:
Which of the following equations can be used to budget purchases?
(BI = beginning inventory, EI = ending inventory desired, CGS = budgeted cost of
goods sold, P = budgeted purchases)
A. P = CGS + BI – EI
B. P = CGS + BI
C. P = CGS + EI + BI
D. P = CGS + EI – BI
When standard costs are used in process costing,
A. variances can be measured during the production period.
B. total costs rather than current production and current costs are used.
C. process costing calculations are made simpler.
D. the weighted average method of calculating EUPs makes computing transferred-out
costs easier.
Which of the following is considered a “feeder” system to the cost management
system?
A. yes no yes
B. yes yes yes
C. no no no
D. yes yes no
Roberts Company
Roberts Company has the following information available for the current year:
Refer to Roberts Company. Compute the labor rate and efficiency variances.
How does adopting a JIT system affect the firm’s relationship with suppliers and how
must suppliers change their way of doing business?
Moore Company
Moore Company produces three products from the same process and incurs joint
processing costs of $3,000.
Disposal costs for the products if they are processed further are:
M, $3.00; N, $5.50; Q, $1.00.
Refer to Moore Company. What amount of joint processing cost is allocated to the three
products using sales value at split-off?
Standards that provide for no human limitations or operating delays are referred to as
______________________________.
Why have many managers in recent years moved toward emphasizing employee
participation in the budgeting process rather than simply imposing the budget on the
employees?
Define an environmental management system (EMS).
An organizational unit that performs management activities, such as personnel
services, that benefit the entire organization is referred to as a(n)
________________________________________.