Which of the following reflects the simplest allocation method for a factory?
A.The department allocation method.
B.The unit cost allocation method.
C.The plantwide allocation method.
D.The use of activity-based costing.
Three Dog Bite Company:
Refer to Three Dog Bite Company. What are the total external failure costs?
A.$ 600,000
B.$ 900,000
C.$ 370,000
D.$1,220,000
Which errors will likely have the largest effect on the net present value of changes in
assumptions and estimates?
A.Errors in predicting the amounts of future cash flows.
B.Errors in predicting the timing of future cash flows.
C.Errors in predicting the discount rate.
D.Errors in sensitivity analysis.
What is true concerning the agency view of motivation?
A.The theory recommends providing desirable rewards and a high probability of
behaving as the organization wishes will lead to the rewards.
B.The theory looks for ways to encourage agents to act in the interests of principals.
C.The theory looks for ways to discourage agents from acting in the interests of
principals.
D.The theory looks for ways to encourage principals to act in the interests of agents.
Why is activity-based costing used to allocate service department costs?
A.There are fewer cost-allocation bases.
B.It can lead to improved allocation of production department costs to service
departments.
C.It results in identifying more accurate cost-allocation bases.
D.None of the answers is correct.
Which of the following describes just-in-time inventory methods?
A.JIT inventory is a method of managing purchasing only.
B.JIT inventory is a method of managing production only
C.JIT inventory is a method of sales only.
D.JIT inventory is a method of managing purchasing, production, and sales.
Which costing system would be most appropriate for use by a soft drink bottling
company?
A.process costing system.
B.variable costing system.
C.job costing system.
D.direct costing system.
Break-even and target profits; volume defined in sales dollars. The manager of
Jose’s Food Court Express estimates operating costs for the year will total $300,000 for
fixed costs.
Required:
a. Find the break-even point in sales dollars with a contribution margin ratio of 40
percent.
b. Find the break-even point in sales dollars with a contribution margin ratio of 25
percent.
c. Find the sales dollars required with a contribution margin ratio of 40 percent to
generate a profit of $100,000.
How does overstated ending inventory leads to overstated earnings?
A.By understating cost of goods sold.
B.By overstating cost of goods sold.
C.By understating contribution margin.
D.By understating gross margin.
Which of the following is a limitation of break-even time in assessing new-product
development?
A.All cash flows after the moment of break-even are ignored.
B.Strategic and nonfinancial reasons for product development are not considered.
C.Variances between one business to the next due to product life cycles and investment
requirements.
D.All of the answers are correct.
Stephanie Company
Stephanie Company has two production departments: D and J. Stephanie also has 3
service departments: Personnel, Administration, and Shipping. Shipping costs are
allocated on the basis of number of packages, while Personnel and Administration costs
are allocated using number of employees. Assume that the ranking of the benefits
provided is in the order listed below.
Refer to Stephanie Company. Using the step method, what amount of Administration
costs is allocated to Department J (rounded to the nearest $)?
A.$ 97,561
B.$216,216
C.$273,115
D.$409,673
Sprint Company has the following data for 2009:
Sprint Company has a target ROI of 20 percent.
Required:
Calculate the following amounts for each division:
a. Investment Turnover.
b. ROI
c. EVA
The total cost (TC) of an item is calculated as TC = F + VX, where F is the
A.fixed cost during the period.
B.full cost during the period.
C.final costs during the period.
D.finite cost during the period.
Why bother allocating joint-process costs?
A.It is a performance measurement.
B.It is used for determining and responding to regulatory rate changes.
C.It is used in estimating casualty losses.
D.All of the answers are correct.