Which of the following optimizes the use of scarce resources?
A.Total quality management
B.Linear programming
C.Just-in-time inventory
D.The economic order quantity
If the profit margin percentage of 30% stayed the same and the investment turnover
ratio of 5.0 increased by 10%, what would happen to ROI?
A.increase by 10%
B.decrease by 10%
C.increase by 15%
D.remain the same
The cash flows associated with an investment project include which of the following?
A.initial cash flows
B.periodic cash flows
C.terminal cash flows.
D.all of the above.
Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair) and
two operating departments (Fabrication and Assembly). Management has decided to
allocate repair costs on the basis of the area (square feet) in each department and to
allocate General Factory on the basis of labor hours worked by the employees in each
of their respective departments.
The following data appear in the company records for the current period:
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company. Using the direct method, what is the total amount of
costs allocated to (a) the Fabrication Department and (b) the Assembly Department?
If the investment turnover ratio increased by 30% and the profit margin percentage
increased by 20%, what would happen to the divisional ROI?
A.It would increase by 56%.
B.It would decrease by 60%.
C.It would increase by 20%.
D.The answer cannot be determined.
The production volume variance is the difference between which of the following two
costs?
A.Budgeted and applied fixed costs.
B.Actual costs and the budgeted costs.
C.Budgeted and actual fixed costs.
D.Variable costs and the budgeted costs.
Some data-recording method(s) could lead the analyst astray because they can make the
data appear to exhibit incorrect cost behavior patterns; for example,
A.”unitizing” fixed costs.
B.firms sometimes do maintenance only when activity is slow.
C.firms peg advertising expenditures as a percentage of actual sales.
D.All of the answers are correct.
What cost centers do not have input-output relationships sufficiently well established so
that a particular set of inputs will provide a predictable and measurable set of outputs?
A.engineered cost centers.
B.direct cost centers.
C.opportunity cost centers.
D.discretionary cost centers.
Transfer pricing systems based on costs include which of the following?
A.activity-based costing.
B.cost-plus.
C.standard costs.
D.All of the answers are correct.
Actual costs and normal costs. Canyon Ridge Company uses a predetermined rate for
applying overhead to production using normal costing. The rates for Year 1 follow:
variable, 200 percent of direct labor dollars; fixed, 300 percent of direct labor dollars.
Actual overhead costs incurred follow: variable, $20,000; fixed, $26,000. Actual direct
materials costs were $5,000, and actual direct labor costs were $9,000. Canyon Ridge
produced one job in Year 1.
Required:
a. Calculate actual costs of the job.
b. Calculate normal costs of the job using predetermined overhead rates.
Explain how to perform cost-volume-profit (CVP) analysis.
Benezra Enterprises, Inc.
Benezra Enterprises, Inc. has a plant capacity that can produce 4,000 units annually. Its
predicted operations for the year are:Sales (2,000 units at $50 each) $100,000
Manufacturing costs:
Variable $15 per unit
Fixed $20,000
Marketing and administrative costs:
Variable $10 per unit
Fixed $10,000
Refer to the information for Benezra Enterprises. What is the current operating profit?
Charles Company had 14,000 units of switch plates on hand at the end of its previous
year. The company has a policy of maintaining 10 percent of the current year’s
requirements in ending inventory. During the current year, Charles used 150,000 units
of switch plates. How many units did Charles purchase during the current year?
What is the difference between short-run and long-run pricing decisions?
Explain common causes of financial fraud.
Computing product costs with incomplete products (Appendix 2.1). The Assembly
Department had 90,000 units 75 percent complete in Work-in-Process Inventory at the
beginning of April. During
April, the department started and completed 110,000 units. The department started
another 46,000 units and completed 20 percent as of the end of April. Assume that the
cost assigned to beginning inventory on April 1 was $78,000 and that the department
incurred $298,000 of production costs during April.
Required: Prepare a production cost report like the one shown in Exhibit 2.10 in the
text. Assume the department incurred production costs evenly throughout processing.
Jackson Company is considering the investment in a computer system. The company
estimates that it will require an initial outlay of $1,200,000. Other cash flows will be as
follows:
Required:
Assuming the company limits its analysis to five years, should the company consider
this investment if the required rate of return is 12 percent?
