Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to
allocate variable manufacturing overhead. The following information relates to the
company’s manufacturing overhead data:
What is the amount of the budgeted variable manufacturing overhead cost per unit? (Do
not round any intermediary calculations. Round your final answer to the nearest cent.)
A) $8.91
B) $8.06
C) $8.80
D) $8.16
Which account is credited if direct materials of $28,000 and indirect materials of $7,000
are sent to the manufacturing plant floor?
A) Manufacturing Overhead Control for $35,000
B) Work-in-Process Control for $35,000
C) Accounts Payable Control for $21,000
D) Materials Control for $35,000
Ventaz Corp manufactures keyboards. The manufacturing cycle efficiency is 40%.
What is its manufacturing time for value added if the manufacturing lead time is 132
minutes per keyboard?
A) 42.24 minutes
B) 66.00 minutes
C) 52.80 minutes
D) 59.40 minutes
Which of the following is not correct about the balanced scorecard?
A) profits and value created for shareholders are perspectives revealed on a balance
scorecard
B) nonfinancial and operational indicators are reported on a balance scorecard
C) the balanced scorecard reveals information about the success of the company in its
target market
D) the balance scorecard increases managements emphasis on short-term results
Which of the following statements is true of a post-investment audit?
A) It encourages managers to overstate the expected cash inflows from projects and
accept projects they should reject.
B) It helps managers avoid optimistic estimate errors.
C) It does not help senior management to recognize problems in the implementation of
the project.
D) It provides managers with feedback about the performance of a project to determine
if any variance from expectations were the result of the overly optimistic estimates of
because of implementation issues.
Crandle Manufacturers Inc. is approached by a potential customer to fulfill a
one-time-only special order for a product similar to one offered to domestic customers.
The company has excess capacity. The following per unit data apply for sales to regular
customers:
Variable costs:
Direct materials $130
Direct labor 60
Manufacturing support 105
Marketing costs 95
Fixed costs:
Manufacturing support 175
Marketing costs 65
Total costs 630
Markup (50%) 315
Targeted selling price $945
What is the change in operating profits if the one-time-only special order for 1,030 units
is accepted for $550 a unit by Crandle?
A) $164,800 increase in operating profits
B) $164,170 increase in operating profits
C) $164,170 decrease in operating profits
D) $164,800 decrease in operating profits
Most of the decisions determining the level of fixed overhead costs to be incurred will
be made ________.
A) by the end of a budget period
B) by the middle of a budget period
C) on a day-to-day ongoing basis
D) at the start of a budget period
Upon which of the following items does discounted cash flow methods for capital
budgeting focus?
A) cash inflows and required rate of return
B) operating income and required rate of return
C) operating income and cost of capital
D) working capital and cost of capital
The above table is a ________.
A) 4-variance analysis
B) 3-variance analysis
C) 2-variance analysis
D) 1-variance analysis
A company reported revenues of $382,000, cost of goods sold of $125,000, selling
expenses of $16,000, and total operating costs of $74,000. Gross margin for the year is
________.
A) $257,000
B) $241,000
C) $167,000
D) $292,000
Which of the following statements is true of scrap?
A) When a production process yields two or more products with high total sales values
relative to the total sales values of other products, those are called scrap.
B) For accounting purpose, distinction is made between normal and abnormal scrap.
C) Scrap refers to units of production, fully or partially completed, that do not meet the
specifications required by customers for good units and are discarded or sold at reduced
prices
D) Scrap is either sold or disposed of quickly or it is stored for later sale, disposal, or
reuse.
A perfectly competitive market exists when which of the following conditions are
present?
A) individual buyers or sellers can affect prices by their own actions
B) market prices reach well above their historical averages due to demand outstripping
supply
C) market prices drop well below their historical averages due to supply outstripping
demand
D) there is a homogeneous product with buying prices equal to selling prices
A graph comparing locked-in costs with incurred costs will have ________.
A) locked-in costs rising much faster initially, but dropping to zero after the product is
manufactured
B) the two cost lines running parallel until the end of the process, when they join
C) locked-in costs rising much faster initially than the incurred cost, but joining the
incurred cost line at the completion of the value-chain functions
D) no differences unless the product is manufactured inefficiently
Depreciation is usually NOT considered an operating cash flow in capital budgeting
because ________.
A) depreciation is usually a constant amount each year over the life of the capital
investment
B) deducting depreciation from operating cash flows would be counting the lump-sum
amount twice
C) depreciation usually does not result in an increase in working capital
D) depreciation usually has no effect on the disposal price of the machine
The drawback of the constant gross-margin percentage NRV method in joint costing is
that it ________.
A) recognizes that profits are derived from the costs incurred after split-off
B) assumes the profit margin to be identical across all products
C) attempts to approximate the sales values at split-off by subtracting from final selling
prices the separable costs incurred after the split-off point
D) ignores the separable costs of further processing
Jean Peck’s Furniture manufactures tables for hospitality sector. It takes only bulk
orders and each table is sold for $500 after negotiations. In the month of January, it
manufactures 3,100 tables and sells 2,700 tables. Actual fixed costs are the same as the
amount of fixed costs budgeted for the month.
The following information is provided for the month of January:
At the end of the month Jean Peck’s Furniture has an ending inventory of finished goods of
400 units. The company also incurs a sales commission of $13 per unit.
What is the gross margin when using absorption costing? (Round any intermediary
calculations to the nearest cent and your final answer to the nearest dollar.)
A) $958,700
B) $1,179,900
C) $842,003
D) $907,551
Bosely Corporation is reviewing its business strategy. The first step for Bosely is to
perform an industry analysis. You have been hired to help the company go through the
strategy formulation process.
Required:
To perform the industry analysis, what areas should Bosely focus on and give at least
one example of how Bosely can effectively deal with each area.
Net present value is calculated using which of the following?
A) internal rate of return
B) required rate of return as a discount rate
C) risk-free rate
D) predetermined overhead cost rate
Arrangement of long-term financing is an integral part of the ________ function in an
organization.
A) CFO’s
B) controller’s
C) auditor’s
D) president’s
Jean Peck’s Furniture manufactures tables for hospitality sector. It takes only bulk
orders and each table is sold for $400 after negotiations. In the month of January, it
manufactures 3,200 tables and sells 2,400 tables. Actual fixed costs are the same as the
amount of fixed costs budgeted for the month.
The following information is provided for the month of January:
At the end of the month Jean Peck’s Furniture has an ending inventory of finished goods of
800 units. The company also incurs a sales commission of $11 per unit.
What is the cost of goods sold per unit when using absorption costing?
A) $130.00
B) $101.87
C) $158.13
D) $169.13
Among different types of costs associated with inventory, the costs of obtaining
purchase approvals are ________.
A) purchasing costs
B) ordering costs
C) stockout costs
D) carrying costs
Which of the following factors affect the direct/indirect classification of a cost?
A) the level of budgeted profit for the next year
B) the estimation of time required to complete the order
C) the ability to execute an order in the most cost-efficient manner
D) the design where a particular area is dedicated to a specific cost object
Zolas’ Heaters is approached by Ms. Leila, a new customer, to fulfill a large
one-time-only special order for a product similar to one offered to regular customers.
Zolas’ Heaters has excess capacity. The following per unit data apply for sales to regular
customers:
For Zolas’ Heaters, what is the minimum acceptable price of this one-time-only special
order?
A) $710.00
B) $920.00
C) $610.00
D) $1150.00
Partial productivity multiplied by the quantity of input used results in ________.
A) expected production
B) budgeted output
C) actual output
D) a ratio
Jean Peck’s Furniture manufactures tables for hospitality sector. It takes only bulk
orders and each table is sold for $500 after negotiations. In the month of January, it
manufactures 3,000 tables and sells 2,600 tables. Actual fixed costs are the same as the
amount of fixed costs budgeted for the month.
The following information is provided for the month of January:
At the end of the month Jean Peck’s Furniture has an ending inventory of finished goods of
400 units. The company also incurs a sales commission of $13 per unit.
What is the operating income when using absorption costing? (Round any intermediary
calculations to the nearest cent and your final answer to the nearest dollar.)
A) $828,000
B) $858,000
C) $794,200
D) $824,200
AARR indicates the average rate at which ________.
A) a dollar of investment generates after-tax operating income
B) a dollar of after-tax cash flow generates net income
C) a dollar of investment generates a positive cash flow
D) a dollar of after-tax non-operating income generates net income
Butler Hospital wants to estimate the cost for each patient stay. It is a general health
care facility offering only basic services and not specialized services such as organ
transplants.
Required:
a. Classify each of the following costs as either direct or indirect with respect to each
patient.
b. Classify each of the following costs as either fixed or variable with respect to
hospital costs per day.
Which of the following would most likely be the user of financial accounting
information?
A) factory shift supervisor
B) distribution manager
C) current shareholder
D) department manager
Which of the following statements is true of a linear cost function?
A) It presents variable cost as a slope coefficient.
B) It presents total cost as an intercept.
C) It presents variable cost as an intercept.
D) It presents total cost as slope coefficient.
Managers use management accounting information to ________.
A) help external users such as investors, banks, regulators, and suppliers
B) communicate, develop, and implement strategies
C) communicate a firm’s financial position to investors, banks, regulators, and other
outside parties
D) ensure that financial statements are consistent with the SEC rules
High Traffic Products Corporation has two departments, Small and Large. Central costs
could be allocated to the two departments in various ways.
If total rent expense of $144,300 is allocated on the basis of square footage, the amount
allocated to the Large Department would be ________. (Do not round interim calculations.
Round the final answer to the nearest whole dollar.)
A) $103,000
B) $41,100
C) $72,150
D) $103,200
Knowledge Transfer Associates is in the process of evaluating its new client services for
the business systems consulting division.
∙ Server Planning, a new service, incurred $330,000 in development costs.
∙ The direct costs of providing the service, which is all labor, averages $40 per hour.
∙ Other costs for this service are estimated at $340,000 per year.
∙ The current program for server planning is expected to last for two years. At that time,
expected new operating systems are likely to make the service non viable.
∙ Customer service expenses average $350 per client, with each job lasting an average
of 40 hours. The current staff expects to bill 15,000 hours for each of the two years the
program is in effect. Billing averages $100 per hour.
What are the estimated life-cycle revenues?
A) $3,000,000
B) $3,340,000
C) $3,670,000
D) $1,500,000
Which of the following could be a measure of the balanced scorecard’s financial
perspective?
A) Service response time
B) Number of new patents
C) Operating income
D) Defect rates