1) Total assets is the denominator in the formula managers use to compute ROI.
2) The direct labor efficiency variance tells managers how much of the total labor
variance is due to using a greater or lesser amount of time than anticipated.
3) Circumstances can occur that result in favorable direct materials price variances and
unfavorable direct materials quantity variances.
4) The manager at a service company does not prepare a cash budget.
5) Management by exception saves management time because managers in revenue
centers only focus on unfavorable variances.
6) A profit center is the responsibility center that is only responsible for costs.
7) Management by exception directs management’s attention to a large variance
between an actual and budget amount in a performance report.
8) SOX do not allow CPA firms to provide certain non-audit services to companies
during the same period of time in which they are providing the services.
9) Budgets are helpful because managers can plan the cash inflows and outflows in an
organization.
10) If a manufacturer finds that the amount of manufacturing overhead allocated to a
job is less than the actual amount of manufacturing overhead incurred, then the jobs are
overcosted.
11) The following information relates to Truman Unlimited for the past two years.
Days’ sales in receivables for the current year is closest to
A) 61.85 days.
B) 50.83 days.
C) 79.50 days.
D) 9.60 days.
12) Which of the following cost of quality categories represent the cost incurred to
detect poor quality goods or services prior to consumer delivery in the marketplace?
A) Internal failure costs
B) Value-added activity
C) External failure costs
D) Just-in-time production
13) Which of the following is responsible for the ability of foreign companies to
compete with domestic companies in the global marketplace?
A) Globalization
B) The Sarbanes-Oxley Act of 2002
C) Decreased barriers to international trade
D) International financial reporting standards
14) The performance report that highlights the center’s segment margin at a ________
may include direct fixed expenses and direct fixed costs.
A) cost center
B) sales center
C) profit center
D) revenue center
15) The balance sheet for Bostick Corporation follows:
Operating income during the period was $13,650, while cash dividends paid were
$3,770. The total uses of cash for Bostick Corporation during the year was
A) $32,320.
B) $13,800.
C) $2,450.
D) $54,970.
16) The Hummel Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s earnings per share for the current year?
A) $6.50
B) $2.00
C) $3.50
D) $12.50
17) A ________ is a document manufacturing production personnel use to request that
the itemized materials be sent from the showroom into the factory.
A) cost ticket
B) job cost record
C) materials requisition
D) manufacturing ticket
18) All of the following are potential advantages of decentralization except
A) Frees top management’s time
B) Encourages use of expert knowledge
C) Potential duplication of costs
D) Provides training
19) A company uses the direct method to prepare the statement of cash flows. It
presents the following amounts on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about the accounts receivable in the operating
activities category in the statement of cash flows?
A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be subtracted from sales to determine cash received
from customers.
C) The increase of $15,000 will be added to sales to determine cash received from
customers.
D) The increase of $15,000 will be added to net income.
20) The managerial accountant at Boone Furriers reported the following contribution
margin statement information:
Use the data listed above to compute the following:
a.Compute the sales in units.
b.Compute the breakeven point in sales revenue.
A) 1,659 units; $338,900
B) 323 units; $512,000
C) 528 units; $448,800
D) 650 units; $525,000
21) Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to current year selling and general
expenses?
A) An increase of $57,768
B) 19% of net sales revenue
C) A decrease of 82.80%
D) 25% of net sales revenue
22) Tasty Treats is a snow cone stand near the local park. To plan for the future, Tasty
Treats wants to determine its cost behavior patterns. It has the following information
available about its operating costs and the number of snow cones served.
Using the high-low method, the fixed costs for a month are
A) $980.
B) $12,660.
C) $1,500.
D) $5,320.
23) The McCumber Corporation data for the current year:
With respect to net sales revenue, what would a horizontal analysis report?
A) There was an increase of 20.00% in net sales revenue.
B) There is a sales return of $10.40.
C) The cost of goods sold is 77.37% of net sales revenue.
D) There is an accounts receivable turnover of 11.17 times.
24) A company reported the following amounts of net income:
Which of the following is the percentage change from Year 1 to Year 2?
A) 24.00%
B) 25.00%
C) 124.00%
D) 55.00%
25) Flash E-Card Manufacturing manufactures software parts for the computer software
systems that produce e-cards. The Flash II part is currently manufactured in the
Computer Department. The Data Department also produces the part and the plant has
excess capacity to produce the Flash II part. The current market price of the Flash II
part is $600. The managerial accountant reported the following manufacturing costs and
variable expense data:
If the highest acceptable transfer price is $600 in the market, what is the lowest
acceptable in-house price the Data Department should receive to produce the part
in-house at the Computer Department?
A) $110
B) $120
C) $840
D) $1,070
26) Kent Coffee Shoppe total sales revenue is $850,000, its variable expenses total
$250,000, and its fixed expenses total $375,000. Compute the overall contribution
margin ratio and use the contribution margin ratio in the shortcut formula to predict the
breakeven point in dollars.
27) Use the direct method of cash flows to answer the question.
Calculate the amount of cash paid to purchase merchandise during the year.
28) The managerial accountant at the Holly and Ivy Tree Store reported that the
company anticipates sales of $600,000 in September and October, $625,000 in
November, $635,000 in December, and note that the sales figure is $640,000 in January.
The August sales revenue was equal to the September sales revenue. The managerial
accountant establishes the prices at the Holly and Ivy Tree Store on its merchandise to
ensure the company earns 45% gross profit on its sales. The managerial accountant
expects the ending inventory at the store to equal 12% of the next month’s cost of goods
sold.
Compute the COSG, inventory, and purchases budget for October, November, and
December.
29) Satellite Manufacturing is a company that manufactures satellite parts. The two
departments in the company include the Placement Department and the Organization
Department. The managerial accountant assigned total costs to units completed and to
units in ending Work In Process Inventory and reported the following information:
Which of the following journal entry is needed to transfer the costs?
30) Grain Alternative Corporation has a predicted operating income of $80,000. The
managerial accountant reported that total variable expenses are $25,000 and its total
fixed expenses are $24,000. The company has a unit contribution margin of $20 on its
sole product. Calculate the number of units needed to reach the operating income of
$80,000.
