Compared to a traditional two-stage cost allocation system, activity-based costing
systems:
A. use fewer cost centers.
B. use more cost drivers.
C. are less expensive to maintain.
D. All of these answers are correct.
A series of equal cash flows at fixed intervals is termed a(n):
A. net cash flow.
B. lump sum.
C. annuity.
D. return on investment.
The following income statements are provided for Li Company’s last two years of
operation:
Assuming that cost behavior did not change over the two year period, what is Li
Company’s contribution margin in 2013?
A. $33,000
B. $32,000
C. $39,000
D. $69,000
Which ratios measure a company’s long-term debt paying ability and its financing
structure?
A. Solvency
B. Liquidity
C. Profitability
D. None of these answers is correct.
Earnings before interest and taxes divided by interest expense is the formula for which
of these analytical measures?
A. Debt to assets ratio
B. Earnings per share
C. Return on investment
D. Number of times interest is earned
The type of planning that involves long term decisions, such as defining the scope of
the business and deciding what products to make is known as:
A. Continuous planning
B. Strategic planning
C. Capital budgeting
D. Operations budgeting
Which of the following are not present value methods of analyzing capital investment
proposals?
A. Internal rate of return and payback
B. Unadjusted rate of return and net present value
C. Net present value and payback
D. Payback and unadjusted rate of return
Sentra Sporting Company sells tennis rackets and other sporting equipment. The
purchasing department manager prepared the inventory purchases budget. Sentra’s
policy is to maintain an ending inventory balance equal to 15% of the following
month’s cost of goods sold. January’s budgeted cost of goods sold is $70,000.
What would be the required purchases (on account) for December?
A. $47,000
B. $50,000
C. $53,000
D. $60,500
Which of the following transactions would cause net income for the period to decrease?
A. Paid $2,500 cash for raw material cost
B. Purchased $8,000 of merchandise inventory
C. Recorded $5,000 of depreciation on production equipment
D. Paid $2,000 for production supplies
Various ratios are computed to assess different aspects of a company’s financial
condition and/or strength.Required:In the table below, indicate which aspect of
financial condition each specified ratio is designed to assess:
Which of the following statements regarding activity based cost drivers is correct?
A. Activity based cost drivers are measures of activity that are directly associated with
production.
B. Activity based cost drivers are directly related to the volume of production.
C. Activity based cost drivers improve the accuracy of direct cost allocations.
D. None of these answers is correct.
Invoice processing costs would be considered a:
A. unit-level cost.
B. batch-level cost.
C. product-level cost.
D. facility-level cost.
What amount of cash must be invested today in order to have $60,000 at the end of one
year assuming the rate of return is 9%? (Do not round your PV factors.)
A. $45,454.56
B. $54,000.00
C. $55,045.88
D. $54,600.00
Select the correct statement from the following.
A. The allocation base determines whether a cost is classified as direct or indirect.
B. The same cost cannot be classified as both direct and indirect.
C. Relevant costs can include direct and indirect costs.
D. Direct costs always display a variable behavior pattern.
Shaw Associates uses the indirect method for preparing the statement of cash flows.
The following accounts and balances were drawn from the company’s accounting
records:
Net income for the period was $42,000. The net cash flows from operating activities
equals:
A. $37,200.
B. $34,800.
C. $49,200.
D. $40,000.
Levenworth Company incurs unnecessary costs each period because of the excess
quantities of inventory maintained to meet unexpected customer demand. The costs of
inventory financing, storage, supervision, and obsolescence could most likely be
reduced by which of the following practices?
A. Activity-based costing
B. Just-in-time inventory
C. Total quality management
D. Benchmarking
Cost accumulation is used to:
A. Determine the cost of a particular cost object.
B. Identify and estimate opportunity costs.
C. Identify fixed and variable costs.
D. Set the selling price for a service.
The Valz Corporation had a balance in its equipment account on January 1, 2014 of
$650,000. During the year, equipment originally costing $170,000 and having
accumulated depreciation of $40,000, was sold for $134,000. The ending balance of the
equipment account was $550,000. How much additional equipment was purchased
during 2014?
A. $70,000
B. $40,000
C. $170,000
D. $174,000
Which of the following cash budget equations is incorrect?
A. Cash payments + cash receipts = cash requirements
B. Beginning cash + cash receipts = total cash available
C. Cash payments + cash cushion = total cash needed
D. Period one ending cash balance = period two beginning cash balance
Gaither Company uses a process cost system. The following data applies to January
2014.
The ending work in process inventory is 90% complete. The total number of equivalent
units for January was:
A. 25,600.
B. 26,500.
C. 27,500.
D. 27,400.
Company X manufactures 3-ring notebooks. All of the following are considered
indirect costs except:
A. cardboard used in production of notebooks.
B. depreciation on manufacturing equipment.
C. factory utilities.
D. salaries for production supervisors.
In a manufacturing company, service department costs are:
A. reported as selling and administrative expenses.
B. allocated to the products made by the company.
C. treated as direct costs.
D. expensed when incurred.
Classifying costs into one of four hierarchical levels can facilitate the identification of
relevant costs. Place an “X” in the appropriate column to classify the following costs as
Unit-level, Batch-level, Product-level, and Facility level.
Cruz Tools produces scissors in a two-stage production process. The following
production times are provided:
Required:
1) Identify the non-value-added activities.
2) What percentage of the total time to complete is actually value-added time?
3) How could this production operation be improved?
Indicate whether each of the following statements is true or false.
A favorable variance may indicate the existence of unfavorable conditions.
Managers should be praised or punished based on variances.
Budget slack exists when performance standards are set at an ideal, unachievable level.
Establishing standards is the least difficult aspect of using a standard cost system.
A standard is the amount a price, cost, or quantity should be.
For what activities do an organization’s managers need accounting information?
Complete the following table to indicate your understanding of fixed and variable cost
behavior by inserting one of the following responses in each box: “Remain constant,”
“Increase,” or “Decrease.”