Using activity-based costing to analyze customer profitability requires the analyst to
determine the cost to acquire customers, which includes such activities as
A.process payments
B.conduct campaign to win back lost customers
C.issue refunds
D.deliver products
Which statement is true concerning linear programming?
A.Linear programming will find the product mix that will maximize profits given the
constraints.
B.Linear programming does not provide opportunity costs of constraints.
C.Linear programming does not allow for sensitivity analysis.
D.Linear programming cannot find the product mix that will maximize profits given the
constraints.
Use the following information to answer the following questions. Magnolia
Company makes products B546 and C245. Information for overhead costs and for the
two products appears below. The company makes 100,000 units of product B546 each
year and 20,000 units of product C245.
What will be the total overhead cost of product C245 if all overhead is assigned using
ABC and each activity above is treated as a separate pool?
A.$8.60 per unit
B.$90.00 per unit
C.$15.00 per unit
D.$47.00 per unit
Which of the following is a function that shows how the amount of time required to
perform a task goes down per unit as the number of units increases?
A.curvilinear fixed.
B.semi-variable.
C.semi-fixed.
D.learning curve.
Which of the following statements is correct concerning break-even time?
A.Break-even time is the length of time required to recover the investment made in
new-product development.
B.Break-even time begins when management approves a project, rather than when cash
out-flows first occur.
C.Break-even time considers the time value of money by discounting all cash flows.
D.All of the answers are correct.
Which of the following is an example of internal failure costs?
A.Warranty repairs
B.Reinspection / retesting
C.machine inspection
D.Inspection of incoming materials
An incentive plan model for accurate reporting should not have which of the following
components?
A.it relates rewards positively to forecasted sales.
B.it provides incentives for the sales manager to increase sales beyond the forecast.
C.it penalizes the sales manager when sales are less than forecasted.
D.it penalizes the sales manager when sales are more than forecasted.
In determining the Production Budget, what is the formula for computing the quantity
of each product to be produced?
A.Units to Be Produced = Number of Units to Be Sold + Desired Units in Ending
Inventory – Units in Beginning Inventory
B.Number of Units to Be Sold = Units to Be Produced + Desired Units in Ending
Inventory – Units in Beginning Inventory
C.Units to Be Produced = Number of Units to Be Sold + Units in Beginning Inventory –
Desired Units in Ending Inventory
D.none of the above.
Which of the following costs are the responsibility of investment center managers?
A.costs only.
B.revenues only.
C.both costs and revenues.
D.revenues, costs, and assets.
If a division has sales of $2,500,000, operating profit of $250,000, and a division
investment of $1,250,000, its return on investment is
A.20%
B.10%
C.500%
D.200%
To achieve organizational goal congruence, how should management set transfer
prices?
A.To allow for divisional autonomy and encourage managers to pursue corporate goals
consistent with their own personal goals.
B.Top management should set the selling division’s revenue and the buying division’s
cost.
C.Transfer prices should be compatible with the company’s performance evaluation
system.
D.All of the answers are correct.
The terminal cash flows associated with an investment project include which of the
following?
A.income tax effects resulting from periodic cash flows.
B.loss in tax savings from lost depreciation.
C.tax loss on disposal of equipment.
D.all of the above.
Just-in-time (JIT) methods
A.do not start production until the firm receives an order for the finished product.
B.do not order raw materials until the firm receives an order for the finished product.
C.ends production as soon as an order for the finished product is filled.
D.All of the answers are correct.
The law firm of Duwe, Cheatem & Howe provides legal services for clients. During the
year, corporate clients required 5,000 hours of legal services, while individuals required
3,000 hours. The firm has traditionally used direct labor hours to assign overhead.
However, Ms. Duwe believes services to businesses cost more than services to
individuals and wishes to adopt activity-based costing. The firm’s revenues and costs
for the year are shown below:
Mr. Cheatem has kept records of the following data for use in the new activity-based
costing system:
Getting a bonus is a(n) ____________ reward and getting satisfaction from one’s own
performance is a(n) ____________ reward.
A.intrinsic, extrinsic
B.extrinsic, intrinsic
C.material, immaterial
D.monetary, intangible
All of the following are ways in which IFRS may relate to managerial accounting
except:
A.IFRS governs managerial accounting methods.
B.Managerial accountants usually do not use LIFO for internal reports, so managerial
accounting reports are more likely to agree with IFRS than with U.S. GAAP, if the U.S.
GAAP reports use LIFO.
C.If the current IFRS approach of capitalizing R & D costs as assets prevails in the
United States, then we are likely to see development costs capitalized for managerial
reports.
D.The accounting information that managers use in making decisions and evaluating
performance need not comply with IFRS.
Beta Division had the following information:
If the division investment is decreased by $100,000, with no other changes, the return
on investment of Beta Division will be
A.100.0%
B.16.7%
C.600.0%
D.62.5%
Computing product costs with incomplete products (Appendix 2.1). The Assembly
Department had 80,000 units 65 percent complete in Work-in-Process Inventory at the
beginning of April. During
April, the department started and completed 150,000 units. The department started
another 42,000 units and completed 25 percent as of the end of April. Assume that the
cost assigned to beginning inventory on April 1 was $84,000 and that the department
incurred $276,000 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.
Leon Manufacturing Company
Leon Manufacturing Company uses a normal costing system. During the current year,
the following events took place:
Refer to Leon Manufacturing Company. Calculate the finished goods ending inventory
(there was no beginning finished goods inventory).
Fisher Products Company
The Fisher Products Company uses a job costing system. The company estimated its
annual overhead to be $100,000, and the number of direct labor hours for the year to be
20,000 hours. In the first month, the following jobs were completed:
Refer to the Fisher Products Company. What is the total manufacturing cost of job
#115?
Explain how linear programming optimizes the use of scarce resources.
Nonmanufacturing variances. Ralph’s Sales uses standard costs and variances for
controlling costs. As a result of studying past cost data, it has established standards as
follows: variable costs, $6 per sales call; nine sales calls per unit sold. Actual data for
May, June, and July follow:
Required:
Compute the variable cost price and efficiency variances for each month.
Discuss fraud in financial reporting from a managerial accounting perspective.