Which of the following does benchmarking focus on?
a. Identifying best matrics.
b. Analyzing best matrics.
c. Studying best processes.
d. Exceeding best processes.
When products are completed, which of the following accounts is decreased?
a. Raw Materials Inventory.
b. Work in Process Inventory.
c. Finished Goods Inventory.
d. Cost of Goods Sold.
Avoidable costs are those costs that
a. Are always variable.
b. Are always fixed.
c. Occur only with the implementation of a particular alternative.
d. None of these answer choices are correct.
Assume R&N Manufacturing has always used a static budget approach to analyze
variances, but the new controller has suggested that the company implement a flexible
budget strategy. Required: Answer the following questions relating to flexible budget
variances. a. What are the direct materials and direct labor variances that the controller
will be analyzing? b. Give an example of what would cause each variance to be
favorable. c. Give an example of what would cause each variance to be unfavorable.
ABC Corporation allocates overhead based on direct labor cost. Assume ABC expects
to incur a total of $1,025,000 in overhead costs and $820,000 in direct labor costs.
Actual overhead costs incurred totaled $1,050,000 and actual direct labor costs totaled
$800,100. ABC ‘s predetermined overhead rate is nearest
a. 125% of direct labor cost.
b. 128% of direct labor cost.
c. 98% of direct labor costs.
d. 100% of direct labor costs.
During the current year, Maddox Industries sold a delivery truck with a book value of
$5,000 for $15,000, declared and paid cash dividends of $8,000 and borrowed $50,000
from First National Bank. Maddox’s net cash flows provided by investing activities is
a. $5,000
b. $15,000
c. $42,000
d. $50,000
The flexible budget variance reflects
a. How efficiently the company operated in producing a given level of sales.
b. How effectively the company reached its strategic goals.
c. A different volume of products than that specified in the static budget.
d. All of these answer choices are correct.
Economic value added (EVA) performance measures
a. Fair market value of income.
b. Economic profit.
c. Segment margin.
d. None of these answer choices are correct.
On the breakeven graph, any level of sales to the left of the breakeven point represents
a. Fixed cost.
b. Variable cost.
c. Operating income.
d. Operating loss.
All other things equal, an increase in the number of units sold will
a. Increase unit variable cost.
b. Increase fixed cost per unit.
c. Increase total contribution margin.
d. Decrease the unit sales price.
Fill in the missing data (ignore indirect materials)
If the ending balance in Raw Materials Inventory is $3,500, $60,000 was purchased,
and $61,500 was transferred to Work in Process Inventory during the period, what was
the amount in beginning inventory?
a. $1,500
b. $2,000
c. $3,500
d. $5,000
The first component of the master budget is the
a. Cash budget.
b. Overhead budget.
c. Pro-forma budget.
d. None of these answer choices are correct.
The theory of constraints seeks to maximize
a. Inventory control.
b. Contribution margin
c. Capacity.
d. Throughput contribution.
One of the planning activities that occupies managers is inventory planning. Which of
the following is not an input into this planning process?
a.Projected sales forecasts
b.Variance analysis of actual versus budgeted inventory
c.Projected supply and prices
d.Anticipated manufacturing capacity
Utica Corporation reported the following financial information:
Required: a. What is the trend percentage for cash in 2014 with 2012 as the base year?
b. What is the trend percentage for inventory in 2014 with 2012 as the base year?
Adele Truff designs and manufactures a variety of personal products including wallets,
purses, and key chains. Adele is proposing to begin manufacturing smart phone covers
which sell for $25 each. Adele estimates that monthly sales volume will be 8,500 units.
Variable product costs will be $15.50 per unit and fixed overhead will be $5.20 per unit.
Half of the fixed overhead is directly traceable to the smart phone cover line. To
promote the covers, Adele proposes a $1.25 per unit commission to the company ‘s
salespeople and a $7,500 per month advertising campaign. In compliance with
corporate policy, the smart phone cover line will also be allocated $15,000 in fixed
corporate support costs.
Required
a. Prepare a traditional monthly income statement for the smart phone cover line.
b. Prepare a monthly income statement that highlights the proposed smart phone cover
line ‘s segment margin.
c. Which income statement would you recommend that Adele use when pitching the
proposed line to company managers? Why would you recommend she use this
statement?
