Which of the following is a weakness of the accounting rate of return?
a. It does not consider cash flows
b. It does not consider the time value of money
c. Both that it does not consider cash flows and that it does not consider the time value
of money
d. Neither that it does not consider cash flows nor that it does not consider the time
value of money
The Assembly Division of Mounds Corporation makes a component part that the
Packaging Division needs to purchase. The Assembly Division ‘s variable cost of
manufacturing the component is $25 per unit. The component is also available on the
open market at a price of $52. The Packaging Division needs 800 units of the
component and the Assembly Division has excess capacity of 1,000 units.
Required:
a. Calculate the cost-based-transfer price that the Assembly division should charge the
Packaging division.
b. Calculate the market-based transfer price that the Assembly division should charge
the Packaging division.
Managers becoming overwhelmed by the huge amount of information available to them
is referred to as
a. Unavoidable overload.
b. Information overload.
c. Phenomenon overload.
d. Irrelevance overload.
The organizational structure in which decision-making authority for the entire
organization rests in the hands of one person or a small group of people in a single
location is called
a. Responsibility centered.
b. Centralization.
c. Decentralization.
d. Segmentation .
The return generated by an investment based on its operating income is the
a. Internal rate of return.
b. Discounted rate of return.
c. Accounting rate of return.
d. Payback period.
Jody Jewelry manufactures jewelry. In October Jody is planning to make 500 rings, 400
bracelets, and 210 pendants. The company expects the total manufacturing overhead for
the year would be $3,450,000 and that total direct labor hours for the year would be
75,000. Actual overhead incurred for October was $295,920. Each ring requires 6.25
hours of labor to manufacture; each bracelet requires 5.5 hours of labor to manufacture,
and each pendant requires 4 hours of labor to manufacture. What is the standard
overhead cost per bracelet?
a. $46.00
b. $253.00
c. $264.00
d. $48.00
In a centralized organization, decision-making authority
a. Is spread throughout the organization.
b. Always rests with profit center managers.
c. Rests with a small group of people in a single location.
d. None of these answer choices are correct.
The New Age Pet Store sells butterfly garden kits which includes a free-standing
pop-up habitat and three varieties of butterfly larvae. New Age sells the kits for $30.
The store pays $12 for the habitat and $8 for the butterfly larvae. Fixed costs are
$5,000.
a. What is the contribution margin ratio for the butterfly garden kits?
b. What is the breakeven point in units?
Megan Industries manufactures several products including a basic case for a popular
smart phone. The company is considering adopting an activity-based costing approach
for setting its budget. The company’s production activities, budgeted activity costs, and
cost drivers for the coming year are as follows.
The budgeted data for smart phone case production are as follows.
Required:
a. Calculate the activity rate for each cost pool.
b. Calculate the activity-based unit cost of the smart phone case.
City Retail sells two products: Standard and Deluxe. The company had sales of
$800,000 during the current year. The company ‘s contribution margin ratio was 40%
and total fixed costs totaled $300,000. Sales were $600,000 for Standard and $200,000
for Deluxe. Traceable fixed costs were $150,000 for Standard and $90,000 for Deluxe.
Variable costs were $360,000 for Standard and $120,000 for Deluxe. What is the
segment margin for the Standard product?
a. $20,000
b. $80,000
c. $90,000
d. $240,000