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1) The standard error of the estimated coefficient indicates how much the estimated
value, b, is likely to be affected by random factors.
2) The single cost-allocation method makes no distinction between fixed and variable
costs.
3) When new products are introduced, learning-curve effects can have a major influence
on production scheduling.
4) Budgeting helps managers gather information for improving only the budgeted
period's performance.
5) The breakeven point is the quantity of output at which total revenues equal fixed
costs.
6) The following information is for the Jeffries Corporation:
What is the operating income of Jeffries Corporation, assuming actual sales total 25,000
units, and the sales mix is three units of Product A and one unit of Product B?
A) $50,000
B) $60,000
C) $77,000
D) $66,000
7) Megatron Corp. earned net income of 13,000 Euros in its overseas branch at France.
Its headquarters is located in the U.S. The rate of conversion during set up was $1.306 /
Euro. What is the value of its income in its home currency if the rate is $1.508 / Euro at
the end of a financial year and the average rate being $1.407 / Euro?
A) $16,060
B) $18,291
C) $14,070
D) $19,768
8) Which of the following deals with management accounting?
A) identifying the costs of acquiring the resources of the company
B) developing budgets
C) preparing the income statement
D) preparing the statement of cash flows
9) For each type of report listed below, identify one planning decision and one
controlling decision for which the information would be helpful. Assume you are a
Walgreen Company store.
Item:
a.annual financial statements for the past three years
b.report detailing sales by department by each hour of the day for the past week
c.special study regarding increased road traffic due to the construction of a new
shopping mall at a near-by intersection
10) The budgeted indirect-cost rate for each cost pool is computed as ________.
A) budgeted annual indirect costs divided by budgeted annual quantity of cost
allocation base
B) budgeted annual quantity of cost allocation base divided by budgeted annual indirect
costs
C) actual annual indirect costs divided by budgeted annual quantity of cost allocation
base
D) budgeted annual indirect costs divided by budgeted actual quantity of cost allocation
base
11) Which cost-allocation criterion is most likely to subsidize poor performers at the
expense of the best performers?
A) the fairness or equity criterion
B) the benefits-received criterion
C) the ability to bear criterion
D) the cause-and-effect criterion
12) Allocation of corporate-sustaining costs is useful for ________.
A) evaluating the performance of salespersons with individual customer accounts
B) motivating distribution-channel management
C) focusing on the cause-and-effect relationships with the cost-allocation bases
D) motivating division managers to examine how corporate costs are planned and
controlled
13) Classify each cost item of Ripon Printers given below into one of the business
functions of the value chain, either (1) R&D, (2) design of products and processes, (3)
production, (4) marketing (including sales), (5) distribution, or (6) customer service.
Item:
a.cost of customer order forms
b.cost of paper used in manufacture of books
c.cost of paper used in packing cartons to ship books
d.cost of paper used in display at national trade show
e.depreciation of trucks used to transport books to college bookstores
f.cost of the wood used to manufacture paper
g.salary of the scientists attempting to find another source of printing ink
h.cost of designing the book size so that a standard-sized box is filled to capacity
14) Teecorp Company uses a flexible budget for its indirect manufacturing costs. For
2015, the company anticipated that it would produce 27,000 units with 4,800
machine-hours and 8,000 employee days. The costs and cost drivers were to be as
follows:
During the year, the company processed 26,500 units, worked 8,200 employee days,
and had 4,850 machine-hours. The actual costs for 2015 were:
Required:
a.Prepare the static budget using the overhead items above and then compute the
static-budget variances.
b.Prepare the flexible budget using the overhead items above and then compute the
flexible-budget variances.
15) An organization that is using the product differentiation approach would ________.
A) focus on tight cost control
B) use innovative research and development
C) provide products that are similar to competitors
D) offer products at a lower cost than competitors
16) Bosely Corporation is in the business of selling computers. The following expenses
were incurred in March 2011:
What will be the breakeven point if variable costing is used?
A) 150 units
B) 220 units
C) 157 units
D) 92 units
17) Bob's Cellular Phone Company uses ROI to measure divisional performance.
Annual ROI calculations for each division have traditionally employed the ending
amount of invested capital along with annual operating income and net revenue. The
Dupont method is generally used. The company's Phone Accessories Division had the
following results for the last two years:
2015 ROI = ($2,000,000/$20,000,000) x($20,000,000/$10,000,000) = 0.20
2016 ROI = ($2,400,000/$25,000,000) x($25,000,000/$15,000,000) = 0.16
Corporate management was disappointed in the performance of the division for 2016,
since it had made an additional investment in the division that was budgeted for a 23%
ROI.
Required:
a.Discuss some factors that may have contributed to the decrease in ROI for 2016.
b.Would there have been any substantial difference if average capital had been used?
18) It is usually difficult to find good cause-and-effect relationships between ________
and a cost allocation base.
A) unit-level costs
B) batch-level costs
C) product-sustaining costs
D) facility-sustaining costs
19) Which of the following is an advantage of using actual input data from past periods
to develop a budget?
A) Past inefficiencies are excluded in the preparation of new budget.
B) Expected future changes are incorporated in the preparation of new budget.
C) Information is available at a low cost.
D) Data represents the ideal performance.
20) An example of a performance measure with a long time horizon is ________.
A) direct materials efficiency variances
B) overhead spending variances
C) number of new patents developed
D) quality of room service
