ACC 510 Midterm 2

subject Type Homework Help
subject Pages 9
subject Words 1659
subject Authors Charles T. Horngren, Madhav V. Rajan, Srikant M. Datar

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1) The financial perspective of the balanced scorecard identifies targeted customers and
market segments and measures the company's success in these segments.
2) The same cost concept used for external and internal reporting purposes.
3) In a job-cost system, each indirect-cost pool is clubbed under one account in the
general ledger.
4) A traditional format income statement organizes costs on the basis of behavior.
5) Kaizen budgeting allows for budgeting of small incremental increases in costs each
budgeting period to allow for the effects of normal inflation.
6) Total costs of quality help managers aggregate costs to evaluate the tradeoffs of
incurring prevention costs and appraisal costs to eliminate internal and external failure
costs.
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7) An increase in production capacity will always result in a favorable cost effect of
productivity for variable costs in the short run.
8) The increasing pace of technological information has resulted in longer product
lifecycles.
9) Developing a product that satisfies the need of the potential customers is the first step
in implementing target pricing and target costing.
10) Cost allocation is necessary for accurate income measurement.
11) In absorption costing, fixed manufacturing overhead is treated as a period cost.
12) Companies which strive to achieve cost leadership should never try to implement
business process reengineering measures.
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13) The feedback from budgets can lead to changes in plans and strategies.
14) The single-rate method transforms the direct costs per hour into indirect costs to
users of that facility.
15) Costing systems that are used for the costing of like or similar units of products in
mass production are called ________.
A) inventory-costing systems
B) job-costing systems
C) process-costing systems
D) weighted-average costing systems
16) The sales-quantity variance will be unfavorable when ________.
A) the composite unit for the actual mix is less than for the budgeted mix
B) the actual unit sales are less than the budgeted unit sales
C) the actual contribution margin per unit is less than the static-budget contribution
margin
D) the actual sales mix shifts toward the less profitable units
17) Toyz Manufacturing uses departmental cost driver rates to apply manufacturing
overhead costs to products. Manufacturing overhead costs are applied on the basis of
machine-hours in the Machining Department and on the basis of direct labor-hours in
the Assembly Department. At the beginning of 2014, the following estimates were
provided for the coming year:
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The accounting records of the company show the following data for Job #897:
Required:
a.Compute the manufacturing overhead allocation rate for each department.
b.Compute the total cost of Job #897.
c.Provide possible reasons why Toyz Manufacturing uses two different cost allocation
rates.
18) While doing industry analysis on five forces, which of the following is a force that
shapes an organization's profit potential?
A) previous year profit figures
B) current year profit figures
C) bargaining power of suppliers
D) research and development
19) Regression analysis ________.
A) calculates the slope coefficient using only two observed values within the relevant
range and their respective costs
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B) measures the average amount of change in the dependent variable associated with a
unit change in one or more independent variables
C) estimates the cost functions using the time-and-motion studies
D) measures the variability or dispersion in a set of data points
20) Under the stand-alone method of allocating common costs ________.
A) the individual users of a cost object are ranked in the order of users least responsible
for the common cost and then uses this ranking to allocate cost among those users
B) disputes can arise over who is the primary user
C) each party bears a proportionate share of the total costs in relation to their individual
stand-alone costs
D) the individual users of a cost object are ranked in the order of users most responsible
for the common cost and then uses this ranking to allocate cost among those users
21) Customers making large contributions to the profitability of the company should
________.
A) be treated the same as other customers because all customers are important
B) receive a higher level of attention from the company than less profitable customers
C) be charged higher prices for the same products than less profitable customers
D) not be offered the volume-based price discounts offered to less profitable customers
22) What is the reorder point?
A) 500 lenses
B) 562.5 lenses
C) 1050 lenses
D) 1062.5 lenses
23) The capital budgeting method that calculates the discount rate at which the present
value of expected cash inflows from a project equals the present value of expected cash
outflows is the ________.
A) net present value method
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B) accrual accounting rate-of-return method
C) payback method
D) internal rate of return method
24) If 24,000 units are sold during the third quarter and this activity is within the
relevant range, Bee Company's expected contribution margin would be:
A) $646,800
B) $762,000
C) $810,000
D) $760,080
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25) An unfavorable efficiency variance for direct manufacturing labor might indicate
that ________.
A) there is unexpected increase in direct labor rates
B) work is scheduled inefficiently
C) lower-quality materials were purchased
D) more higher-skilled workers were scheduled than planned
26) Which of the following is true of capacity costs?
A) Capacity costs are difficult to estimate.
B) Capacity costs don't provide a useful planning tool for nonmanufacturing firms.
C) Capacity costs cannot be used with activity-based costing.
D) Capacity costs do not arise in the nonmanufacturing parts of the value chain.
27) Which of the following is a disadvantage of dual pricing?
A) It strongly preserves the autonomy of divisions, and the division managers are
motivated to put forth effort to increase the operating income of their respective
divisions, causing inefficiencies.
B) The price arrived by using dual pricing has no specific relationship to either costs or
the market price.
C) It leads to disputes about which price should be used when computing the taxable
income of subunits located in different tax jurisdictions.
D) It assumes that the minimum transfer price equals the incremental cost per unit
incurred up to the point of transfer minus the opportunity cost per unit to the selling
division.
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28) Beverage Drink Company processes direct materials up to the splitoff point where
two products, A and B, are obtained. The following information was collected for the
month of July:
The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff
point to yield a total of 2,000 liters of good products was $4,500. There were no
inventory balances of A and B.
Product A may be processed further to yield 1,375 liters of Product Z5 for an additional
processing cost of $150. Product Z5 is sold for $25.00 per liter. There was no beginning
inventory and ending inventory was 125 liters.
Product B may be processed further to yield 375 liters of Product W3 for an additional
processing cost of $275. Product W3 is sold for $30.00 per liter. There was no
beginning inventory and ending inventory was 25 liters.
If Product Z5 and Product W3 are produced, what are the expected sales values of
production, respectively?
A) $11,250 and $34,375
B) $22,500 and $ 5,000
C) $31,250 and $10,500
D) $34,375 and $11,250
29) What is the gross margin for 2015?
A) $163,000
B) $177,000
C) $170,000
D) $167,000
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30) Costs that are initially recorded as assets and expensed when goods sold are called
________.
A) period costs
B) inventoriable costs
C) irrelevant costs
D) research and development costs

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