Which statement is true concerning decentralization?
A.Decentralization impedes local personnel response to a changing environment.
B.Decentralization requires significant oversight from top management.
C.Decentralization divides large, complex problems into manageable pieces.
D.All of the answers are correct.
Predatory pricing
A.occurs when a business deliberately prices below its costs in an effort to drive out
competitors.
B.occurs when a business unintentionally prices below its costs which results in driving
out competitors.
C.is legal in all 50 States.
D.is generally accepted in the United States.
Manufacturing Overhead costs such as maintenance, rent, insurance, and depreciation
should be categorized as which of the following?
A.fixed overhead costs and facility-level activities.
B.variable overhead costs and facility-level activities.
C.fixed overhead costs and product-level activities.
D.variable overhead costs and product-level activities.
Correll Company
Correll Company has two divisions, A and B. Information for each division is as
follows:
Refer to Correll Company. What is the investment turnover for Division A?
A.4.00
B.0.10
C.0.15
D.2.50
In deciding whether to manufacture a part or buy it from an outside vendor, which of
the following represents a cost that is not relevant to the short-run decision?
A.direct labor.
B.variable overhead.
C.fixed overhead that will be avoided if the part is bought from an outside vendor.
D.fixed overhead that will continue even if the part is bought from an outside vendor.
The method of cost estimation where the accountant assigns costs to each of the inputs
to estimate the cost of the outputs is known as:
A.regression.
B.account analysis.
C.engineering methods.
D.All of the answers are correct.
What effect would an increase in building insurance rates have on the break-even point
and the contribution margin?
Break-even Point Contribution Margin
A. Increase Increase
B. Increase Decrease
C. Decrease Increase
D. Decrease Decrease
Customer costs generally fall under several categories, including
A.cost to acquire the customer and cost to provide goods and services.
B.cost to maintain customers.
C.cost to retain customers.
D.All of the answers are correct.
Which of the following cost functions describes costs vary with the volume of activity,
but not in constant proportion?
A.semi-variable.
B.semi-fixed.
C.curvilinear variable.
D.curvilinear fixed.
Many consultants and analysts modify the numbers presented in external financial
statements that comply with GAAP when implementing incentive compensation plans.
The main adjustments that companies seem to make, if any, include
A.restating inventories to reflect replacement cost.
B.making price-level adjustments so that assets, revenues, and expenses are stated in
current-year currency values.
C.using market values of assets at the beginning and end of fiscal periods to reflect the
actual decline in the economic value of assets.
D.All of the answers are correct.
Which statement is true concerning depreciation charges?
A.Depreciation charges directly affects cash flows.
B.Depreciation charges directly affect the after-tax cash flow.
C.Depreciation charges can be deducted from a firm’s tax return.
D.all of the above.
Which of the following is a disadvantage of decentralization?
A.Decentralization helps train managers.
B.Decentralization provides a basis for evaluating performance.
C.Decentralization motivates managers.
D.Decentralization may promote non-goal-congruent behavior.
Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair) and
two operating departments (Fabrication and Assembly). Management has decided to
allocate repair costs on the basis of the area (square feet) in each department and to
allocate General Factory on the basis of labor hours worked by the employees in each
of their respective departments.
The following data appear in the company records for the current period:
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company. Using direct labor hours as the base and the direct
method of allocation, what is the overhead rate for the Assembly Department?
Why do companies allocate common costs to departments and products?
Explain the importance of product cost information for managers.
At Bingham Dry Goods, the strategy for success requires rapid growth with a limited
number of units for each design of product in order to enhance is promise of exclusivity,
perfect fit, on-time delivery to customers, retaining good employees with innovative
ideas, and control of inventory.
Required:
Based on this, suggest one performance measure for each dimension of a balanced
scorecard for Bingham.
Product mix decision. The Gulf Shores Company has one machine on which it can
produce either of two products, S or T. Sales demand for both products is such that the
machine could operate at full capacity on either of the products, and Gulf Shores can
sell all output at current prices. Product S requires one hour of machine time per unit of
output and Product T requires two hours of machine time per unit of output. The
following information summarizes the per-unit cash inflows and costs of Products S and
T.
Selling costs are the same whether Gulf Shores produces Product S or T, or both; you
may ignore them.
Required:
Should Gulf Shores Company plan to produce Product S, Product T, or some mixture of
both? Why?
Sales volume variance analysis. Ralston Company prepared a budget last period with
budgeted sales of 55,000 units at a price of $75 each. Variable costs were budgeted to
be $10 per unit. Fixed costs were budgeted to be $2,000,000 for the period. During the
period, actual sales totaled 58,000 units.
Required:
Prepare a variance report to show the difference between the master budget and the
flexible budget.
Assume Spring Fresh Beverages has discovered a problem involving the mix of flavor
to their seltzer water that costs the company $3,000 in waste and $2,500 in lost business
per period. There are two alternative solutions. The first is to lease a new mix regulator
at a cost of $4,000 per period. The new regulator would save Spring Fresh Beverages
$2,000 in waste and $2,000 in lost business each period. The second alternative is to
hire an additional employee to manually monitor the existing regulator at a cost of
$2,500 per period. This would save Spring Fresh Beverages $1,500 in waste and $800
in lost business per period.
Required:
Which alternative should Spring Fresh Beverages choose?