In the joint production process, the point at which the identifiable products emerge is
called the
A.joint processing point.
B.decision point.
C.go-no-go point.
D.splitoff point.
Studies have shown that after activity-based costing has been implemented, the costs of
A.high-volume, standard products have declined significantly.
B.high-volume, specialty products have increased significantly.
C.low-volume, standard products have declined significantly.
D.all products have increased significantly.
Which of the following costs are the responsibility of profit center managers?
A.costs only.
B.revenues only.
C.both costs and revenues.
D.revenues, costs, and assets.
Which variance(s) are generally calculated to analyze fixed manufacturing overhead
costs?
A.Production volume variances only.
B.Price variances only.
C.Production volume and price variances only.
D.Production volume, price, and efficiency variances.
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 capitalizing
expenditures on
A.research and development and then amortizing the capitalized expenditures over their
useful life.
B.customer development, advertising, and promotion if these expenditures will benefit
future years and then amortizing the capitalized expenditures over their useful life.
C.employee training that will benefit future years and then amortizing the capitalized
expenditures over their useful life.
D.All of the answers are correct.
The cost structure of an organization is the proportion of which of the following?
A.opportunity and variable costs to total costs.
B.fixed and opportunity costs to total costs.
C.variable and opportunity costs to total costs.
D.fixed and variable costs to total costs.
Joint-process cost allocations arise from the need to assign joint-process costs to
A.a single product manufactured from a common input.
B.a single product manufactured from two or more common inputs.
C.two or more products manufactured from a common input.
D.two or more products manufactured from two or more common inputs.
What is a short-term operating budget?
A.management’s quantitative action plan for the coming year.
B.shareholders’ quantitative action plan for the coming year.
C.investment bankers’ quantitative action plan for the coming year.s’ quantitative action
plan for the coming year.
D.employees’ quantitative action plan for the coming year.
Which statement is true with regards to differential pricing?
A.Only fixed costs become differential costs in the long run.
B.Both fixed and variable costs become differential costs in the long run.
C.Fixed costs are never differential costs.
D.When considering a special order all costs become differential costs.
Which of the following is the correct calculation for Division return on investment?
A.Divide division profit margin by division investment.
B.Divide profit margin by division investment.
C.Divide profit margin by division revenue.
D.Divide division revenue by division investment.
The best use by managers of cost behavior patterns is to
A.estimate how activities affect costs and forecast costs.
B.estimate how activities affect subordinate behavior.
C.control subordinate behavior.
D.reward and punish subordinates.
Companies concerned about quality production do not treat waste or spoiled goods as a
normal cost of production and remove all waste and spoilage costs from the product
cost. Some companies have found that waste or spoilage costs range from
A.1 to 5 percent of their total product costs.
B.5 to 10 percent of their total product costs.
C.10 to 20 percent of their total product costs.
D.20 to 30 percent of their total product costs.
Which costing system is generally used by companies who mass-produce homogeneous
products, such as a petroleum refining company?
A.process costing system.
B.variable costing system.
C.job costing system.
D.direct costing system.
Which of the following would be considered the single, biggest obstacle to
implementing activity-based management in an organization?
A.Lower-level employee resistance.
B.Middle-level employee resistance.
C.Top-level employee resistance.
D.Customer resistance.
A planned factory expansion project has an estimated initial cost of $500,000. Using a
discount rate of 20 percent, the present value of the future cost savings from the
expansion is $520,000. To yield exactly the 20 percent time-adjusted rate of return, the
actual investment expenditure should not exceed the $500,000 estimate by more than
A.$160,000.
B.$20,000.
C.$1,075.
D.$43,000.
The formula used in performing cost-volume-profit (CVP) analysis for the Target Profit
in Sales Dollars, where t is the tax rate, is
A.(Total Fixed Costs + Before-Tax Target Profit) / Unit Contribution Margin.
B.(Total Fixed Costs + Before-Tax Target Profit) / Contribution Margin Ratio.
C.(Total Fixed Costs x t) / Unit Contribution Margin.
D.(Total Fixed Costs + (Target Profit x t)) / Unit Contribution Margin.
Economists argue that corruption requires the following element(s):
A.An individual, such as a government official, must have discretionary power to award
a contract or rights.
B.There must be economic benefits associated with the discretionary power to award a
contract or rights.
C.The legal system must be unlikely to detect wrongdoing.
D.All of the answers are correct.
Columbia Hospital for Women is planning to expand its labor and delivery room
facilities. Although variable costs per patient will remain unchanged, fixed costs will
increase by 20 percent. Last year’s costs are below.
Calculate the future total cost assuming 100 patients are expected each month.
A.$25,000
B.$29,000
C.$20,500
D.$20,000
What are the incentives for committing financial fraud?
What is the role of capital expenditure decisions in the strategic planning process?
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 machine hours as the base and the step
method of allocation, what is the overhead rate for the Fabrication Department?
Walk-In Health Center
The Walk-In Health Center sets targets for every responsibility center to achieve a 10
percent increase over last year in the number of patients treated.
Refer to the Walk-In Health Center. What is the problem with this performance
measure?
Jamar Company has two production departments, Tubing and Packing, and two service
departments, Quality Control and Maintenance. In June, the Quality Control department
provided 2,000 hours of service- 1,047 hours to Tubing, 255 hours to Maintenance, and
698 hours to Packing. In the same month, Maintenance provided 2,750 hours to Tubing,
1,900 hours to Packing, and 350 hours to Quality Control. Quality Control incurred
costs of $100,000, and Maintenance incurred costs of $210,000.
Required:
Use the step method to allocate service department costs sequentially based on hours of
service provided. Start with Maintenance and then allocate Quality Control. Check your
solution by making certain that the firm finally allocates $310,000 to the production
departments.
Describe what is meant by just-in-time inventory management and explain how it can
benefit an organization.
How are fixed production cost variances calculated and why do they occur?
Just-in-time methods. Carmen Products uses just-in-time production methods. To
produce 1,200 units for an order, the company purchased and used materials costing
$36,000 and incurred other manufacturing costs of $24,000, of which $10,000 was
labor. All costs were on account. After Carmen completed production on the 1,200 units
and shipped 1,100 units, management recorded the Finished Goods Inventory balance
for the 100 units remaining in inventory for financial statement preparation.
Required: Prepare journal entries and T-accounts for these transactions using backflush
costing.
Fisher Products Company
The Fisher Products Company uses a job costing system. The company estimated its
annual overhead to be $100,000, and the number of direct labor hours for the year to be
20,000 hours. In the first month, the following jobs were completed:
Refer to the Fisher Products Company. What is the overhead assigned to job #115?
How is linear programming used to optimize the use of scarce resources?