Activity-based management reduces customer response time by identifying the
activities that consume the most resources and making them more efficient, and by
identifying __________ activities, which the firm can eliminate.
A.value-added
B.non-value-added
C.inefficient
D.ineffective
A flexible budget is appropriate for a which of the following types of costs?
Direct-Labor Marketing
Budget Budget
A. No No
B. No Yes
C. Yes No
D. Yes Yes
What does the theory of constraintsassume?
A.a short time horizon.
B.a long time horizon.
C.a short or long time horizon.
D.None of the answers is correct.
When measuring divisional operating costs, direct versus indirect refers to whether
A.the costs associate directly with the division.
B.the division manager can affect the cost.
C.the costs are fixed.
D.the costs are variable.
Extrinsic rewards include rewards from a(n)
A.teacher.
B.parent or a spouse.
C.organization.
D.All of the answers are correct.
Carson Company’s market for the Model A has changed significantly, and Carson has
had to drop the price per unit from $265 to $125. There are some units in the work in
process inventory that have costs of $150 per unit associated with them. Carson could
sell these units in their current state for $100 each. It will cost Carson $10 per unit to
complete these units so that they can be sold for $125 each.
When the incremental revenues and expenses are analyzed, the company is better off
by:
A.$25 per unit if they sell the units in their current state.
B.$15 per unit if they complete the units.
C.$10 per unit if the sell the units in their current state.
D.$125 per unit if they complete the units.
The short-run differential costs of a product are $25. Fixed costs are $5 per unit based
on 10,000 units produced during this period. The company has adequate capacity to
accept a special order of 1,000 units. What is the minimum price that could be charged
using the differential approach to pricing?
A.$ 5.00
B.$20.00
C.$25.00
D.$30.00
Companies generally base most of the divisional managers’ compensation on which of
the following?
A.management-based performance.
B.performance based on financial measures.
C.the company’s stock performance.
D.accounting-based performance.
Management uses the following as a measure for assessing efficiency in producing and
selling goods and services because it indicates the portion of each dollar of revenue that
is profit.
A.Profit margin percentage.
B.Return on investment
C.Investment turnover ratio.
D.Revenue realization ratio.
Significant differences between the “traditional view” of quality and the emerging
“quality-based view” relate to which of the following?
A.quality production, inspections, causes of defects, standards, purchasing, and
customer focus.
B.financial, internal business process, learning and growth, customer.
C.total quality, smooth production flow, purchasing quality materials, well trained and
flexible workforce, short customer-response times, backlog of orders.
D.prevention costs, appraisal costs, internal failure costs, and external failure costs.
Which of the following does not represent how managers make cost-benefit decisions
as to the use of activity analysis or traditional costing methods?
A.They reject activity analysis and stay with the simpler traditional method.
B.They use activity-based costing because they want information that will help them be
competitive.
C.They use traditional costing as a special analysis, but not as an ongoing information
system.
D.They use activity-based costing as a special analysis, but not as an ongoing
information system.
Repairing a defect found after a product has been delivered to the customer is an
example of which of the following type of cost?
A.prevention costs.
B.appraisal costs.
C.internal failure costs.
D.external failure costs.
Using activity-based costing to analyze customer profitability requires the analyst to
determine the cost to provide goods and services, which includes such activities as
A.order processing.
B.product delivery.
C.processing returns.
D.All of the answers are correct.
ABC Company has three products that use common facilities. The relevant data
concerning these three products follows:
Fixed costs are allocated common costs. If product line C is dropped, what will be the
impact on operating profits?
A.Operating loss will decrease to ($15,000).
B.Operating loss will decrease to ($5,000).
C.Operating loss will increase to ($35,000).
D.There would be no change in operating profits.
In regression analysis, what is the term used to describe the vertical distance between
the actual and fitted values?
A.residual.
B.unexplained difference.
C.variance.
D.error.
J-Mobile provides cellular phone and Internet services with a plan that provides up to
1,000 minutes of airtime usage for a flat rate of $99.99 per month plus a charge for any
minutes used over this amount at the rate of $0.10 per minute in excess of the minimum
1,000 airtime minutes. Which of the following describes the cost of the J-Mobile
service?
A.fixed cost, only.
B.variable cost, only.
C.semi-variable cost.
D.semi-fixed cost.
Materials and labor variances. The Chocolate Factory presents the following data for
September:
During the month, the firm purchased 59,000 pounds of materials for $216,500. Wages
earned were $330,000.
Required:
1)Compute the labor and material variances.
2) Based on the information for the company, write a short report explaining the cause
of the variances that you computed.
Identify the factors underlying make-or-buy decisions.
Solving for labor hours. Bill’s Engineering Consulting reports the following direct
labor information for clerical staff:
Required:
What are the actual hours worked, rounded to the nearest hour?
Customer profitability analysis. ChoiceBank’s management is evaluating the
profitability of providing special checking accounts to new businesses that start in its
town. The company’s financial analysts have developed the following cost information:
On average, each account generates $180 per year in fees and interest. After inquiring
whether the costs above are all differential, you learn that the $200,000 per year cost to
acquire accounts includes $30,000 of advertising that ChoiceBank would have done
with or without the new accounts. The remainder of the $200,000 costs are differential.
Further, you learn that $10 of the $150 to process and service accounts are general
office costs allocated to these accounts, which are incurred whether or not the bank has
the new accounts. The bank has an average of 7,000 new business commercial accounts
each year.
Required:
Should ChoiceBank continue to offer these promotional new business accounts?
(ChoiceBank; customer profitability analysis)
Jenkins Company
Jenkins Company applies overhead costs to products at a rate of 50 percent of direct
labor costs. The following data relate to the manufacturing activities of Jenkins
Company during April:
Factory costs incurred during the month were:
Refer to Jenkins Company. Calculate the cost of direct materials used during April.
Wilkens Company
Wilkens Company wants to determine the cost behavior pattern of maintenance costs.
Wilkens has decided to use linear regression by employing the equation y = a + bx for
maintenance costs. The prior year’s data regarding maintenance hours and costs, and the
results of the regression analysis are given in the data below.
Average cost per hour $9.00
Refer to the Wilkens Company. Based upon the data derived from the regression
analysis, what maintenance costs should be budgeted for a month in which 420
maintenance hours will be worked?
An investment of $20,000 today will yield $8,000 a year at the end of the next three
years.
Refer to the above information. Will the project be accepted at a cost of capital of 10
percent?
A chemical company manufactures an ointment. Sales for the next year are estimated at
100,000 units. The beginning finished goods inventory contains 20,000 units. The target
for each year’s ending inventory is 15,000 units. How many units will be scheduled for
production this year?
Susan Johnson Products Company
The Susan Johnson Products Company uses a job costing system. For Year 4, the firm
estimated total overhead to be $40,000 and the number of direct labor hours to be
10,000.
Refer to the Susan Johnson Products Company. Job 247 is a special order of 100
special-design tables. The work-in-process inventory account for this job shows raw
material costs of $4,600 and direct labor costs of $7,600. The firm has charged 1,200
direct labor hours to the job. What is the total cost of Job 247?
Use this information to answer the following question(s):
Refer to the above information; determine the cost of goods sold during the period.