1) based on analyzing the relationship of total factory overhead (y) to direct labor hours
(x). the following relationship was found:
y = $1,000 + $2x
the relationship is:
a.parabolic
b.curvilinear
c.linear
d.probabilistic
2) which of the following is not a term used for a phase of the value chain?
a.operations
b.upstream
c.downstream
d.marketing
3) keego enterprises manufactures two products, boat wax and car wax, in two
departments, mixing and packaging. the mixing department has 800 hours per month
available while the packaging department has 1,200 hours per month available.
production of the two products cannot exceed 36,000 pounds. data on the two products
follow:
the objective function for the linear program keego would use to determine the
optimum monthly product mix would be:
a.z = $150b + $200c
b.2b + 1.5c 36,000.
c.2b + 1.5c 36,000.
d.z = $200b + $150c
e.z = 8.6b + 8.4b
4) the use of activity-based costing is most appropriate for:
a.firms that manufacture multiple product lines
b.firms that have very low manufacturing overhead costs relative to other costs of
production
c.firms with high levels of production activity
d.firms that are labor intensive
e.firms that manufacture a small number of product lines
5) the successful use of a budgeting system generally involves all of the following
except which item?
a.acceptance and support by key management people
b.a sense of ownership by those assigned to carry out the budgeting process
c.the budgets are technically correct and reasonably accurate
d.the budgets include “budgetary slack”
e.the set of budgets in the master budget articulate with one another
6) strategic management can be defined as the development of a sustainable:
a.chain of command
b.competitive position
c.cash flow
d.business entity
e.company image
7) cripe corporation maintains ending inventory for each month at 5% of the following
month’s sales. it predicted the following sales (in units) for the first four months of the
coming year:
how many units should be produced in march?
a.2,810
b.2,850
c.2,970
d.2,990
e.4,250
8) value activities can best be defined as:
a.activities that firms in the industry must perform to improve a product
b.activities that firms in the industry must perform in the process of converting raw
material to final product, including customer service
c.activities that firms in the industry must perform in the process of closing down a
product line, including customer service
d.activities that firms in the industry must perform to consider ways of marketing a
product
e.activities that firms in the industry must perform in the process of considering new
products, including customer service
9) which of the following activity cost pools would most likely be allocated based on
the number of production runs?
a.machinery set-up costs
b.raw materials warehousing costs
c.factory heating costs
d.factory janitorial costs
e.indirect labor costs
10) armer company is accumulating data to use in preparing its annual profit plan for
the coming year. the cost behavior pattern of the maintenance costs must be determined.
the accounting staff has suggested the use of linear regression to derive an equation for
maintenance hours and costs. data regarding the maintenance hours and costs for the
last year and the results of the regression analysis follow:
if armer company uses the high-low method of analysis, the equation for the
relationship between hours of activity and maintenance cost follows:
a.y = 400 + 9.0x
b.y = 570 + 7.5x
c.y = 3,600 + 400x
d.y = 570 + 9.0x
e.none of the above
11) in regard to selling activities, which one of the following would be a cost driver for
selling expense?
a.number of invoices
b.number of sales calls
c.number of production runs
d.number of shipments
e.all of the above
12) effective use of the cvp (cost-volume-profit) model requires an understanding of all
of the following concepts, except:
a.contribution margin per unit
b.contribution margin ratio
c.contribution income statement
d.total cost of goods sold (cgs)
e.variable versus fixed cost behavior patterns
13) burmer co. has accumulated data to use in preparing its annual profit plan for the
upcoming year. the cost behavior pattern of the maintenance costs must be determined.
data regarding the machine hours and maintenance costs for the last year and the results
of the regression analysis are as follows:
a staff assistant has run regression analyses on the data and obtained the following
output using excel:
regression analysis
y (dependent) variable: maintenance cost
x (independent) variable: maintenance hours
the 95% confidence range for a prediction of monthly manufacturing cost using the
model is:
a.from $631 to $936
b.from $6.49 to $7.06
c.the range of +/- $47.06 around the predicted amount
d.the range of +/- $47.06 x 2 = $94.12 around the predicted amount
14) a firm that has traditionally succeeded on the basis of its innovative products and
excellent customer service has started to place greater emphasis on reducing waste and
providing its customers with the lowest priced product. which of the following most
accurately describes this change of competitive strategy?
a.cost leadership to differentiation
b.a balanced strategy to cost leadership
c.differentiation to a balanced strategy
d.cost leadership to a balanced strategy
e.differentiation to cost leadership
15) a key ethical issue in cost allocation involves costing in an international context,
because the choice of a cost allocation method can affect:
a.management reward systems
b.management fraud
c.taxes in domestic and foreign countries
d.the firm’s financial statements
e.the fair share of cost by a governmental unit
16) the standard error of the estimate (se) in a regression analysis is:
a.a measure indicating the amount of a data falling within the relevant range
b.a measure of explanatory power which is a number between zero and 1
c.a measure of the accuracy of the regression’s estimates
d.a measure of reliability of each independent variable
17) fresplanade co. had the following historical pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after sale
8% collected in the second month after sale
3% collected in the third month after sale
2% uncollectible
the sales on open account (credit sales) have been budgeted for the last six months of
the year as shown below:
july $72,000
august $84,000
september $96,000
october $108,000
november $120,000
december $102,000
the estimated cash collection by fresplanade co. during august from july and august
credit sales is:
a.$83,160
b.$79,380
c.$87,840
d.$54,000
e.$71,640
18) the change in total cost associated with each change in the quantity of the cost
driver is:
a.average cost
b.controllable cost
c.variable cost
d.unit cost
19) which one of the following documents records and summarizes the costs of direct
materials, direct labor, and factory overhead for a particular job?
a.purchase order
b.material requisition form
c.job product cost document
d.bill of materials
e.job cost sheet
20) everlast co. manufactures a variety of drill bits. the company’s plant is partially
automated. the budget for the year includes $432,000 payroll for 4,800 direct
labor-hours. listed below is cost driver information used in the product-costing system:
a current product order has the following requirements:
using abc, how much total overhead is assigned to the order?
a.$42,160
b.$43,740
c.$44,268
d.$44,432
e.$45,993