1) The economic order quantity model completely ignores ________.
A) carrying costs
B) ordering costs
C) stockout costs
D) the size of a purchase order
2) Ways to “produce for inventory” that result in increasing operating income include
________.
A) switching production to products that absorb the least amounts of fixed
manufacturing costs
B) delaying items that absorb the greatest amount of fixed manufacturing costs
C) deferring maintenance to accelerate production
D) undervaluing ending inventory by not recording certain costs that have been
incurred
3) The Bovise Company has assembled the following data pertaining to certain costs
that cannot be easily identified as either fixed or variable. Bovise Company has heard
about a method of measuring cost functions called the high-low method and has
decided to use it in this situation.
What is the estimated total cost at an operating level of 3,100 hours?
A) $71,133
B) $39,600
C) $36,607
D) $63,687
4) Sales of Blair Inc. have been on a steady decline for the last 12 months. A market
research study conducted revealed that the product of Blair Inc. can be sold only for
$400 as opposed to the current market price charged of $500 per unit. Blair Inc. has
decided to revise its sales price to $400. The annual sales target volume of the product
after price revision is 200 units. Blair Inc. wants to earn 18% on its sales amount.
What are the target sales revenues?
A) $94,400
B) $80,000
C) $65,600
D) $18,000
5) Which of the following is an example of a revenue object?
A) suppliers
B) products
C) labor
D) duration to complete a given task
6) Which of the following statements is a possible pitfall while implementing a
balanced scorecard?
A) Managers using cost-benefit considerations while designing a balanced scorecard.
B) Managers ignoring objective measures as market share, manufacturing yield.
C) Managers using subjective measures in the balanced scorecard.
D) Top management ignoring nonfinancial measures when evaluating employee
performance.
7) Which of the following statements is true of the sales method of accounting for
byproducts?
A) It makes journal entries when the byproducts are produced.
B) It is the preferred method because of the matching principle.
C) It allows a firm to manage its reported earnings by timing the sale of byproducts.
D) This method recognizes the byproduct inventory in the accounting period in which it
is produced.
8) Xylon Corp. has contracts to complete weekly supplements required by forty-six
customers. For the year 2015, manufacturing overhead cost estimates total $840,000 for
an annual production capacity of 10 million pages.
For 2015, Xylon decided to evaluate the use of additional cost pools. After analyzing
manufacturing overhead costs, it was determined that number of design changes,
setups, and inspections are the primary manufacturing overhead cost drivers. The
following information was gathered during the analysis:
During 2015, two customers, Money Managers and Hospital Systems, are expected to
use the following printing services:
Under ABC costing, what is the inspection cost allocated to Xylon Corp.?
A) $190
B) $160
C) $150
D) $180
9) Kretzinger Company makes extensive use of financial performance reports for each
of its departments. Although most departments have been reporting favorable cost
variances with the company’s current inventory system, management is concerned about
the overall performance of the purchasing department. For example, the following
information is for the purchasing of materials for a product the company has been
manufacturing for several years:
Required:
a.Compute the inventory turnover for each year. Can any conclusions be drawn for a
yearly comparison of the purchase price variance and the inventory turnover?
b.Identify problems likely to be caused by evaluating purchasing only on the basis of
the purchase price variance.
c.What recommendations will improve the evaluation process?
10) Which of the following statements is true of Brital?
A) The gross profit percent of condensed milk is lower than the gross profit of butter
cream.
B) The gross margin is same for both products because constant gross margin
percentage NRV method ignores profits earned before the splitoff point.
C) The gross profit of condensed milk is lower than the gross profit of butter cream.
D) The gross margin is allocated to the joint products in order to determine the
joint-cost allocations.