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compares actual performance against budgeted goals
Match each phrase that follows with the term (a-e) it describes.
a. planning
b. directing
c. controlling
d. budget slack
e. goal conflict
Cash payback method
Match the methods that follow with the correct category (a'“b).
a. Methods that does not use present value
b. Methods that uses present value
Only a single line, which represents the difference between total sales revenues and
total costs, is plotted on the profit-volume chart.
a. True
b. False
Factory rent
The following are some of the costs incurred by Cupcake Company. Identify them as
either:
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
A diagram of the operating structure of an organization is called an organization chart.
a. True
b. False
The current ratio is
a. used to evaluate a company's liquidity and short-term debt paying ability
b. a solvency measure that indicates the margin of safety of a bondholder
c. calculated by dividing current liabilities by current assets
d. calculated by subtracting current liabilities from current assets
In a common-sized income statement, each item is expressed as a percentage of net
income.
a. True
b. False
Standards are set for only direct labor and direct materials.
a. True
b. False
Variable costing is also known as direct costing.
a. True
b. False
When a job is completed in a service organization, the job costs are transferred to the
a. work in process account
b. cost of services account
c. finished goods account
d. cost of goods sold account
Estimated cash payments are planned reductions in cash from all of the following
except
a. manufacturing and operating expenses
b. capital expenditures
c. notes and accounts receivable collections
d. payments for interest or dividends
The manufacturing cost of Mocha Industries for three months of the year are provided
below:
Using the high-low method, determine the (a) variable cost per unit, and (b) the total
fixed costs.
Richards Corporation had net income of $250,000 and paid dividends to common
stockholders of $50,000. It had 50,000 shares of common stock outstanding during the
entire year. Richards Corporation's common stock is selling for $35 per share. The
price-earnings ratio is
a. 7 times
b. 14 times
c. 2 times
d. 5 times
Beemer's sales are $400,000, variable costs are 75% of sales, and operating income is
$50,000. The operating leverage is
a. 2.5
b. 7.5
c. 2.0
d. 0
The systematic examination of the differences between planned and actual contribution
margin is
a. gross profit analysis
b. contribution margin analysis
c. sales mix analysis
d. volume variance analysis
measures the quantity of output of production relative to the inputs
Match each phrase that follows with the term (a-e) it describes.
a. cost of production report
b. equivalent units of production
c. manufacturing cells
d. yield
e. just-in-time processing
Only managers are encouraged to submit capital investment proposals because they
know the processes and are able to match investments with long-term goals.
a. True
b. False
In cost-volume-profit analysis, all costs are classified into the following two categories:
a. mixed costs and variable costs
b. sunk costs and fixed costs
c. discretionary costs and sunk costs
d. variable costs and fixed costs
Unusual items affecting the prior period's income statement consist of errors and
changes in accounting principles.
a. True
b. False
A business operated at 100% of capacity during its first month and incurred the
following costs:
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the
month, what is the amount of the manufacturing margin that would be reported on the
variable costing income statement?
a. $104,000
b. $106,000
c. $140,000
d. not reported
What pricing concept considers the price that other providers charge for the same
product?
a. demand-based concept
b. total cost concept
c. cost-plus concept
d. competition-based concept
The expected average rate of return for a proposed investment of $4,800,000 in a fixed
asset, using straight-line depreciation, with a useful life of 20 years, no residual value,
and an expected total net income of $10,560,000 over the 20 years is
a. 24%
b. 22%
c. 45%
d. 10%
The following data relate to direct labor costs for March:
Rate: standard, $12.00; actual, $12.25
Hours: standard, 18,500; actual, 17,955
Units of production: 9,450
Calculate the direct labor rate variance.
a. $4,488.75 unfavorable
b. $6,851.25 favorable
c. $4,488.75 favorable
d. $6,851.25 unfavorable
