Which of the following does the cost variance model use to analyze differences
between actual and budgeted profits?
A.Flexible production budget.
B.Fixed production budget.
C.Prior period’s production budget.
D.Generally accepted accounting principles.
Which of the following is a strength of the regression method of cost estimation?
A.The method provides a detailed expert analysis of the cost behavior in each account.
B.The method is based on studies of what future costs should be rather than what past
costs have been.
C.The method requires that several relatively strict assumptions be satisfied.
D.The method is relatively easy to use with computer and sophisticated calculators.
What is a general type of long-term capital investment that companies make?
A.replacement and minor improvements
B.training and development of employees
C.advertising campaigns
D.all of the above
Which of the following is a cost that is not usually allocated to a department?
A.Direct labor used.
B.Manager’s salary for the department.
C.Property taxes for the factory building.
D.All of the answers are correct.
The value chain influences long-run pricing decisions because __________ cost is the
total of all the costs incurred by the activities in the value chain.
A.differential
B.full
C.marginal
D.variable
Which of the following statements is true when there is only one scarce resource?
A.Choose the product that gives the largest contribution per unit of the scarce resource
used.
B.Choose the product that gives the smallest contribution per unit of the scarce resource
used.
C.Choose the product that gives the largest contribution per unit of all of the resources
used.
D.Choose the product that gives the smallest contribution per unit of all of the resources
used.
When measuring a division’s operating costs, thecost of the company president’s salary
is
A.direct, controllable.
B.indirect, controllable.
C.direct, noncontrollable.
D.indirect, noncontrollable.
Which of the following terms describes a method of yielding information for
developing budgets that employees know but managers do not?
A.benchmarking.
B.participative budgeting.
C.bottom-up budgeting.
D.motivational budgeting.
The master budget for governmental organizations differs from that of public
companies because the budget for governmental organizations provides the
A.organization’s authority to produce and sell goods.
B.organization’s authority to produce and provide services.
C.legal authorization for expenditures.
D.all of the above
A company produces two products, A and B. A sells for $16 and has variable costs of
$10. B sells for $12 and has variable costs of $8. Fixed Costs for the period are
$35,000. Normally four units of A are sold for every two units of B units. How many
units of B must be sold if the company expects profits of $50,000?
A.15,947
B.10,637
C.5,313
D.Cannot be determined
Stephanie Company
Stephanie Company has two production departments: D and J. Stephanie also has 3
service departments: Personnel, Administration, and Shipping. Shipping costs are
allocated on the basis of number of packages, while Personnel and Administration costs
are allocated using number of employees. Assume that the ranking of the benefits
provided is in the order listed below.
Refer to Stephanie Company. Using the direct method, what amount of personnel costs
is allocated to Department J (rounded to the nearest $)?
A.$120,000
B.$240,000
C.$300,000
D.$360,000
Which of the following is the secondstep in activity based costing?
A.Identify the activities that consume resources and assign costs to those activities.
B.Identify the cost drivers associated with each activity.
C.Compute a cost rate per cost driver unit.
D.Assign cost to products by multiplying the cost driver rate times the volume of cost
driver consumed by the product.
Ambros Company
In the Ambros Company, Division A has a product that can be sold either to outside
customers or to Division B. Information about these divisions is given below:
Refer to Ambros Company. The company uses the opportunity cost approach to transfer
pricing. Which case should not be transferred internally?
A.Case 1
B.Case 2
C.Neither should be transferred internally.
D.Both should be transferred internally.
Jones Corporation estimates manufacturing costs as follows for the coming year:
If 25,000 units are produced, what is the total manufacturing costs?
A.$275,000
B.$300,000
C.$775,000
D.$900,000
Estimating flexible selling expense budget and computing variances. Golden
Nugget estimates the following selling expenses next period:
Required:
a. Derive the cost equation (y = a + bx) for selling expenses. (Hint: y = a + bx + cy.
b. Assume that Golden actually sells 60,000 units during the period at an average price
of $7 per unit. The company had budgeted sales for the period to be: volume, 75,000
units; price, $6.50. Calculate the sales price and volume variance.
c. The actual selling expenses incurred during the period were $90,000 fixed and
$40,000 variable. Prepare a profit variance analysis for sales revenue and selling
expenses.
How might a company with a negative contribution margin reach the break-even point?
A.Increase sales volume.
B.Decrease sales volume.
C.Decrease fixed costs.
D.Decrease variable costs.
Which statement is true concerning depreciation?
A.Depreciation does not affect taxable income.
B.Depreciation should be considered in the cash flow analysis.
C.Depreciation is never relevant for decision making.
D.Depreciation is never affected by income tax laws.
In a service organization, accounting charges overhead to jobs based on hours worked
on the job. Actual overhead incurred is $15,000. Actual hours worked for client A is 200
hours, for client B is 100 hours, and unbillable is 100 hours. Calculate the overhead
rate.
A.$30 per hour.
B.$40 per hour.
C.$50 per hour.
D.$60 per hour.
Using the following information, calculate equivalent units of production for Jetton
Manufacturing using the FIFO method:
Beginning Inventory: 30,000 units, 40% complete
Units started & completed: 75,000 units
Units in ending inventory: 20,000 units, 70% complete
A.93,000
B.107,000
C.105,000
D.125,000
Controls that can be instituted to prevent financial fraud includes
A.separation of duties where a single person carrying out a series of tasks could commit
fraud and take steps to hide it.
B.the presence of the independent auditors and their review of a company’s internal
controls.
C.the presence of the internal auditors and their review of a company’s internal controls.
D.All of the answers are correct.
Identify the effects of cost structure and operating leverage on the sensitivity of profit to
changes in volume. Use a nuclear power plant and an ice cream store as examples.
Identify types of costs to be considered in measuring divisional operating costs.
Discuss the concepts of cost, expense, and opportunity cost.
Why are service department costs allocated to producing departments?
A company produces two products, A and B. A sells for $16 and has variable costs of
$10. B sells for $12 and has variable costs of $8. Fixed costs for the period are $35,000.
Normally, two units of A are sold for every one unit of B. How many units of B must be
sold if the company expects profits of $50,000?