Which of the following is not a way a company can use information about activities to
manage its operations?
a. Activity-based budgeting
b. Activity-based resource reduction
c. Activity-based costing
d. All of these answer choices are ways a company can use information about activities
to manage its operations.
Under the Sarbanes-Oxley Act, which of the following related to the corporate code of
ethics is not required?
a.Must be published in the annual report or on the corporate website or provided at no
charge upon request.
b.Must disclose the likelihood of a breach of the code based on the industry and
structure of the corporation.
c.Must disclose all instances in which these codes have been waived for a particular
individual.
d.Must disclose all changes to the code.
Myers Company is preparing the raw materials ending inventory budget. Which of the
following items will Myers not need to complete the budget?
a. Beginning raw materials inventory balance
b. Actual production
c. Direct materials used in the production of new units started during the period
d. Myers will need all of these answer choices to complete the budget.
When direct materials are used, which of the following accounts increases?
a. Raw Materials Inventory
b. Work in Process Inventory
c. Finished Goods Inventory
d. Manufacturing Overhead
Assembly line workers at Thompson Manufacturing worked a total of 8,800 direct labor
hours to produce 36,000 units. The standard for producing one unit is 15 minutes at a
wage rate of $10. If the actual wage rate was $10.50 per direct labor hour, Thompson’s
direct labor efficiency variance is
a. $2,000 favorable
b. $2,000 unfavorable
c. $2,100 favorable
d. $2,100 unfavorable
Selling expenses include which of the following?
a. Storage of products
b. Sale of products
c. Delivery of products to customers
d. All of these answer choices are correct
Mallory Manufacturing produces thermal tents and sleeping bags. The company ‘s
products are in high demand due to the quality and durability of the products. Mallory
estimates it could sell 600 tents per month and 600 sleeping bags per month. Following
is information for each of these products:
Mallory has 800 machine hours available each month. If Mallory allocates its
production capacity between the tents and sleeping bags so that it maximizes the
company ‘s contribution margin, what will the contribution margin be?
a. $14,000
b. $13,765
c. $13,550
d. $19,500
A company’s prepaid insurance account decreased by $1,000 during the year. Which of
the following would appear on the statement of cash flows prepared using the indirect
method?
a. An addition under investing activities
b. A deduction under investing activities
c. An addition under operating activities
d. A deduction under operating activities
Kandy Harts manufactures custom T-shirts. Each T-shirt can be imprinted front and
back with photos, company logos or other information. Each T-shirt requires 2 ounces
of ink, 15 minutes of direct labor (processing, folding, packaging), and a plastic bag for
packaging. The following information is available regarding costs:
Kandy applied overhead at a rate of $9.40 per direct labor hour, and fringe benefits for
workers are an additional 20% of wages. What is the standard price of producing one
short-sleeve T-shirt?
a. $10.65
b. $11.73
c. $10.73
d. $12.23
In the calculation of ROI, the most common measure for average operating assets is
a. Ending balance.
b. Beginning balance.
c. Appraised balance.
d. Average of the assets during the year.
Which of the following is not a use of trend analysis?
a. For revealing more information about performance than is revealed by just one year’s
worth of change
b. For comparing changes in related accounts.
c. For analyzing information other than that found on the balance sheet and income
statement, such as supplemental information reported in annual reports
d. All of these answer choices are uses of trend analysis
Kitty City Company ‘s Canned Foods division has collected the following information:
Normal selling price $3.90 per can
Variable product costs 2.20 per can
Fixed product costs .80 per can
Variable selling and administrative costs .30 per can
Production capacity 2,500,000 cans
The Canned Foods division is currently producing 2,000,500 cans. The company ‘s
Dinner Pack division wants to buy 350,000 cans. The minimum transfer price would be
a. $1.10
b. $2.50
c. $3.00
d. $3.30
Instead of maximizing income, as measured by traditional accounting methods, the
theory of constraints seeks to maximize
a. Contribution income.
b. Throughput contribution.
c. Quality.
d. Gross profit.
Which of the following cash flows results from an operating activity?
a. Paying dividends to stockholders
b. Repaying note payable
c. Receiving interest on investment
d. Purchasing equipment
Which of the following is not an example of a customer-oriented nonfinancial measure?
a. Market share
b. Delivery performance
c. Product flexibility
d. Product defects
Which of the following is not an indirect material?
a. Supplies used in supporting the production process which may not be part of the final
product
b. Direct material that is not a significant part of the product
c. Material used that is inexpensive, so it is not cost effective to trace their cost back to
the product
d. Office supplies used by human resources
Which of the following is not an administrative expense?
a. Factory supervisor’s salary
b. Depreciation on office equipment
c. Payroll clerk’s salary
d. Janitorial supplies
In June, Indigo Manufacturing purchased 6,000 gallons of blue dye used to produce
stone-washed denim clothing. The price per gallon was $1.24 and the company used
5,400 gallons of the dye during the month to produce 42,660 yards of denim fabric. The
standard allows for 8 yards of fabric per gallon of dye. The standard price for the dye is
$1.26. What is the materials quantity variance for Indigo for June?
a. $85.05 favorable
b. $85.05 unfavorable
c. $108 favorable
d. $108 unfavorable
Panella Company’s has provided the following financial information for last year.
Required:
Using the direct method, prepare the cash flows provided by operating activities section
of the statement of cash flows.
Assume you have just been hired by a large manufacturing company and have been
assigned to a team that has the responsibility of gathering the data for completing the
company ‘s operating budget. Your first assignment is to make the initial contact with
the department managers who will be providing data to insure that everyone involved
knows the importance of preparing a realistic budget. The first manager you approach
does not appear to know what an operating budget is and apparently is not interested in
assisting your team in preparing a meaningful budget. Prepare a written memo to the
managers explaining what the operating budget is, its components, and its importance.
Identify basic cost behavior patterns and explain how changes in activity level affect
total cost and unit cost.
You are a member of a team responsible for screening capital budgeting projects.
Another team member has come to you in private and explained that she has become
confused with so many ‘œreturns’ that the team has been discussing. She has made a list
of the terms she is having trouble understanding. Her list includes the following:
1> Return on investment
2> Return of investment
3> Internal rate of return
4> Simple rate of return
5> Accounting rate of return
6> Unadjusted rate of return
Required:
Prepare a brief summary of each of the above terms.
Adler Industries uses a standard cost system in which direct material is carried at
standard cost. Adler has established the following standards: standard quantity of 8
pounds per unit, standard price $1.80 per pound. During January, Adler purchased
160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in
production of 18,700 units.
Required:
Calculate the direct materials quantity variance and indicate whether the variance is
favorable or unfavorable.
The direct method of preparing the statement of cash flows lets users know exactly how
cash was generated and used in operations. Specifically, cash flows from operating
activities are generated by five major activities.
Required:
List the five activities.
Managerial accounting is designed to assist managers with four general activities. List
the activities and give an example of each.