Reasons for the post-audit of an investment project do NOT include ________.
A) ensuring that the investment expenditures are proceeding on time and within budget
B) providing information for improving future predictions of cash flows
C) evaluating the continuation of the project
D) comparing actual project results with actual results from prior projects to evaluate
manager performance
If demand is the limiting factor, and there are no other scarce resources, managers
should emphasize the product with ________.
A) the highest selling price per unit
B) the lowest variable costs per unit
C) the highest contribution margin per unit
D) the highest contribution margin per hour
The financial performance of a segment manager is evaluated by ________.
A) contribution margin of segment
B) contribution margin of segment less fixed costs controllable by others
C) contribution margin of segment less fixed costs controllable by segment manager
D) contribution by segment
In determining product costs, variable costing and absorption costing differ in the
treatment of ________.
A) variable overhead costs
B) variable selling costs
C) fixed selling costs
D) fixed overhead costs
Which of the following statements is FALSE?
A) Flexible budgets are prepared for a range of activity.
B) Flexible budgets are matched to actual levels of activity.
C) A flexible budget is also called a variable budget.
D) Flexible budgets are based on different assumptions about cost behavior than those
used for static budgets.
The ________ account is supported by a file of job-cost records for completed jobs.
A) Direct Materials Inventory
B) Work-in-process Inventory
C) Finished Goods Inventory
D) Factory Overhead Control
In the area of quality control, which of the following statement(s) about Six Sigma
is(are) TRUE?
A) The focus is on measuring the number of defects in a production process.
B) It is a data-driven approach to eliminate defects.
C) The goal is to eliminate all defects in the production process.
D) All of the above
The direct materials price variance reflects the effects of ________.
A) changing input prices, holding the quality of outputs constant
B) changing input quantities, holding the input price constant
C) changing input prices, holding the quantity of inputs constant
D) changing input quantities, while changing the input price
A plant asset with a book value of $40,000 is sold for $10,000. The applicable tax rate
is 20%. The net after-tax cash effect of the sale is a ________.
A) $6,000 cash inflow
B) $10,000 cash inflow
C) $16,000 cash inflow
D) $16,000 cash outflow
Advertising is an example of the ________ function of the value chain.
A) distribution
B) selling
C) marketing
D) promotion
The final output of the financial budget is ________.
A) budgeted statement of stockholders’ equity
B) budgeted balance sheet
C) budgeted income statement
D) budgeted statement of cash flows
When measuring invested capital for purposes of calculating return on investment,
managers in practice predominantly use ________.
A) net book value at current cost
B) net book value at historical cost
C) gross book value at historical cost
D) gross book value at replacement cost
Toto Company has the following data available:
Sales for the year ended December 31, 2012 $106,950
Gross profit for the year ended December 31, 2012 $45,150
Net income for the year ended December 31, 2012 $7,300
Total Current Assets, December 31, 2012 $18,700
Total Current Liabilities, December 31, 2012 $7,600
Total Assets, December 31, 2012 $48,400
Total Liabilities, December 31, 2012 $20,850
Average total common shares outstanding in 2012 1,000
Market price per share, December 31, 2012 $75.00
Preferred dividends declared during 2012 $2,000
What are the earnings per share for the year ended December 31, 2012?
A) $2.00
B) $5.30
C) $6.30
D) $7.30
Goodwill is recognized when one company purchases another company and ________.
A) the purchase price of the acquired company exceeds the book value of the acquired
company’s assets
B) the purchase price of the acquired company exceeds the book value of the acquired
company’s assets less liabilities
C) the purchase price of the acquired company exceeds the fair value of the acquired
company’s assets
D) the purchase price of the acquired company exceeds the fair value of the acquired
company’s assets less liabilities
Assume fixed costs are constant and contribution margin per unit is reduced by 50
percent. What will happen to the break-even point in units?
A) It will decrease 50 percent.
B) It will increase 100 percent.
C) It will be the same.
D) It will increase 50 percent.
Process costing can be used for ________ activities.
A) manufacturing
B) nonmanufacturing
C) manufacturing and nonmanufacturing
D) none of the above
When looking at a manufactured product, an example of an inventoriable cost is
________.
A) depreciation expense on office equipment in corporate office
B) insurance expense on vehicles used by sales staff
C) wages of plant security guard
D) clerical salaries in corporate office
Current assets are expected to be converted to cash or sold or consumed within
________.
A) one year or operating cycle if longer than one month
B) one year or operating cycle if longer than one year
C) one year or operating cycle if shorter than one year
D) one fiscal year
On January 1, 2014, Liberty Company purchased common stock in Garcia Company
for $1,000,000. During 2014, Garcia Company earned $4,000,000 and paid dividends
of $1,000,000. Assume that Liberty Company owns 30% of the outstanding shares of
Garcia Company. The market value of the investment at December 31, 2014 is
$1,100,000. What is the balance in the Investment account at December 31, 2014?
A) $1,000,000
B) $1,100,000
C) $1,900,000
D) $2,200,000
The management control system should be designed to achieve the best possible
alignment between ________ and ________.
A) cost centers; profit centers
B) local managers’ decisions; upper managers’ bonuses
C) employee behavior; agency theory
D) local managers’ decisions; the actions upper management seeks
Bambi Company has two departments. Relevant information is presented below:
Department 1 Department 2
Budgeted total assets $1,000,000 $2,000,000
Actual total assets $1,200,000 $2,300,000
Budgeted sales $500,000 $2,000,000
Actual sales $300,000 $2,100,000
Total company-wide advertising costs are $540,000. The advertising costs are allocated
based on sales using the preferred approach. What amount of advertising costs is
allocated to Department 1?
A) $67,500
B) $108,000
C) $185,143
D) $270,000
Margaret Company has been producing and selling 100,000 units per year. They have
excess capacity, and there are no beginning and ending inventories. The following
budget was prepared for the next year:
Selling price per unit $11.00
Direct materials per unit $5.00
Direct labor per unit $3.00
Variable manufacturing overhead per unit $1.00
Variable selling and administrative per unit $0.25
Total fixed manufacturing overhead costs $50,000
Total fixed selling and administrative $15,000
Required:
A) Prepare an income statement using the contribution approach.
B) Prepare an income statement using the absorption approach.
Variable administrative expenses affect the calculation of ________ on the contribution
income
statement. Variable administrative expenses do NOT affect the calculation of ________
on the absorption income statement.
A) gross margin; contribution margin
B) contribution margin; gross margin
C) operating income; contribution margin
D) gross margin; operating income
________ is the delegation of decision-making power to segment managers of an
organization.
A) Goal congruence
B) Segment autonomy
C) Managerial effort
D) Segment contribution
A company has the following information available about one of its products:
Standard price per pound of input $25
Actual price per pound of input $24
Standard inputs per unit of output 3 pounds
Actual units of output 2,770
Direct Materials Quantity Variance $250 F
How many pounds of material were used?
A) $8,300
B) $8,310
C) $8,320
D) $8,330
Marjorie Company has the following information:
Month Budgeted Purchases
January $25,000
February 19,000
March 33,000
April 27,000
May 27,680
Purchases are paid as follows:
75% in the month of purchase
25% one month after purchase
What are the estimated cash disbursements in March?
A) $22,500
B) $24,750
C) $29,500
D) $39,000
Brown Company is considering the following investment:
Estimated capital investment $220,000
Estimated useful life 3 years
Estimated disposal value in 3 years $5,000
Estimated annual savings in cash operating costs(end of year) $120,000
Minimum desired rate of return 12%
Present value of ordinary annuity of one, 3 periods at 12% 2.4018
Present value of one, 3 periods at 12% 0.7118
Assume straight-line depreciation is used. Ignore income taxes. The net present value of
the investment is ________.
A) $68,216
B) $71,775
C) $73,216
D) $145,090
In perfect competition, additional sales will be profitable if ________.
A) the marginal cost is less than marginal revenue
B) sales price exceeds the variable product cost
C) total variable cost is less than sales price
D) the fixed cost equals the contribution margin
Goodwill from the purchase of another company appears on the consolidated balance
sheet as a ________.
A) stockholders’ equity item
B) part of the Investment in subsidiary
C) separate intangible asset account
D) component of other comprehensive income
Costs that may be essential to the long-run achievement of the organization’s goals, but
that managers can almost reduce to zero in the short-run, are called ________.
A) capacity costs
B) committed fixed costs
C) discretionary fixed costs
D) mixed costs
Differential revenue is the difference in ________ between two alternatives.
A) average revenue
B) marginal revenue
C) median revenue
D) total revenue
What happens when the cost-driver activity level decreases within the relevant range?
A) Total fixed costs increase.
B) Fixed costs per unit of cost driver decrease.
C) Total variable costs increase.
D) Variable costs per unit of cost driver are unchanged.
In a corporate setting, property taxes are an example of a(n) ________.
A) mixed cost
B) committed fixed cost
C) discretionary fixed cost
D) engineering cost