In a decision to add or eliminate a product or service, which of the following is an
avoidable cost?
a. Common costs
b. Depreciation
c. Variable overhead
d. Allocated overhead
Since fixed overhead does not vary with volume within the relevant range, the flexible
budget will always agree with
a. Actual results.
b. Static budget.
c. Both actual results and the static budget.
d. Neither actual results nor the static budget.
The following data have been taken from the financial records of Bubba’s Body Shop
for the current year:
Required:
a. Calculate the price/earnings ratio.
b. Calculate the current ratio.
On a common-size income statement, income taxes are shown as a percentage of
a. Operating income.
b. Net sales revenue.
c. Net income.
d. Gross profit.
ROI will not be improved by
a. Increasing revenue.
b. Converting variable costs to traceable fixed costs.
c. Decreasing assets.
d. All of these answer choices will improve ROI.
Which of the following measures shows manager how many dollars a customer
contributes to the company’s bottom line?
a. Customer net profit
b. Customer revenue margin
c. Times revenue earned per customer
d. Customer profit margin
Basil Industries reported the following information for December:
What was the cost of the direct materials used by Basil in production?
a. $406,250
b. $362,500
c. $450,000
d. $381,250
As the level of activity increases, the total variable cost
a.Increases proportionally.
b.Changes inversely.
c.Changes conversely.
d.Remains the same.
To determine the present value of any future amount, you need to know
a. The future amount to be received
b. The interest rate
c. When the future amount will be received
d. All of these answer choices are correct
Which of the following would be least likely classified as a direct cost of a business
segment?
a. Shipping
b. Sales commissions
c. Rent
d. Direct material
On July 31st of the current year Bridges Industries issued $80,000 of bonds payable.
The $80,000 was used to purchase $30,000 of equipment and $50,000 to purchase stock
in another company. How will these transactions be reported in the statement of cash
flows? Operating Section Investing Section Financing Section
a. $0 $30,000 use $80,000 source/$50,000 use
b. $50,000 use $30,000 use $80,000 source
c. $0 $30,000 use/$50,000 use $80,000 source
d. $0 $30,000 use $80,000 source/$50,000 use
A cost center manager ‘s performance might be measured by
a. The center ‘s ROI.
b. Direct material variance.
c. Segment profit.
d. Any of these answer choices are correct.
A characteristic of non-value-added activities is that they
a. Can always be eliminated.
b. Can never be eliminated.
c. Can sometimes be eliminated.
d. Are always related to fixed costs.
Match the following terms to the appropriate statement by placing the letter to the left
of each statement. a. Common size analysis f. Price earnings ratio
b. Earnings per share g. Quick ratio
c. Financial leverage h. Return on assets
d. Horizontal analysis i. Vertical analysis
e. Liquidity j. Working capital
Which of the following is not a measure on which transfer prices can be based?
a. Market-based price
b. Cost-based price
c. Negotiated price
d. All of these answer choices are measures on which transfer prices can be based.
The categories of activities that are required to produce and sell products,
non-value-added and value-added, are defined from which of the following
perspectives?
a. Industry
b. Management
c. Customer
d. Organization
Which of the following is an example of an enterprise resource planning (ERP) system?
a.SAP
b.Oracle
c.Both SAP and Oracle
d.Neither SAP nor Oracle
Classify the following costs incurred by a Ranger Boat Company manufacturing plant
as product or period costs by placing an “X” in the appropriate column.
Your boss has asked you to lead a committee to develop a code of conduct for the
company. Write a memo to the committee members to schedule your first meeting. In
your memo list the six components you believe are most important to be included in the
code and explain why.
Financial measures alone do not capture all aspects of an organization’s performance.
Nonfinancial measures can be either qualitative or quantitative. However, it is important
for managers to understand qualitative measures and their relationship to the
organization’s goals.
Required:
List five barriers to the effective use of nonfinancial performance measures by
organizations.
Prepare a segment margin income statement and evaluate a segment ‘s financial
performance.
What is a mixed cost? What happens to a mixed cost as the level of activity changes?
River Rafters produces side imaging sonar devices. The company uses a job order
costing system. During the period, the company incurred the following costs to
complete job #SIS423: direct materials, $110,000 and direct labor, $128,000. The
company also incurred $14,000 of administrative costs and $18,000 of selling costs to
complete this job. Job #SIS423 required 10,600 machine hours. Factory overhead was
applied to the job at a rate of $20 per machine hour. If job #SIS423 resulted in 1,800
sonar devices, what was the unit cost of goods sold?
The following list includes activities that are performed in a manufacturing company.
Classify each activity as value-added or non-value added.