1) Bonuses given to employees based on performance is an example of extrinsic
reward.
2) The breakeven points are the same under both variable costing and absorption
costing.
3) In markets that are not perfectly competitive, companies can increase their capacity
utilization only by decreasing their prices.
4) When making strategic decisions about which products and how much to produce,
managers must need to distinguish fixed costs from variable costs.
5) A budget helps to control activities by adhering to the prescribed plan.
6) An activity-based costing system with many activities can become overly detailed
and unwieldy to operate.
7) The nominal rate of return is made up of a risk-free element when there is no
expected inflation, a business-risk element, and an inflation element.
8) A direct cost of one cost object can be an indirect cost of another cost object.
9) Interactive control systems ________.
A) articulate the mission, purpose, and core values of a company
B) describe standards of behavior and codes of conduct expected of all employees and
help in achieving the maximum benefit
C) are formal information systems managers use to focus the company’s attention and
learning on key strategic issues
D) describe the geographic limits of a company and help organize its layout
10) Zitrik Corporation manufactured 90,000 buckets during February. The variable
overhead cost-allocation base is $5.05 per machine-hour. The following variable
overhead data pertain to February:
What is the flexible-budget amount?
A) $49,490
B) $45,450
C) $46,350
D) $47,650
11) The best method to determining weights for the stand-alone revenue-allocation
method is ________.
A) selling prices revenue-allocation method because the weights explicitly consider the
prices customers are willing to pay for the individual products
B) unit cost revenue-allocation method because it can be used on all occasions
C) the direct revenue-allocation method since selling prices or unit costs are difficult to
calculate for individual products
D) physical-units revenue-allocation method because the physical units explicitly value
the prices customers are willing to pay for the individual products
12) Archoid’s Flowering Plants provides the following information for the month of
May:
ActualBudget
What is the budgeted contribution margin per composite unit for the actual mix?
A) $13.80
B) $15.00
C) $15.36
D) $15.80
13) A reason why a physical-measure to allocate joint costs is less preferred than the
sales value at splitoff is because ________.
A) a physical measure such as volume is difficult to estimate than sales value
B) physical volume usually has little relationship to the revenue producing power of
products
C) a physical measure usually results in less costs being allocated to the product that
weighs the most
D) customers will easily understand that the products are overpriced
14) Special cost-allocation problems arise when ________.
A) support department costs exceed budgetary estimates
B) practical capacity is used as the allocation base
C) support departments provide reciprocal services to each other and operating
departments
D) the same cost-allocation base is used among various support departments
15) Lights Manufacturing produces a single product that sells for $125. Variable costs
per unit equal $50. The company expects total fixed costs to be $75,000 for the next
month at the projected sales level of 1,000 units. What is the current breakeven point in
terms of number of units?
A) 800 units
B) 1033 units
C) 667 units
D) 1,000 units
16) The property taxes on a factory building would be an example of:
Prime Cost Conversion Cost
A) No Yes
B) Yes No
C) Yes Yes
D) No No
17) If an oil refinery used refinery down-time as a Balanced Scorecard control measure,
it would represent the ________ perspective.
A) financial
B) customer
C) internal business process
D) learning and growth
18) Which of the following is true of hybrid transfer prices?
A) The cost used in hybrid transfer prices is always the actual cost.
B) The cost used in hybrid transfer prices is always the budgeted cost.
C) They take into account both cost and market information.
D) They are less popular in manufacturing industry.
19) Chem Manufacturing Company processes direct materials up to the splitoff point
where two products (X and Y) are obtained and sold. The following information was
collected for the month of November:
Direct materials processed:10,000 gallons (10,000 gallons yield 9,500 gallons of good
product and 500 gallons of shrinkage)
The cost of purchasing 10,000 gallons of direct materials and processing it up to the
splitoff point to yield a total of 9,500 gallons of good products was $975,000.
The beginning inventories totaled 50 gallons for X and 25 gallons for Y. Ending
inventory amounts reflected 300 gallons of Product X and 525 gallons of Product Y.
October costs per unit were the same as November.
Using the physical-volume method, what is Product X’s approximate gross-margin
percentage?
A) 32%
B) 34%
C) 35%
D) 38%
20) Bismite Corporation purchases trees from Cheney lumber and processes them up to
the splitoff point where two products (paper and pencil casings) are obtained. The
products are then sold to an independent company that markets and distributes them to
retail outlets. The following information was collected for the month of October:
The cost of purchasing 250 trees and processing them up to the splitoff point to yield
180,000 sheets of paper and 180,000 pencil casings is $12,500.
Bismite’s accounting department reported no beginning inventory.
What is the total sales value at the splitoff point of the pencil casings?
A) $21,600
B) $27,000
C) $26,775
D) $20,880
21) Brown Laundry has a variable demand. The daily demand ranges from 100 to 140
customers a day with an average of 5 items. The average daily demand is 110
customers. The laundry operates 10 hours a day. Each order takes approximately 5
minutes.
Required:
a.What is the average customer waiting time, in minutes?
b.What is the cycle time for an order?
c.The manager has decided that the waiting time is too long and has increased the
workday to 11 hours. What is the waiting time now? Will the customers be any happier?
22) ________ is a measure of the balanced scorecard’s learning-and-growth perspective.
A) Information system availability
B) Economic value added
C) Cost reductions in key areas
D) Customer-retention percentage
23) The general term used to identify both the tracing and the allocation of accumulated
costs to a cost object is ________.
A) cost accumulation
B) cost assignment
C) cost tracing
D) conversion costing
24) When budgeted cost-allocations rates are used ________.
A) user departments are not informed about the charges until the end of the period
B) the manager of the supplier division bears the risk of unfavorable cost variances
C) user divisions pay for costs that exceed budgeted amounts
D) user divisions pay for inefficiencies of the supplier department
25) Elton, Inc., expects to sell 6,000 ceramic vases for $20 each. Direct materials costs
are $2, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase.
The following inventory levels apply to 2016:
What are the 2016 budgeted production costs for direct materials, direct manufacturing
labor, and manufacturing overhead, respectively?
A) $12,200; $61,000; $18,300
B) $12,000; $60,000; $18,000
C) $2,000; $10,000; $3,000
D) $2,000; $0; $4,500