The relative sales value method requires a common physical unit for measuring the
output of each product.
Lean manufacturing and just-in-time (JIT) systems are both concerned with reduction
of inventory levels.
Non-financial measures are generally more appropriate for gauging teamwork than are
financial performance measures.
A company may outsource some of its production in order to focus on core
competencies.
A participatory budget is developed by both top management and operating personnel.
The financial perspective of the balanced scorecard focuses on using an organization’s
intellectual capital to adapt to or influence customer needs and expectations.
If a company’s variable costs per unit were to increase but its unit selling price stays
constant, the effect on a profit-volume graph would be that the
A. contribution margin line would shift upward parallel to the present line.
B. contribution margin line would shift downward parallel to the present line.
C. slope of the contribution margin line would be pronounced (steeper).
D. slope of the contribution margin line would be less pronounced (flatter).
Which of the following statements is false concerning a management control system?
A. A management control system may be referred to as a black box.
B. A management control system should serve as a guide to organizations.
C. A management control system should help implement strategies.
D. A management control system is separate from a cost management system.
Commodore Company
Commodore Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
September when Commodore produced 5,000 units:
Refer to Commodore Company. Using the two-variance approach, what is the
controllable variance?
A. $4,075 U
B. $4,075 F
C. $4,575 U
D. $4,575 F
A firm’s break-even point in dollars can be found in one calculation using which of the
following formulas?
A. FC/CM per unit
B. VC/CM
C. FC/CM ratio
D. VC/CM ratio
When JIT is implemented, which of the following changes in the accounting system
would not be expected?
A. fewer cost allocations
B. elimination of standard costs
C. combining labor and overhead into one product cost category
D. combing raw material and materials in work-in-process into one product cost
category
Jennings Creations
Jennings Creations is considering an investment in a computer that is capable of
producing various images that are useful in the production of commercial art. The
computer would cost $20,000 and have an expected life of eight years. The computer is
expected to generate additional annual net cash receipts (before-tax) of $6,000 per year.
The computer will be depreciated according to the straight-line method and the firm’s
marginal tax rate is 25 percent.
Refer to Jennings Creations. What is the after-tax payback period for the computer
project?
A. 7.62 years
B. 3.90 years
C. 4.44 years
D. 3.11 years
Production of Product B has been budgeted at 200,000 units for Novenber. One unit of
Product B requires 2 lbs. of raw material. The projected beginning and ending materials
inventory for Novenber are:
Beginning inventory: 2,000 lbs.
Ending inventory: 10,000 lbs.
How many lbs. of material should be purchased during Novenber?
A. 192,000
B. 208,000
C. 408,000
D. 416,000
The cost object under the control of a manager is called a(n) ____ center.
A. cost
B. revenue
C. responsibility
D. investment
Reed Company
Reed Company produces 50,000 units of Product Q and 6,000 units of Product Z during
a period. In that period, four set-ups were required for color changes. All units of
Product Q are black, which is the color in the process at the beginning of the period. A
set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red
units of Product Z; a set-up was made for 500 green units of Product Z. A set-up was
then made to return the process to its standard black coloration and the units of Product
Q were run. Each set-up costs $500.
Refer to Reed Company. If set-up cost is assigned on a volume basis for the department,
what is the approximate per-unit set-up cost for Product Z?
A. $.010.
B. $.036.
C. $.040.
D. None of the responses are correct.
A cost of quality report compares current period quality costs in specified categories to
A. last year’s quality costs.
B. current period budgeted quality costs.
C. total quality costs for the period.
D. both a and b.
Thunder Sports Enterprises
The Basketball Division of Thunder Sports Enterprises reported the following financial
data for the year:
Refer to Thunder Sports Enterprises. What was the target rate of return for Thunder
Sports Enterprises?
A. 4%
B. 5%
C. 7%
D. 9%
Normal spoilage is defined as unacceptable production that
A. arises because of a special job or process.
B. occurs in on-going operations.
C. is caused specifically by human error.
D. is in excess of that which is expected.
Bradley Corporation
Bradley Corporation has three production departments A, B, and C. Bradley
Corporation also has two service departments, Administration and Personnel.
Administration costs are allocated based on value of assets employed, and Personnel
costs are allocated based on number of employees. Assume that Administration
provides more service to the other departments than does the Personnel Department.
Refer to Bradley Corporation. Using the step method, what amount of Administration
costs is allocated to A (round to the nearest dollar)?
A. $72,973
B. $291,892
C. $145,946
D. $389,189
Phoenix Corporation
The records of Phoenix Corporation revealed the following data for the current year.
Refer to Phoenix Corporation. Assume that Phoenix has underapplied overhead of
$10,000 and that this amount is immaterial. What is the balance in Cost of Goods Sold
after the underapplied overhead is closed?
A. $133,650
B. $123,650
C. $143,650
D. $137,803
Brennan Company
The following information is for Brennan Company’s September production:
(Round all answers to the nearest dollar.)
Refer to Brennan Company. What is the material price variance (calculated at point of
purchase)?
A. $ 735 F
B. $ 735 U
C. $ 710 F
D. $ 710 U
An example of a fixed cost is
A. total indirect material cost.
B. total hourly wages.
C. cost of electricity.
D. straight-line depreciation.
Lincoln Company
Lincoln Company applies overhead based on direct labor hours and has the following
available for the current month:
Refer to Lincoln Company. Compute all the appropriate variances using the
four-variance approach.
A company that manufactures sugar will use a ____________________ costing system
to track production costs
Discuss how spoilage is treated in EUP computations.
Standards that are attainable with reasonable effort are referred to as
___________________________________.
If a substandard product can be reworked, it is known as a ____________________.
The difference between budgeted variable overhead for actual hours and standard
overhead is the __________________________________________________.
Management and financial accounting are used for which of the following purposes?