When reconciling net income to net cash provided by operating activities, a(n)
________ is an addition to net income.
A) increase in inventories
B) increase in accounts receivable
C) increase in wages payable
D) decrease in taxes payable
What will happen to the net present value of a project if my predictions of cash flows
change? I think the cash flows may be overestimated. What should be done to address
this?
A) net present value analysis
B) internal rate of return
C) sensitivity analysis
D) payback period
All of the following are differences between GPK and activity-based costing systems
EXCEPT for ________.
A) GPK applies only variable costs to products. Activity-based costing systems apply
fixed and variable costs to products.
B) GPK focuses on cost centers. Activity-based costing systems focus on activities.
C) GPK may have thousands of cost centers. Activity-based costing systems may have
only a few activities.
D) GPK uses many cost pools. Activity-based costing systems use one cost pool.
In a linear cost function, the slope measures the ________.
A) total fixed cost
B) total variable cost
C) variable cost per unit of cost driver
D) fixed cost per unit of cost driver
A budget prepared for one expected level of activity is called a ________.
A) flexible budget
B) static budget
C) variable budget
D) rolling budget
The following information is available for Arnett Company:
Current assets $100,000 Current liabilities $75,000
Property, plant and Long-term liabilities 100,000
equipment 150,000 Stockholders’ equity 125,000
Other assets 50,000 Total liabilities and
Total assets $300,000 stockholders’ equity $300,000
Invested capital is defined as total assets. Net operating income is $60,000. What is
ROI?
A) 20%
B) 30%
C) 50%
D) 120%
The key to determining the financial difference between two alternative courses of
action is to identify the ________.
A) opportunity cost of each alternative
B) marginal cost
C) differential costs and revenues
D) joint cost of both alternatives
When preparing the budgeted income statement, which of the following is the source
for the amount of operating expenses?
A) schedule of disbursements for operating expenses
B) purchases budget
C) schedule of disbursements for purchases
D) operating expense budget
The ________ is the juncture in manufacturing where the joint products become
individually identifiable.
A) joint processing juncture
B) split-off point
C) common point
D) joint processing point
Andy Basil Industries Inc. reported the following information about the production and
sale of its only product during the first month of operations:
Selling price per unit $225.00
Sales $360,000
Direct materials used $176,000
Direct labor $100,000
Variable factory overhead $44,000
Fixed factory overhead $80,000
Variable selling and administrative expenses $20,000
Fixed selling and administrative expenses $10,000
Production volume variance 0
Ending inventory, Direct Materials 0
Ending inventory, Work-in-process 0
Ending inventory, Finished Goods 400 units
Under absorption costing, what is the Cost of Goods Sold?
A) $256,000
B) $272,000
C) $320,000
D) $360,000
The cash inflow from the sale of a long-term plant asset at a loss is equal to the
________.
A) amount of the loss plus the loss times the tax rate
B) amount of the loss
C) selling price of asset plus the loss times the tax rate
D) selling price of asset minus the loss times the tax rate
The financial ratios for a company can be evaluated using ________.
A) time-series comparisons
B) benchmark comparisons
C) cross-sectional comparisons
D) all of the above
Which of the following is an example of a value-added cost to a manufactured product?
A) the cost of handling inventory
B) the cost of storing inventory
C) changing the setup of production-line operations
D) the depreciation expense of robots that assemble the product
When comparing projects using the total project approach, a manager should choose the
project with the ________.
A) smallest net present value
B) largest net present value
C) zero net present value
D) largest differential net present value
The distinction between paid-in capital and retained earnings is not made for ________.
A) corporations
B) corporations and partnerships
C) corporations and sole proprietorships
D) partnerships and sole proprietorships
Linda Company manufactures gadgets in one department. The following information is
available:
Work-In-Process Inventory, beginning 0
Units started 60,000
Units completed and transferred 48,000
Work-In-Process Inventory, end 12,000
Direct materials added $240,000
Direct labor $164,780
Factory overhead $82,000
The units in the ending Work-In-Process Inventory are 0 percent complete with respect
to materials and 50 percent complete with respect to conversion costs. Direct materials
are added at the end of the process. The cost of one completed unit is ________.
A) $8.14
B) $8.57
C) $9.57
D) $10.18
On a cost-volume-profit graph, the net profit area is found ________.
A) at the break-even point
B) to the right of the break-even point
C) to the left of the break-even point
D) to the right of the intersection of the y-axis and x-axis
Which of the following statements about responsibility centers is FALSE?
A) Responsibility centers usually have one goal.
B) Management control systems monitor responsibility center goals.
C) Responsibility centers are usually classified according to their managers’ primary
financial responsibility.
D) Cost centers, profit centers and investment centers are all examples of responsibility
centers.
The cash payment for the maturity value of bonds payable is included in the ________
section of the statement of cash flows.
A) operating
B) investing
C) financing
D) noncash
Sue Company is considering the production of a new product. Sue Company has the
following data available:
Expected product life 4 years
Expected sales (units) over product life 2,000
Variable production costs $42 per unit
Variable selling costs $16 per unit
Annual fixed production costs $15,000
Annual fixed selling costs $5,000
Research and development costs $184,000
Selling price $200 per unit
What is the expected profit or (loss) of the product over the product life cycle?
A) $(40,000)
B) $20,000
C) $204,000
D) $880,000
The statement of financial position is also called the ________.
A) income statement
B) statement of cash flows
C) statement of retained earnings
D) balance sheet
Denise Company manufactures three products from a joint process. Joint costs for the
year amounted to $250,000. The following data was available:
Product Units Produced Sales Value at Split-off
X 5,000 $70,000
Y 3,000 $30,000
Z 2,000 $100,000
Assume the relative-sales-value method of allocating joint costs is used. What amount
of joint costs is allocated to Product X?
A) $70,000
B) $87,500
C) $125,000
D) $250,000
Lorna Corporation has determined the contribution margin ratio is 35% and the income
tax rate is 40%.
Required:
A) Assume break-even volume in dollars is $1,500,000. What are total fixed costs?
B) Assume Lorna Corporation wants after-tax net income of $300,000. What volume of
sales in dollars is necessary to achieve this net income?
A brainstorming group in the Research and Development area is charged with
developing new product ideas for the company. What is a good cost driver of the cost of
this activity?
A) number of parts in new products proposed
B) number of new product proposals
C) number of workers
D) number of engineering hours
The accounting convention of ________ permits a company to immediately expense
assets with long useful lives and small dollar costs.
A) objectivity
B) materiality
C) continuity
D) conservatism
Given below are the activities of the Phoenix Company:
Owners invested cash in business $20,000
Credit sales $80,000
Cash sales $20,000
Cash collections from credit customers $56,000
Purchased inventory on account $37,000
Using the accrual basis of accounting, the total revenues for Phoenix Company are
________.
A) $46,000
B) $90,000
C) $100,000
D) $173,000
A cost-volume-profit graph has a line for ________ and a line for ________.
A) revenues; variable costs only
B) revenues; fixed costs only
C) revenues; total costs
D) net profit; net loss
When allocating indirect production costs to cost objects, which of the following is/are
a cost-allocation base(s)?
A) some measure of input or output that determines the amount of cost to be allocated
to a cost object
B) a measure used to assign indirect costs to cost objects
C) a measure used to assign direct costs to cost objects
D) A and B
Which of the following budget(s) has(have) the disbursement for a planned purchase of
equipment?
A) operating expense budget
B) purchases and cost of goods sold budget
C) cash budget only
D) cash budget and capital budget
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
Bunch Company is considering the production of a new product. Bunch Company has
the following data available:
Expected product life 4 years
Expected sales (units) over product life 2,000
Variable production costs $42 per unit
Variable selling costs $16 per unit
Annual fixed production costs $15,000
Annual fixed selling costs $5,000
Research and development costs $184,000
What is the total cost of the product over the product life cycle?
A) $116,000
B) $196,000
C) $264,000
D) $380,000