Two calculations that can be made to measure customer profitability are
a. Customer net profit and customer earnings per share
b. Times revenue earned per customer and customer revenue margin
c. Customer net profit and customer profit margin
d. Customer revenue margin and customer profit margin
The best measures relate to corporate strategy and SMART. Which of the following is
not a component of SMART?
a. Measurable
b. Timeliness
c. Actionable
d. Responsibility
Which of the following is the reason that preferred dividends declared during the period
are deducted from net income in calculating return on common stockholders’ equity?
a. Preferred dividends will reduce the amount of income available for distribution to
common stockholders.
b. Preferred dividends are not paid from net income.
c. Preferred dividends are not a part of stockholders’ equity.
d. Preferred dividends are not paid until all common stockholders have received their
dividends, so preferred dividends are not relevant in the formula and so must be taken
out of the equation.
The DuPont model for calculating ROI contains which of the following components?
a. Asset turnover
b. Internal rate of return
c. Both asset turnover and internal rate of return.
d. Neither asset turnover nor internal rate of return.
When using a standard costing system, which of the following statements is true?
a. There is never any question about the recorded cost of a unit in inventory; it is always
at the standard cost.
b. There is always a question about the recorded cost of a unit in inventory; the standard
cost differs with each purchase.
c. A unit recorded in inventory last week and one recorded in inventory today will not
have the same recorded cost.
d. None of these answer choices are true.
Which of the following methods of reporting cash flows provided by operating
activities does the Financial Accounting Standards Board recommend?
a. The indirect method
b. The direct method
c. Either the indirect method or the direct method
d. Neither the indirect method nor the direct method
Which of the following would not be a focus of top managers in a decentralized
organizational structure?
a. Long-range projections
b. Corporate goals
c. Day-to-day operational issues
d. All of these answer choices would be focuses of top management.
Leading indicators provide managers with the information they need to
a. Prepare direct material and direct labor variances.
b. Take timely, corrective action.
c. Prepare GAAP- based financial statements.
d. All of these answer choices are correct.
Which of the following is not a step in calculating the unit product cost?
a. Calculate the physical unit flow
b. Calculate the equivalent units of production
c. Calculate the cost per equivalent unit
d. Multiply the physical unit flow by the equivalent unit cost.
The Inland Corporation manufactures 1,000 motors that are used in the production of its
go-karts. Inland has been approached by an outside supplier that will sell the motor to
Inland for $39 each. Inland ‘s cost to manufacture each motor are as follows:
All fixed overhead is unavoidable, and is allocated based on machine hours. The
facilities that are used to manufacture the motors have no alternative uses.
Required:
a. Should Inland continue to manufacture the motors?
b. Would your answer change if Inland could lease the facilities previously used to
produce the motors for $4,800 per year?
On a common-size income statement, selling expense is shown as a percentage of
a. Net sales revenue.
b. Operating income.
c. Net income.
d. Gross profit.
Alexa Industries has the following amounts budgeted for selling and administrative
expenses for February:
What amount will Alexa report on its February pro-forma income statement for selling
and administrative expenses?
a. $154,400
b. $169,200
c. $148,000
d. $156,000
In deciding whether to eliminate a segment of a business, an important issue is the
identification of common costs. Answer the following questions relating to common
costs.
a. What is a common fixed cost?
b. Is a common fixed cost considered relevant?
c. Give two examples of common fixed costs.
d. What happens to common fixed costs if a segment is eliminated?
Barber Industries reported net income of $32,000, earnings per share of $1.20 and paid
dividends of $0.30 per share. What is the dividend payout ratio?
a. 400%
b. 25%
c. $4
d. $1.50
Myers Industries reported sales of $220,000 on its income statement. During the year,
accounts receivable increased by $25,000 and accounts payable decreased by $15,000.
Maddox uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. What is the amount of sales revenue adjusted
to a cash basis for the year?
a. $170,000
b. $195,000
c. $205,000
d. $210,000