Which of the following is an example of using cost information for operational control?
A) determination of Cost of Goods Sold for the income statement
B) identification of capital assets to acquire for expansion purposes
C) selection of value-chain function to emphasize in corporate mission
D) evaluation of process improvement efforts in a manufacturing process
In a job-order system, the actual factory overhead costs incurred are $150,000. Applied
factory overhead costs are $160,000. What entry is needed to dispose of the overhead
variance? Use the immediate write-off method.
A) Debit Factory Department Overhead Control, Credit Factory Department Overhead
Applied
B) Debit Factory Department Overhead Applied, Credit Cost of Goods Sold
C) Debit Factory Department Overhead Applied, Credit Finished Goods Inventory
D) Debit Factory Department Overhead Control, Credit Cost of Goods Sold
Which of the following types of costs cannot be specifically and exclusively identified
with a cost object in an economically feasible manner?
A) variable costs
B) fixed costs
C) direct costs
D) indirect costs
Landslide Company has two service departments, Maintenance and Human Resources.
Landslide Company also has two production departments, Mixing and Finishing.
Maintenance costs are allocated based on square footage while Human Resources costs
are allocated based on number of employees. The following information has been
gathered for the current year:
Human
Maintenance Resources Mixing Finishing
Direct costs $126,000 $84,000 $105,000 $175,000
Square footage 800 400 1,600 1,200
Number of employees 8 12 24 32
If the step-down method is used to allocate service department costs, and the
Maintenance Department is allocated first, the amount of costs allocated from the
Maintenance Department to the Mixing Department is ________.
A) $36,000
B) $42,000
C) $42,750
D) $63,000
Research and development is the function of a value chain that involves ________.
A) the detailed design and engineering of products, services or processes
B) the generation of ideas related to new products, services or processes
C) the generation of ideas related to new products only
D) the detailed design and engineering of new processes
Garcia Company reports the following information:
Net operating income after taxes $100,000
Before-tax operating income $300,000
Average invested capital $500,000
After-tax cost of capital 10%
What is the residual income for Garcia Company?
A) $30,000
B) $50,000
C) $250,000
D) $450,000
Predatory pricing occurs when a firm sets ________.
A) prices below the average cost for each product
B) prices below the production cost for each product
C) prices below their competitors’ prices
D) prices so low that competitors are driven out of the market
Apple Company pays 15% on the first $50,000 of pretax income and 30% on any
additional pretax income. Apple Company currently earns $52,000. An investment
under consideration is expected to add $20,000 in pretax income. What is the tax rate
on the additional income from the investment?
A) 15%
B) 22.5%
C) 30%
D) 43%
How is accounting information prepared by management accountants used within an
organization?
A) to help operating managers make decisions
B) to plan an organization’s operations
C) to control an organization’s operations
D) all of the above
Which statement is FALSE concerning Enterprise Resource Planning (ERP) systems?
A) Accounting is one part of an ERP system.
B) Accountants must work with operating managers throughout the organization to
ensure that the ERP system provides the financial information that managers need.
C) ERP systems support all functional areas of a company.
D) SAP is not a provider of ERP systems.
A merchandising firm has ________ inventory account(s). A manufacturing firm has
________ inventory account(s).
A) one; three
B) three; one
C) two; three
D) three; three
If the proportions of different products sold in a sales mix change, the ________.
A) contribution margin per unit for each product increases
B) break-even point will change
C) contribution margin per unit for each product decreases
D) net income will not change
The following information is available for Maher Manufacturing Company.
— Direct materials price standard is $3.25 per pound.
— Direct materials quantity standard is six pounds per finished unit.
— Budgeted production is 25,000 finished units.
— 175,000 pounds of direct materials were purchased for $525,000.
— 175,000 pounds of direct materials were used in production.
— 25,600 finished units of product were produced.
What is the direct materials quantity variance?
A) $21,400 Unfavorable
B) $21,400 Favorable
C) $69,550 Unfavorable
D) $69,550 Favorable
When cash dividends are declared, ________ decrease(s) and ________ increase(s).
A) retained earnings; cash
B) cash; retained earnings
C) retained earnings; liabilities
D) cash; liabilities
On May 1, Gomez Company paid $36,000 for rent. The rent covers the period May 1
through August 31. Gomez Company recorded Prepaid Rent of $36,000. What is the
balance in the Prepaid Rent account on June 1?
A) $0
B) $9,000
C) $18,000
D) $27,000
Lonestar Company pays taxes of 25% on their first $25,000 of taxable income and 30%
on any taxable income in excess of $25,000. The company’s current taxable income is
$30,000. What is the marginal tax rate?
A) 25%
B) 30%
C) 40%
D) 65%
Radison Company owns a fixed asset with an original cost of $100,000. The company
estimates it will use the fixed asset for 5 years, at which time the fixed asset will be sold
for $5,000. The company uses straight-line depreciation. The annual depreciation
expense is ________.
A) $0
B) $10,000
C) $18,000
D) $19,000
A responsibility center for which separate measures of revenues and costs are obtained
is called a(n) ________.
A) cost center
B) contribution center
C) contribution margin center
D) segment
The Computer Department in a large company provides services to many departments.
The cost driver for costs in the Computer Department is the number of computer hours.
When allocating variable costs of the Computer Department to a user department,
which of the following formulas is used?
A) actual computer hours used × (total budgeted variable costs of Computer
Department / total budgeted computer hours of Computer Department)
B) budgeted computer hours to be used × (total budgeted variable costs of Computer
Department/ total budgeted computer hours of Computer Department)
C) actual computer hours used × (total actual variable costs of Computer Department/
total actual computer hours of Computer Department)
D) budgeted computer hours to be used × (total actual variable costs of Computer
Department/ total budgeted computer hours of Computer Department)
Lantern Company reported sales of $200,000, an increase in accounts receivable of
$5,000, and a decrease in cash of $20,000. How much cash was collected from
customers?
A) $185,000
B) $195,000
C) $200,000
D) $220,000
What does a decentralized company expect from its transfer pricing system?
A) to increase the transferring segment’s profits only
B) to increase the buying segment’s profits only
C) to increase the company’s overall profits only
D) to increase the transferring segment’s profits and the company’s overall profits
The following information pertains to Sanjay Company:
Total assets $50,000
Total current liabilities $30,000
Total expenses $60,000
Total liabilities $45,000
Total revenues $100,000
Invested capital is defined as total assets. What is the capital turnover?
A) 0.40
B) 0.63
C) 1.79
D) 2.00
On May 1, Gonzalez Company paid $36,000 for rent. The rent covers the period May 1
through August 31. Gonzalez Company recorded Prepaid Rent of $36,000. What is the
Rent Expense for the period, May 1 through June 30?
A) $0
B) $9,000
C) $18,000
D) $27,000
In an efficient capital market, the market prices of securities ________.
A) fully reflect all the information available to the public
B) fully reflect all the information available to insiders
C) reflect some of the information available to the public
D) reflect most of the information available to the public
Damon Company sold 10,000 shares of $1 par value common stock. The selling price
was $9.00 per share. After the sale, what is the capital in excess of par value?
A) $80,000
B) $90,000
C) $100,000
D) $110,000
Managers can influence the amount of fixed and variable costs in a firm through
decisions about ________.
A) product attributes
B) capacity level
C) amount of high technology equipment used for manufacturing products
D) all of the above
The amortization of intangible assets applies to ________.
A) Research and Development Costs
B) Goodwill
C) intangible assets with definite lives
D) intangible assets with indefinite lives
Which of the following statements is FALSE?
A) A cost may be defined as a sacrifice or giving up of resources for a particular
purpose.
B) Costs are frequently measured by the monetary units that must be paid for goods and
services.
C) Only manufacturing firms need some form of cost accounting.
D) A cost accounting system typically has two processes that include cost accumulation
and cost assignment.
The following information was extracted from the accounting records of Yamaguchi
Company:
Paid-in Capital, December 31, 2014 $87,000
Retained Earnings, December 31, 2014 $211,000
Total Assets, December 31, 2014 $455,000
Revenues for year ended December 31, 2015 $200,000
Expenses for year ended December 31, 2015 $165,000
Total Assets, December 31, 2015 $605,000
Additional investments by owners in 2015 $10,000
At December 31, 2014, what is the total amount of liabilities?
A) $45,000
B) $150,000
C) $157,000
D) $272,000
Incremental benefits are the ________ generated by a proposed alternative.
A) reduced revenues
B) additional costs
C) additional profits
D) additional revenues or reduced costs
In the United States, Generally Accepted Accounting Principles are developed primarily
by ________.
A) International Accounting Standards Board
B) Financial Accounting Standards Board
C) Securities and Exchange Commission
D) International Accounting Federation
Pilot Company will purchase a truck for $80,000. The truck’s depreciable life is 5 years.
The truck has no terminal salvage value. Assume a tax rate of 30% and a required
after-tax rate of return of 12%. The company uses the straight-line method of
depreciation for tax purposes. What is the annual after-tax cash flow from depreciation
expense?
A) $4,800 cash outflow
B) $4,800 cash inflow
C) $11,200 cash outflow
D) $11,200 cash inflow
In decision making situations, ________ aspects may dominate quantitative aspects in
many decisions.
A) relevant
B) precision
C) accuracy
D) qualitative