The most useful information derived from a cost-volume-profit chart is the
A. amount of sales revenue needed to cover enterprise variable costs.
B. amount of sales revenue needed to cover enterprise fixed costs.
C. relationship among revenues, variable costs, and fixed costs at various levels of
activity.
D. volume or output level at which the enterprise breaks even.
A budget manual should include which of the following?
A. a list of specific budgetary activities to be performed
B. original, revised, and approved budgets
C. a calendar of scheduled budgetary activities
D. all of the above
Which of the following will decrease the break-even point?
A. yes yes yes
B. yes no yes
C. yes no no
D. no yes no
The total labor variance can be subdivided into all of the following except
A. rate variance.
B. yield variance.
C. learning curve variance.
D. mix variance.
The profitability index is
A. the ratio of net cash flows to the original investment.
B. the ratio of the present value of cash flows to the original investment.
C. a capital budgeting evaluation technique that doesn’t use discounted values.
D. a mandatory technique when capital rationing is used.
The costs generated by the cost management system are used to
A. assess product/service profitability.
B. establish prices for products with significant competition.
C. determine underlying reasons for variations from standards.
D. all of the above.
Which of the following should be considered in a cost management system design?
A. yes yes yes
B. no yes yes
C. no no no
D. yes no yes
Manufacturing cycle efficiency is a measure of
A. bottlenecks.
B. effectiveness.
C. efficiency.
D. quality.
On a balanced scorecard, which of the following would be most appropriate to measure
financial performance?
A. Market share
B. Customer retention
C. Percentage of sales from new products
D. Investment in intellectual capital
Michigan Company
Ann Arbor Division of the Michigan Company has the following statistics for its most
recent operations:
Refer to Michigan Company. What is the target rate of return in Michigan Company?
A. 25%
B. 20%
C. 15%
D. 10%
For financial reporting to the IRS and other external users, manufacturing overhead
costs are
A. deducted in the period that they are incurred.
B. inventoried until the related products are sold.
C. treated like period costs.
D. inventoried until the related products have been completed.
Which of the following is most likely to make the implementation of ABC/ABM slow
and difficult?
A. The development of new cost drivers that measure costs more effectively.
B. A lack of involvement by or support from upper management.
C. The need for dual costing systems.
D. An inability to eliminate all business-value-added activities.
Austin, Brown, and Freeman Companies
Below are income statements that apply to three companies: Austin, Brown, and
Freeman:
Refer to Austin, Brown, and Freeman Companies. Within the relevant range, if sales go
up by one unit for each firm, which firm will experience the greatest increase in net
income?
A. Austin Company
B. Brown Company
C. Freeman Company
D. can’t be determined from the information given
A cost that is found to bear an observable and known relationship to a quantifiable
activity base is a(n)
A. discretionary cost.
B. product cost.
C. period cost.
D. engineered cost.
Saturn Corporation
Material A is added at the start of production, while Material B is added uniformly
throughout the process.
Refer to Saturn Corporation Assuming a weighted average method of process costing,
compute EUP for conversion.
A. 2,600
B. 2,180
C. 2,000
D. 2,700
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Using approximated net realizable value at split-off, what
amount of joint processing cost is allocated to Product X (round to the nearest dollar)?
A. $3,090
B. $5,204
C. $4,000
D. $2,390
A favorable fixed overhead volume variance occurs if
A. there is a favorable labor efficiency variance.
B. there is a favorable labor rate variance.
C. production is less than planned.
D. production is greater than planned.
The material price variance (computed at point of purchase) is
A. the difference between the actual cost of material purchased and the standard cost of
material purchased.
B. the difference between the actual cost of material purchased and the standard cost of
material used.
C. primarily the responsibility of the production manager.
D. both a and c.
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 C (round to the nearest dollar)?
A. $389,189
B. $145,946
C. $291,892
D. $72,973
Parker Company
Below is an income statement for Parker Company:
Refer to Parker Company. What is Parker’s degree of operating leverage?
A. 3.67
B. 5.33
C. 1.45
D. 2.67