1) Benchmarking is the continuous process of measuring products, services, and
activities against the best possible levels of performance, either inside or outside the
organization.
2) An individual cost item can be simultaneously a direct cost of one cost object and an
indirect cost of another cost object.
3) Total variable cost is expected to remain unchanged as activity changes within the
relevant range.
4) A good balanced scorecard tells the story of a company’s strategy, articulating a
sequence of cause-and-effect relationshipsthe links among the various perspectives that
align implementation of
the strategy.
5) Budgetary slack is the practice of underestimating costs so as to project an optimistic
future outlook.
6) Conversion costs include direct materials and direct labor but excludes all other
manufacturing and non-manufacturing costs.
7) The engineering approach to the analysis of mixed costs involves a detailed analysis
of what cost behavior should be, based on an industrial engineers evaluation of the
production methods to be used, the materials specifications, labor requirements,
equipment usage, production efficiency, power consumption, and so on.
8) The financial cost of quality measures serves as a common denominator for
evaluating trade-offs among prevention costs and failure costs.
9) Control comprises taking actions that implement the planning decisions, evaluating
past performance, and providing feedback and learning to help future decision making.
10) The sales-value at splitoff method of joint cost allocation involves computation of
the relative amounts of the sales value of the amount of each joint product sold during
the period.
11) A disadvantage of using negotiated prices is that the time and energy spent by
managers haggling over transfer prices make the method too costly.
12) Which of the following is a stage of the capital-budgeting process that tracks
realized cash flows and compares those against estimated numbers?
A) implement the decision, evaluate performance, and learn stage
B) make predictions stage
C) identify projects stage
D) make decisions by choosing among alternatives stage
13) Which of the following is a reason for a favorable material price variance?
A) the purchasing manager bargaining effectively with suppliers
B) the purchasing manager giving orders for small quantity to reduce storage cost
C) the purchasing manager accepting a bid from the highest-priced supplier to ensure
the quality of material
D) the personnel manager hiring underskilled workers
14) ________ is a method of inventory costing in which all variable manufacturing
costs and all fixed manufacturing costs are included as inventoriable costs.
A) Variable costing
B) Mixed costing
C) Absorption costing
D) Standard costing
15) Crimpson Company has invested $2,000,000 in a plant to make commercial juicer
machines. The target operating income desired from the plant is $299,000 annually. The
company plans annual sales of 7,000 juicer machines at a selling price of $400 each.
What is the markup percentage as a percentage of cost for Crimpson Company?
A) 22.0%
B) 18.0%
C) 12.0%
D) 11.0%
16) The Alfarm Corporation processes raw milk up to the splitoff point where two
products, cream and liquid skim, are produced and sold. There was no beginning
inventory. The following material was collected for the month of February:
The cost of purchasing 750,000 gallons of direct materials and processing it up to the
splitoff point to yield a total of 727,500 gallons of good product was $2,280,000.
When using the physical-volume method, what is Cream’s approximate production cost
per gallon?
A) $3.03
B) $3.31
C) $3.13
D) $3.21
17) The direct allocation method ________.
A) allocates support-department costs to operating departments by fully recognizing the
mutual services provided among all support departments
B) allocates support-department costs to other support departments and to operating
departments in a sequential manner that partially recognizes the mutual services
provided among all support departments
C) allocates each support-department’s costs to operating departments only
D) requires managers to rank the support departments in the order that the step-down
allocation is to proceed
18) A report showing the actual financial results for a period compared to the budgeted
financial results for that same period would most likely be called a ________.
A) strategic plan
B) management forecast
C) performance report
D) revised plan
19) The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint
process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols.
Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the
splitoff point are $187,500.
What amount of joint costs will be allocated to the Gizmos?
A) $44,118
B) $30,882
C) $77,206
D) $66,176
20) Product costs used for government contracts generally include ________.
A) marketing costs, and customer service costs
B) design costs and production costs
C) all the costs for pricing and product-mix decisions
D) production costs, distribution costs, marketing costs, and customer service costs
21) Hypore Darby Park Department is considering a new capital investment. The
following information is available on the investment. The cost of the machine will be
$251,130. The annual cost savings if the new machine is acquired will be $110,000. The
machine will have a 3-year life, at which time the terminal disposal value is expected to
be zero. Hypore Park Department is assuming no tax consequences. What is the internal
rate of return for Hypore Park Department?
A) 10%
B) 15%
C) 14%
D) 16%
22) Isondo’s TV and Appliance Store is a small company that has hired you to perform
some management advisory services. The following information pertains to 2015
operations.
What was the variable cost per unit sold for 2015?
A) $30
B) $480
C) $770
D) $450
23) Assume the following cost information for Fernandez Company:
What minimum volume of sales dollars is required to earn an after-tax net income of
$30,000?
A) $465,000
B) $330,000
C) $390,000
D) $165,000