A performance measure is specific if it
a. Measures only one activity.
b. Relates clearly and directly to the process it measures.
c. Is either qualitative or nonfinancial, but not both.
d. Is complete and accurate.
Which of the following items would be subtracted from net income when using the
indirect method of calculating cash flows provided by operating activities?
a. Depreciation expense
b. Repayment of bonds payable
c. A gain on the sale of land
d. A loss on the sale of equipment
For a small business producing a single product, having one location and few
employees, the organizational structure that is most appropriate is
a. Centralized.
b. Decentralized.
c. Divisional stability.
d. Segmented decision making.
Which of the following is the most popular way to begin the budgeting process?
a. The incremental approach
b. Zero-based approach
c. Rolling approach
d. None of these answer choices are correct.
Which of the following is not classified as a fixed period cost?
a. Packaging for delivery
b. Depreciation on delivery trucks
c. Marketing Vice President’s salary
d. Advertising
A statistical technique that identifies the line of best fit for the points plotted in a
scattergraph is called
a.Regression analysis
b.Break-even analysis
c.High-low method
d.ERP
Which of the following is not a factor that influences the discount rate?
a. Amount of the cash flows
b. Inflation
c. Investor’s expected rate of return
d. All of these answer choices are factors that influence the discount rate
The formula for converting desired net income into operating income is
a. Desired net income times the income tax rate.
b. Desire net income divided by the income tax rate.
c. Desired net income divided by (1- tax rate).
d. Desired net income divided by (1+ tax rate).
Jenny’s Cutting Station is a new concept in haircuts; low cost and very quick. Set in a
local mall, Jenny’s offers 15 minute haircuts for harried shoppers who do not have time
for lengthy appointments. To ensure that the clients are in and out quickly, she
schedules her 5 employees based on expected client traffic. Each of the employees is
paid $1,200 per month, with part of their pay coming from client tips. Jenny pays rent
and overhead costs of $2,000 per month. Because of the quick nature of the service,
Jenny doesn’t have time to clean combs in between clients, so she uses a new comb for
each customer, at a cost of $.55 each. She also provides shampoo and conditioner for
each client at a cost of $.95 per client. The average price for a haircut is $12. Jenny pays
herself $5,000 per month. What are Jenny’s fixed costs for the month?
a.$9,200.
b.$13,000
c.$11,000
d.$8,000
Which of the following is a difference between job order costing and process costing
systems?
a. Companies that use a process costing system accumulate product costs throughout
the production process while companies that use a job order costing system accumulate
product cost only at the end of the production process.
b. Companies that use a process costing system accumulate product costs in each
production department and allocate the costs evenly across all units produced in the
department during the period while companies that use job order costing accumulate
product costs by job and allocate those costs only to the units in that particular job.
c. Companies that use a process costing system accumulate direct material and direct
labor, but not manufacturing overhead while companies that use a job order costing
systems accumulate direct material, direct labor and manufacturing overhead.
d. All of these answer choices are differences between process costing and job order
costing systems.
During the current year, ABC Corporation did not purchase any property, plant and
equipment, but sold land with a book value of $6,000 for $12,000 cash and sold a
delivery truck with a cost of $18,000, depreciation of $16,000, and an appraised value
of $5,000 for $4,000. What is ABC’s net cash flows provided by investing activities for
the year?
a. $8,000
b. $11,000
c. $16,000
d. $24,000
Materiality can be measured in terms of
a. Absolute dollars.
b. Relative percentages.
c. Both absolute dollars and relative percentages.
d. None of these answer choices are correct.
When a company continues to manufacture a product, but changes the geographical
location of production, it is called
a. Outsourcing.
b. Offshoring.
c. Right-sourcing.
d. All of these answer choices are correct.
The price/earnings ratio indicates
a. The amount of earnings that a company is willing to pay to shareholders in the form
of dividends.
b. What multiple of current earnings investors are willing to pay for a share of stock.
c. The net income available to pay out in dividends to shareholders.
d. None of these answer choices are correct.
Managerial accounting information is not just for accountants. All areas within an
organization can use the information to support decision making. For the following
positions, list three decisions the manager might have to make and give an example of a
report that would help the manager in the decision making process.
a.Plant manager
b.Vice-President of sales
c.Inventory supervisor
Michael Porter, a management strategy expert, developed a strategic framework in
which a firm has ways to develop a competitive advantage. Which of the following is
not one of the ways Porter suggested a firm use to develop a competitive advantage?
a.Product differentiation
b.Low cost production
c.Contribution differentiation
d.None of these answer choices are correct.
In looking at the ‘œPresent Value of $1 Received in n Periods’ the columns represent
a. Different interest rates
b. Number of periods in the future
c. Discount factor
d. None of these answer choices are correct
Direct materials variances, direct labor variances, return on investment, residual income
and EVA are performance measures that are
Greenland, Inc. is a manufacturing company specializing in eco-friendly products.
Greenland has recently developed a new water filter. Since the product is new to the
market, Greenland does not have a prior history of sales to help develop its budget for
the coming quarter. Greenland has agreements from several retail outlets to promote
and stock the filters. Based on customers ‘ request and Greenland ‘s sales staff,
managers have estimated January sales to be 200 units and estimate that sales will
double each month for the next six months. The units are priced at $120 each.
Required:
Prepare a sales budget for the first quarter.
R&W Manufacturing Company produces men ‘s hiker shorts. The selling price of the
shorts is $35. The following standard cost data per unit includes $7 direct material, $4
direct labor and $12 manufacturing overhead (50% variable, 50% fixed). R&W has
received a special order for 200 at a price of $20 each. The only additional cost of
accepting the special order is a sales commission of $1 per unit. R&W has ample
capacity to produce the special order without interrupting regular production. Ignoring
qualitative factors, should R&W accept the special order?
Burton Corporation ‘s Central region operates an investment center. John Meadows, the
region ‘s director, has set a 15% required minimum rate of return. John is considering
investing in a $50,000 machine that is expected to generate $20,000 in additional
income.
Required:
Calculate the machine ‘s residual income. Show your work.
Velton Corporation produces toddlers’ plastic slides. In preparing the current budget,
Velton’s management chooses to use an overhead base of labor hours. Velton estimates
a total of $300,000 in manufacturing overhead costs and 5,000 labor hours for the
coming year. In December, Velton’s controller reported actual manufacturing overhead
incurred of $320,000 and 4,900 labor hours used during the year.a. What is Velton’s
predetermined overhead rate for the year?
b. How much manufacturing overhead did Velton apply during the year?
Calculate the variable overhead spending and efficiency variances.
