An opportunity cost is the contribution margin of the next-best alternative use of the
facilities.
Both the top-down and bottom-up approaches to budgeting are linear, with budget
information flowing in a single direction.
The segment margin is the contribution margin of a particular segment less any direct
fixed costs.
The type of analysis that looks at the changes in the account balances over time is
referred to as horizontal analysis.
The contribution margin is the difference between sales and fixed costs.
Measures that can be determined only after something is finished are called lagging
indicators.
A tool that managerial accountants have developed to assist in monitoring
organizational performance is the balanced scorecard.
Ethical business behavior is compliance with the law.
Stacey Trail has just won the Lotto. Her prize pays $40,000 at the end of each year for 5
years. In addition, she will receive a one-time payment of $240,000 at the end of 5
years. Using the following factors at 10%, what amount has Stacey really won in the
Lotto?
a. $440,000
b. $300,653
c. $553,317
d. $484,204
When multiple products share a constrained resource, the constrained resource should
be allocated first to the product with
a. The lowest contribution margin.
b. The lowest contribution margin per unit.
c. The highest contribution margin per constrained resource.
d. The highest contribution margin.
The units of product in the ending work in process inventory must be converted to
equivalent units of production separately for the direct materials and conversion costs
because
a. The units may be in different departments at the end of the period
b. The units may not be at the same stage of completion
c. The conversion cost may have been added at the beginning of the process
d. None of these answer choices are correct
A company’s inventory account decreased by $1,000 during the year. Which of the
following would appear on the statement of cash flows prepared using the indirect
method?
a. An addition under investing activities
b. A deduction under investing activities
c. An addition under operating activities
d. A deduction under operating activities
The algebraic equation for the direct materials price variance is
a. Direct materials price variance = AQpurch x (AP – SP)
b. Direct materials price variance = SQpurch x (AP – SP)
c. Direct materials price variance = SP x (AQpurch – SQpurch)
d. Direct materials price variance = AP x (AQpurch – SQpurch)
Which of the following is not an advantage of a company using equity rather than debt
to finance a project?
a. Interest always takes more cash than does paying dividends.
b. Dividends do not need to be paid.
c. Equity does not need to be repaid whereas debt does.
d. All of these answer choices are advantages of using debt rather than equity to finance
a project.
The matching principle states that
a. Expenses should be matched with specific jobs.
b. Expenses should be matched with revenues they generate.
c. Revenues should be recorded in the period in which the payment is received.
d. Expenses should be matched to assets which generated the expenses.
An example of a discretionary fixed cost for a clothing manufacturer is
a.An annual contract for television advertising cost.
b.A 10-year lease on an office building.
c.Yards of fabrics used.
d.None of these answer choices are correct.
Which of the following does the statement of cash flows not help managers evaluate?
a. A company’s ability to generate cash from operations
b. How well a company manages its assets
c. The quality of a company’s assets
d. A company’s use of debt and equity
Turnbull Company produces two products and their overhead consists of setups
$20,000; machining $2,220,000; and packing $80,000. Data for the current year follow:
The overhead allocated to Beta assuming a single overhead rate based on machine
hours and assuming ABC, respectively, are:
a. $256,000 and $478,000
b. $464,000 and $456,000
c. $256,000 and $242,000
d. $464,000 and $478,000
You are considering moving off campus. You have found a one-bedroom apartment
very near campus that is clean and safe. However, you do not want to live alone. A
one-bedroom apartment is roomy enough to have one or two roommates. The manager
discourages having more than one individual in an apartment and so charges rent per
person. The relationship between the number of roommates, the total cost, and the cost
per person is:
This is an example of
a.A fixed cost.
b.A variable cost.
c.A mixed cost.
d.A step cost.
Which of the following would be considered a batch-level activity?
a. Engineering changes made on the assembly line
b. Quality tests
c. Warehouse costs
d. None of these answer choices are correct.
When using the balanced scorecard to monitor performance, the learning and growth
perspective answers which of the following questions?
a. Are we developing employees and providing technologies that facilitate change and
improvement?
b. Are we creating products and hiring employees with skills to create product and
deliver them in a timely manner?
c. Are we meeting our stakeholders’ expectations?
d. Are we growing in a manner to be competitive in the industry?
Ellis Dover is a scout for a Major League Baseball team based in Phoenix, Arizona.
Ellis needs to travel to Los Angeles, California on June 1 to perform a variety of
professional functions prior to the team travelling to Los Angeles to play. If Ellis flies,
he could catch a 6 a.m. flight on June 1. In order to perform all of his professional
responsibilities, Ellis will need to spend the night and catch a flight on June 2nd to
return to Phoenix. If Ellis flies, he will need to rent a car for $38 per day. To cover
meals and other incidental expenses, Ellis will receive $45 per day (per diem) for each
day he works out of town. Flights between Phoenix and Los Angeles can be purchased
for $89 one way.
Phoenix is approximately 300 miles from Los Angeles, a 5-hour drive at speed limits
permitted on the freeways connecting the two cities. If he drives from Phoenix to Los
Angeles, Ellis would need to leave the afternoon of May 31 and would be reimbursed
$.50 per mile. He would need to spend 2 nights in a hotel, the night of May 31 and the
night of June 1. He would return to Phoenix by car on June 2nd. The hotel used by the
team charges $160 per night. What is the relevant cost of flying?
a. $414
b. $254
c. $459
d. $504
Phelps Piping Company manufactures PVC pipe. The company has provided the
following selected financial information:
Required:
a. What is Phelps’ accounts receivable turnover for 2014? b. What is Phelps’ gross
margin percentage for 2014?
Which of the following measures would not help managers manage their degree of
operating leverage?
a. Convert a welder who is paid by the hour to a welding machine.
b. Put all sales staff on salary Instead of paying a sales commission.
c. Convert some indirect material to direct material.
d. Change the unit sales price.
Etters Manufacturing Company has provided the following financial data for its most
recent month.
Required:
Prepare an income statement using a variable costing format.
Spivey Industries engaged in the following activities during the year:
ï€ï€ Borrowed money from City Bank for $200,000
ï€ï€ Sold equipment that cost $125,000 for $40,000
ï€ï€ Sold 100 shares of stock for $20 each
ï€ï€ Paid dividends to stockholders totaling $12,000
Required:
Prepare the cash flows provided by financing activities section of Spivey’s statement of
cash flows.
Knowing the breakeven point helps managers evaluate the profitability, but not the
desirability of various business opportunities.
Good Morning Day Care Center is a child care facility. Good Morning is considering
benchmarking with Lights Out Motel, a small, successful motel located on the same
block as Good Morning.
Required:
List five processes would Good Morning have in common with those of a motel?
Calculate a project’s payback period.