When management by exception is employed, both favorable and unfavorable variances
should be investigated.
When using the risk-adjusted discount rate method, a manager increases the rate used
for discounting future cash outflows.
A responsibility accounting system should include the revenues and costs under a
division manager’s control.
Distribution costs are an example of product costs.
The tax benefit from depreciation expense is the depreciation amount divided by the
tax rate.
Grade refers to one of many quality levels that a product or service has relative to the
inclusion or exclusion of certain characteristics to satisfy customer needs.
Capital budgeting uses both financial and non-financial criteria when evaluating
projects.
The first step in performing activity analysis is to prepare a process map.
Conversion costs include all manufacturing costs other than direct materials.
In a pollution prevention system, managers produce the pollutant, and then clean it up.
Top management personnel are the key players in open-book management.
Building depreciation is generally considered a product or process level cost.
In a process costing system using the weighted average method, cost per equivalent
unit for a given cost component is found by dividing which of the following by EUP?
A. only current period cost
B. current period cost plus the cost of beginning inventory
C. current period cost less the cost of beginning inventory
D. current period cost plus the cost of ending inventory
Mobile Company
Mobile Company is a manufacturer of electronic components. The following
manufacturing information is available for the month of May:
Refer to Mobile Company. What is the throughput per hour?
A. 1.3 units (rounded)
B. 2.0 units
C. 1.8 units
D. .8 units
St. Paul Medical Clinic has two service departments: Building Operations and Utilities,
and three operating departments: Rehabilitation, Preventative Medicine, and Geriatrics.
St. Paul Medical Clinic allocates the cost of Building Operations on the basis of square
footage and Utilities on the basis of patient days. Fixed and variable costs are not
separated.
Budgeted operating data for the previous year are presented below:
Required:
Relative to qualitative performance measures, quantitative performance measures are
less
A. subject to manipulation.
B. dependent on accounting information.
C. effective in the pursuit of organizational goals.
D. subjective.
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 a physical measure, what amount of joint
processing cost is allocated to Product X (round to the nearest dollar)?
A. $4,000
B. $4,757
C. $5,500
D. $3,243
With regard to a capital investment, net cash inflow is equal to the
A. cost savings resulting from the investment.
B. sum of all future revenues from the investment.
C. net increase in cash receipts over cash payments.
D. net increase in cash payments over cash receipts.
Calhoun Corporation
Calhoun Corporation’s order quantity for Material T is 5,000 lbs. The company
maintains a safety stock of T at 500 lbs., and its order point is 1,500 lbs.
Refer to Calhoun Corporation. What is the lead time assuming daily usage is 50 lbs.?
A. 30 days
B. 100 days
C. 10 days
D. 20 days
Strategic alliances take the form of
A. joint ventures.
B. technology swaps.
C. licensing.
D. all of the above.
The measure of activity that allows for routine variations in manufacturing activity is:
A. theoretical capacity
B. practical capacity
C. normal capacity
D. expected capacity
Blue Mountain Company manufactures a single product. In the prior year, the company
had sales of $90,000, variable costs of $50,000, and fixed costs of $30,000. Blue
Mountain expects its cost structure and sales price per unit to remain the same in the
current year, however total sales are expected to increase by 20 percent. If the current
year projections are realized, net income should exceed the prior year’s net income by:
A. 100 percent.
B. 80 percent.
C. 20 percent.
D. 50 percent.
Wyman Enterprises
Refer to Wyman Enterprises. For March, Cost of Goods Manufactured was
A. $118,000.
B. $115,000.
C. $112,000.
D. $109,000.
Which of the following are categories judged for the Baldrige Award?
A. no yes no yes yes
B. yes yes yes yes yes
C. yes yes no yes no
D. no no no no no
Beauty Tools Corporation makes and sells brushes and combs. It can sell all of either
product it can make. The following data are pertinent to each respective product:
Total fixed overhead is $380,000.
The company has 40,000 machine hours available for production. What sales mix will
maximize profits?
A. 320,000 brushes and 0 combs
B. 0 brushes and 800,000 combs
C. 160,000 brushes and 600,000 combs
D. 252,630 brushes and 252,630 combs
What factor, related to manufacturing costs, causes the difference in net earnings
computed using absorption costing and net earnings computed using variable costing?
A. Absorption costing considers all costs in the determination of net earnings, whereas
variable costing considers fixed costs to be period costs.
B. Absorption costing allocates fixed overhead costs between cost of goods sold and
inventories, and variable costing considers all fixed costs to be period costs.
C. Absorption costing “inventories” all direct costs, but variable costing considers direct
costs to be period costs.
D. Absorption costing “inventories” all fixed costs for the period in ending finished
goods inventory, but variable costing expenses all fixed costs.
Terry Smith Corporation used least squares regression analysis to obtain the following
output:
a. What is the total fixed cost?
b. What is the variable cost per employee?
c. Prepare the linear cost function.
d. What is the coefficient of determination? Comment on the goodness of fit.
Sterling Vision Corporation
Sterling Vision Corporation manufactures various glass products including a car
window. The setup cost to produce the car window is $1,200. The cost to carry a
window in inventory is $3 per year. Annual demand for the car window is 12,000 units.
Refer to Sterling Vision Corporation. What is the most economical production run
(rounded to the nearest unit)?
A. 6,000 units
B. 3,000 units
C. 9,295 units
D. 3,098 units
If actual overhead is less than applied overhead, factory overhead is said to be
____________________.
Mobile Corporation
Mobile Corporation is a manufacturer of electronic blood pressure monitors for
home use. The following is a summary of quality costs for the first year of operations.
Refer to Mobile Corporation. Compute the total rework cost.
A management philosophy that allows all workers access to information necessary to
do their jobs effectively is referred to as
________________________________________.
Wisteria Corporation produces a product using the following standard proportions and
costs of material:
A recent production run yielding 100 output pounds required an input of:
Required: Material price, mix, and yield variances.
Using the information below, prepare a Schedule of Cost of Goods Manufactured (in
good form) for the Cayton Company for June 20y0:
Additional information: purchases of raw material were $51,900; 21,560 direct labor
hours were worked at $12.50 per hour; overhead costs were $39,800.
Discuss the four categories of quality costs.