Customer-level activities are also referred to as customer-sustaining activities.
The American Institute of Certified Public Accountants is the leading organization for
management accountants in the United States.
When using a standard costing system, the direct materials price variance is recorded at
the time direct materials are purchased.
Job order costing systems are not used exclusively by manufacturers; many service
organizations use job order costing.
Which of the following characteristics relate to non-value-added activities?
a. They are sometimes essential to production.
b. They can sometimes be decreased without affecting the quality of operations.
c. Both they are sometimes essential to production and they can sometimes be
decreased without affecting the quality of operations.
d. Neither that they are sometimes essential to production nor that they can sometimes
be decreased without affecting the quality of operations.
On January 4th, Stevens Manufacturing received an order for 30 uniforms. The
following information pertained to that order.
Calculate the manufacturing cycle time.
a. 500 hours
b. 507 hours
c. 502 hours
d. 505 hours
Assume Buddy’s Farm Supply wants to make $45,000 in net income. If the tax rate is
25%, how much operating income must Buddy have?
a. $56,250
b. $60,000
c. $180,000
d. $360,000
Randy’s Garden Supply Manufacturing Company had $105,000 in raw materials’
inventory at the beginning of the month. During the month Randy used $920,000 and
had $120,000 remaining in inventory at the end of the month. How much inventory did
Randy purchase during the month?
a. $815,000
b. $905,000
c. $920,000
d. $935,000
The examination of business processes to identify incremental changes that may reduce
operating costs is referred to as
a. Process improvement.
b. Incremental analysis.
c. Business process analysis.
d. Activity-based management.
Which of the following items would not appear on a segment margin income statement?
a. Direct material
b. Traceable fixed costs
c. Selling expense
d. Common fixed costs
London Manufacturing Company expects the following sales in January, February, and
March:
The controller has determined that the company collects credit sales as follows: 60% in
the month of sale, 30% in the first month after sale, 5% in the second month after sale,
and 5% is expected to be uncollectible. How much cash will be collected from
customers in March?
a. $291,500
b. $376,500
c. $373,500
d. $410,000
Which of the following strategies relate to the internal business processes
a. Infuse corporate culture of quality throughout workforce and develop reputation for
quick turnaround
b. Achieve operational excellence and infuse corporate culture of quality throughout
workforce
c. Manage customer relationships and achieve operational excellence
d. Develop reputation for quick turnaround and manage customer relationships
When a small business begins, it is generally simple for the owner or manager to stay
on top of everything going on in the business. However, as the business adds more
product lines and locations and hires more employees, it becomes more and more
difficult for top management to remain informed about the company ‘s activities.
Required: a. What is decentralization? b. What are four advantages of decentralization?
c. Identify and describe the three organizational centers of responsibility under a unit
manager ‘s control.
Which of the following is a True statement relating to step costs?
a.Step costs remain constant over only a small range of activity.
b.Step costs do not contain a fixed component.
c.Step costs are also referred to as fixed costs.
d.None of these answer choices is a true statement.
Depreciation on a factory machine is an example of which of the following types of
cost?
a. Variable cost
b. Sunk cost
c. Opportunity cost
d. Period cost
Johnson Whole Distributors has invested in equipment that cost $120,000. The
equipment has an 8-year life and no salvage value. Johnson uses straight-line
depreciation. The equipment has a payback period of 5 years. The accounting rate of
return is closest to
a. 5%
b. 6.25%
c. 7.8%
d. 7.5%
Which of the following is an advantage of a company using equity rather than debt to
finance a project?
a. Dividends do not need to be paid.
b. Interest is tax deductible whereas dividends paid are not.
c. Dividends always require less cash than does paying interest on debt.
d. All of these answer choices are advantages of using equity rather than debt to finance
a project.
Delivery cycle time is the difference between
a. The start of production of a product and its delivery.
b. The start of production of a product and its shipment.
c. An order’s placement and its delivery.
d. An order’s placement and its shipment.
Answer the following questions relating to the statement of cash flows.
a. List the three sections used to classify activities in the statement of cash flows.
b. Give one example of a use of cash for each of the three activities.
c. Give one example of a source of cash for each of the three activities.
Variable costing is acceptable for which of the following purposes?
a. GAAP reporting
b. Internal reporting
c. Reporting to the IRS
d. All of these answer choices are correct
Activity-based costing did not gain widespread popularity until
a. 1887
b. 1907
c. 1957
d. 1987
Return on investment measures the rate of return generated by an investment in assets.
Describe the three major components of product costs: direct materials, direct labor, and
manufacturing overhead.
Juan ‘s Ortiz ‘s taco stand in Bomfa, California, specializes in fresh, handmade tacos.
While Juan ‘s business does not yet have a national presence, he does have a strong
citywide reputation. Recently, Juan has been receiving some orders from other parts of
the country through the company ‘s website. He is beginning to think about the potential
for growing his out-of-city business.
The breakeven graph illustrates the relationship between product and period costs,
allowing managers to view a range of results at a single glance.
Two measures of liquidity are the accounts receivable turnover and the inventory
turnover. What do each of these measure, and how are they each calculated?
Custom Design manufactures baby blankets by turning a client ‘s photograph of a new
baby into a design printed on the blanket. This is a popular item, selling for $30, for
new parents and grandparents. The following information has been provided by various
units within Custom Design ‘s departments. The company purchases fleece blankets in
bundles of 100 at a price of $500 per bundle. Custom Design has to pay shipping
charges of $10 per bundle. The process of transferring a picture onto a blanket costs
$1.50. Each blanket is boxed in a cardboard box that costs $0.25 each. It takes one
worker 15 minutes to prepare a blanket and transfer the picture onto the blanket and
another worker 5 minutes to check the shirt for flaws in the printing and package the
blanket. Workers are paid $9 per hour. Custom Design applies overhead at a rate of
120% of direct labor cost.
Required
Compute the standard cost of producing one blanket.
What is the difference between a normal costing system and a standard costing system?