What effect would an increase in fixed costs have on the break-even point and the
contribution margin?
Break-even Point Contribution Margin
A. Increase Increase
B. Increase Decrease
C. Decrease Increase
D. Decrease Decrease
What is the objective of value engineering?
A.to increase quality in order to satisfy customer needs.
B.to reduce quality while satisfying customer needs.
C.to increase profits while satisfying customer needs.
D.to reduce costs while satisfying customer needs.
Which statement is correct concerning the learning curve function?
A.This function shows how the amount of time required to perform a task goes up per
unit as the number of units increases.
B.This function shows how the amount of time required to perform a task goes down
per unit as the number of units increases.
C.This function shows how the amount of time required to perform a task goes up per
unit as the number of units decreases.
D.This function shows how the amount of time required to perform a task goes down
per unit as the number of units decreases.
When graphing cost behavior, each point best represents one pair of:
A.Revenue and activity values.
B.Fixed cost and revenue values.
C.Variable cost and revenue values.
D.Cost and activity values.
Which of the following is true about short-run and long-run pricing decisions?
A.Short-run decisions include pricing for a special order with no long-term
implications.
B.Short-run decisions typically have a time horizon of six months or less.
C.Long-run decisions include pricing a main product in a major market.
D.All of the answers are correct.
Which of the following companies would most likely use a job costing system?
A.Pillsbury (flour)
B.Heinz (catsup)
C.Universal Studios (movies)
D.Budweiser (beer)
What can be said of the relationship between total manufacturing costs and the cost of
goods manufactured when work-in-process inventories decrease during the period?
(Assume no change in per unit costs.)
A.They are equal.
B.Total Manufacturing Costs greater than Cost of Goods Manufactured
C.Cost of Goods Manufactured greater than Total Manufacturing Costs
D.Nothing can be said without additional information.
What stabilizes and improves processes to decrease variation, and is well suited to
removing disruptions in the process?
A.Total Quality Management
B.Total Quantity Management
C.Total Price Management
D.Total Cost Management
Which of the following statements is true concerning a normalized overhead rate?
A.A normalized overhead rate should be used whenever the firm does not prepare a
master budget.
B.A normalized overhead rate is employed so that wide fluctuations and variations in
the level of production will not influence unit costs.
C.A normalized overhead rate is used by firms that have a normal production schedule.
D.A normalized overhead rate results in distorting the income figures of the firm.
Which of the following costs are not customer activities in the product cost hierarchy?
A.Plant management.
B.Promotion.
C.Customer records.
D.Market research.
Pauter Company
Pauter Company had the following historical accounting data per unit:
The units are normally transferred internally from Division A to Division B. The units
also may be sold externally for $210 per unit. The minimum profit level accepted by the
company is a markup of 30 percent. There were no beginning or ending inventories.
Refer to Pauter Company. What would be the transfer price if Division X uses full cost
plus markup?
A.$167.70
B.$198.90
C.$136.50
D.$129.00
ABC Company
ABC Company reports the following information for the most recent period when 2,750
units were produced.
Refer to ABC Company. Calculate the direct labor efficiency variance.
A.$70 F
B.$200 U
C.$270 U
D.$130 U
In 1977, the United States Government passed the Foreign Corrupt Practices Act which
A.requires all companies registered with the SEC to make and keep accurate books and
records.
B.requires all companies registered with the SEC to devise and maintain a system of
internal accounting controls sufficiently adequate that managers of a company will
know if a bribe is paid.
C.allows for “grease payments” paid to low-level foreign government employees to
expedite routine matters.
D.All of the answers are correct.
The relative proportion of various products sold by a company is called the
A.marketing mix.
B.product mix.
C.operating mix.
D.output mix.