An auto body shop is trying to decide whether or not to purchase a new piece of
diagnostic equipment. Which of the following costs would not be relevant to the
decision?
a. The cost of the new equipment
b. The increase in property taxes as a result of purchasing the expensive equipment
c. The book value of the old equipment
d. The cost of training a technician to operate the equipment.
The measure that divides customer net profit by customer revenues is referred to as
a. Customer revenue margin
b. Times revenue earned per customer
c. Customer profit margin
d. Customer net profit
Judy’s Jewelry sells necklaces to retailers across the country. Her gross margin can run
as high as 35%. Required:
a. If the sales price for a pearl necklace is $249, what is the cost to make it, assuming a
35% gross margin?
b. If Judy were to increase the cost of producing the pearl necklace to $166, what would
be the markup percentage at the $249 sales price?
c. If Judy were to increase the cost of producing the pearl necklace to $166, what would
be the sales price at a 35% gross margin?
The income that is earned above the specified minimum level of return is referred to as
a. EVA.
b. Residual income.
c. Segment income.
d. Operating income.
Which of the following is a way a company can use information about activities to
manage its operations?
a. Activity-based costing
b. Activity-based management
c. Activity-based budgeting
d. All of these answer choices are correct.
Match the following terms to the appropriate statement by placing the letter to the left
of each statement. a. Balanced scorecard f. Learning and growth perspective
b. Benchmarking g. Manufacturing cycle efficiency
c. Delivery cycle time h. Manufacturing cycle time
d. Financial perspective i. Performance dashboards
e. Internal business process perspective j. Strategy map
The ratio that shows how much of each sales dollar that is available to cover operating
expenses and provide a profit after the cost of goods sold has been covered is called
a. Contribution margin percentage
b. Return on equity.
c. Internal rate of return.
d. Gross margin percentage.
Which of the following costs are incurred in a process costing system?
a. Direct material
b. Direct labor
c. Manufacturing overhead
d. All of these answer choices are correct
In an activity-based system, which of the following is not a category in which activities
are classified?
a. Unit-level
b. Batch-level
c. Product-level
d. All of these answer choices are categories in which activities are classified.
On July 31st of the current year Bridges Industries borrowed $60,000 from the First
National Bank. The $60,000 was used to pay dividends of $40,000 to stockholders and
purchase a $20,000 piece of equipment. How will these transactions be reported in the
statement of cash flows? Operating Section Investing Section Financing Section
a. $40,000 use $20,000 use $60,000 source
b. $0 $40,000 use/$20,000 use $60,000 source
c. $40,000 use $20,000 use $60,000 source
d. $0 $20,000 use $60,000 source/$ 40,000 use
Identify which of the following items would be classified as capital assets.
a. Pollution prevention technology
b. Direct material
c. Computer generated manufacturing system
d. Office supplies
e. Delivery van