Preparation of a value chart is the first step in activity analysis
A total quality system should place an emphasis on prevention and continuous
improvement.
In a normal job-order costing system, factory overhead is applied using predetermined
rates times standard input.
Customer satisfaction is an example of a quantitative performance measure.
The product life cycle has a significant impact on costs and profits.
A hybrid costing system would be appropriate for a company that manufactures cake
flour.
The primary distinction between by-products and scrap is the difference in sales value.
An organization’s discount rate should be equal to or exceed the organization’s cost of
capital.
In a manufacturing organization, the production budget is prepared immediately after
the sales budget.
In computing a transfer price, the maximum price should be no higher than the highest
market price at which the buying segment can obtain the good or service externally.
The most common external performance measure used for all organizations is financial
in nature.
The FIFO method separates beginning inventory and current production to compute
cost per unit of production.
A manager of a cost center is evaluated solely on the basis of how well costs are
controlled.
Objectives for a pay plan
A. are not needed in a performance-based plan.
B. must be stated for a performance-based plan to work.
C. are essential for a periodic compensation plan to be successful.
D. are unnecessary for a merit pay plan.
Crosby Corporation
Crosby Corporation has two service departments: Data Processing and
Administration/Personnel. The company also has three divisions: X, Y, and Z. Data
Processing costs are allocated based on hours of use and Administration/Personnel costs
are allocated based on number of employees.
Assume that Data Processing provides more service than Administration/Personnel.
Refer to Crosby Corporation. Assume that Data Processing costs have been allocated
and the balance in Administration is $600,000. Using the step method, what amount is
allocated to Z?
A. $200,000
B. $112,500
C. $214,286
D. $225,000
Cost accounting is necessitated by
A. the high degree of conversion found in certain businesses.
B. external reporting requirements for manufacturing companies.
C. management’s need to be aware of all production activities.
D. management’s need for information to be used for planning and controlling
activities.
Chronologically, the last part of the master budget to be prepared would be the
A. pro forma financial statements.
B. cash budget.
C. capital budget
D. production budget.
Painter Corporation
Painter Corporation has the following information for the current month:
All materials are added at the start of the production process. Painter Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Painter Corporation. Assume that the costs per EUP for material and
conversion are $1.00 and $1.50, respectively. What is the cost assigned to normal
spoilage, using weighted average, and where is it assigned?
A. $7,438 Units transferred out and Ending Inventory
B. $7,438 Units transferred out
C. $8,750 Units transferred out and Ending Inventory
D. $8,750 Units transferred out
Variance analysis would be appropriate to measure performance in
A. profit centers.
B. investment centers.
C. cost centers.
D. all of the above.
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product E?
A. $3,495
B. $2,447
C. $1,748
D. $1,311
A manager is attempting to determine whether a segment of the business should be
eliminated. The focus of attention for this decision should be on
A. the net income shown on the segment’s income statement.
B. sales minus total expenses of the segment.
C. sales minus total direct expenses of the segment.
D. sales minus total variable expenses and avoidable fixed expenses of the segment.
Which of the following is not a factor that directly affects the budget for a discretionary
cost?
A. the importance of the activity to the achievement of the organization’s goals
B. last period’s budget
C. the expected level of operations
D. managerial negotiations in the budgeting process
An outside firm selected to provide services to an organization is called a
A. contract vendor.
B. lessee.
C. network organization.
D. centralized insourcer.
A commonly recognized critical success factor for most organizations is
A. yes yes yes no
B. yes no yes yes
C. no yes no yes
D. no no yes no
The interest rate used to find the present value of a future cash flow is the
A. prime rate.
B. discount rate.
C. cutoff rate.
D. internal rate of return.
JIT is a philosophy concerned with
A. when to do something.
B. how to do something.
C. where to do something.
D. how much of something should be done.
Which of the following could not be used in job-order costing?
A. standards
B. an average cost per unit for all jobs
C. normal costing
D. overhead allocation based on the job’s direct labor hours
On a balanced scorecard, which of the following would be most appropriate to measure
innovation:
A. Rapid time-to-market of new products
B. Corporate financial profits
C. On-time delivery
D. Manufacturing cycle efficiency
An activity center is an organizational unit
A. that makes a single product or performs a single service.
B. in which only value-added activities are performed.
C. that incurs only unit, batch, or product/process level costs.
D. for which management wants separate activity information.
Hunnicutt Company is a construction company that builds greenhouses on special
request. What is the proper classification of indirect material used?
A. no no no
B. no yes yes
C. yes yes yes
D. yes no no
The following information is given for the Corn and Oats Divisions of Wholesome
Grains Corporation.
Sales less variable cost of goods sold is referred to as
________________________________________.
Adams Corporation manufactures a certain product by mixing three kinds of materials
in large batches. The blend master has the responsibility for maintaining the quality of
the product, and this often requires altering the proportions of the various ingredients.
Standard costs are used to provide material control information. The standard material
inputs per batch are:
The finished product is packed in 50-pound boxes; the standard material cost of each
box is, therefore, $3.61.
During January, the following materials were put in process:
Inventories in process totaled 5,000 pounds at the beginning of the month and 8,000
pounds at the end of the month. It is assumed that these inventories consisted of
materials in their standard proportions. Finished output during January amounted to
4,100 boxes.
Required: Compute the total material quantity variance for the month and break it
down into mix and yield components.
Explain the source of fixed overhead spending and volume variances and how these
variances are computed.
The two costs of compliance are ______________________________ and
______________________________.
The costing technique that treats all manufacturing costs as inventoriable is referred to
as _________________ or ___________ costing.
The accounting practices that are practiced by a decentralized organization are referred
to as ___________________________________.
What are the advantages and disadvantages of market value as a transfer price?
Western Division
The Western Division of Lansing Chemical Co. produced the following operating
results for the previous year:
The Western Division is considering a $1,000,000 investment in a new project. The
Western Division estimates that its return on investment (for all of its operations) would
be at 22% with the new investment.
Refer to Western Division. How much net segment income is the new project expected
to produce?
A loss that occurs at a specific point in a production process is referred to as a
____________ loss.
The quantity of good output generated from a specific of output during a time period is
referred to as ____________________.