The rate of return on investment may be computed by multiplying investment turnover
by the profit margin.
a. True
b. False
Cupcake mix
The following are some of the costs incurred by Cupcake Company. Identify them as
either:
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
Using the data below for the Coffee & Cocoa Company,
(a) determine the divisional income from operations for the three regions by allocating
the service department expenses proportional to the sales of the regions.
(b) determine the increase or decrease in net income if C Region did not operate.
A staff department or unit is one that provides services, assistance, and advice to the
departments with line or other staff responsibilities.
a. True
b. False
Which of the following would not lend itself to applying direct labor variances?
a. help desk assistant
b. research and development scientist
c. customer service personnel
d. telemarketer
If the actual direct labor hours spent producing a commodity differs from the standard
hours, the variance is a
a. time variance
b. price variance
c. quantity variance
d. rate variance
Zipee Inc.’s unit selling price is $90, the unit variable costs are $40.50, fixed costs are
$170,000, and current sales are 12,000 units. How much will operating income change
if sales increase by 5,000 units?
a. $125,000 decrease
b. $175,000 increase
c. $75,000 increase
d. $247,500 increase
The balance sheet for Seuss Company at the end of the current fiscal year indicated the
following:
Income before income tax was $1,500,000 and income taxes were $200,000 for the
current year. Cash dividends paid on common stock during the current year totaled
$150,000. The common stock sells for $70 per share at the end of the year.
Determine each of the following:
(a) Number of times interest charges are earned
(b) Earnings per share on common stock
(c) Price-earnings ratio
(d) Dividends per share of common stock
(e) Dividend yield
Round to one decimal place except earnings per share and dividends per share, which
should be rounded to two decimal places.
Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.
a. $25.00 per dlh
b. $0.07 per dlh
c. $14.77 per dlh
d. $ 6.25 per dlh
The dividend yield rate is equal to the dividends per share divided by the par value per
share of common stock.
a. True
b. False
Which of the following is not included in conversion costs?
a. direct labor
b. factory overhead
c. indirect labor
d. direct materials
Short-term creditors are typically most interested in analyzing a company’s
a. marketability
b. profitability
c. operating results
d. solvency
Even if a business sells six products, it is possible to estimate the break-even point.
a. True
b. False
Multiple production department factory overhead rates are less accurate than are
plantwide factory overhead rates.
a. True
b. False
The cost of production report reports the cost of the goods sold.
a. True
b. False
The cost system best suited to industries that manufacture a large number of identical
units of commodities on a continuous basis is
a. process
b. departmental
c. first-in, first-out
d. job order
A company with a break-even point at $900,000 in sales revenue had fixed costs of
$225,000. When actual sales were $1,000,000 variable costs were $750,000. Determine
(a) the margin of safety expressed in dollars, (b) the margin of safety expressed as a
percentage of sales, (c) the contribution margin ratio, and (d) the operating income.
Treats fixed selling cost as a period cost.
Match each phrase that follows with the term (a-c) it describes.
a. Absorption costing only
b. Variable costing only
c. Both absorption and variable costing
Job cost sheets can provide information to managers on unit cost trends, the cost impact
of continuous improvement in the manufacturing process, the cost impact of materials
changes, and the cost impact of direct materials price or direct labor rate changes over
time.
a. True
b. False
What is the primary criterion for the preparation of managerial accounting reports?
a. relevance of the reports
b. manager needs
c. timing of the reports
d. cost of the reports
The following data are available from the accounting records of Willow Creek Co. for
the month ended May 31. During the accounting period, 17,000 units were
manufactured and sold at a price of $60 per unit. There were no beginning inventories,
and all units were completed (no work in process).
Selling and administrative expenses:
(a) Prepare a variable costing income statement.
(b) Prepare an absorption costing income statement.
Flyer Company sells a product in a competitive marketplace. Market analysis indicates
that its product would probably sell at $48 per unit. Flyer management desires a 12.5%
profit margin on sales. Their current full cost for the product is $44 per unit.
What is the desired profit per unit?
a. $6
b. $8
c. $5
d. $4
A college would like to increase enrollment by streamlining the enrollment process.
Which of the following would not fall in line with the college goal?
a. Reduce the requirements necessary to enroll.
b. Relocate counselors, academic advisors, and financial aid specialists for a major to a
central location.
c. Cross-train counselors, academic advisors, and financial aid specialists.
d. All of these choices would fall in line with the college goal.