The balanced scorecard perspective that focuses on using a firm’s intellectual capital to
adapt to the needs of the market through product or service innovations is the:
a. learning and growth perspective
b. internal business perspective
c. customer value perspective
d. financial perspective
When the majority of authority is maintained by top management personnel, the
organization is said to be
a. centralized.
b. decentralized.
c. composed of cost centers.
d. engaged in transfer pricing activities.
Dawson Corporation has a sales goal of $500,000 for the coming year. Based on this
level of activity, Dawson budgets its total expenses at $450,000. Actual sales are
$480,000 and actual costs are $460,000. Dawson Corporation’s operations were
a. both efficient and effective.
b. neither efficient nor effective.
c. efficient but not effective.
d. effective but not efficient.
A managerial accountant who prepares clear reports and recommendations after
analyzing relevant facts is exercising which of the following standards?
a. objectivity
b. integrity
c. competence
d. confidentiality
Glassman Company
Glassman Company produces two products: A and B. The company has three overhead
functions that are required for both products.
Below is production information for Products A and B:
The company produces 800 units of Product A and 8,000 units of Product B each
period.
The overhead functions have the following hourly costs:
Refer to Glassman Company If total overhead is assigned to A and B on the basis of
units produced, Product A will have an overhead cost per unit of
a. $ 88.64.
b. $123.64.
c. $135.00.
d. None of the responses are correct.
In a FIFO process costing system, which of the following are assumed to be completed
first in the current period?
a. units started this period
b. units started last period
c. units transferred out
d. units still in process
Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent. The company employs
both skilled and unskilled workers. To produce one 55-gallon drum of solvent requires
Materials A and B as well as skilled labor and unskilled labor. The standard and actual
material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon
drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company. What is the labor mix variance?
a. $1,083 U
b. $2,588 U
c. $1,083 F
d. $2,588 F
Richards Company
The following information has been taken from the cost records of Richards Company
for the past year:
Refer to Richards Company. Direct labor cost charged to production during the year
was
a. $135.
b. $216.
c. $225.
d. $360.
Terrell and Associates, CPA’s provides two types of services: audit and tax. All
company personnel can perform either service. In efforts to market its services, the
company relies on radio and billboards for advertising. Information on the company’s
projected operations for the coming year follows:
Spoiled units are
a. units that cannot be economically reworked to bring them up to standard.
b. units that can be economically reworked to bring them up to standard.
c. the same as defective units.
d. considered abnormal losses.
In a perpetual inventory system, a transaction that requires two journal entries (or one
compound entry) is needed when
a. raw materials are purchased on account.
b. goods are sold for either cash or on account.
c. goods are finished and transferred out of Work in Process Inventory.
d. overhead is applied to Work in Process Inventory.
A total quality system should be designed to promote a reorientation of thinking from
an emphasis on
a. internal quality improvements to an emphasis on external benchmarking.
b. the planning process to an emphasis on the performance evaluation process.
c. inspection to an emphasis on prevention.
d. process benchmarking to an emphasis on results benchmarking.
The presence of idle capacity in the selling division may increase
a. the incremental costs of production in the selling division.
b. the market price for the good.
c. the price that a buying division is willing to pay on an internal transfer.
d. a negotiated transfer price.
A pro forma financial statement is
a. a financial statement for past periods.
b. a projected or budgeted financial statement.
c. presented for the form but contains no dollar amounts.
d. a statement of planned production.
____ focuses only on factors that change from one course of action to another.
a. Incremental analysis
b. Margin of safety
c. Operating leverage
d. A break-even chart
Which service department cost allocation method assigns indirect costs to cost objects
after considering some of the interrelationships of the cost objects?
a. step method
b. indirect method
c. algebraic method
d. direct method
The Foreign Corrupt Practices Act is directed at
a. U.S. corporations operating overseas.
b. foreign businesses operating in the U.S.
c. all businesses dealing with U.S. consumers.
d. all U. S. businesses with operations in foreign countries.
Jennings Creations
Jennings Creations is considering an investment in a computer that is capable of
producing various images that are useful in the production of commercial art. The
computer would cost $20,000 and have an expected life of eight years. The computer is
expected to generate additional annual net cash receipts (before-tax) of $6,000 per year.
The computer will be depreciated according to the straight-line method and the firm’s
marginal tax rate is 25 percent.
Refer to Jennings Creations. What is the after-tax payback period for the computer
project?
a. 7.62 years
b. 3.90 years
c. 4.44 years
d. 3.11 years
The net present value and internal rate of return methods of decision making in capital
budgeting are superior to the payback method in that they
a. are easier to implement.
b. consider the time value of money.
c. require less input.
d. reflect the effects of sensitivity analysis.
Romano Company
The following information pertains to Romano Company for September:
Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and
at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323
and #325 is identical.
Refer to Romano Company. What amount of overhead is applied to Job #323?
a. $4,800
b. $5,550
c. $6,300
d. $7,500
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.
Control of engineered costs is frequently achieved through the use of
a. zero-base budgeting.
b. program budgeting.
c. standards.
d. cash budgeting.
Gallagher Company produces a part that has the following costs per unit:
Homeland Corporation can provide the part to Gallagher for $19 per unit. Gallagher
Company has determined that 60 percent of its fixed overhead would continue if it
purchased the part. However, if Gallagher no longer produces the part, it can rent that
portion of the plant facilities for $60,000 per year. Gallagher Company currently
produces 10,000 parts per year. Which alternative is preferable and by what margin?
a. Make-$20,000
b. Make-$50,000
c. Buy-$10,000
d. Buy-$40,000
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.
Michigan Company
Ann Arbor Division of the Michigan Company has the following statistics for its most
recent operations:
Refer to Michigan Company. What is the target rate of return in Michigan Company?
a. 25%
b. 20%
c. 15%
d. 10%
Another name for absorption costing is
a. full costing.
b. direct costing.
c. job order costing.
d. fixed costing.
Marathon Manufacturing Company uses a standard cost system. Overhead cost
information for January is as follows:
What is the total overhead variance?
a. $1,200 F
b. $1,200 U
c. $1,400 F
d. $1,400 U
A credit to Work in Process Inventory represents
a. work still in process.
b. raw material put into production.
c. the application of overhead to production.
d. the transfer of completed items to Finished Goods Inventory.
Buxton Company
One of the products manufactured by Buxton Company is a plastic tray. The
information below relates to the Tray Production Department:
Refer to Buxton Company. What is the throughput per hour in the Tray Production
Department?
a. 470 units
b. 500 units
c. 625 units
d. 667 units
Usually, with respect to a variable cost, optimal control is exerted when the cost
a. can be controlled prior to incurrence.
b. is compared to its budget amount.
c. increases steadily over time.
d. is closely monitored.
If underapplied factory overhead is immaterial, the account is closed by a credit to
Cost of Goods Sold.
Continuous production losses are assumed to occur uniformly throughout the process.
A decision regarding whether a capital project is desirable based upon some previously
established minimum criteria is referred to as a(n)
___________________________________.
The plan in which an organization indicates how it will fulfill its goals is referred to as a
____________________.
On a CVP graph, the total revenue line intersects the y-axis at zero.
The point at which individual products are first identifiable in a joint process is referred
to as the split-off point.
When using the high-low method, the variable component is computed before
computing the fixed component.
A cost that shifts upward or downward when activity changes by a certain interval is
referred to as a mixed cost.
Managerial accounting is most concerned with addressing the needs of individual
departments of the firm.
How costs change relative to changes in production or sales volume is referred to as
______________________________.
A company that manufactures large quantities of homogeneous goods will normally use
a costing system.
Information provided by financial reporting systems provides the most useful
information to cost managers.
The ratio of sales to assets is referred to as ______________________________.
Accelerating inventory turnover will increase an organization’s levels of cash.
In a push system of production control, inventory is produced in anticipation of
customer or work center demand.
A measuring device that identifies what is actually happening in the process being
controlled is a detector.
Outdoor Oasis, Inc.
Outdoor Oasis, Inc. has just finished its first year of business. Outdoor Oasis, Inc.
makes decorative outdoor furniture. The firm manufactured 2,500 pieces of furniture
during the year: 2,400 were sold at garden centers for $456,000; 100 pieces were
defective and could only be sold as scrap metal (25 pounds each and can be sold for
$2.50 per pound). No defective units could be reworked. During the year the following
costs were incurred:
Refer to Outdoor Oasis, Inc. Compute the total profits lost by the company from selling
scrap units during its first year of operations.
Standards that provide for nohuman limitations or operating delays are referred to as
______________________________.
Decentralization means that a unit manager has the authority to make all decisions
concerning that specific unit.