The total amount of manufacturing overhead allocated to a particular product will
always be the same for both the traditional overhead allocation method based on direct
labor hours and the activity-based costing overhead allocation.
The objective of process costing is the same as job order costing: to assign all costs to
specific jobs.
The customer profit margin allows managers to compare customers based on how much
each dollar of revenue they generate goes to the bottom line, regardless of the
customers’ absolute sales volume.
All costs are either fixed or variable. That is, a cost cannot have a fixed and a variable
component.
Benchmarking is the practice of using data from other organizations to identify the
processes and practices associated with world-class performance.
The balanced scorecard uses only nonfinancial information such as customer
satisfaction or employee turnover to measure performance.
Given the following data, what is the total relevant cost of internal production of 50
units?
a. $1,800
b. $2,100
c. $4,100
d. None of these answer choices are correct.
Mike Mounts has a membership at the Marigold Men’s Fitness Club. The membership
costs $30 per month regardless of how many times the facility is used. The membership
cost is classified as a:
a.Variable cost.
b.Fixed cost.
c.Step variable cost.
d.Mixed cost.
The Logan Company reported the following operating data for the past year:
Required:
a. Calculate Logan ‘s margin.
b. Calculate Logan ‘s asset turnover.
c. Calculate Logan ‘s ROI.
Assets that are expected to provide economic benefits for several years are referred to
as
a. Cash assets.
b. Short-term assets.
c. Capital assets.
d. Balance sheet assets.
Earnings per share is a financial measure that is
Keltner Enterprises is considering investing in a new packing machine. The new
machine will provide annual cash operating inflows of $12,300 for 5 years. The cost of
the machine is $42,300 and it can be sold at the end of its 5-year useful life for $6,800.
Keltner’s required rate of return is 10%. What is the packing machine’s payback period?
a. 3.44 years
b. 2.89 years
c. 3.99 years
d. 7.69 years
When a new piece of equipment is purchased, which of the following would be
considered a cash inflow?
a. Cost savings
b. Salvage value of the new equipment
c. Additional revenue generated
d. All of these answer choices are correct.
At what amount will the inventory and cost of goods sold amounts be reported on the
financial statements?
a. Inventory at standard and cost of goods sold at actual
b. Inventory at actual and cost of goods sold at actual
c. Inventory at standard and cost of goods sold at standard
d. Inventory at actual and cost of goods sold at standard
The two components of the direct labor flexible budget variance are the
a. The direct labor price variance and the direct labor quantity variance.
b. The direct labor rate variance and the direct labor efficiency variance.
c. The direct labor rate variance and the direct labor standard variance.
d. The direct labor efficiency variance and the direct labor standard variance.
Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units. The
standard allows for 2 switches per unit. The company actually used 12,500 to produce
the 6,000 units. Johnson budgeted $0.75 per switch, but because they received a
discount for purchasing more than 10,000 switches, they received a discount of $0.05
per switch and paid $0.70 each. What is Johnston’s direct materials quantity variance
for the period?
a. $375 unfavorable
b. $375 favorable
c. $1,125 favorable
d. $1,500 favorable
The formula for calculating the debt ratio is
a. Total liabilities divided by total assets.
b. Long-term liabilities divided by total assets.
c. Total liabilities divided by total liabilities and stockholders’ equity.
d. Total debt divided by total stockholders’ equity.
In each of the following situations, identify whether the setting is primarily financial
accounting or managerial accounting.
a.Abba Company purchased a new telephone system costing $132,000 for its sales
division. The new phone system will be depreciated using the straight-line method over
a period of five years and has an estimated salvage value of $5,000.
b.Bandex Company has had several customers who are experiencing the negative
effects of the downturn in the economy. As a result, the company believes its allowance
for doubtful accounts should be increased from 1% of credit sales to 1.5% of credit
sales.
c.Cortez, Inc. has experienced a decline in net income over the past three years. The
engineering department is considering redesigning a product to eliminate waste and
inefficiency in the production process.
d.The sales manager of Decca Corporation believes one salesman is creating fictitious
sales to inflate his commission. The sales manager has asked the controller for a
detailed report of sales by salesman.
e. Essex, Inc. executives are meeting to analyze the company ‘s actual results compared
to budgeted amounts.
Express the relationship between total cost (TC), variable cost per unit (VC), sales
volume (X), and fixed cost (FC) in equation form.
Categorize cash activities as operating, investing, or financing.
Which of the following is the correct journal entry to record the purchase of indirect
materials on account?
Leisure World produces folding padded hammocks. The hammocks are heavy duty and
weather resistant. Each hammock comes with steel tubing frame. Give three specific
examples (not categories) of products costs that are incurred in the production of the
hammocks.
A manager who is responsible for both the revenue and the cost incurred in generating a
product is managing an investment center.