In the Du Pont model, profit margin is a ratio of
a. income to sales.
b. income to assets.
c. sales to income.
d. sales to assets.
Transfer pricing is primarily incurred in
a. foreign corporations exporting their products.
b. decentralized organizations.
c. multinational corporations headquartered in the U.S.
d. closely held corporations.
Emerald Company has the following expected pattern of collections on credit sales: 70
percent collected in the month of sale, 15 percent in the month after the month of sale,
and 14 percent in the second month after the month of sale. The remaining 1 percent is
never collected. At the end of May, Emerald Company has the following accounts
receivable balances:
Emerald’s expected sales for June are $150,000. What were total sales for April?
a. $150,000
b. $72,414
c. $70,000
d. $140,000
Mass customization can be achieved through the use of
a. activity-based costing.
b. just-in-time inventory.
c. flexible manufacturing systems.
d. all of the above.
For cost control purposes, actual costs should be compared to
a. the original budget.
b. actual costs for the prior period.
c. a flexible budget.
d. a static budget.
Kaizen costing is used for which of the following types of products?
a. yes yes
b. no yes
c. no no
d. yes no
Product costs are deducted from revenue
a. as expenditures are made.
b. when production is completed.
c. as goods are sold.
d. to minimize taxable income.
Cost-volume-profit relationships that are curvilinear may be analyzed linearly by
considering only
a. fixed and mixed costs.
b. relevant fixed costs.
c. relevant variable costs.
d. a relevant range of volume.
Which service department cost allocation method utilizes a “benefits-provided”
ranking?
a. algebraic method
b. indirect method
c. step method
d. direct method
Shrinkage should be treated as
a. defective units.
b. spoiled units.
c. miscellaneous expense.
d. a reduction of overhead.
Activity analysis allows managers to
a. classify activities so that processes can be eliminated.
b. devise ways to minimize or eliminate non-value-added activities.
c. evaluate process performance to gain competitive advantages.
d. all of the above.
Andersen Corporation
Andersen Corporation has the following information for the current month:
All materials are added at the start of the production process. Andersen Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Andersen Corporation. Assume that the costs per EUP for material and
conversion are $2.00 and $2.25, respectively. Using FIFO, what is the total cost
assigned to the transferred-out units (rounded to the nearest dollar)?
a. $344,938
b. $365,875
c. $376,938
d. $378,625
The customer value perspective of the balanced scorecard addresses how well the
organization is doing with regard to important customer criteria.
Denver Boot Corporation has been asked to submit a bid on supplying 1,000 pairs of
military combat boots to the Armed Forces Training Center. The company’s costs per
pair of boots are as follows:
Assuming that there would be no commission on this potential sale, the lowest price the
firm can bid is some price greater than
a. $23.
b. $20.
c. $17.
d. $14.
The optimal size of the safety stock is defined by the point where the
a. costs of carrying the safety stock equal stockout costs.
b. setup costs equal stockout costs.
c. ordering costs equal stockout costs.
d. reorder point equals safety stock.
The weighted average cost of capital represents the
a. cost of bonds, preferred stock, and common stock divided by the three sources.
b. equivalent units of capital used by the organization.
c. overall cost of capital from all organization financing sources.
d. overall cost of dividends plus interest paid by the organization.
Under absorption costing, fixed manufacturing overhead could be found in all of the
following exceptthe
a. work-in-process account.
b. finished goods inventory account.
c. Cost of Goods Sold.
d. period costs.
Actual overhead exceeds applied overhead and the amount is immaterial. Which of the
following will be true?Upon closing,
a. underapplied increase
b. overapplied decrease
c. overapplied increase
d. underapplied decrease
The Television Division of Electronics Corporation has the following segment
information:
What was Television Division’s return on investment?
a. 12%
b. 10%
c. 24%
d. 20%
An increase in the use of technology has caused
a. fewer costs to be susceptible to short-run control.
b. companies to be more flexible in responding to changing short-term conditions.
c. managers to be less concerned about capacity utilization because of the increased
ability to produce in large quantities.
d. a decline in the amount of fixed costs in an organization.
External factors considered in setting transfer prices in multinational firms typically
donotinclude
a. the corporate income tax rates in host countries of foreign subsidiaries.
b. foreign monetary exchange risks.
c. environmental policies of the host countries of foreign subsidiaries.
d. actions of competitors of foreign subsidiaries.
Real Products Company
Real Products Company produces and sells a single product. Information on its costs
follow:
Refer to Real Products Company. In the upcoming year, Real Products Company
estimates that it will produce and sell 4,000 units. The variable costs per unit and the
total fixed costs are expected to be the same as in the current year. However, it
anticipates a sales price of $16 per unit. What is Real Products Company’s projected
margin of safety for the coming year?
a. $7,000
b. $20,800
c. $18,400
d. $13,000
Wright Company
Wright Company adds material at the start of production. The following production
information is available for September:
Refer to Wright Company. What is the material cost per equivalent unit using the
weighted average method?
a. $.58
b. $.62
c. $.77
d. $.82
Organizational form directly affects which of the following?
a. no yes yes
yes
b. yes yes yes
no
c. no yes no
yes
d. yes yes no
no
A key concept underlying cost driver analysis is that
a. all cost drivers identified should be used for cost accumulation.
b. the cost of measuring a driver does not exceed the benefits of using it.
c. only costs occurring at the unit-level should be assigned to products or services.
d. organizational/facility costs are non-value-added and should never be assigned to
products or services.
Lawson Corporation
Lawson Corporation has the following data for use of its machinery
Refer to Lawson Corporation. Using the high-low method, compute the variable cost
element.
a. $1.02
b. $.98
c. $1.31
d. $1.19
Flexible manufacturing systems are
a. designed to provide more flexibility in a firm’s manufacturing process by using
computer-aided machinery.
b. the same as computer-aided design systems.
c. commonly used by firms that need to make large quantities of one product.
d. are very complicated and cause increased defect rates in output.
Grant Corporation
The following information is available for Grant Corporation for the current month:
All materials are added at the start of production and the inspection point is at the end
of the process.
Refer to Grant Corporation. What is cost per equivalent unit for conversion costs using
FIFO?
a. $4.00
b. $4.19
c. $4.34
d. $4.38
Which of the following is nota characteristic of relevant costing information? It is
a. associated with the decision under consideration.
b. significant to the decision maker.
c. readily determined from financial records.
d. related to a future endeavor.
Which of the following U.S. legislation relates to bribes being offered to foreign
officials?
a. Racketeer Influenced and Corrupt Organizations Act
b. Foreign Illegal Activities Act
c. Foreign Corrupt Practices Act
d. Federal Bribery and Corrupt Practices Act
Expected standards tend to yield favorable variances.
Lean manufacturing and just-in-time (JIT) systems are both concerned with reduction
of inventory levels.
A method of product costing that develops an allowable product cost by estimating
what the market will pay for a product with specific characteristics is referred to as
______________________________.
Plantwide overhead rates provide a more accurate computation of factory overhead than
departmental overhead rates
Unexpired costs are reflected on the balance sheet.
Open-book management systems are usually easy to implement.
Discuss briefly the three monetary measurement techniques of joint cost allocation.
When implementing TQM, an organization should establish long-term relationships
with preferred suppliers.
An organization’s hurdle rate should be at least equal to the organization’s cost of
capital.
The difference between budgeted and applied fixed factory overhead is referred to as a
__________________________________________________.
If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost
is classified as a mixed cost.
A cost that remains unchanged in total within the relevant range is known as a
____________________ cost.
What are the four types of responsibility centers? What is the focus of each of these
responsibility centers?
A performance measure that is short-run in nature and represents a firm’s anticipated
activity level for the upcoming period is ____________________ capacity.
An observation that is found outside the relevant range is referred to as a(n)
____________________.
What four areas are covered by the Standards of Ethical Conduct for Certified
Management Accountants? How are these areas defined?