1) cost estimation includes all of the following steps except:
a.defining the cost object for which the related costs are to be estimated
b.determining the cost drivers
c.graphing the data
d.selecting and employing the appropriate estimation method
e.calculating the multiple regression coefficient
2) felinas inc. produces floor mats for cars and trucks. the owner, kenneth felinas, asked
you to assist him in estimating his maintenance costs. together, mr. felinas and you
determined that the single best cost driver for maintenance costs was machine hours.
below are data from the previous fiscal year for maintenance expense and machine
hours:
using the high-low method, unit variable cost is calculated to be:
a.$1.31
b.$1.59
c.$1.36
d.$1.14
e.$1.20
3) the firm of miller, lombardi, and york was recently formed by the merger of two
companies providing accounting services. york’s business was providing personal
financial planning, while miller and lombardi conducted audits of small governmental
units and provided tax-planning and preparation for several commercial firms. the
combined firm has leased new offices and acquired several microcomputers that are
used by the professional staff in each area of service. however, in the short run the firm
does not have the financial resources to acquire computers for all of its professional
staff.
the expertise of the professional staff can be divided into three distinct areas that match
the services provided by the firm, i.e., tax preparation and tax planning, insurance and
investments, and auditing. however, since the merger, the new firm has had to turn
away business in all three areas of service. one of the problems is that while the total
number of staff seems adequate, the staff members are not completely interchangeable.
limited financial resources do not permit hiring any new staff in the near future, and
therefore, the supply of staff is restricted in each area.
rick oliva has been assigned the responsibility of allocating staff and computers to the
various engagements. the management has given oliva the objective of maximizing
revenues in a manner consistent with maintaining a high level of professional service in
each of the areas of service. management’s time is billed at $200 per hour and staff’s
time is billed at $140 per hour for those with experience, and $100 per hour for
inexperienced staff. pam wren, a member of the staff, recently completed a course in
managerial accounting at the local university. she suggested to oliva, based on material
covered in the course she took, that he use linear programming to assign the appropriate
staff and computers to the various engagements.
required:
1> identify and discuss the assumptions underlying the linear programming model.
2> explain the reasons why linear programming would be appropriate for miller,
lombardi, and york to use in making staff assignments.
3> identify and discuss the data that would be needed to develop a linear programming
model for miller, lombardi, and york.
4> discuss objectives other than revenue maximization that rick oliva should consider
before making staff allocations.
4) a potential weakness of the cost leadership strategy is:
a.cutting costs in a way that causes the firm to grow too fast
b.deleting key features or reducing quality of products or services
c.lowering productivity to ensure lower costs
d.increasing life cycle costs
e.increasing prices temporarily to undermine competition
5) which of the following is not a key benefit of the balanced scorecard (bsc)?
a.it provides a means for implementing strategy
b.it provides an objective basis for determining each manager’s compensation and
advancement
c.it provides a framework for the firm to achieve a desired organizational change in
strategy
d.it provides a baseline for how a firm’s financial operations compare to competition
within the industry
6) a large company has recently been experiencing larger than normal inventory levels.
management would like to implement a theory of constraints system to help control the
company’s inventories. which of the following is not a benefit associated with the
theory of constraints?
a.speed of product development
b.existing problems such as bottlenecks are highlighted
c.reduced cycle time
d.prompt delivery
e.better product design
7) which one of the following issues would least likely be addressed during the regular
review of product profitability?
a.which product managers should be rewarded?
b.which products are most profitable?
c.which products provide the greatest contribution margin per unit of the scarce
resource?
d.which products should be promoted and advertised most aggressively?
e.are the products priced properly?
8) which of the following organizations presents awards to firms that excel at execution
of strategy, based on criteria such as leadership, marketing, strategic planning and
process management?
a.international organization for standardization
b.malcolm baldrige national quality program
c.global reporting initiative
d.world resources institute
e.american institute of certified public accountants
9) service and not-for-profit organizations often:
a.have abc systems which are similar to those of manufacturing firms
b.do not have changeable outputs
c.are unable to benefit from abc costing
d.do not have abc systems which are similar to those of manufacturing firms
e.none of the above answers is correct
10) management accounting information plays a critical role in all but which of the
following management functions?
a.profit planning
b.managerial compensation
c.planning and decision making
d.hiring a new cio
e.financial reporting to the sec
11) which of the following is not usually influenced by learning curve analysis?
a.make-or-buy decisions
b.cost-volume-profit analysis
c.capital budgeting
d.development of standard product costs
e.theory of constraints
12) fresplanade co. had the following historical pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after sale
8% collected in the second month after sale
3% collected in the third month after sale
2% uncollectible
the sales on open account (credit sales) have been budgeted for the last six months of
the year as shown below:
july $72,000
august $84,000
september $96,000
october $108,000
november $120,000
december $102,000
the estimated total cash collections by fresplanade co. during october from accounts
receivable is:
a.$113,160
b.$101,400
c.$143,640
d.$125,640
e.$102,420
13) the johann’s professional service company expects 70% of sales for cash and 30%
on credit. the company collects 80% of its credit sales in the month following sale, 15%
in the second month following sale, and 5% are not collected. expected sales for june,
july, and august are $48,000, $54,000, and $44,000, respectively. what are the
company’s expected total cash receipts in august?
a.$45,920
b.$61,400
c.$87,600
d.$50,400
e.$15,120
14) a p-value of less than _______ is typically considered statistically significant.
a..5
b..05
c..005
d.5
15) cvp analysis using activity-based costs will tend to shift some costs from fixed to
variable classifications, resulting in:
a.lower breakeven sales
b.higher breakeven sales
c.higher or lower breakeven sales, depending on batch size
d.a higher contribution margin per unit
e.a lower contribution margin per unit