What would the initial cash flows associated with an investment project include?
A.asset, freight and installation costs.
B.cash proceeds from disposing of existing assets made redundant or unnecessary by
the new project.
C.income tax effect of gain(loss) on disposal of existing assets.
D.all of the above.
Marshall Manufacturing Co.
Marshall Manufacturing Co. uses an activity-based costing system. The company has
gathered the following information concerning various cost pools and activity drivers;
The following data was collected and is specific to Item No. 824.
Refer to Marshall Manufacturing Co. What would be the amount of quality inspection
cost allocated to Item No. 824?
A.$2,500
B.$ 125
C.$1,000
D.$ 250
Companies that track quality costs and use the information to improve operations tend
to see a
A.long-run decline in total costs of quality.
B.short-run decline in total costs of quality.
C.no decline in total costs of quality.
D.short-run decline followed by a long-term increase in total costs of quality.
Which statement is true concerning the cost-volume-profit (CVP) model?
A.The CVP model can be used to determine a desired selling price.
B.The CVP model can be used to determine a new break-even point when fixed costs
increase.
C.The CVP model can be used to determine a new break-even point when variable
costs decrease.
D.All of the answers are correct.
What is the formula for Break-Even Point in Sales Dollars?
A.Total Fixed Costs / Unit Contribution Margin.
B.(Total Fixed Costs + Target Profit) / Unit Contribution Margin.
C.Sales Units – Break-Even Sales Units.
D.Total Fixed Costs / Contribution Margin Ratio.
Job costs in a service organization. Adams and Associates, a CPA firm, uses job
costing. During January, the firm provided audit services for two clients and billed
those clients for the services performed. Paxton Productions was billed for 4,000 hours
at $140 per hour, and Young Industries in was billed for 2,000 hours at $140 per hour.
Direct labor costs were $75 per hour. Of the 6,400 hours worked in January, 400 hours
were not billable. The firm assigns overhead to jobs at the rate of $25 per billable hour.
During January, the firm incurred actual overhead of $155,000. The firm incurred
marketing and administrative costs of $35,000. All transactions were on account.
Required:
a. Show how Adams and Associates’ accounting system would record these revenues
and costs using journal entries.
b. Prepare an income statement for January like the one in Exhibit 2.5 in the text.
Stephanie Company
Stephanie Company has two production departments: D and J. Stephanie also has 3
service departments: Personnel, Administration, and Shipping. Shipping costs are
allocated on the basis of number of packages, while Personnel and Administration costs
are allocated using number of employees. Assume that the ranking of the benefits
provided is in the order listed below.
Refer to Stephanie Company. Using the step method, what amount of Administration
costs is allocated to Department D (rounded to the nearest $)?
A.$ 97,561
B.$216,216
C.$273,115
D.$409,673
What is the process by which a firm considering acquiring a new plant or new
equipment must decide whether to make the investment, then decide how to raise the
funds required for the investment?
A.zero-based budgeting.
B.capital budgeting.
C.annual budgeting.
D.management by objectives.
Costs incurred for scrapping, reworking, reinspection or retesting are all examples of
A.prevention costs.
B.appraisal costs.
C.internal failure costs.
D.external failure costs.
How does cost-volume-profit analysis allows management to determine the relative
profitability of a product?
A.By highlighting potential bottlenecks in the production process.
B.By keeping fixed costs to an absolute minimum.
C.By determining the contribution margin and projected profits at various levels of
production.
D.By assigning costs to a product in a manner that maximizes the contribution margin.
The total cost (TC) of an item is calculated as TC = F + VX, where V is the
A.estimated volume of production
B.variable cost per unit of activity.
C.total variable costs
D.actual volume of production
Just-in-time
A.requires the acquisition of new tracking software.
B.has the objective to eliminate all non-value-added activities and reduce costs.
C.seeks to increase inventory levels to prevent stock-outs.
D.All of the answers are correct.
Which of these is a transfer pricing methodology that preserves the autonomy of the
division managers?
A.cost-plus.
B.actual costs.
C.negotiated.
D.predetermined.