Trade-offs must be made in and among the prevention, appraisal, internal failure, and
external failure costs in order to reduce total costs of quality over time. Over the
long-term, what should the targeted level of defective units?
A.Zero
B.Over zero but less than 10 percent
C.Over 10 percent but less than 25 percent
D.Over 25 percent
Which of the following statement accurately describes activity-based costing (ABC)?
A.ABC considers the entire plant to be one cost pool.
B.ABC uses a separate cost pool for each department.
C.ABC uses a cost pool for each activity center.
D.ABC uses a cost pool for each industry.
Which of the following statements is true concerning the operating budget?
A.The operating budget is a formal short-run plan of action.
B.The operating budget identifies capital projects.
C.The operating budget states the strategy for achieving organizational goals.
D.all of the above.
If a company has variable costs of $40 per unit, fixed costs of $3,000 per month and
sells its product for $50, how many units must it sell to break-even?
A.300
B.250
C.100
D.50
What organization publishes a journal called Strategic Finance, numerous policy
statements, and research studies on accounting issues?
A.Institute of Management Accountants
B.Cost Accounting Standards Board
C.General Accounting Office
D.American Institute of Certified Public Accountants
Which of the following costs are notunit activities in the product cost hierarchy?
A.Energy to run machines.
B.Direct materials.
C.Machine setups.
D.Piecework labor costs.
Clear Sailing Lifeboats
Clear Sailing Lifeboats uses 12,000 units of a certain component in production each
year. Presently, this component is purchased from an outside supplier at $9.50 per unit.
For some time now there has been idle capacity in the factory that could be utilized to
make this component. The costs associated with manufacturing the component
internally rather than buying it from the outside supplier are
Refer to Clear Sailing Lifeboats. Assuming other things stay the same, at what price per
unit from the outside supplier would the company be indifferent (on economic grounds)
to buying or making the components?
A.$9.50
B.$9.00
C.$8.50
D.$8.00
Which of the following departments is likely to be an investment center?
A.Machining department
B.Food products division
C.Personnel department
D.Accounting department
Which method of costing is used to record all manufacturing costs directly in Cost of
Goods Sold, and if any inventories occur at the end of the accounting period, the
appropriate costs are transferred back to the inventory accounts?
A.Put-back costing
B.Traditional costing
C.Reverse costing
D.Backflush costing
A comprehensive master budget includes individual schedules for which of the
following budgets?
A.a materials purchase budget.
B.a capital budget.
C.a cash outlays budget.
D.all of the above.
When referring to quality according to the customer, all of the following are typically
important elements for service of freshly squeezed orange juice except:
A.taste
B.cost
C.amount
D.knowing which plant produced the juice
What is part of a “lean production” philosophy that has been credited for the success of
many Japanese companies and some large U.S. companies?
A.Just-in-time production
B.Mini-max inventory systems
C.Economic order quantities
D.Strategic cost analysis systems
What is the term used to describe costs that increase in steps?
A.fixed costs.
B.variable costs.
C.mixed costs.
D.semi-fixed costs.