TopSail Company
TopSail Company produces one type of machine with the following costs and revenues
for the year
Refer to the TopSail Company. Calculate the selling price per unit.
A.$ 8
B.$ 6
C.$ 2
D.$12
What is generally considered the best transfer pricing basis when there is a competitive
market for the product and market prices are readily available?
A.Market price-based transfer pricing
B.Variable cost-based transfer pricing
C.Fixed price-based transfer pricing
D.Fixed cost-based transfer pricing
Which of the following is a strength of the engineering method of cost estimation?
A.The method provides a detailed expert analysis of the cost behavior in each account.
B.The method is based on studies of what future costs should be rather than what past
costs have been.
C.The method uses all the observations of cost data.
D.The method is relatively easy to use with computer and sophisticated calculators.
The following information relates to the operating performance of two divisions of
Mega Electronics, Inc., for last year.
Required:
a. Compute the return on investment (ROI) of each division, using total assets at gross
book value as the investment base.
b. Compute the ROI of each division, using total assets net of accumulated depreciation
(net book value) as the investment base.
c. Which of the two measures do you think gives the better indication of operating
performance? Explain your reasoning.
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 direct method, what amount of Shipping costs
is allocated to Department D (rounded to the nearest $)?
A.$ 63,636
B.$318,182
C.$381,818
D.$450,000
The theory which maintains that people act in ways to obtain the rewards that they
desire and prevent the penalties that they wish to avoid is called the
A.agency theory.
B.expectancy theory.
C.reward-penalty theory.
D.mini-max theory.
When measuring a division’s operating costs, indirect noncontrollable operating costs
include
A.labor used in the division’s production.
B.salary of the division manager (controlled by top management).
C.costs of providing centralized services, such as data processing and employee
training.
D.company president’s salary.
Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds
of roasted gourmet coffee beans were actually produced (note: standard costs do not
allow for any wastage), Actual:
Standard:
Refer to Java Gourmet Coffee. Calculate the variable manufacturing overhead variance.
A.$1,000 U
B.$2,000 U
C.$1,000 F
D.$2,000 F
Why do companies allocate common costs to departments and products?
A.pricing and bidding.
B.contract cost reimbursement.
C.motivation.
D.All of the answers are correct.
Which of the following are true regarding activity-based management (ABM)?
A.ABM deals with how management uses the cost information generated from
activity-based costing.
B.ABM rests on the premise that products require activities.
C.ABM rests on the premise that activities consume resources.
D.All of the answers are correct.
Biloxi Corporation
Refer to Biloxi Company. What are the total external failure costs?
A.$250,000
B.$400,000
C.$950,000
D.$650,000
Which of the following costs are not capacity-sustaining activities in the product cost
hierarchy?
A.Plant management.
B.Building depreciation and rent.
C.Heat and lighting.
D.Market research.
Which term refers to categorizing costs according to whether they are capacity, product,
customer, batch, or unit costs?
A.The cost hierarchy.
B.Activity-based costing.
C.Traditional costing.
D.None of the answers is correct.
Which of the following is not an example of prevention costs?
A.Procurement inspection
B.Field testing
C.Processing control
D.Designing production processes
External financial reporting requires which costing method?
A.standard costing.
B.variable costing
C.full-absorption costing.
D.normal costing.
Given the following facts for the Histep Company:
REQUIRED:
Which of the following is not a benefit of participative or grassroots budgeting?
A.The process of participative budgeting can be time consuming.
B.Participating budgeting enhances employee motivation and acceptance of goals.
C.Participative budgeting provides information that enables employees to associate
rewards and penalties with performance.
D.Participative budgeting yields information that employees know but managers do not
know.