1) Bismite Corporation purchases trees from Cheney lumber and processes them up to
the splitoff point where two products (paper and pencil casings) are obtained. The
products are then sold to an independent company that markets and distributes them to
retail outlets. The following information was collected for the month of October:
The cost of purchasing 250 trees and processing them up to the splitoff point to yield
180,000 sheets of paper and 180,000 pencil casings is $12,500.
Bismite’s accounting department reported no beginning inventory.
If the sales value at splitoff method is used, what is the approximate production cost for
each pencil
casing?
A) $0.309
B) $0.301
C) $0.031
D) $0.039
2) Wilde Corporation budgeted the following costs for the production of its one and
only product for the next fiscal year:
Wilde has an annual target operating income of $900,000.
The markup percentage for setting prices as a percentage of total manufacturing costs is
________.
A) 51.4%
B) 125.3%
C) 185.6%
D) 245.8%
3) Which of the following groups would be least likely to receive detailed management
accounting reports?
A) stockholders
B) sales managers
C) production supervisors
D) distribution managers
4) Mount Carmel Company sells only two products, Product A and Product B.
Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount
Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units
of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel’s tax rate is reduced to 25%, assuming
the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax
net income of $73,500, facing a tax rate of 30%?
5) The income statement of a service-sector firm reports ________.
A) period costs only
B) inventoriable costs only
C) both period and inventoriable costs
D) direct labor costs
6) Line management includes ________.
A) distribution managers
B) human-resource managers
C) information-technology managers
D) management-accounting managers
7) Which one of the following is a benefit of activity-based budgeting?
A) It uses a single cost driver for batch-level activities or higher.
B) It is the most convenient method of budgeting as it requires minimal effort.
C) It provides detailed information that improves decision making.
D) It is the most efficient method to budget direct costs and trace them to individual
cost objects.
8) Inflation clouds the real economic returns on an asset and ________.
A) makes variable-cost-based ROI higher
B) makes historical-cost-based ROI lower.
C) makes historical-cost-based ROI higher
D) makes variable-cost-based ROI lower
9) Syosis Company uses the high-low method to estimate its cost function. The
information for 2015 is provided below:
What is the estimated cost function for the above data?
A) y = 300,000 +120X
B) y = 220,000 +147X
C) y = 100,000 +80X
D) y = 130X
10) If machine maintenance is scheduled at a time when production is at a low level,
then ________.
A) low production is the cost driver of high repair costs
B) an understanding of operations is needed to determine an appropriate cost driver
C) low production should be avoided since it is the cause of machine maintenance
D) machine maintenance cannot be accurately predicted
11) Uninder Company uses the high-low method to estimate the cost function. The
information for 2015 is provided below:
What is the estimated total cost when 400 machine-hours are used?
A) $20,800
B) $29,000
C) $16,000
D) $17,500
12) When analyzing the change in operating income, the strategy component of growth
________.
A) calculations are similar to the selling-price variance calculations
B) isolates the change attributed solely to an increase in market share
C) isolates the change attributed solely to an increase in industry growth
D) isolates the change attributed solely to an increase in the quantity of units sold
13) The first step in estimating a cost function using quantitative analysis is to plot the
data.
14) The most likely cost driver of distribution costs is the ________.
A) number of parts within the product
B) number of miles driven
C) number of products manufactured
D) number of production hours