Murphy Company produces two products: Standard and Deluxe. The company uses an
activity-based costing system. Murphy produces 8,000 units of Standard and 2,000
units of Deluxe. The company uses two activity cost pools, with estimated total cost and
activity as follows:
What is the cost per unit of Standard under activity-based costing?
a. $1.75
b. $9.00
c. $15.00
d. $16.00
Which of the following is not a suggested source for forecasting sales?
a. Customer-provided requirements
b. Historical sales data
c. Random statistical data
d. Industry projections
Which of the following would be considered a financing activity and a source of cash
on the statement of cash flows?
a. Purchase of treasury stock
b. Sale of land
c. Borrowing on a long-term debt
d. Payment from customers
The purpose of financial statements contained in annual reports is to
a.Communicate information about the financial health of a company to external users.
b.Assist internal managers in making pricing decisions.
c.Both communicate information about the financial health of a company to external
users and assist internal managers in making pricing decisions.
d.Neither communicate information about the financial health of a company to external
users nor assist internal managers in making pricing decisions.
Which of the following items would be subtracted from net income when using the
indirect method of calculating cash flows provided by operating activities?
a. A decrease in accounts receivable
b. Depreciation expense
c. A decrease in salaries payable
d. A loss on the sale of equipment
Which of the following would be considered an investing activity and a source of cash?
a. Purchase of equipment
b. Sale of Dillard’s stock held as an investment
c. Issuance of corporate stock
d. Receipt of interest on savings account
Managerial accounting information is not just for accountants. All areas within an
organization can use the information to support decision making. For the following
positions, list three decisions the manager might have to make and give an example of a
report that would help the manager in the decision making process.
a.Human resources manager
b.Purchasing manager
c.Engineering department
Woods Manufacturing is considering the purchase of a new sewing machine that costs
$18,000. The machine, because of its efficiency, will save about $4,000 in cost each
year. The machine is expected to have a salvage value of $3,000 and a life of 6 years.
Woods’ required rate of return is 12%. What is the machine’s net present value?
a. ($34)
b. $1,520
c. $15,000
d. $24,000
Children’s World Toy Shop is an on-line toy store specializing in hand made stuffed
animals. Children’s World sold 4,000 Donny the Dragon stuffed toys during April and
6,000 during May. Shipping costs for the two months were $12,000 and $16,800
respectively. Using these two months’ data, the shipping cost function is best estimated
as
a.($2 x number of toys sold) + $70,000
b.($2.40 x number of toys sold) + $2,400
c.($3 x number of toys sold) + $2,880
d.($0.50 x number of toys sold) + $10,000
Suggest one reason for each of the following variances.
a. Unfavorable direct material quantity variance
b. Favorable direct labor rate variance
c. Favorable variable overhead spending variance
d. Unfavorable fixed overhead volume variance