Like process costing, job order costing makes no attempt to track an individual
product’s costs, all the products have similar costs.
If the net present value of a project is greater than or equal to zero, the project has
achieved the required rate of return and should be accepted.
Product-level activities are also referred to as product-sustaining activities.
Capital budgeting decisions involve both outflows of cash at one or more times and
inflows of cash at other times.
The greatest use of activity-based costing information is for product costing and cost
control.
A scattergraph is simply a graph that shows total costs in relation to volume, or activity
level.
To be of any value, a measure of performance must be measurable, meaning that it is
complete and accurate, and is based on actual results rather than on estimates.
Step costs are fixed over only a small range of activity.
A performance dashboard is a management tool that integrates performance measures
(performance) across four different perspectives (dashboard) to guide operations toward
achieving an organization’s strategy.
When using a standard costing system, all product costs are recorded at standard cost
while the products are being made.
Which of the following is not a criticism of ideal standards?
a. Product quality may decline if standards are not met.
b. Employee morale will suffer if standards are not met.
c. Employees may take shortcuts in order to meet the standards.
d. All of these answer choices are criticisms of ideal standards.
Undesirable behavior is especially common in a bottom-up budget environment
because
a. Managers may be required to explain unfavorable outcomes whether or not they are
in control of the factors that caused the outcomes.
b. Managers have the ability to include budgetary slack to increase his or her chances of
beating the budget.
c. Both that managers may be required to explain unfavorable outcomes whether or not
they are in control of the factors that caused the outcomes and that managers have the
ability to include budgetary slack to increase his or her chances of beating the budget.
d. Neither that managers may be required to explain unfavorable outcomes whether or
not they are in control of the factors that caused the outcomes nor that managers have
the ability to include budgetary slack to increase his or her chances of beating the
budget.
The direct materials price variance is calculated using which of the three amounts?
a. Actual quantity purchased, standard quantity purchased, actual price paid
b. Actual quantity purchased, standard quantity purchased, standard price paid
c. Standard quantity purchased, actual price paid, standard price paid
d. Actual quantity purchased, actual price paid, standard price paid
You are on a team responsible for addressing cash flow problems with other managers
in your corporate division. Your accounting department has provided your team with
the statement of cash flows prepared using the indirect method. At your first meeting,
some of the managers have expressed concerns about the statement’s understandability
and do not view the statement as anything other than a “rearranged income statement”.
The managers have requested that your team explain to them how the statement is
constructed.
Required:
a. Explain to your managers why the indirect method is a useful approach to reporting
cash flows from operating activities.
b. Explain to your managers why increases in current assets are subtracted from net
income and increases in current liabilities are added to net income to calculate the cash
flow provided by operating activities.
c. Explain to your managers any differences between the indirect method and the direct
method of preparing the investing and financing sections of the statement of cash flows.
University Hospital provided the following income statement for two of its divisions:
Diagnostic and Outpatient. Both divisions are structured as investment centers.
The average assets for Diagnostic and Outpatient divisions total $400,000 and
$600,000, respectively. The required minimum rate of return for both divisions is 10%.
Required:
a. Calculate the current residual income for each division.
b. Why is residual income a better measure of performance for managers of investment
centers than the overall profit compared to the flexible budget?
In order to increase a company’s bottom line, it can
a. Increase sales
b. Decrease costs
c. Either a or b.
d. Neither a nor b.
Calculating the activity rate is similar to the calculation of the
a. Activity pools.
b. Predetermined overhead rate.
c. Overhead leverage rate.
d. Contribution margin rate.
Frequent feedback from planning, controlling, evaluating, and decision making
activities creates which of the following types of decision-making process?
a.Linear
b.Circular
c.Scattered
d.None these answer choices are correct
Basil Industries reported the following information for December:
What was the ending balance in Basil’s Finished Goods Inventory account?
a. $531,250
b. $43,750
c. $231,250
d. $343,750
Benchmarking does not require an organization to share
a. Processes.
b. Process matrics.
c. Proprietary information.
d. None of these answer choices are correct.
Universal Outfitters, Inc. is a manufacturer of aluminum folding picnic tables. The
company’ controller has provided you with the following financial information:
Required:
Prepare a performance report for the period.
Although managers ‘ actions may improve ROI in the short run, they may do so at the
expense of the company ‘s long-term financial health.
Complete the following table by answering ‘œYes’ and ‘œNo’ in the columns that apply
to each item. (First item is done for you.)
R&N Sports has budgeted $57,000 for fixed overhead for the period. This budget was
based on the following items: depreciation of $24,000, rent of $4,000, executive
salaries of $27,000 and other fixed costs of $2,000. Actual overhead incurred is
$52,000. Production was budgeted at 8,000 units while actual production is 8,100.
Required:
Calculate the fixed overhead spending variance.
Haven Industries transferred 5,500 units of raw material into production to produce
2,500 units. The standard quantity of raw material required for each unit is 2 and the
standard cost is $1.20 per unit. Which of the following is the correct journal entry to
record the transfer?
Classify the following costs incurred by a Toyota manufacturing plant as product or
period costs by placing an “X” in the appropriate columns. Identify whether the product
costs are direct materials, direct labor, or overhead.
