1) To comply with antitrust laws, a company must not engage in predatory pricing,
dumping, or collusive pricing which lessen competition, put another company at a
competitive disadvantage, or harm consumers.
2) Total factor productivity explicitly considers gains from using fewer physical inputs
as well as substitution among inputs.
3) An effective plan for variable overhead costs will eliminate activities that do not add
value.
4) Inflation can distort data that are compared over time so purely inflationary effects
should be removed.
5) A fixed cost remains constant if expressed on a unit basis.
6) When analyzing the change in operating income, the strategy component of growth
will increase when more units are sold.
7) Under activity-based costing, the flexible-budget amount equals the static-budget
amount for fixed overhead costs.
8) The Corata Appliance Manufacturing Corporation manufactures two vacuum
cleaners, the Standard and the Super. The following information was gathered about the
two products:
What is the total sales-mix variance in terms of the contribution margin?
A) $290,000 favorable
B) $260,000 favorable
C) $530,000 favorable
D) $790,000 favorable
9) Activity-based costing (ABC) can eliminate cost distortions because ABC systems
________.
A) establish a cause-and-effect relationship with the activities performed
B) use single cost pool for all overhead costs, thereby enabling simplicity
C) use a broad average to allocate all overhead costs
D) never consider interactions between different departments in assigning support costs
10) Gracius Manufacturing is approached by a European customer to fulfill a
one-time-only special order for a product similar to one offered to domestic customers.
Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently
has excess capacity. The following per unit data apply for sales to regular customers:
For Gracius Manufacturing, what is the minimum acceptable price of this
one-time-only special order?
A) $40
B) $60
C) $70
D) $190
11) Genend’s Good Value Appliance Store is a small company that has hired you to
perform some management advisory services. The following information pertains to
2015 operations.
What was the variable cost per unit sold for 2015?
A) $8.70
B) $160
C) $168.70
D) $232
12) If Carne Company were to sell 40,000 units, the total expected cost per unit would
be:
A) $2.50
B) $2.25
C) $2.13
D) $1.88
13) Mario Garcia is paid $20 an hour for straight-time and $30 an hour for overtime.
One week she worked 42 hours, which included 2 hours of overtime. What is the
overhead incurred to the company?
A) $60
B) $10
C) $30
D) $20
14) Comfort Manufacturing is a small textile manufacturer using machine-hours as the
single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year
for the company and for the Winton High School band jacket job.
What amount of manufacturing overhead costs will be allocated to this job?
A) $405
B) $425
C) $270
D) $465
15) Eigen Manufacturing Corp. provided the following information for last month:
If sales reduce to half of the amount in the next month, what is the projected operating
income?
A) $15,000
B) $6,000
C) $16,000
D) $3,000
16) What is the operating income for 2015?
A) $75,000
B) $55,000
C) $62,000
D) $68,000
17) Cardiv Corporation has provided the following production and average cost data for
two levels of monthly production volume. The company produces a single product.
The best estimate of the total cost to manufacture 4,300 units is closest to:
A) $877,200
B) $909,400
C) $901,925
D) $926,650
18) Branded Shoe Company manufactures only one type of shoe and has two divisions,
the Stitching Division and the Polishing Division. The Stitching Division manufactures
shoes for the Polishing Division, which completes the shoe and sells it to retailers. The
Stitching Division ‘sells’shoes to the Polishing Division. The market price for the
Polishing Division to purchase a pair of shoes is $42. (Ignore changes in inventory.)
The fixed costs for the Stitching Division are assumed to be the same over the range of
40,000-100,000 units. The fixed costs for the Polishing Division are assumed to be $14
per pair at 100,000 units.
Stitching’s costs per pair of soles are:
Polishing’s costs per completed pair of shoes are:
What is the market-based transfer price per pair of shoes from the Stitching Division to
the Polishing Division?
A) $20
B) $32
C) $42
D) $52
19) The costs that result from theft of inventory are ________.
A) shrinkage costs
B) external failure costs
C) stockout costs
D) costs of quality
20) Blistre Company operates on a contribution margin of 20% and currently has fixed
costs of $500,000. Next year, sales are projected to be $3,000,000. An advertising
campaign is being evaluated that costs an additional $80,000. How much would sales
have to increase to justify the additional expenditure?
A) $320,000
B) $380,000
C) $400,000
D) $600,000
21) Woodruff Flowering Plants provides the following information for the month of
May:
ActualBudget
What is the budgeted contribution margin per composite unit for the budgeted mix?
A) $19.00
B) $19.40
C) $20.00
D) $20.30
22) The income statement of a manufacturing firm reports ________.
A) sales promotion costs only
B) inventoriable costs only
C) cost of goods sold
D) only manufacturing overhead costs