Budget slack is a condition in which
A. demand is low at various times of the year.
B. excess machine capacity exists in some areas of the plant.
C. there is an intentional overestimate of expenses or an underestimate of revenues.
D. managers grant favored employees extra time off.
Continental Publishing Company
The Magazine Division of Continental Publishing Company had the following financial
data for the year:
Refer to Continental Publishing Company. What was the target rate of return for
Continental Publishing Company?
A. 10%
B. 15%
C. 25%
D. 5%
As projected net income increases the
A. degree of operating leverage declines.
B. margin of safety stays constant.
C. break-even point goes down.
D. contribution margin ratio goes up.
Texas Metal Company
Texas Metal Company has developed standard overhead costs based on a monthly
capacity of 180,000 machine hours as follows:
During November, 90,000 units were scheduled for production, but only 80,000 units
were actually produced. The following data relate to November:
Actual machine hours used were 165,000.
Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed).
All inventories are carried at standard cost.
Refer to Texas Metal Company. The variable overhead efficiency variance for
November was
A. $15,000 U.
B. $23,000 U.
C. $38,000 F.
D. $38,000 U.
If only one or two overhead cost pools are used,
A. it will be easy to determine which products or services are creating the most costs.
B. overhead created by a specific product will be assigned to all products.
C. the reduction in cost accumulation and allocation time will raise company profits.
D. allocations should be made using only unit-based cost drivers.
Which of the following statements about an organization’s mission statement is true?
A. The mission statement should express an organization’s purpose.
B. The mission statement should identify how an organization will meet the needs of its
targeted customers.
C. The mission statement must be communicated throughout the organization.
D. All of the statements are true.
In analyzing production flow, a bottleneck is
A. an intermediate inventory.
B. always off the critical path.
C. a capacity constraint.
D. related to a non-value-adding activity.
Which of the following changes would not decrease the present value of the future
depreciation deductions on a specific depreciable asset?
A. a decrease in the marginal tax rate
B. a decrease in the discount rate
C. a decrease in the rate of depreciation
D. an increase in the life expectancy of the depreciable asset
Lawson Corporation
Lawson Corporation has the following data for use of its machinery
Refer to Lawson Corporation. Using the high-low method, compute the fixed cost
element (to the nearest whole dollar).
A. $225
B. $138
C. $411
D. $364
Which of the following groups are external users of data gathered by a management
information system?
A. yes no yes
B. no no no
C. no yes yes
D. yes yes yes
When variable costing is used,
A. all product costs are considered to be variable.
B. all period costs are considered to be variable.
C. all product costs are considered to be fixed.
D. product costs are separated into fixed and variable components.