1) The weighted-average cost of capital (WACC) equals ________.
A) the after-tax average cost of all the long-term and short-term funds
B) the after-tax average cost of all the long-term funds
C) the pre-tax average cost of all the short-term funds
D) the pre-tax average cost of all the long-term and short-term funds
2) Effective planning of fixed overhead costs includes ________.
A) planning day-to-day operational decisions
B) eliminating value-added costs
C) determining which products are to be produced
D) choosing the appropriate level of capacity
3) If total payroll processing costs of $64,000 are allocated on the basis of number of
employees, the amount allocated to the Small Department would be ________.
A) $44,800
B) $48,400
C) $46,200
D) $45,600
4) Which of the following is an advantage of nonfinancial measures of quality?
A) They help managers aggregate costs to evaluate the tradeoffs of incurring prevention
costs and appraisal costs to eliminate internal and external failure costs.
B) They detect and provide immediate short-run feedback on whether
quality-improvement efforts are succeeding.
C) They focus managers’ attention on how poor quality affects operating income.
D) They direct attention to financial processes that help managers identify the precise
problem areas that need improvement.
5) If the net present value for a project is positive, ________.
A) the project should be accepted
B) its internal rate of return is more than its cost of capital
C) its expected rate of return is below the required rate of return
D) its internal rate of return is less than its cost of capital
6) Capital budgeting is a process of ________.
A) tracing overhead costs to products by focusing on the activities that drive costs
B) assigning identified costs to specific cost objectives or cost centers
C) measuring an organization’s operations, products, and services against those of
competitors recognized as market leaders
D) making long-run planning decisions for investments in projects
7) Which of the following statements best relates to the balanced scorecard’s internal
business processes perspective?
A) How do we lower costs?
B) How do we motivate employees?
C) How can we obtain greater profits?
D) How processes will increase value to customers?
8) Which of the following classifications best describes the behavior of clerical
expense?
A) Mixed
B) Variable
C) Fixed
D) none of the above
9) Munoz, Inc., produces a special line of plastic toy racing cars. Munoz, Inc., produces
the cars in batches. To manufacture a batch of the cars, Munoz, Inc., must set up the
machines and molds. Setup costs are batch-level costs because they are associated with
batches rather than individual units of products. A separate Setup Department is
responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are
fixed with respect to the number of setup-hours. The following information pertains to
June 2015:
Calculate the spending variance for variable overhead setup costs.
A) $1,900 unfavorable
B) $1,900 favorable
C) $600 unfavorable
D) $600 favorable
10) Unile Auto produces and sells an auto part for $60.00 per unit. In 2015, 100,000
parts were produced and 75,000 units were sold. Other information for the year
includes:
What is the inventoriable cost per unit using variable costing?
A) $20.00
B) $24.00
C) $25.00
D) $31.00