Just-in-time implementations are simple and take little or no effort to implement and
will work for most companies.
When production and sales are equal, a drawback of the contribution format income
statement is that is does not produce the same operating income as the traditional
functional income statement format.
The first component of the master budget is the cash budget.
Vertical analysis is also referred to as common-size analysis.
The underlying principle that absorption costing satisfies is the historical cost principle.
In an activity-based costing system, a critical question to ask during activity
identification is, “How important is this activity to the overall strategy of the
organization?”
A manager can use a performance dashboard for
a. Driving business operations.
b. Focusing on critical measures.
c. Both driving business operations and focusing on critical measures.
d. Neither driving business operations nor focusing on critical measures.
The examination of business processes to identify incremental changes that may reduce
operating costs is referred to as
a. Variance analysis.
b. Incremental analysis.
c. Process improvement.
d. Total quality management.
Which of the following is not a problem associated with residual income?
a. It can change without any change in operations because of depreciation.
b. It is an absolute measure that is stated in absolute dollars.
c. Using it to compare divisions of different sizes is difficult.
d. All of these answer choices are problems associated with residual income.
Paula’s Payroll Services provides weekly payroll processing for a number of small
businesses. Paula Peraz, the company’s owner, has been using an activity-based costing
system for several years. She used the following information in preparing this year’s
budget.
Required:
a. Calculate the cost rates for each activity cost pool.
b. Paula is preparing a proposal for a prospective client, Barney’s Bistro. The client has
25 employees. What is the estimated cost of providing weekly payroll services to this
client for the first year?
c. How can Paula use the estimated cost information you have calculated to price the
service it will provide to Barney’s Bistro.
Which of the following is not associated with period costs?
a. Selling of a product
b. Creation of overhead
c. The passage of time
d. Administration of the business
A balanced scorecard
a. Integrates performance measures across four different perspectives.
b. Assists in communicating the corporate strategy throughout the organization.
c. Helps managers understand the interrelationships between various areas of an
organization.
d. All of these answer choices are correct.
Which of the following is the formula for calculating residual income?
a. Operating income – average assets
b. Operating income plus interest and depreciation expense
c. Operating income – (average assets x required minimum rate of return)
d. None of these answer choices are correct.
An investment center manager should be evaluated by
a. Examination of actual costs against budgeted costs.
b. A review of both revenues and expenses, with a focus on operating income.
c. How well assets have been used to generate income.
d. None of these answer choices are correct.
Wasson Whatsit Company is contemplating the production and sale of a new product.
Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the
target cost per unit?
a. $4.00
b. $3.52
c. $4.48
d. $4.80
The variable overhead spending variance has to do with the efficient use of
a. The activity base.
b. The overhead items.
c. All variable manufacturing costs.
d. All of these answer choices are correct.
Jesse Allen, a product engineer for L’Oso Gaming, is designing a new electronic game.
Market research indicates that gamers will pay $36 for the game.
Required:
a. If L’Oso desires a 80% markup on production costs, what is the target cost for the
new game?
b. Jesse believes it will cost $24 per unit to produce the new game. What actions should
he take next?
On a scattergraph, you must “fit” a line to the plotted points. Once the line is drawn,
a.Calculate the fixed and variable costs using basic algebra.
b.You must use a statistical technique to identify the fixed and variable costs.
c.You must choose more than one point to calculate the fixed and variable costs.
d.Use regression analysis to calculate the fixed and variable components of the total
cost.
The following items were gathered from Rankin Corporation’s general ledger:
Required:
Using the indirect method, construct Rankin’s statement of cash flows.
Explain how to use benchmarking to improve an organization’s performance.
Place an “X” in the column that corresponds to the type of activity referred to in each
scenario.
If a cost is a traceable fixed cost at one level, it will remain a traceable cost at a lower
level.
What is an opportunity cost and what is the impact of opportunity cost on a decision to
outsource the production of an item?
Suppose you are trying to decide whether to rent an apartment across the street from
campus or a nicer apartment one mile from campus (in either case, you plan to keep
your car for social outings). Indicate whether the following pieces of information are
relevant or irrelevant to your decision.
List the four standards that guide a management accountant ‘s conduct as specified by
the IMA Statement of Ethical Professional Practice and give two responsibilities under
each standard.