A plant manager’s salary is
a. a direct cost and an indirect cost
b. a direct cost
c. an indirect cost
d. a period cost
The period costs of a textbook printer would include
a. wages of a press operator
b. factory insurance costs
c. CEO salary expense
d. paper costs
In the vertical analysis of a balance sheet, the base for current liabilities is total
liabilities.
a. True
b. False
Mason Corporation had $650,000 in invested assets, sales of $700,000, income from
operations amounting to $99,000, and a desired minimum rate of return of 15%.
The profit margin for Mason is
a. 7.1%
b. 20%
c. 15.2%
d. 14.1%
The present value index is computed using which of the following formulas?
a. Amount to be invested/Average rate of return
b. Total present value of net cash flow/Amount to be invested
c. Total present value of net cash flow/Average rate of return
d. Amount to be invested/Total present value of net cash flow
Standards are designed to evaluate price and quantity variances separately.
a. True
b. False
The formula to the compute direct labor time variance is to calculate the difference
between
a. Actual costs ‘“ Standard costs
b. Actual costs + Standard costs
c. (Actual hours × Standard rate) ‘“ Standard costs
d. Actual costs ‘“ (Actual hours × Standard rate)
Managerial accountants could prepare all of the following reports except
a. a performance report identifying amounts of scrap
b. a control report comparing direct material usage over time
c. a sales report targeting monthly sales and potential bonuses
d. an annual report for external regulators such as the SEC
Brunette Company is contemplating investing in a new piece of manufacturing
machinery. The amount to be invested is $180,000. The present value of the future cash
flows generated by the project is $163,000. Should they invest in this project?
a. yes, because the rate of return on the project exceeds the desired rate of return used to
calculate the present value of the future cash flows
b. no, because the rate of return on the project is less than the desired rate of return used
to calculate the present value of the future cash flows
c. no, because net present value is +$17,000
d. yes, because the rate of return on the project is equal to the desired rate of return used
to calculate the present value of the future cash flows
If in evaluating a proposal by use of the net present value method there is a deficiency
of the present value of future cash inflows over the amount to be invested, the proposal
should be rejected.
a. True
b. False
Dove Corporation began its operations on September 1 of the current year. Budgeted
sales for the first three months of business are $250,000, $320,000, and $410,000,
respectively, for September, October, and November. The company expects to sell 25%
of its merchandise for cash. Of sales on account, 70% are expected to be collected in
the month of the sale and 30% in the month following the sale.
The cash collections in November are
a. $317,750
b. $389,750
c. $490,000
d. $410,000
A receiving report is prepared when purchased materials are first received by the
manufacturing department.
a. True
b. False
The process by which management allocates available investment funds among
competing investment proposals is called
a. investment capital
b. investment rationing
c. cost-volume-profit analysis
d. capital rationing
Materials purchased on account during the month totaled $190,000. Materials
requisitioned and placed in production totaled $165,000. The journal entry to record the
material purchase on account is
a. Materials Accounts Payable 165,000
165,000
b. Materials Accounts Payable 190,000
190,000
c. Materials Cash 190,000
190,000
d. Accounts Payable Materials 190,000
190,000
Relevant revenues and costs refer to
a. activities that occurred in the past
b. monies already earned and/or spent
c. last year’s net income
d. differences between the alternatives being considered
The finished goods account is the controlling account for the
a. cost ledger
b. materials ledger
c. work in process ledger
d. stock ledger
If the cost of employee wages is not a significant portion of the total product cost, the
wages are classified as direct materials cost.
a. True
b. False
The production budget is the starting point for preparation of the direct labor cost
budget.
a. True
b. False
The budget procedure that requires all levels of management to start from zero in
estimating sales, production, and other operating data is called continuous budgeting.
a. True
b. False
The product cost concept includes all manufacturing costs plus selling and
administrative expenses in the cost amount to which the markup is added to determine
product price.
a. True
b. False
The primary difference between a static budget and a flexible budget is that a static
budget
a. is suitable in volatile demand situation while flexible budget is suitable in a stable
demand situation
b. is concerned only with future acquisitions of fixed assets, whereas a flexible budget
is concerned with expenses that vary with sales
c. includes only fixed costs, whereas a flexible budget includes only variable costs
d. is a plan for a single level of production, whereas a flexible budget can be converted
to any level of production
The amount of the average investment for a proposed investment of $120,000 in a fixed
asset with a useful life of 4 years, straight-line depreciation, no residual value, and an
expected total net income of $21,600 for the 4 years, is
a. $30,000
b. $21,600
c. $5,400
d. $60,000