In net present value analysis for a proposed capital investment, the expected future net
cash flows are averaged and then reduced to their present values.
a. True
b. False
Answer:
A company reports the following:
Determine the (a) accounts receivable turnover, and (b) number of days’ sales in
receivables. Round your answer to one decimal place.
Answer:
A business operated at 100% of capacity during its first month, with the following
results:
Operating expenses:
What is the amount of the contribution margin that would be reported on the variable
costing income statement?
a. $34,200
b. $20,200
c. $29,700
d. $26,200
Answer:
If selling and administrative expenses are allocated to different products, they should be
reported as a
a. cost of goods manufactured
b. factory overhead cost
c. period cost
d. cost of goods sold
Answer:
The portion of whole units that were completed with respect to either materials or
conversion costs within a given accounting period is the definition of
a. units started and completed
b. equivalent units
c. conversion costs
d. ending work in process
Answer:
an event or transaction that is both unusual and infrequent
Match each definition that follows with the term (a’“h) it defines.
a. discontinued operations
b. extraordinary items
c. change from one generally accepted accounting principle to another
d. horizontal analysis
e. vertical analysis
f. common-sized financial statements
g. current position analysis
h. profitability analysis
Answer:
In contribution margin analysis, the unit price or unit cost factor is computed as the
difference between the actual unit price or unit cost and the planned unit price or unit
cost, multiplied by the actual quantity sold.
a. True
b. False
Answer:
The controller’s staff often consists of several management accountants. All of the
following would most likely be on the controller’s staff except
a. general accountants
b. budgets and budget analysts
c. investments and shareholder relations managers
d. cost accountants
Answer:
One of the primary uses of a cost of production report is to assist management in
controlling production costs.
a. True
b. False
Answer:
In most business organizations, the chief management accountant is called the
controller.
a. True
b. False
Answer:
For which of the following businesses would the process cost system be appropriate?
a. a custom cabinet maker
b. a landscaper
c. a paper mill
d. a catering firm
Answer:
Both job order and process cost accounting use equivalent units of production to
determine costs.
a. True
b. False
Answer:
Managers used managerial information for all of the following except
a. to evaluate the company’s stock performance
b. to analyze the performance of a company’s operations
c. to support long-term planning decisions
d. to determine the cost of manufacturing a product
Answer:
A company is considering the purchase of a new piece of equipment for $90,000.
Predicted annual net cash inflows from the investment are $36,000 (Year 1), $30,000
(Year 2), $18,000 (Year 3), $12,000 (Year 4), and $6,000 (Year 5). The average income
from operations over the 5-year life is $20,400. The payback period is 3.5 years.
a. True
b. False
Answer:
Conversion cost is the combination of direct materials cost and factory overhead cost.
a. True
b. False
Answer:
Production and sales estimates for April are as follows:
The number of units expected to be manufactured in April is a. 11,000
b. 9,500
c. 12,000
d. 13,000
Answer:
In a lean system, there are more transactions to record than there are in a traditional
system.
a. True
b. False
Answer:
The manager of a profit center does not make decisions concerning the fixed assets
invested in the center.
a. True
b. False
Answer:
Which of the following are two methods of analyzing capital investment proposals that
both ignore present value?
a. internal rate of return and average rate of return
b. net present value and average rate of return
c. internal rate of return and net present value
d. average rate of return and cash payback method
Answer:
Managerial accounting reports must be prepared according to generally accepted
accounting principles.
a. True
b. False
Answer:
Net present value and the payback period are examples of discounted cash flow
methods used in capital budgeting decisions.
a. True
b. False
Answer:
Dotterel Corporation uses the variable cost concept of product pricing. Below is cost
information for the production and sale of 35,000 units of its sole product. Dotterel
desires a profit equal to an 11.2% rate of return on invested assets of $350,000.
The unit selling price for the company’s product is
a. $16.32
b. $13.44
c. $12.10
d. $13.72
Answer:
The management of River Corporation is considering the purchase of a new machine
costing $380,000. The company’s desired rate of return is 6%. The present value factor
for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing
information, use the following data in determining the acceptability of this investment:
The average rate of return for this investment is
a. 5%
b. 10.5%
c. 25%
d. 15%
Answer:
theoretical standard
Match the following descriptions with the term (a-e) it describes:
a. Ideal standard
b. Nonfinancial performance measure
c. Currently attainable standard
d. Unfavorable cost variance
e. Favorable cost variance
Answer: