Revenue center performance reports are reports that list the variances between actual
sales and budgeted sales.
Because the number of units produced was greater than anticipated, production capacity
was used less efficiently than anticipated, resulting in an unfavorable volume variance.
Budgets communicate financial plans to employees at all levels in the company.
A profit center is the responsibility center that is only responsible for costs.
The performance reports of cost centers only include those costs incurred within each
individual cost center.
An example of management by exception occurs when a manager investigates a large
variance in a performance report to assign responsibility.
Budgets are helpful because managers can plan the cash inflows and outflows in an
organization.
Businesses are now viewing sustainability and social responsibility as opportunities for
innovation and business development.
Management by exception saves management time because managers in revenue
centers only focus on unfavorable variances.
The management philosophy of lean production is used by many U.S. companies to cut
costs, improve quality, and speed production.
A segment margin is the operating income generated by a profit or investment center
before subtracting common allocated fixed costs to the center.
Disadvantages of using standard costs and variances include all of the following except
A) the excessive cost to keep standards up-to-date.
B) companies that pay employees a salary because direct labor is a fixed cost rather
than a variable cost.
C) those manufacturing costs that enter Work in Process Inventory are recorded at
standard cost, rather than actual cost.
D) traditional standards can promote unfavorable employee behavior.
Which of the following cost of quality categories represent the cost incurred to detect
poor quality goods or services prior to consumer delivery in the marketplace?
A) Internal failure costs
B) Value-added activity
C) External failure costs
D) Just-in-time production
Moe’s Garage management has budgeted the following amounts for its next fiscal year:
If Moe’s can reduce fixed expenses by $20,000, by how much can variable expenses per
unit increase and still allow the company to maintain the original breakeven sales in
units?
A) $19.20
B) $25.80
C) $0.80
D) $20.00
The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to common stock show?
A) An increase of 6.89 in sales revenue
B) Increase of $6,000 in common stock
C) An increase of 85.37% from prior to current year
D) Sales return of $9.16
All of the following are advantages of using standard costs and variances except
A) standard costs have benchmarks managers use to judge actual costs.
B) standard costs and benchmarks are useful tools that mangers use as a basis in the
master budget.
C) the timeliness that occurs when variances are computed once each month.
D) standard costing systems simplify the bookkeeping process.
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s price-earnings ratio for the current year?
A) 2.00
B) 3.50
C) 12.50
D) 0.08
To follow is selected information about The Boston Company for the current year and
prior year.
What is the current year’s income tax percentage (as would be found on a vertical
analysis of the income statement for the current year)?
A) 4.00%
B) 13.68%
C) 113.68%
D) 4.36%
Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to the relationship between current
year net sales revenue and COGS?
A) COGS was 60.00% of net sales revenue
B) A 8.20% decrease from prior to current year
C) An increase of $19,680 from prior to current year
D) An increase of $460,320 from prior to current year
Sydney’s Barbecue manufactures barbecue equipment for consumers and businesses in
the marketplace. The managerial accountant at Sydney’s Barbecue reported the
following data:
What is the average manufacturing cost per unit at Sydney’s Barbecue? (Round your
answer)
A) $58
B) $68
C) $75
D) $85
E) $95
The following information relates to Woolf Unlimited for the past two years.
What is the acid-test ratio for the current year?
A) 0.52
B) 0.75
C) 0.78
D) 2.30
(Present value tables are needed.) Georgia Peach Farms is upgrading its fruit
washing/separating machine. Georgia has narrowed the decision down to two machines:
Machine A and Machine B. Pertinent information about each machine include :
Required:
a.Calculate the net present value of Machine A.
b.Calculate the net present value of Machine B.
c.Using the net present value method, which machine should Georgia select if it can
select only one investment?
A company reported the following amounts of net income:
Which of the following is the percentage change from Year 1 to Year 2?
A) 24.00%
B) 25.00%
C) 124.00%
D) 55.00%
Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing
and avid amateur cyclists. Rubber City has found a CNC (computer numerical control)
machine that will significantly reduce manufacturing waste while improving the quality
of the frames. The new CNC machine will increase annual fixed costs by $13,750, but
will decrease variable cost per unit by $150. Rubber City expects to sell 750 frames
next year.
Annual data for the current system are as follows:
By what amount will Rubber City’s operating income increase (decrease) if they
purchase the new CNC machine?
A) $98,750
B) ($98,750)
C) $312,500
D) ($312,500)
Use the following information to do a horizontal analysis of Boyce Corporation’s
income statement for the current year and prior year:
Jasmine and Rosemary sell healthy spices to consumers at the county fair. Sally and
Rosemary only accept credit card purchases and cash from consumers. On Saturday,
they sold $350 in merchandise and all consumers used credit cards to purchase
merchandise at the fair. The bank charges 1.75% on total credit charges each day to
settle the credit charges on their business banking account. Compute the total charges
the bank will charge Jasmine and Rosemary on their account. How much will the bank
deposit into their account after all charges? How should Jasmine and Rosemary show
the sale and fees in the sales budget, the operating expense budget, and the cash
collections budget?
The managerial accountant at Coffee and Tea Manufacturing manufactures three
different types of coffee for consumers to enjoy in the marketplace. The managerial
accountant reported the following information about the cases of coffee products
Product A, Product B, and Product C:
Product A uses 1 machine-hour to produce 1 case of coffee; and, Products B and C use
2 machine hours to produce 1 case of coffee. There are 1,000 available machine hours
to produce each product. Calculate the contribution margin per unit, the contribution
margin ratio, and the available capacity per machine-hour for each coffee product A, B,
and C.
Stacy’s Manufacturing Company manufactures parts to accommodate the needs of
bicycle shops. The managerial accountant reported the following data:
Compute the average manufacturing cost per unit. What is the amount of ending
finished goods inventory?
Ted’s Graduation Store sells graduation supplies to students through the college
bookstore. The bank charges Ted’s Graduation Store 3.25% on the total credit card sales
each day to settle the credit card transactions. The college bookstore reported that
consumers purchased $420 in credit card purchases. The managerial accountant needs
to update the sales budget, the operating expenses budget, and the cash collections
budget to account for the credit sales. What amount should the managerial accountant
use to complete the sales budget, the operating expenses budget, and the cash
collections budget? In which month should the managerial accountant show this data?
What should the managerial accountant consider when updating the master budget?