In an outsourcing decision, one important factor is the quality of the outsourced
product.
If a company follows a strategy of product differentiation, it will seek ways to set its
products apart from competitors ‘ in terms of quality, design or service.
Unlike the scattergraph, the high-low method requires only two data points – the lowest
point of activity and the highest point of activity.
The supply chain ‘s goal is to reduce or eliminate defects.
The process of determining how much an amount of money to be received in the future
is worth today is called future value.
When using a standard costing system, which of the following should be recorded when
invoices are received for variable overhead costs?
a. Debit manufacturing overhead for the actual overhead costs and credit accounts
payable or cash for the actual amount invoiced
b. Debit work in process inventory for the actual overhead costs and credit accounts
payable or cash using a predetermined variable overhead rate
c. Credit manufacturing overhead for actual overhead rate and debit work in process
inventory using a predetermined variable overhead rate
d. Credit work in process inventory for the actual overhead and debit accounts payable
or cash using a predetermined variable overhead rate
For the past two years, Monroe Corporation’s statement of cash flows has shown net
cash provided by investing activities. Which of the following choices could explain this
result?
a. Collection of accounts receivable balances
b. Sales of factory equipment
c. Receipt of cash dividends from investments in other company’s stock
d. Issuance of long-term debt
For the past two years, Monroe Corporation’s statement of cash flows has shown net
cash provided by financing activities. Which of the following choices could explain this
result?
a. Collection of accounts receivable balances
b. Sales of factory equipment
c. Receipt of cash dividends from investments in other company’s stock
d. Issuance of long-term debt
Which of the following employees is typically held accountable for the direct material
quantity variance?
a. Controller
b. Purchasing Manager
c. Production Manager
d. Engineering Department Manager
Marilyn’s parents have agreed to help her purchase a new car upon graduation in four
years. They have given her two choices. The first choice is that they will give her
$4,000 each year for the next four years for her to invest herself. The second choice is
that they will wait four years and give her $18,000. Marilyn can invest the money at a
4% rate.
Required:
a. Which option should Marilyn choose? Why?
b. If Marilyn can invest the money at 8%, which options should she choose? Why?
If you think of an organization ‘s structure as a continuum, on the decentralized end of
the continuum, operational managers
a. Are never evaluated.
b. Are evaluated on costs, revenue, and profit.
c. Have complete control over operational decisions.
d. Have no authority to make decisions.
Which of the following are strategies based on a firm ‘s approach to market share
growth?
a.Handle, Hermetic, Hold, or Harvest
b.Build, Hold, Harvest, or Divest
c.Handle, Expand, Low-Cost, or Divest
d.Build, Expand, Hold, or Divest
Which of the following is not a component of the master budget?
a. Selling and administrative expenses budget
b. Ending inventory and cost of goods sold budget
c. Capital expenditures budget
d. All of these answer choices are components of the master budget.
Which of the following would not be a relevant cost in a special order of expensive
clocks?
a. Direct materials
b. Direct labor
c. Variable overhead
d. Fixed overhead
In the activity identification stage of implementing an activity-based costing system,
defining activities in greater detail will
a. Require more monitoring.
b. Lessen the change of misclassifying some costs and activities.
c. Both require more monitoring and lessen the change of misclassifying some costs
and activities.
d. Neither require more monitoring nor lessen the change of misclassifying some costs
and activities.
Which of the following is the formula for setting a minimum transfer price?
a. Sales less variable cost
b. Contribution less income taxes and interest
c. Variable cost to produce/sell + contribution margin forgone from the transfer
d. Variable cost to produce/sell + allocated fixed costs
In response to a growing awareness of various allergies, Barb ‘s Better Breads (BBB)
developed baking mixes which contain a unique blend of gluten-free flours and
starches, including almond meal, organic flax seeds and arrowroot. The breads are also
baked in a preheated, heavy, lidded pan which creates a better crust and texture in
gluten-free breads. BBB has been approached by a large restaurant chain to supply the
bread used in restaurants throughout the region. Due to demand, almond meal is often
in limited supply. Pertinent information for 3 types of bread follows:
Required
a. Assuming no raw material constraints and unlimited demand for all 3 types of bread,
what type of bread would maximize the company ‘s contribution margin? Why?
b. Assume that based on typical customer demand, BBB will sell 12,000 loaves of
cinnamon raisin, 8,000 loaves of ciabatta, and 10,000 loaves of crusty french. What will
the company ‘s contribution margin be?
c. BBB ‘s almond meal supplier has announced a shortage of almond meal. As a result,
BBB will only be able to purchase 20,000 pounds of almond meal. How many loaves of
each type of bread should the company bake? What will the company ‘s contribution
margin be?
In a process costing system, when raw material is received in which of the following
balance sheet accounts is it recorded?
a. Raw materials inventory
b. Work in process inventory
c. Finished goods inventory
d. Cost of goods sold
Santa’s Toys Company makes retro wooden toys. The company also maintains retail
stores throughout the Southeastern United States. Classify each of the following costs
as a product or period cost.
a. Elm wood used in the production of toys
b. Wood glue used to in the production of toys
c. Salaries of the district sales managers
d. Rent on factory building
e. Depreciation on machinery used in production of toys
f. Rent on retail stores
g. Salary of production manager
h. Cost of delivering toys to retail stores
i. Paint used in the production of toys
j. Depreciation on CEO’s mahogany office furniture
Assume you have prepared a horizontal analysis of your company’s balance sheet and
income statement and have found some account balances you believe need to be
investigated. What would be a cause of the following changes in account balances? a.
Decrease in accrued salaries b. Sales increased by a greater percentage than cost of
goods sold c. Accounts receivable decreased d. Significant drop in long-term debt e.
Decrease in retained earnings
Classify each of the following items from City Hospital’s statement of cash flows as an
operating, investing, or financing activity.
Cooper Company, a retailer of camping supplies has budgeted activity for January using
the following data:
Required:
What is Cooper ‘s budgeted cash disbursements for January?
List four differences in managerial and financial accounting.
What are the requirements Section 406 of the Sarbanes-Oxley Act regarding publicly
traded company ‘s code of conduct?
Although a profit center is expected to generate profits, not just revenues or costs, the
manager cannot commit funds to invest in assets.
Place and “X” in the column that corresponds to the cost classification for each of the
following scenarios. Some items may fit in more than one column.
