Key Company has a targeted sales volume of 62,300 units. Total fixed costs are
$31,200. The contribution margin per unit is $1.20. What is targeted net income?
A) $31,200
B) $37,440
C) $43,560
D) $74,760
The following information is available for Nobelski Books and its two divisions,
Textbooks and Tablets.
Whole
Company Textbooks Tablets
Net sales $100,000 $50,000 $50,000
Fixed costs controllable by
Division Manager 16,500 12,500 4,000
Fixed costs controlled by others 8,000 5,000 3,000
Variable costs:
Cost of merchandise sold 24,500 17,500 7,000
Operating expenses 16,400 10,000 6,400
Unallocated costs 1,000
What is the contribution by segment for the Tablets Division?
A) $28,600
B) $29,600
C) $32,600
D) $36,600
Differences between actual results and the static budget at the original planned level of
output are ________ variances.
A) flexible budget
B) financial budget
C) operating budget
D) static budget
In a corporate setting, a mortgage payment would be identified as a ________.
A) purely variable cost
B) discretionary fixed cost
C) committed fixed cost
D) mixed cost
The cash inflow from the sale of a long-term plant asset at a loss is equal to the
________.
A) amount of the loss plus the loss times the tax rate
B) amount of the loss
C) selling price of asset plus the loss times the tax rate
D) selling price of asset minus the loss times the tax rate
An activity analysis has shown that the number of components added to Product X and
Product Y is the cost driver for support costs. Support costs are $20 per component.
Product X has 4 components and Product Y has 8 components. What amounts of
support costs should be assigned to Product X and Product Y?
Product X Product Y
A) $6.67 $13.33
B) $20 $20
C) $80 $160
D) $80 $320
Dolly Madison Company is considering two investments. The relevant data follows:
Project A Project B
Cost $200,000 $300,000
Annual cash savings(end of year) $50,692 $60,995
Terminal salvage value $50,000 $70,000
Estimated useful life in years 5 5
Minimum desired rate of return 10% 10%
Method of depreciation Straight-line Straight-line
Present Value Present Value
Of $1 of Ordinary
for 5 periods Annuity of $1
for 5 periods
5% 0.7835 4.3295
6% 0.7473 4.2124
7% 0.713 4.1002
8% 0.6806 3.9927
10% 0.6209 3.7908
12% 0.5674 3.6048
14% 0.5194 3.4331
Ignoring taxes, the internal rate of return for Project A is approximately ________.
A) 8%
B) 10%
C) 12%
D) 14%
There is no difference between variable-costing operating income and
absorption-costing operating income if there is no ________.
A) beginning inventory of finished goods
B) ending inventory of finished goods
C) variable overhead costs
D) change in finished goods inventory during the period
If the sales activity variance was $8,000 Favorable and the static budget variance was
$10,000 Favorable, then the flexible budget variance was ________.
A) $2,000 Favorable
B) $2,000 Unfavorable
C) $18,000 Favorable
D) $18,000 Unfavorable
The traditional approach to quality control in the United States was to ________.
A) inspect products upon completion and reject or rework the defective products
B) prevent defects before they occur
C) set tolerance standards of zero defects
D) emphasize customer satisfaction over product quality
________ arise as a result of strategic decisions about the scale and scope of an
organization’s activities.
A) Capacity costs
B) Discretionary fixed costs
C) Mixed costs
D) Committed fixed costs
________ is a measure of income divided by the investment required to obtain that
income.
A) Return on sales
B) Capital turnover
C) Return on investment
D) Residual income
An example of secured bonds is ________.
A) debentures
B) zero coupon bonds
C) mortgage bonds
D) serial bonds
A company has 10,000 hours of capacity and manufactures two products. Product 1
takes 2 hours per unit. Product 2 takes 3 hours per unit. The contribution margin per
unit for Product 1 is $5. The contribution margin per unit for Product 2 is $6. The
demand for either product exceeds the factory capacity. Which product or products
should be manufactured?
A) 3,000 units of Product 1 and 2,000 units of Product 2
B) 2,500 units of Product 1 and 3,333 units of Product 2
C) make 5,000 units of Product 1 and 0 units of Product 2
D) make 3,333 units of Product 2 and 0 units of Product 1
Which of the following statements about performance measures is FALSE?
A) Organizational goals without performance measures do not motivate managers.
B) Every performance measure used to evaluate employees should be consistent with
organizational goals.
C) An ideal management control system should include at least one performance
measure related to every goal.
D) Performance measures become more specific at higher levels of the organization.
One variance often influences another variance. If the direct materials price variance is
favorable, then it is possible that this variance will cause ________.
A) the direct materials quantity variance to be unfavorable
B) the direct labor price variance to be unfavorable
C) the direct labor price variance to be favorable
D) the direct materials quantity variance to be favorable
What types of variances should be investigated when looking at performance reports?
A) all variances
B) only favorable and unfavorable variances that are large in size
C) only unfavorable variances that are large in size
D) only favorable variances that are large in size
In job-order costing, a debit to Work-In-Process Inventory is used to record ________.
A) a requisition of direct materials for a job
B) the cost of labor used by a job
C) factory overhead applied to a job
D) all of the above
Wal-Mart buys Halloween candy from a candy company in Hershey, Pennsylvania. This
is an example of a(n) ________.
A) A2B transaction
B) B2B transaction
C) B2C transaction
D) C2B transaction
Accountants play a role in supporting ________ of the value-chain functions.
A) some
B) none
C) about half
D) all
Venus Company has the following information:
Month Budgeted Sales
January $90,000
February 85,000
March 92,000
April 79,000
Budgeted Operating Expenses Per Month
Wages $15,000
Advertising 12,000
Depreciation 3,000
Sales Commission 4% of sales
All cash expenses are paid as incurred. What are the total cash disbursements budgeted
for operating expenses for the month of January?
A) $28,200
B) $30,000
C) $30,600
D) $33,600
Product costing is an averaging process. This statement pertains to ________.
A) job order costing only
B) process costing only
C) activity-based costing only
D) all of the above
In the net present value method, the disposal value of a long-term asset at the end of its
useful life is considered to be a ________.
A) cash outflow at time zero
B) cash inflow at time zero
C) cash outflow in the year of disposal
D) cash inflow in the year of disposal
Which of the following statements about long-range plans is FALSE?
A) Long-range plans provide forecasted financial statements for five to ten year
periods.
B) Long-range plans guide day-to-day operations.
C) Companies coordinate long-range plans with capital budgets.
D) A decision made during long-range planning is the acquisition of a plant building.
A widespread problem in practice is that the decision model used by managers for
________ and the model used by their superiors in ________ are different.
A) outsourcing; incremental analysis
B) outsourcing; differential analysis
C) decision making; performance evaluation
D) operational decisions; joint costing
Source documents are associated with ________.
A) Generally Accepted Accounting Principles
B) implicit transactions
C) explicit transactions
D) compound entries
If perfectly accurate and relevant information is not available for decision making, the
accountant should consider using information that is ________.
A) precise but irrelevant
B) imprecise but irrelevant
C) imprecise but relevant
D) imprecise but timely
When using the visual-fit method to estimate a cost function, the variable cost per unit
of the cost driver is equal to the ________.
A) the point where the sketched line (through all or most of the data points) intersects
the x-axis
B) the point where the sketched line (through all or most of the data points) intersects
the y-axis
C) slope of the sketched line (through all or most of the data points)
D) any point on the sketched line divided by the fixed cost
How do managers obtain the target cost for a new product under consideration? Assume
the market price per unit is known and it cannot be influenced by management.
A) the sum of all production and nonproduction costs
B) the sum of all production costs
C) price per unit minus gross profit per unit
D) the sum of all variable costs
The Todd Dolhun Company has the following information available:
Targeted after-tax net income $120,000
Total fixed costs $300,000
Contribution margin per unit $2
Tax rate 40%
How many units should be sold to achieve the targeted after-tax net income?
A) 180,000
B) 210,000
C) 250,000
D) 300,000
Steps used in applying the net present value method to a proposed capital investment do
NOT include ________.
A) identify the amount and timing of relevant expected cash inflows and outflows
B) find the present value of each expected future cash inflow and outflow
C) find the sum of the present values of each expected future cash inflow and outflow
D) find the future value of the cash outflow that occurs at the present time.