1) ISO 9000 are standards designed to encourage organizations to develop
environmental management systems to reduce environmental costs.
2) Companies that have low manufacturing lead time usually find that a version of
backflush costing will report cost numbers totally different to what a sequential costing
approach would report.
3) In nominal rate of return, the inflation element is the premium above the real rate.
4) When budgeted fixed costs are allocated based on actual usage, user departments will
not know their fixed-cost allocations until the end of the budget period.
5) Cost accounting measures and reports short-term, long-term, financial, and non
financial information.
6) The nominal approach to incorporating inflation into the net present value method
predicts cash inflows in real monetary units and uses a real rate as the required rate of
return.
7) The Cost of Goods Sold account tracks job costs from the time jobs are started until
they are completed.
8) The Alex Miller Corporation operates one central plant that has two divisions, the
Flashlight Division and the Night Light Division. The following data apply to the
coming budget year:
Assume that practical capacity is used to calculate the allocation rates. Further assume
that actual usage of the Lamp Division was 700 hours and the Flashlight Division was
400 hours for the month of June.
Required:
a.If a single-rate cost-allocation method is used, what amount of operating costs will be
budgeted for the Lamp Division each month? For the Flashlight Division each month?
b.For the month of June, if a single-rate cost-allocation method is used, what amount of
cost will be allocated to the Lamp Division? To the Flashlight Division? Assume actual
usage is used to allocate operating costs.
c.If a dual-rate cost-allocation method is used, what amount of operating costs will be
budgeted for the Lamp Division each month? For the Flashlight Division each month?
d.For the month of June, if a dual-rate cost-allocation method is used, what amount of
cost will be allocated to the Lamp Division? To the Flashlight Division? Assume
budgeted usage is used to allocate fixed operating costs and actual usage is used to
allocate variable operating costs.
9) The ________ method of profitability analysis recognizes the two basic ingredients
in profit-making: increasing income per dollar of revenues and using assets to generate
more revenues.
A) Balanced Scorecard
B) Residual-Income
C) DuPont
D) Economic Value Added
10) The Green Company processes unprocessed goat milk up to the splitoff point where
two products, condensed goat milk and skim goat milk result. The following
information was collected for the month of October:
The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff
point to yield a total of 98,000 gallons of saleable product was $184,480. There were no
inventory balances of either product.
Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is
shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4
per usable gallon. Xyla can be sold for $20 per gallon.
Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream,
for an additional processing cost per usable gallon of $4. The product can be sold for $9
per gallon.
There are no beginning and ending inventory balances.
Using the sales value at splitoff method, what is the gross-margin percentage for
condensed goat milk at the splitoff point?
A) 51.74%
B) 50.00%
C) 35.83%
D) 48.26%
11) Concose Park Department is considering a new capital investment. The following
information is available on the investment. The cost of the machine will be $330,000.
The annual cost savings if the new machine is acquired will be $85,000. The machine
will have a 5-year life, at which time the terminal disposal value is expected to be
$32,000. Concose Park Department is assuming no tax consequences. If Concose Park
Department has a required rate of return of 11%, which of the following is closest to the
present value of the project?
A) $8,245
B) $24,836
C) $3,136
D) $15,840
12) Terbium Corporation manufactures water toys. It plans to grow by producing
high-quality water toys that are delivered in a timely manner. There are a number of
other manufacturers who produce similar water toys. Terbium believes that
continuously improving its manufacturing processes and reengineering processes to
downsize and eliminate excess capacity are critical to implementing its strategy. To
further company strategy, measures on the balanced scorecard would most likely
include ________.
A) number of process improvements
B) price premium earned
C) longer cycle times
D) an increase in operating income from increased profit margins
13) Berman’s Camera Shop has prepared the following flexible budget for September
and is in the process of interpreting the variances. F denotes a favorable variance and U
denotes an unfavorable variance.
The most likely explanation of the above variances for Material A is that ________.
A) a lower price than expected was paid for Material A
B) higher-quality raw materials were used than were planned
C) the company used a higher-priced supplier
D) Material A used during September was $2,000 less than expected
14) Which of the following is true of line management?
A) It is directly responsible for achieving the goals of the organization.
B) It is responsible of management accounting functions.
C) It provides advice, support, and assistance to staff management.
D) It only includes the top level management.
15) A favorable price variance for direct manufacturing labor might indicate that
________.
A) employees were paid more than planned
B) unexpected increase in direct labor rates
C) underskilled employees are being hired
D) congestion due to scheduling problems
16) Velshi Printers has contracts to complete weekly supplements required by forty-six
customers. For the year 2015, manufacturing overhead cost estimates total $840,000 for
an annual production capacity of 12 million pages.
For 2015 Velshi Printers has decided to evaluate the use of additional cost pools. After
analyzing manufacturing overhead costs, it was determined that number of design
changes, setups, and inspections are the primary manufacturing overhead cost drivers.
The following information was gathered during the analysis:
During 2015, two customers, Money Managers and Hospital Systems, are expected to
use the following printing services:
Using pages printed as the only overhead cost driver, what is the manufacturing
overhead cost estimate for Money Managers during 2015?
A) $5,000
B) $3,500
C) $4,200
D) $6,000
17) Which of the following statements is true in regard to the cause-and-effect
relationship between allocated joint costs and individual products?
A) A high individual product value results in a high level of joint costs.
B) A low individual product value results in a low level of joint costs.
C) A high individual product value results in a low level of joint costs.
D) There is no cause-and-effect relationship.
18) Which of the following inventory costing methods shown below is required by
GAAP (Generally Accepted Accounting Principles) for external financial reporting?
A) absorption costing
B) variable costing
C) throughput costing
D) direct costing
19) Globus Autos sells a single product. 8,000 units were sold resulting in $80,000 of
sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. If variable costs
decrease by $1 per unit, the new margin of safety is ________.
A) $65,000
B) $73,567
C) $68,235
D) $66,765
20) Which of the following is a component of sales-volume variance?
A) Net-income volume variance
B) Operating-income volume variance
C) Taxable-income volume variance
D) Budgeted revenue variance
21) Stewart Corporation plans to grow by offering a sound system, the SS3000, that is
superior and unique from the competition. Stewart believes that putting additional
resources into R&D and staying ahead of the competition with technological
innovations is critical to implementing its strategy. To further company strategy,
measures on the balanced scorecard would most likely include ________.
A) number of process improvements
B) manufacturing quality
C) yield
D) an increase in operating income from productivity gains