1) Activity-based costing analysis takes a long-run perspective and treats all activity
costs as variable costs.
2) The objective of maximizing return on investment may induce managers of highly
profitable divisions to reject projects that from the viewpoint of the overall organization
should be accepted.
3) Managers can gain more insight about the static-budget variance by subdividing it
into the flexible-budget variance and the sales-volume variance.
4) When allocating the revenues between a bundled product offering, management
judgement can be used in issuing revenue-allocation weights.
5) Usually there is no production-volume variance when normal capacity utilization is
used as the denominator level.
6) A favorable variance should be ignored by management.
7) One advantage of using standard times to develop a budget is they are simple to
compile, are based solely on the past actual history, and do not require expected future
changes to be taken into account.
8) Conversion costs include all direct manufacturing costs.
9) If total advertising expense of $483,000 is allocated on the basis of sales, the amount
allocated to the Large Department would be ________.
A) $407,500
B) $405,000
C) $402,500
D) $405,250
10) The most likely cost driver of direct labor costs is the ________.
A) number of machine setups for the product
B) number of miles driven
C) number of production hours
D) number of machine hours
11) A system that comprises a single database that collects data and feeds it into
software applications supporting all of a company’s business activities is known as a(n)
________.
A) economic order quantity (EOQ) system
B) enterprise resource planning (ERP) system
C) just-in-time (JIT) system
D) material requirements planning (MRP) system
12) An unfavorable flexible-budget variance for variable costs may be the result of
________.
A) using more input quantities than were budgeted
B) paying lower prices for inputs than were budgeted
C) selling output at a higher selling price than budgeted
D) selling less quantity compared to the budgeted
13) Aspen Manufacturing Company sells its products for $33 each. The current
production level is 50,000 units, although only 40,000 units are anticipated to be sold.
Required:
a.Prepare an income statement using absorption costing.
b.Prepare an income statement using variable costing.
14) From a balanced scorecard perspective, average reduction in setup time and
processing time at bottleneck operations is an example of ________.
A) financial measures
B) customer measures
C) internal-business-process measures
D) learning-and-growth measures
15) Which of the following statements is a disadvantage of balanced scorecards?
A) Balanced scorecards ignore short-run objectives.
B) Balanced scorecards may become unwieldy and difficult to understand.
C) Balanced scorecards use a lot of nonfinancial measures.
D) Balanced scorecards are of little use in influencing managerial behavior.
16) In the computation of the cost per equivalent unit, the weighted-average method of
process costing considers all the costs ________.
A) entering work in process from the units in beginning inventory plus the costs for the
work completed during the current accounting period
B) costs that have entered work in process from the units started or transferred in during
the current accounting period
C) that have entered work in process during the current accounting period from the
units started or transferred in minus the costs associated with ending inventory
D) that have entered work in process during the current accounting period from the
units started or transferred in plus the costs associated with ending inventory
17) The method that ranks individual products in a bundle for revenue allocation is the
________.
A) stand-alone revenue-allocation method
B) incremental revenue-allocation method
C) unit-cost weighting method
D) physical-unit weighting method
18) Which of the following statements is true regarding cost-plus pricing?
A) It starts with a target price which is the estimated price for a product.
B) A company uses a markup percentage that estimates a product price that covers full
product costs and earns the required return on investment.
C) It first determines product characteristics and target price on the basis of customer
preferences and then computes a target cost.
D) The cost-plus price chosen has already been studied for customer reaction to the
price.
19) The purpose of the equivalent-unit computation is to ________.
A) convert completed units into the amount of partially completed output units that
could be made with that quantity of input
B) assist the business in determining the cost assigned to ending inventory and
work-in-process inventory
C) predict the future production capabilities of the organization
D) satisfy the GAAP requirements which requires all partially completed goods to be
reported as equivalent-units