To calculate the present value of an annuity, multiply
a. The principal amount by the present value factor
b. The amount to be received each year by the present value factor
c. The principal by the discounted interest rate
d. The amount to be received each year by the discounted interest rate
Knoll Manufacturing has manufacturing facilities in several locations. One of Knoll ‘s
facilities has been showing losses over several quarters, and management is considering
closing the facility. If the facility is closed, only two part-time employees will be
retained by Knoll. The annual wage of each part-time worker is $14,400. This particular
location has been in operation for many years. As a result, the manufacturing equipment
has no resale value. Following is the most recent income statement for the facility:
What would be the impact on Knoll ‘s overall operating income if the manufacturing
facility is eliminated?
a. Increase by $81,800 per year.
b. Decrease by $241,000 per year.
c. Decrease by $226,600 per year.
d. Increase by $322,800 per year.
Marcello Industries reported the following cash transactions for last year.
Required:
a. Prepare the investing section of Marcello’s statement of cash flows.
b. Prepare the financing section of Marcello’s statement of cash flows.
If an organization wants to make a profit, it must generate more sales revenue than the
total costs it incurs. This relation can be expressed using which of the following profit
equations?
a.Operating income = [(Sales price per unit – Variable cost per unit) x # units sold] –
Fixed cost
b.Operating income = [Sales price per unit – Fixed cost per unit) x # units produced] –
Variable cost
c.Operating income = Sales revenue – Total variable costs – Discretionary costs
d.Operating income = Sales revenue – Committed costs – Fixed costs
Predetermined overhead rates and manufacturing overhead application (
Ignatenko Company manufactures a line of lightweight running shoes. CEO Alona
Ignatenko estimated that the company would incur $2,400,000 in manufacturing
overhead during the coming year. Additionally, she estimated the company would
operate at a level requiring 200,000 direct labor hours and 500,000 machine hours.
Required
a. Assume that Ignatenko Company uses direct labor hours as its manufacturing
overhead application base. Calculate the company’s predetermined overhead rate.
b. Assume that job 3574 required 250 direct labor hours to complete. How much
manufacturing overhead should be applied to the job?
c. Assume that Ignatenko Company used machine hours as its manufacturing overhead
application base. Calculate the company’s predetermined overhead rate.
d. Assume that job 3574 required 600 machine hours to complete. How much
manufacturing overhead should be applied to the job?
Which of the following is a measure that relates to the financial perspective?
a. Revenue growth
b. Market share
c. Customer profitability
d. Defect rate
A profit center manager ‘s performance is typically measured based on the unit ‘s
a. Direct material and direct labor variances only.
b. Overall profit compared to the flexible budget.
c. ROI.
d. None of these answer choices are correct.
When the budget being used is a static budget, the difference between actual results and
budgeted results is referred to as a
a. Static swing.
b. Variable discrepancy.
c. Static budget variance.
d. Static budget fluctuation.
Which of the following does not affect the price a company charges under cost-plus
pricing?
a. Desired gross margin percentage
b. The cost of the product
c. The historical price of the product or service
d. All of these answer choices affect the price a company charges under cost-plus
pricing.
The sales volume variance does not help managers understand
a. The effects of price changes on actual results.
b. Operational efficiency on actual results.
c. Either the effects of price changes on actual results or the operational efficiency on
actual results.
d. None of these answer choices are correct.
Andrea Kris is opening a small flower shop that will focus primarily on delivery, but
will provide a small showroom for walk-in customers. A local florist is retiring and
selling her small flower shop to Andrea for $162,500. The shop has a remaining life of
20 years. Andrea expects to have revenues of $81,250 per year and pay approximately
60% of revenues in operating costs. What is the accounting rate of return for Andrea’s
flower shop?
a. 15%
b. 20%
c. 45%
d. 25%
Which of the following is not a main barrier to the effective use of nonfinancial
performance measures by organizations?
a. Skepticism that the measures are directly related to the bottom line
b. Lack of management skill needed to implement the measures
c. Lack of familiarity with the measures on the part of the board members
d. Undeveloped tools for analyzing the measures
Basil Industries reported the following information for December:
What was the total manufacturing cost for Basil for December?
a. $1,062,500
b. $1,087,500
c. $1,131,250
d. $1,250,000
The contribution margin ratio can be used to
a.Determine the increase in profits from a given dollar increase in sales revenue.
b.Determine the impact of fixed costs on contribution margin.
c.Both to determine the increase in profits from a given dollar increase in sales revenue
and to determine the impact of fixed costs on contribution margin.
d.Neither to determine the increase in profits from a given dollar increase in sales
revenue nor to determine the impact of fixed costs on contribution margin.
The leading professional organization for management accountants is the
a.American Association of Management Accountants.
b.Institute of Management Accountants.
c.National Association of Accountants.
d.Society of Management Accountants.
When a manager talks about cost behavior, she is referring to
a.The way in which total costs change in response to changes in the level of activity.
b.The method used to determine whether a cost is accrued or expensed.
c.Both A and B.
d.None of these answer choices are correct.
In which type of organization would using a balanced scorecard not be appropriate?
a.For-profit organizations
b.Governmental units
c.Service organizations
d.None of these answer choices are correct.
Which of the following is not a factor that could influence worker productivity?
a. The level of skill and training workers possess will affect their productivity.
b. The amount of automation used in the production process.
c. Workers’ level of fatigue will affect the direct labor efficiency variance.
d. The quality of direct material used.