1) As activity increases, unit variable cost:
A.increases proportionately with activity
B.decreases proportionately with activity
C.remains constant
D.increases by a fixed amount
E.decreases by a fixed amount
2) Northwest’s production data for one of its products were taken from the most recent
quarterly production budget:
If it takes two direct labor hours to produce each unit and Northwest’s cost per labor
hour is $15, direct labor cost for August would be budgeted at:
A.$16,500
B.$31,200
C.$33,000
D.$34,800
E.None of the other answers are correct
3)
The mayor of Statesville is considering the purchase of a new computer system for the
city’s tax department. The system costs $75,000 and has an expected life of five years.
The mayor estimates the following savings will result if the system is purchased:
What can be said about the computer system’s internal rate of return if the net present
value at 12% is positive? Statesville uses a 10% discount rate for capital-budgeting
decisions.
A.The internal rate of return is greater than 12%
B.The internal rate of return is between 10% and 12%
C.The internal rate of return is less than 10%
D.The internal rate of return must be less than 5%
E.There is insufficient information to make any judgment about the internal rate of
return
4) Which of the following individuals is least likely to become involved in the setting of
either direct material standards or direct labor standards?
A.The purchasing manager
B.A production supervisor
C.An engineer
D.A machine operator
E.A company’s president
5) The accounting records of Dolphin Company revealed the following information:
Dolphin’s cost of goods sold is:
A.$508,000
B.$529,000
C.$531,000
D.$553,000
E.None of the other answers are correct
6) Consider the following items of information:
I. The target recovery period.
II. The discount rate.
III. The timing (i.e., year) of a cash flow.
Which of the above items would be needed to calculate the present value of a cash
flow?
A.I only
B.II only
C.I and II
D.II and III
E.I, II, and III
7) The break-even point is that level of activity where:
A.total revenue equals total cost
B.variable cost equals fixed cost
C.total contribution margin equals the sum of variable cost plus fixed cost
D.sales revenue equals total variable cost
E.profit is greater than zero
8) Wilmar Corporation is budgeting its equipment needs on an on-going basis, with a
new quarter being added to the budget as the current quarter is completed. This type of
budget is most commonly known as a:
A.capital budget
B.rolling budget
C.revised budget
D.pro-forma budget
E.financial budget
9) The adoption of a 24/7 employee hotline for workplace complaints is an example of
a:
A.business-value-added activity
B.customer-value-added activity
C.nonvalue-added activity
D.batch-related activity
E.product-sustaining activity
10) Under an activity-based costing system, what is the per-unit overhead cost of
Deluxe?
A.$272
B.$282
C.$320
D.$440
E.None of the other answers is correct
11) Which of the following statements about operation costing is(are) true?
I. Conversion costs are accumulated by department.
II. Direct material costs are accumulated by batch.
III. Operation costing is a hybrid product-costing system.
A.I only
B.I and II
C.I and III
D.II and III
E.I, II, and III
12) Huxtable charges manufacturing overhead to products by using a predetermined
application rate, computed on the basis of machine hours. The following data pertain to
the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
Overhead applied to production totaled:
A.$352,000
B.$384,000
C.$550,000
D.$600,000
E.some other amount
13) All other things being equal, which of the following would be most attractive to an
investor?
A.A cash outflow of $60,000 in six years
B.A cash outflow of $10,000 each year for the next six years
C.A cash outflow of $30,000 in year 1 and $30,000 in year 6
D.A cash outflow of $60,000 today
E.All of these would be equally attractive to an investor
14) A recent income statement of Black Corporation reported the following data:
If these data are based on the sale of 20,000 units, the break-even point would be:
A.9,565 units (rounded)
B.11,000 units (rounded)
C.7,586 units (rounded)
D.14,667 units (rounded)
E.None of the other answers is correct
15) The costs that follow all have applicability for a manufacturing enterprise. Which of
the choices listed correctly denotes the costs’ applicability for a service provider?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
16) Northcutt’s production data for a new deluxe product were taken from the most
recent quarterly production budget:
In addition, Northcutt produces 5,000 units a month of its standard product. It takes two
direct labor hours to produce each standard unit and 2.25 direct labor hours to produce
each deluxe unit. Northwest’s cost per labor hour is $15. Direct labor cost for July
would be budgeted at:
A.$183,750
B.$187,125
C.$189,125
D.$194,750
E.None of the other answers are correct
17) A perfection standard:
A.tends to motivate employees over a long period of time
B.is attainable in an ideal operating environment
C.would make allowances for normal amounts of scrap and waste
D.is generally preferred by behavioral scientists
E.will result in a number of favorable variances on a performance report