The efficiency variance measures ________.
A) the difference between the quantity used by the company and the quantity used by
its competitors
B) the change in quantities used over time
C) how well the business uses its materials or human resources
D) how quickly direct materials are processed into finished goods
Which of the following is a disadvantage of enterprise resource planning (ERP)
systems?
A) It is not beneficial to large corporations.
B) It is not supported by cloud computing.
C) Its implementation requires a large commitment of time and people.
D) It uses separate software systems, such as sales and payroll.
A company is analyzing its month-end results by comparing it to both static and flexible
budgets. During the previous month, the actual fixed costs were lower than the expected
fixed costs as per the static budget. This difference results in a(n) ________.
A) unfavorable flexible budget variance for fixed costs
B) favorable sales volume variance for fixed costs
C) favorable flexible budget variance for fixed costs
D) unfavorable sales volume variance for fixed costs
Dessa, Inc. reports the following information for the year ended December 31:
The beginning Finished Goods Inventory costs were $3,500 under absorption costing
and $2,800 under variable costing.
What is the operating income using variable costing?
A) $38,640
B) $40,200
C) $9,840
D) $2,340
Jupiter Manufacturing began business on January 1. During its first year of operation,
Jupiter worked on five industrial jobs and reported the following information at
year-end:
What was the balance in Work-in-Process Inventory at year-end?
A) $2,800
B) $2,400
C) $2,100
D) $1,100
Residual income indicates how ________.
A) efficiently a division uses its average assets to generate sales and thereby profits
B) much operating income the division earns on every dollar of sales
C) much return a division generates on average assets
D) much extra operating income a division generates above the minimum acceptable
level
Which of the following is not an advantage of decentralization?
A) provides training
B) frees top management time
C) works to achieve goal congruence
D) supports the use of expert knowledge
Which of the following would most likely be evaluated using residual income?
A) cost center
B) profit center
C) revenue center
D) investment center
A favorable sales volume variance in sales revenue suggests a(n) ________.
A) increase in actual sales price per unit as compared to budgeted sales price
B) increase in number of actual units sold when compared to the expected number of
units sold
C) increase in actual variable cost per unit as compared to expected variable cost per
unit
D) decrease in actual fixed costs
Fox, Inc. manufactures and sells pens for $5 each. Walton Corp. has offered Fox, Inc.
$4 per pen for a one-time order of 3,600 pens. The total manufacturing cost per pen,
using absorption costing, is $1 per unit and consists of variable costs of $0.80 per pen
and fixed overhead costs of $0.20 per pen. Assume that Fox, Inc. has excess capacity
and that the special pricing order would not adversely affect regular sales. What is the
change in operating income that would result from accepting the special pricing order?
A) increase of $3,600
B) decrease of $3,600
C) increase of $11,520
D) decrease of $11,520
Jasper, Inc. reports the following cost information for March:
What is the cost of goods sold for March?
A) $3,100
B) $72,800
C) $75,400
D) $78,100
Grand Products is a price-setter that uses the cost-plus pricing approach for pricing its
products. These products are unique, artistically designed architectural decorations.
Grand produces and sells 6,200 units per year, which represent maximum capacity.
Variable costs are $300 per unit. Total fixed costs are $910,000 per year. The CEO has a
target of $60,000 in operating income, which he wants to achieve by year-end. Using
the cost-plus pricing method, what sales price should Grand use? (Round your answer
to the nearest cent.)
A) $309.68 per unit
B) $446.77 per unit
C) $456.45 per unit
D) $156.45 per unit
The sales volume variance is the difference between the ________.
A) actual results and the expected results in the flexible budget for the actual units sold
B) expected results in the flexible budget for the actual units sold and the static budget
C) static budget and actual amounts due to differences in sales price
D) flexible budget and static budget due to differences in fixed costs
Jose Foster, a manager of Prettiest Pooch, Inc., was reviewing the water bills of a dog
daycare and spa. He determined that its highest and lowest bills of $3,800 and $2,000
were incurred in the months of May and November, respectively. If 600 dogs were
washed in May and 200 dogs were washed in November, what was the fixed cost
associated with the company’s water bill? (Round any intermediate calculations to the
nearest cent and your final answer to the nearest dollar.)
A) $2,000
B) $3,800
C) $1,100
D) $1,800
A company has two different products that are sold in different markets. Financial data
are as follows:
Assume that fixed costs of $4,000 could be eliminated if Product B was dropped.
Assume furthermore that dropping one product would not impact sales of the other. If
Product B is dropped, what would be the impact on total operating income of the
company?
A) increases by $4,000
B) increases by $4,200
C) increases by $200
D) increases by $2,000
Dellarte Corporation has two major divisions’”Agricultural Products and Industrial
Products. It provides the following information for the year.
Calculate the residual income for the Agriculture Division.
A) $27,500
B) $9,300
C) $103,000
D) $47,000
Emerald Marine Stores Company manufactures special metallic materials and
decorative fittings for luxury yachts that require highly skilled labor. Emerald uses
standard costs to prepare its flexible budget. For the first quarter of the year, direct
materials and direct labor standards for one of their popular products were as follows:
Direct materials: 4 pounds per unit; $6 per pound
Direct labor: 2 hours per unit; $17 per hour
During the first quarter, Emerald produced 4,000 units of this product. Actual direct
materials and direct labor costs were $65,000 and $329,000, respectively.
For the purpose of preparing the flexible budget, calculate the total standard direct
materials cost at a production volume of 4,000 units.
A) $96,000
B) $65,000
C) $16,000
D) $24,000
The Assembling Department of Mat Liners, Inc. had 8,000 units in process on
December 1 and received 15,000 units from the Sewing Department. Calculate the
number of units to account for by the Assembling Department for December.
A) 23,000 units
B) 15,000 units
C) 8,000 units
D) 7,000 units
Divine Foods produces a gourmet condiment that sells for $24 per unit. Variable cost is
$6 per unit, and fixed costs are $8,000 per month. If Divine expects to sell 1,500 units,
compute the margin of safety in units. (Round any intermediate calculations and your
final answer to the nearest whole unit.)
A) 444 units
B) 1,056 units
C) 1,500 units
D) 19 units
