1) Which of the following measures would reflect the variable costs incurred by a
business segment?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
2) Sunrise Corporation has a return on investment of 15%. A Sunrise division, which
currently has a 13% ROI and $750,000 of residual income, is contemplating a massive
new investment that will (1) reduce divisional ROI and (2) produce $120,000 of
residual income. If Sunrise strives for goal congruence, the investment:
A.should not be acquired because it reduces divisional ROI
B.should not be acquired because it produces $120,000 of residual income
C.should not be acquired because the division’s ROI is less than the corporate ROI
before the investment is considered
D.should be acquired because it produces $120,000 of residual income for the division
E.should be acquired because after the acquisition, the division’s ROI and residual
income are both positive numbers
3) Heathrow employs cost-plus pricing formulas to derive selling prices for its various
products. If the formulas are all used correctly, which of the following cost bases will
result in the highest selling price?
A.Variable manufacturing cost
B.Absorption manufacturing cost
C.Total variable cost
D.Total cost
E.None of these because if the formulas are applied correctly, all should result in the
same selling price through the use of varying markups
4) Which of the following are needed to calculate the total cost of the ending
work-in-process inventory under the weighted-average process-costing method?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
5) The true statement about cost behavior is that:
A.variable costs change on a per-unit basis and change in total as activity changes
B.fixed costs are constant on a per-unit basis and change in total as activity changes
C.fixed costs are constant on a per-unit basis and are constant in total as activity
changes
D.fixed costs change on a per-unit basis and are constant in total as activity changes
E.variable costs are constant on a per-unit basis and are constant in total as activity
changes
6) Vanguilder combines all manufacturing overhead into a single cost pool and allocates
this overhead to products by using machine hours. Activity-based costing would likely
show that with Vanguard’s current procedures that:
A.all of the company’s products are undercosted
B.the company’s high-volume products are undercosted
C.all of the company’s products are overcosted
D.the company’s high-volume products are overcosted
E.the company’s low-volume products are overcosted
7) The Braggs & Strutting’ Company manufactures an engine for carpet cleaners called
the “Snooper.” Budgeted cost and revenue data for the “Snooper” are given below,
based on sales of 40,000 units.
Cost of goods sold consists of $810,000 of variable costs and $310,000 of fixed costs.
Operating expenses consist of $30,000 of variable costs and $70,000 of fixed costs.
Required:
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin (in dollars).
C. Braggs &Struttin’ received an order for 6,000 units at a price of $25.00. There will
be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit
because of cheaper packaging. Determine the projected increase or decrease in profit
from the order, assuming there is no opportunity costs.
8) Which of the following perspectives is normally absent in a balanced scorecard?
A.Financial
B.Customer
C.Internal operations
D.Learning and innovation/growth
E.None of these
9) Which department would normally begin an investigation regarding an unfavorable
materials quantity variance?
A.Quality control
B.Purchasing
C.Engineering
D.Production
E.Receiving
10) The process of assigning overhead costs to the jobs that are worked on is commonly
called:
A.service department cost allocation
B.overhead cost distribution
C.overhead application
D.transfer costing
E.overhead cost apportionment
11) Which of the following best describes the procedures used in operation costing to
assign direct-material and conversion costs to production?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
12) Majesco, which uses a process-costing system, adds material at the beginning of
production and incurs conversion cost evenly throughout manufacturing. The following
selected information was taken from the company’s accounting records:
Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory’s stage of
completion is:
A.40%
B.60%
C.70%
D.80%
E.some other percentage not listed
13) At which step or steps in the decision-making process do qualitative considerations
generally have the greatest impact?
A.Specifying the criterion and identifying the alternatives
B.Developing a decision model
C.Collecting the data
D.Making a decision
E.Identifying the alternatives
14) The following data relate to Horatio, Inc., a new company:
There were no variances during the period.
Required:
A. Determine the number of units in the ending finished-goods inventory.
B. Calculate the cost of the ending finished-goods inventory under (1) variable costing
and (2) absorption costing.
C. Determine the company’s variable-costing income.
D. Determine the company’s absorption-costing income.
15) Variable costing of inventory and absorption costing of inventory is relevant for
which of the following types of businesses?
A.Manufacturing firms
B.Not-for-profit companies
C.Governmental units
D.Service firms
E.All of the other answers are correct
16) A series of equal cash flows is called a (n):
A.ongoing cash flow
B.payback
C.accrual
D.cash accumulation
E.annuity
17) A restaurant’s value chain includes:
A.only the restaurant
B.only upstream contributors
C.only downstream contributors
D.all of the other answers
E.both up and downstream contributors
18) Wee Care is a nursery school for pre-kindergarten children. The school has
determined that the following biweekly revenues and costs occur at different levels of
enrollment:
The marginal cost when the twenty-first student enrolls in the school is:
A.$55
B.$155
C.$300
D.$3,045
E.$3,255
19) McArthur Corp., which began business at the start of the current year, had the
following data:
Planned and actual production: 40,000 units
Sales: 38,000 units at $15 per unit
Production costs:
Variable: $5 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The gross margin that the company would disclose on an absorption-costing income
statement is:
A.$0
B.$133,000
C.$166,500
D.$342,000
E.None of the other answers are correct
20) A controller is normally involved with:
A.preparing financial statements
B.managing investments
C.raising capital
D.safeguarding assets
E.managing the firm’s credit policy
21) Many traditional costing systems:
A.trace manufacturing overhead to individual activities and require the development of
numerous activity-costing rates
B.write off manufacturing overhead as an expense of the current period
C.combine widely varying elements of overhead into a single cost pool
D.use a host of different cost drivers (e.g., number of production setups, inspection
hours, orders processed) to improve the accuracy of product costing
E. produce results far superior to those achieved with activity-based costing
22) Alamo’s customer service department follows up on customer complaints by
telephone inquiry. During a recent period, the department initiated 7,000 calls and
incurred costs of $203,000. If 2,940 of these calls were for the company’s wholesale
operation (the remainder were for the retail division), costs allocated to the retail
division should amount to:
A.$0
B.$29
C.$85,260
D.$117,740
E.$203,000
23) The following data relate to product no. 33 of La Quinta Corporation:
Direct labor standard: 5 hours at $14 per hour
Direct labor used in production: 45,000 hours at a cost of $639,000
Manufacturing activity: 8,900 units completed
The direct-labor efficiency variance is:
A.$7,000F
B.$7,000U
C.$7,100F
D.$7,100U
E.None of the other answers are correct
24) Managerial accounting:
A.focuses only on historical data
B.is governed by GAAP
C.focuses primarily on the needs of personnel within the organization
D.provides information for parties external to the organization
E.focuses on financial statements and other financial reports
25) As production takes place, all manufacturing costs are added to the:
A.Work-in-Process Inventory account
B.Manufacturing-Overhead Inventory account
C.Cost-of-Goods-Sold account
D.Finished-Goods Inventory account
E.Production Labor account
26) Edmonco Company produced and sold 45,000 units of a single product last year,
with the following results:
Edmonco’s operating leverage factor was:
A.4
B.5
C.6
D.7
E.8