Variances from standard costs are reported to
a. suppliers
b. stockholders
c. management
d. creditors
The following information pertains to Diane Company. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What are the dividends per common share for Diane Company?
a. $20.00
b. $3.00
c. $0.67
d. $1.50
The expected period of time that will elapse between the date of a capital investment
and the complete recovery in cash of the amount invested is called the discount period.
a. True
b. False
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
month’s sales.
What is the budgeted unit of production for January?
a. 236,000
b. 181,000
c. 200,000
d. 219,000
The master budget of a small manufacturer would normally include all necessary
component budgets except the capital expenditures budget.
a. True
b. False
Which of the following is a period cost?
a. depreciation on factory lunchroom furniture
b. salary of telephone receptionist in the sales office
c. salary of a security guard for the factory parking lot
d. computer chips used by a computer manufacturer
The taxes on the factory superintendent’s salary would be included as part of the cost of
products manufactured under the variable costing concept.
a. True
b. False
Schedule of Activity Costs
From the above schedule of activity costs, determine the value-added costs.
a. $177,000
b. $191,000
c. $156,000
d. $104,000
Which of the following entries would not be found on the books of a service provider?
a. a debit to Work in Process; and a credit to Materials
b. a debit to Work in Process; and a credit to Wages Payable
c. a debit to Work in Process; and a credit to Overhead
d. a debit to Cost of Services; and a credit to Work in Process
An advantage of the current ratio is that it considers the makeup of the current assets.
a. True
b. False
The principle of exceptions allows managers to focus on correcting variances between
standard costs and actual costs.
a. True
b. False
For the current year ending April 30, Hal Company expects fixed costs of $60,000, a
unit variable cost of $70, and anticipated break-even of 1,715 sales units.
(a) Compute the unit sales price.
(b) Compute the sales (units) required to realize an operating profit of $8,000. Round
your answer to the nearest whole number.
The ratio that indicates the percentage of each sales dollar available to cover the fixed
costs and to provide operating income is termed the contribution margin ratio.
a. True
b. False
Which of the following conditions would cause the break-even point to decrease?
a. total fixed costs increase
b. unit selling price decreases
c. unit variable cost decreases
d. unit variable cost increases
The last step in the preparation of a cost of production report is the calculation of
equivalent units of production.
a. True
b. False
Lean manufacturing is also called make-to-stock manufacturing.
a. True
b. False
If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is
80,000, and the actual direct labor hours is 6,700 for the month, the factory overhead
rate for the month is $68.65 (if the allocation is based on direct labor hours).
a. True
b. False
a plan that lists dollar amounts to be both spent on purchasing additional pant assets to
carry out the budgeted business activities
Match each phrase that follows with the term (a-f) it describes..
a. budget
b. capital expenditures budget
c. sales budget
d. production budget
e. cash budget
f. budgeted balance sheet
The payment of dividends is an example of a cost.
a. True
b. False
All of the following are advantages of decentralization except
a. Managers make better decisions when closer to the operations of the company.
b. Expertise in all areas of the business is difficult; decentralization makes it better to
delegate certain responsibilities.
c. Each decentralized operation purchases its own assets and pays for operating costs.
d. Decentralized managers can respond quickly to customer needs.
A business operated at 100% of capacity during its first month, with the following
results:
Operating expenses:
What is the amount of the income from operations that would be reported on the
variable costing income statement?
a. $18,900
b. $18,200
c. $18,000
d. $21,000
Several items are missing from the following table of rate of return on investment and
residual income. Determine the missing items, identifying each item by the appropriate
letter (a’“l). Round percentage values to one decimal point
Uses present value concepts to compute the rate of return on an investment from a
capital investment proposal based on its’ expected net cash flows
Match the definition that follows with the term (a’“f) it defines.
y. Capital rationing
z. Annuity
aa. Capital investment analysis
bb. Internal rate of return method
cc. Payback period
dd. Accounting rate of return