If a strategic alliance is to function effectively, all parties involved must feel that they
are being fairly treated.
The segment margin of a profit or investment center includes allocated common costs.
Two methods of allocating joint costs to products are physical measure allocation and
monetary allocation.
Non-financial measures are generally more indicative of productive activity than are
financial performance measures.
Managerial accounting is highly regulated by rules and regulations.
The facility manager of Tovar Corporation asked the systems analyst for information to
help in forecasting handling costs. The following printout was generated using the least
squares regression method.
Chronologically, in what order are the sales, purchases, and production budgets
prepared?
A. sales, purchases, production
B. sales, production, purchases
C. production, sales, purchases
D. purchases, sales, production
Which of the following are drawbacks to applying actual overhead to production?
A. A delay occurs in assigning costs to jobs or products.
B. Fluctuations in quantities produced during a period could cause varying per-unit
charges for fixed overhead.
C. Seasonality of overhead costs may cause distortions in job or product costs.
D. all answers are correct.
Houston National Bank
Houston National Bank had the following activities, traceable costs, and
physical flow of driver units:
The above activities are used by the Memorial branch and the University branch:
Refer to Houston National Bank. How much of the new account cost will be assigned
to the University branch?
A. $10,000
B. $20,000
C. $30,000
D. $50,000
Patterson Company
The following information is for Patterson Company’s July production:
(Round all answers to the nearest dollar.)
Refer to Patterson Company. What is the material quantity variance?
A. $3,105 F
B. $1,050 F
C. $3,105 U
D. $1,890 U
A short-run measure of activity that represents a firm’s anticipated activity level for an
upcoming period based upon expected demand is referred to as:
A. theoretical capacity
B. practical capacity
C. normal capacity
D. expected capacity
Office Systems Corporation
Office Systems Corporation manufactures and sells various high-tech office automation
products. Two divisions of Office Systems Corporation are the Computer Chip Division
and the Computer Division. The Computer Chip Division manufactures one product, a
‘super chip,” that can be used by both the Computer Division and other external
customers. The following information is available on this month’s operations in the
Computer Chip Division:
Presently, the Computer Division purchases no chips from the Computer Chips
Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each
month.
Refer to Office Systems Corporation. Assume that next month’s costs and levels of
operations in the Computer and Computer Chip Divisions are similar to this month.
What is the maximum of the transfer price range for a possible transfer of the chip from
one division to the other?
A. $50
B. $45
C. $35
D. $30
Buckingham Company
Buckingham Company uses a standard cost system for its production process and
applies overhead based on direct labor hours. The following information is available for
May when Buckingham produced 4,500 units:
Refer to Buckingham Company. Using the two-variance approach, what is the
controllable variance?
A. $5,813 U
B. $5,813 F
C. $4,375 U
D. $4,375 F
Andersen Corporation
Andersen Corporation has the following information for the current month:
All materials are added at the start of the production process. Andersen Corporation
inspects goods at 75 percent completion as to conversion.
Refer to Andersen Corporation. Assume that the costs per EUP for material and
conversion are $2.00 and $2.25, respectively. What is the cost assigned to normal
spoilage, using weighted average, and where is it assigned?
A. $11,063 Units transferred out and Ending Inventory
B. $11,063 Units transferred out
C. $12,750 Units transferred out and Ending Inventory
D. $12,750 Units transferred out
A company’s return on investment is affected by a change in
A. Yes Yes
B. Yes No
C. No No
D. No Yes
Romano Company
The following information pertains to Romano Company for September:
Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and
at 150 percent of direct labor cost for Jobs #325 and #401. The total cost of Jobs #323
and #325 is identical.
Refer to Romano Company Assume that Jobs #323 and #401 are incomplete at the end
of September. What is the balance in Work in Process Inventory at that time?
A. $18,920
B. $22,620
C. $28,920
D. $30,120
Smith Corporation
Smith Corporation is involved in the evaluation of a new computer-integrated
manufacturing system. The system has a projected initial cost of $1,000,000. It has an
expected life of six years, with no salvage value, and is expected to generate annual cost
savings of $250,000. Based on Smith Corporation’s analysis, the project has a net
present value of $57,625.
Refer to Smith Corporation. What is the project’s internal rate of return? Present value
tables or a financial calculator are required.
A. between 12.5 and 13.0 percent
B. between 11.0 and 11.5 percent
C. between 11.5 and 12.0 percent
D. between 13.0 and 13.5 percent
Given the following notation, what is the break-even sales level in units?
SP = selling price per unit, FC = total fixed cost, VC = variable cost per unit
A. SP/(FC/VC)
B. FC/(VC/SP)
C. VC/(SP – FC)
D. FC/(SP – VC)
The payback method typically assumes that all cash inflows are reinvested to yield a
return equal to
A. the discount rate.
B. the hurdle rate.
C. the internal rate of return.
D. zero.
If management judges one project in a mutually inclusive set to be acceptable for
investment,
A. all the other projects in the set are rejected.
B. only one other project in the set can be accepted.
C. all other projects in the set are also accepted.
D. only one project in the set will be rejected.
The term “committed costs” refers to costs that
A. management decides to incur in the current period to enable the company to achieve
objectives other than the filling of orders placed by customers.
B. are likely to respond to the amount of attention devoted to them by a specified
manager.
C. are governed mainly by past decisions that established the present levels of operating
and organizational capacity and that only change slowly in response to small changes in
capacity.
D. fluctuate in total in response to small changes in the rate of utilization of capacity.
Robertson Company.
Robertson Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #8, #12, and #15.
Direct material was requisitioned as follows for each job respectively: 25 percent, 30
percent, and 30 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000.
Other actual overhead costs totaled $50,000.
Refer to Robertson Company. If Job #15 is completed and transferred, what is the
balance in Work in Process Inventory at the end of the period if overhead is applied at
the end of the period?
A. $191,925
B. $201,888
C. $205,284
D. $208,908
The ratio of sales to assets is referred to as ______________________________.
The theory that the flow of goods through a production process cannot be at a faster
rate than the slowest constraint in the process is known as
________________________________________.
theory of constraints or
What forms can strategic alliances take?
Discuss how establishing standards benefits the following management functions:
performance evaluation and decision making.
The difference between a standard and an actual quantity, price, or rate is a(n)
____________________.
Distinguish between lead indicators and lag indicators, and provide an example of
each. Which of these indicators is a better guide for strategic planning?
A measure of profit produced above the cost of capital is referred to as
___________________________________.
economic value added or