1) the following information pertains to mackenzie corp:
if the sales price per unit were to decrease by 5% and variable expenses were to
increase by $2.00 per unit, which of the following is true?
a.the new selling price is $36 per unit
b.the new breakeven point is $831,250
c.the new variable expenses are $18 per unit
d.the new breakeven point is 21,750 units
1> selling price per unit, p = $900,000 22,500 units = $40/unit
2> per-unit variable cost, v, is determined from the formula to calculate the contribution
margin ratio: contribution margin ratio = 0.5 (i.e., $350,000 $700,000); ($40 – v) $40 =
0.5; therefore, v = $20/unit
2) the competitive strategy of differentiation is implemented by a firm’s targeted,
careful attention to a(n):
a.specific feature of the product or service
b.high efficiency level of production
c.broad possible market
d.aggressive competitive pricing plan
3) of the following, which aspect of a contemporary management technique is a
framework and process that organizations use to manage the occurrence of possible
events that could negatively or positively affect the company’s competitiveness and
success?
a.total quality management
b.lean accounting
c.the theory of constraints
d.enterprise sustainability
e.enterprise risk management
4) allocation of service department costs to producing departments is the most complex
of the allocation phase of departmental cost allocation because of the likely presence of:
a.manager bias
b.formula distracters
c.repetitive steps
d.reciprocal flows
e.non-value adding activities
5) marin products produces three products dbb-1, dbb-2, and dbb-3 from a joint
process. each product may be sold at the split-off point or processed further. additional
processing requires no special facilities, and production costs of further processing are
entirely variable and traceable to the products involved. key information about marin’s
production, sales, and costs follows.
the amount of joint costs allocated to product dbb-2 using the net realizable value
method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%,
and round all dollar amounts to the nearest whole dollar):
a.$2,009,160
b.$286,500
c.$881,640
d.$667,345
e.$709,200
6) a company owns equipment that is used to manufacture important parts for its
production process. because the equipment is repeatedly breaking down, the company
plans to sell the equipment for $10,000 and to select one of the following alternatives:
(1) acquire new equipment for $80,000 and continue to manufacture the part at the
same variable cost, or (2) purchase the parts from an outside company at $4 per part. in
the short run the company should quantitatively analyze the alternatives by comparing
the variable cost of manufacturing the parts:
a.plus $80,000, to the cost of buying the parts
b.to the cost of buying the parts less $10,000
c.less $10,000 to the cost of buying the parts
d.to the cost of buying the parts
e.plus $70,000, to the cost of buying the parts
7) in a process costing system, the cost of abnormal spoilage should be:
a.prorated between units transferred out and ending inventory
b.included in the cost of units transferred out
c.treated as a loss in the period incurred
d.added to overhead
8) technology and complexity issues often lead management to simplify and to:
a.use linear estimation methods
b.use volume-based costing and nonlinear estimation methods
c.use volume-based costing methods
d.use nonlinear estimation methods
e.use activity-based costing and volume-based costing methods
9) the long term care plus company has two service departments actuarial and premium
rating, and two production departments marketing and sales. the distribution of each
service department’s efforts to the other departments is shown below:
the direct operating costs of the departments (including both variable and fixed costs)
were as follows:
the total cost accumulated in the sales department using the direct method is (calculate
all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar
amounts to the nearest whole dollar):
a.$100,000
b.$109,000
c.$126,000
d.$130,000
e.$135,000
10) in deciding whether to manufacture a part or buy it from an outside vendor, a cost
that is irrelevant to this short-run decision is:
a.direct labor
b.variable overhead
c.fixed overhead that will be avoided if the part is bought from an outside vendor
d.fixed overhead that will continue even if the part is bought from an outside vendor
e.transportation-in charges assessed on external purchases
11) the following cost information pertained to the violin division of stringing music co.
and was based on monthly demand and sales of 100 units:
assume that the violin division was evaluating whether or not it would accept a special
sales order for ten violins at $390 per unit. for this purpose, total relevant cost per unit
(given the costs stated above) is:
a.$330
b.$342
c.$390
d.$366
e.$354
12) copeland inc. produces x-547 in a joint manufacturing process. the company is
studying whether to sell x-547 at the split-off point or upgrade the product to become
xylene. the following information has been gathered:
(1) selling price per pound of x-547 .
(2) variable manufacturing costs of the upgrade process.
(3) avoidable fixed costs of the upgrade process.
(4) selling price per pound of xylene.
(5) joint manufacturing costs to produce x-547 .
which of the items should be reviewed when making the upgrade decision?
a.1, 2, and 4
b.1, 2, 3, and 4
c.1, 2, 3, 4, and 5
d.1, 2, 4, and 5
e.2, 3
13) a decision bias is an inherent tendency of most decision makers that leads to
incorrect decisions. an example of decision bias is:
a.failure to consider all relevant costs
b.failure to properly identify sunk costs as irrelevant
c.failure to consider opportunity cost
d.failure to adjust for the time value of money
e.failure to consider legal constraints associated with the pricing decision
14) which of the following is not a correct pairing of estimated costs and its related cost
driver?
a.fuel expense for a delivery truck; miles driven
b.heating expense for a building; temperature to be maintained in the building
c.product design cost; number of design elements
d.sustainability cost in a manufacturing plant; machine-hours
15) zeta company is preparing its annual profit plan. as part of its analysis of the
profitability of individual products, the controller estimates the amount of
manufacturing overhead that should be assigned to each of the two product lines from
the information given below.
budgeted material-handling costs are $50,000 .
under a costing system that allocates manufacturing overhead on the basis of direct
labor hours, the material-handling cost per wall mirror is:
a.$0
b.$500
c.$1,000
d.$2,000
e.$5,000
16) the cost allocation method most widely used because of its accuracy and ability to
provide a detailed level of analysis is:
a.departmental approach
b.activity-based approach
c.direct approach
d.accounting approach
e.joint product costing
17) __________ is a statistical method for obtaining the unique cost-estimating
equation that best fits a set of data points.
a.reciprocal method
b.high-low method
c.regression analysis
d.cost recession analysis