Managers usually decide which cost driver to use based upon which of the following
factors?
A.Causal relation.
B.Cost considerations.
C.Generally accepted costing techniques.
D.Uniform cost driver standards.
The benefits of a just-in-time system usually include which of the following?
A.elimination of non-value-added activities.
B.increase in inventory levels, thus guarding against stock-outs.
C.increased time spent valuating inventories.
D.decrease in the number of deliveries required to maintain production.
Which statement is true concerning direct labor?
A.is work traceable directly to particular units of production.
B.uses estimates which allow for normal, periodic rest periods, yet motivates
employees to perform efficiently.
C.could be fixed, if the firm is a high-tech company having only a few workers, or
variable
D.all of the above.
What is term used to describe the pricing practice in effect when a business deliberately
prices below its costs in an effort to drive out competitors?
A.competitive pricing.
B.cost-based pricing.
C.target pricing.
D.predatory pricing.
Resources used versus resources supplied. Here is information about resources for
Business Unlimited, which produces trade publications for various industries:
Required:
a. Compute unused capacity for these items.
b. Management wants no more than 20 percent of total costs to be incurred for unused
capacity. How well is Business Unlimited doing?
What does the term capital budgetingmean in the context of making capital expenditure
decisions?
A.the process of choosing assets.
B.the process of allocating the funds among assets.
C.the process of acquiring the funds to finance the business.
D.None of the above.
Factors underlying make-or-buy decisions include non-quantitative factors, such as
A.dependability of suppliers and the quality of purchased materials.
B.dependability of suppliers and the quantity of purchased materials.
C.dependability of employees and the quality of manufactured materials.
D.dependability of employees and the quantity of purchased materials.
Procurement inspection, processing control (inspection), design, quality training, and
machine inspection are all examples of
A.prevention costs.
B.appraisal costs.
C.internal failure costs.
D.external failure costs.
What is true concerning applications of incentive compensation plans to nonprofit
organizations?
A.These plans rely heavily on intrinsic rewards.
B.These plans lack high financial payoffs for excellent performance.
C.These plans involve adherence to rules set down by top authorities.
D.All of the answers are correct.
What is economic value added (EVA)?
A.The amount of earnings generated above the cost of funds invested to generate those
earnings.
B.The same as the rate of return on total assets.
C.The same as the rate of return on shareholder’s equity.
D.The same as the rate of return on liabilities.
Misstatements that are material to the financial statements caused by intentional or
reckless conduct is(are) called
A.collusion.
B.fraudulent financial reporting.
C.gross errors.
D.internal controls.
Which of the following are examples of unit activities in the product cost hierarchy?
A.Product specifications and product testing.
B.Market research, customer records, and promotion.
C.Machine setups and quality inspections.
D.Energy to run machines and direct materials.
New Brands Company is currently operating at 80 percent capacity. Worried about the
company’s performance, the general manager reviewed the company’s operating
performance. (All fixed costs are allocated costs.)
REQUIRED:
a. What is the current operating profit for the company as a whole?
b. If the manager eliminated the two unprofitable segments, what would be the new
operating profit for the company as a whole?
c. How can management maximize profits?
Delivery cycle time is also known as:
A.just in time
B.break-even time
C.customer response time
D.external failure cost
What is the formula for Target Profit in Sales Dollars?
A.Total Fixed Costs / Unit Contribution Margin.
B.(Total Fixed Costs + Target Profit) / Unit Contribution Margin.
C.(Total Fixed Costs + Target Profit) / Contribution Margin Ratio.
D.Total Fixed Costs / Contribution Margin Ratio
What appears at the bottom of income statements prepared for managerial use to
distinguish it from net income used in external reporting?
A.Other comprehensive income
B.Operating profit
C.Gross margin
D.Net profit (or loss)
Which of the following departments would not be classified as a profit center?
A.Hardware department
B.Men’s shoes department
C.Accounting department
D.Automotive department
Which of the following is a strength of the account analysis method of cost estimation?
A.The method provides a detailed expert analysis of the cost behavior in each account.
B.The method is based on studies of what future costs should be rather than what past
costs have been.
C.The method uses all the observations of cost data.
D.The method is relatively easy to use with computer and sophisticated calculators.
A cost that changes as a result of changing activitiesor levels of activities is called
which of the following?
A.product cost.
B.department cost.
C.batch cost.
D.differential cost.
How can managerial accounting support modern production environments?
Explain why costs must be covered by prices.
Compare financial and managerial accounting. Discuss the environment in which each
is relevant.
How does technology impact variance analyses?
Universal Distributors
Universal Distributors, a major retailing and mail order operation, has been in business
for the past 10 years. During that time, the mail order operations have grown from a
sideline to represent over 80% of the company’s annual sales. Of course, the company
has suffered growing pains. There were times when overloaded or faulty computer
programs resulted in lost sales, and the scheduling of temporary workers to augment the
permanent staff during peak periods has always been a problem.
Peter Ben Ezra, manager of mail order operations, has developed procedures for
handling most problems. However, he is still trying to improve the scheduling of
temporary workers to take telephone orders from customers. Under the current system,
he keeps a permanent staff of 60 employees who handle the basics; the number of
temporary workers needed for the next day is determined by Ben Ezra each afternoon
based on his estimate of the upcoming telephone volume.
Mr. Ben Ezra has decided to try regression analysis as a way to improve the hiring of
temporary workers. By summarizing the daily labor hours into weekly totals for the
past year, Ben Ezra was able to determine the number of workers that were used each
week. In addition, he listed the number of orders that had been processed each week.
After entering the data into a spreadsheet, Ben Ezra ran two regressions. Regression #1
related the total workers (permanent staff plus temporary workers) to the number of
orders received, and Regression #2 related only temporary workers to the number of
orders received. The output of these analyses is presented below.
Regression Equation: W = a + bT
Where: W = Workers
T = Telephone Orders
Refer to Universal Distributors. Describe at least three ways that Peter Ben Ezra could
improve his analysis in order to get better predictions than either of these regression
results provides.
Houser Parcel Moving Express reports the following information for 2010:
Actual:
Standard:
REQUIRED:
Calculate the following:
Jenkins Company
Jenkins Company applies overhead costs to products at a rate of 50 percent of direct
labor costs. The following data relate to the manufacturing activities of Jenkins
Company during April:
Factory costs incurred during the month were:
Refer to Jenkins Company. Using normal costing, calculate the cost of units completed
during April and transferred to the finished goods storeroom.
The objective of the theory of constraints is to maximize throughput contribution while
minimizing investments and operating costs. The theory of constraints assumes a
short-run time horizon. How is this accomplished?
