1) in a make-or-buy decision:
a.only variable costs are relevant
b.fixed costs that can be avoided in the future are relevant
c.fixed costs that will continue regardless of the decision are relevant
d.only opportunity costs are relevant
e.opportunity costs are generally zero
2) the following costs were for bikeway inc., a bicycle manufacturer:
at an output level of 1,000 bicycles, per unit total cost is calculated to be:
a.$100.00
b.$101.50
c.$125.00
d.$126.32
e.$131.58
3) a range around the regression line within which the management accountant can rely
that the actual value of the predicted cost will fall is referred to as:
a.a relevant range
b.a goodness of fit
c.a confidence interval
d.a t-value
e.a p-value
4) an alternative concept of fairness in cost allocation, absent the cause-and-effect basis,
includes:
a.ability-to-bear
b.efficiency
c.different costs for different purposes
d.consistency
5) which of the following tend to be non-differential in the short term since they cannot
be changed, but are more likely to be differential in the long term?
a.fixed costs
b.variable costs
c.mixed costs
d.semivariable costs
6) wings co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours,
and had the following manufacturing overhead:
using abc, overhead cost assigned to job #971 for machine repair is:
a.$2,300
b.$990
c.$6,500
d.$690
e.$1,020
7) capital one produces a single product, which it sells for $8.00 per unit. variable costs
per unit equal $3.20. the company expected total short-term fixed costs to be $7,200 for
the coming month, at the projected sales level of 20,000 units. management is
considering several alternative actions designed to improve operating results. in
conjunction with this, they have created a profit-planning model, which can be used to
evaluate different scenarios.
suppose that capital one’s management believes that a $1,600 increase in the monthly
promotion costs will provide a boost to sales. by what amount must sales increase
during the month to justify the contemplated expenditure? round answer up to the
nearest whole number.
a.200 units
b.334 units
c.400 units
d.668 units
e.none of the above
8) the degree of operating leverage (dol) at any given sales volume, x, is useful as:
a.an alternative measure of the breakeven volume
b.a measure of targeted profit, expressed on a pre-tax basis
c.a way to estimate fixed costs for an upcoming period
d.a measure of risk in conjunction with a cvp model
e.an easy way to perform a monte carlo simulation (mcs) analysis
9) the make-or-buy decision can apply to decisions about all of the following except:
a.internal auditing
b.security
c.human resource management
d.maintenance and repair
e.strategic management
10) in performing short-term cvp analysis for a new product or service, the
decision-maker would:
a.include all current and future fixed costs
b.include only current fixed costs
c.include only future fixed costs
d.include only incremental fixed costs
e.include only allocated fixed costs
11) the global reporting initiative is an independent group that partners with other
groups to address the measurement of sustainability, including a partnership with:
a.the u.s. government
b.the u.s. department of defense
c.the united nations
d.the european commission
12) barstow manufacturing company has two service departments product design and
engineering support, and two production departments assembly and finishing. 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 assembly department using the step method is
(calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and
round all dollar amounts to the nearest whole dollar):
a.$1,000,125
b.$1,890,000
c.$689,875
d.$642,000
e.$923,000
13) management accountants are frequently asked to analyze various decision situations
including the following:
i. the cost of a special device that is necessary if a special order is accepted.
ii. the cost proposed annually for the plant service for the grounds at corporate
headquarters.
iii. joint production costs incurred, to be considered in a sell-or-process-further
decision.
iv. the costs associated with alternative uses of plant space, to be considered in a
make/buy decision.
v. the cost of obsolete inventory acquired several years ago, to be considered in a
keep-versus-disposal decision.
the cost described in situations iii and v above are:
a.prime costs
b.sunk costs
c.discretionary costs
d.relevant costs
e.opportunity costs
14) which of the following statements is true with respect to the degree of operating
leverage (dol)?
a.it is calculated as the ratio of contribution margin (cm) to operating income
b.it can be calculated and used by manufacturing but not service firms
c.it provides a simple way to estimate the change in total fixed cost for a given change
in sales volume
d.it is calculated as the amount of operating income (1 – t), where t = the income tax
rate
e.for most firms, it is relatively constant in amount as sales volume changes