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Customer service calls
Identify the following quality control activities as either value-added or
non-value-added.
a. Value-added
b. Non-value-added
In the contribution margin analysis, the effect of a change in the number of units sold,
assuming no change in unit sales price or unit cost, is referred to as the:
a. sales factor
b. cost of goods sold factor
c. quantity factor
d. price factor
Service companies can effectively use activity-based costing to compute product
(service) costs.
a. True
b. False
What is the profit margin?
a. 20%
b. 15.7%
c. 14%
d. 6.36%
All of the following are examples of activity bases except
a. salaries of supervisors
b. quality inspections of products
c. number of machine setups
d. raw materials storage
Scrap
Identity the following by their type of quality cost.
a. Preventive costs
b. Appraisal costs
c. Internal failure costs
d. External failure costs
The term used to describe expenses that are incurred by a specific department is
a. indirect expenses
b. margin expenses
c. departmental expenses
d. direct expenses
An analysis in which all the components of an income statement are expressed as a
percentage of sales is a
a. vertical analysis
b. horizontal analysis
c. liquidity analysis
d. solvency analysis
In capital rationing, an initial screening of alternative proposals is usually performed by
establishing minimum standards. Which of the following evaluation methods are often
used?
a. cash payback method and average rate of return method
b. average rate of return method and net present value method
c. net present value method and cash payback method
d. internal rate of return and net present value methods
The Eastwood Cake Factory sells chocolate cakes, birthday decorated cakes, and
specialty cakes. The factory is experiencing a bottleneck and is trying to determine
which cake is more profitable. Even though the company may have to limit the orders
that it takes, Eastwood is concerned about customer service and satisfaction.
(a) Calculate the contribution margin per hour per cake.
(b) Determine which cakes the company should try to sell more of first, second, and
then last.
On the variable costing income statement, deduction of the variable cost of goods sold
from sales yields manufacturing margin.
a. True
b. False
A manager is responsible for costs only in a(n)
a. profit center
b. investment center
c. volume center
d. cost center
Department B had 3,000 units in Work in Process that was 25% completed at the
beginning of the period at a cost of $12,500. 13,700 units of direct materials were added
during the period at a cost of $28,700. 15,000 units were completed during the period,
and 1,700 units were 95% completed at the end of the period. All materials are added at
the beginning of the process. Direct labor was $32,450 and factory overhead was
$18,710.
The number of equivalent units of production for the period for conversion if the
first-in, first-out method is used to cost inventories was
a. 14,365
b. 13,615
c. 12,000
d. 15,865
The management of Wyoming Corporation is considering the purchase of a new
machine costing $375,000. The company's desired rate of return is 6%. The present
value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the
foregoing information, use the following data in determining the acceptability of this
investment:
The average rate of return for this investment is
a. 5% b. 10% c. 25% d. 15%
The Darwin Company reports the following information:
Product costs are a. $24,500
b. $30,300
c. $29,200
d. $35,000
