Managerial accounting information is used by which of the following managers?
A.marketing managers to help price products and assess their profitability.
B.production managers to manage quality and costs and to assure on-time delivery.
C.general managers to measure employee performance and create incentives.
D.All of the answers are correct.
Which statement is true concerning external failure costs?
A.External failure costs are incurred to prevent defects in the products or services being
produced.
B.External failure costs are incurred to detect individual units of products that do not
conform to specifications.
C.External failure costs are incurred when the firm discovers nonconforming products
and services before delivery to customers.
D.External failure costs are incurred when the customers discover nonconforming
products and services at delivery.
Grizzly Company
Grizzly Company manufactures footballs. The forecasted income statement for the year
before any special orders is as follows:
Refer to Grizzly Company. Fixed costs included in the above forecasted income
statement are $1,200,000 in manufacturing CGS and $100,000 in selling expenses.
Grizzly received a special order offering to buy 50,000 footballs for $7.50 each. There
will be no additional selling expenses if Grizzly accepts. Assume Grizzly has sufficient
capacity to manufacture 50,000 more footballs. The unit relevant cost for Grizzly’s
decision is
A.$8.00
B.$5.00
C.$8.75
D.$5.75
Effective incentive compensation plans must induce individual behavior compatible
with increasing the firm’s wealth, so for particular actions or extraordinary performance
firms give
A.cash bonuses and profit sharing.
B.deferred compensation.
C.special awards.
D.reorganizations.
Which of the following accounts does not appear on the balance sheet?
A.Raw Materials Inventory
B.Work in Process Inventory
C.Cost of Goods Sold
D.Finished Goods Inventory
Which of these is an advantage for companies to award managerial performance based
on a subjective approach?
A.The subjective approach considers factors not explicitly captured in the formula
approach.
B.Managers know what reward they will get if they achieve expectations.
C.Managers who do not fully trust their superiors tend to prefer this approach.
D.All of the answers are correct.
Response time improvements often drive simultaneous improvements in quality and
productivity. Analysts focus on which of the following aspects of time?
A.new-product development time and operational measures of time.
B.new-product research time and operational measures of time.
C.new-product strategy time and operational measures of time.
D.new-product research time and response measures of time.
Marshall Company’s sales budget shows the following projections for the year ending
December 31
Inventory at December 31 of the prior year was budgeted at 18,000 units. The quantity
of finished goods inventory at the end of each quarter is to equal 30% of the next
quarter’s budgeted unit sales. How much should the production budget show for units to
be produced during the first quarter?
A.24,000.
B.48,000.
C.66,000.
D.72,000.
When sales dollars are used as the measure of volume in the cost-volume-profit
equation, the focus is on solving for total revenue required to break even or a target
profit rather than total units. The contribution margin ratio is defined as which of the
following?
A.total contribution margin divided by total sales.
B.unit contribution margin divided by unit sales price.
C.total contribution margin divided by total sales and unit contribution margin divided
by unit sales price.
D.the sum of fixed costs plus target profits divided by unit sales price.
When using the internal rate of return to evaluate investment alternatives, analysts
specify which of the following?
A.applicable federal rate.
B.cut-off rate.
C.risk-free rate.
D.prime rate.
The product life cycle lasts from
A.obtaining financing through paying off investors.
B.product design through product termination.
C.initial research and development through termination of customer support.
D.None of the answers is correct.
Which of the following is a cost incurred to detect individual units of products that do
not conform to specifications?
A.internal failure costs.
B.external failure costs.
C.prevention costs
D.appraisal costs.
Fred’s Fine Roasted Coffee
Fred’s Fine Roasted Coffee reports the following data for April 2010 where 500,000
pounds of roasted gourmet coffee beans were actually produced (note: standard costs do
not allow for any wastage),
Refer to Fred’s Fine Roasted Coffee. Calculate the total direct materials variance.
A.$56,000 U
B.$40,500 U
C.$56,000 F
D.$40,500 U
Capacity costs are certain __________ costs that provide a firm with the capacity to
produce or sell or both.
A.fixed
B.variable
C.discretionary costs
D.opportunity costs
What would the periodic cash flows associated with an investment project include?
A.savings for fixed and variable production costs
B.selling, general, and administrative expenditures and savings in selling, general, and
administrative expenditures
C.income tax effects resulting from other periodic cash flows
D.all of the above.
Valley Company incurred a total cost of $5,000 to produce 300 units of output. A total
of 450 hours was incurred for this effort. If the variable cost was $10 per direct labor
hour, then the fixed cost was
A.$4,500.
B.$3,000.
C.$2,000.
D.$500.
Many companies have streamlined the budget process, developed business plans, and
allowed analysts to be proactive in monitoring results by
A.using hundreds of spreadsheets
B.compiling and verifying data from multiple sources
C.implementing a web-based enterprise-wide budgeting solution
D.adopting a two-year budgeting cycle.
Colorado Furniture
Colorado Furniture had the following historical accounting data, per hundred board
feet, concerning one of its products:
The shelving is normally transferred internally from the Cutting Division to the
Finishing Division. It also may be sold externally for $110 per hundred board feet. The
minimum profit level accepted by the company is a markup of 20 percent.
Refer to Colorado Furniture. If the variable manufacturing cost transfer price method is
used without a fixed fee, Colorado Furniture’s transfer price will be
A.$68.
B.$84.
C.$56.
D.$64.
Which of the following is a typical cost structure for home builders?
A.high fixed costs relative to variable costs.
B.high variable costs relative to fixed costs.
C.high profits relative to total costs.
D.None of the answers is correct.
The economic order quantity model is used to
A.set the target cost.
B.set the target profit.
C.set the target sales price.
D.derive the optimal number of orders or production runs.