1) which of the following is not an ethical issue managers encounter with cost
allocation?
a.products that are produced for both a competitive market and a public agency
b.governmental agency provides a free service to the public
c.governmental agency reimburses the costs of a private institution
d.costs of products sold to or from foreign subsidiaries
2) brownsville novelty store prepared the following budget information for the month
of may:
sales are budgeted at $360,000. all sales are on account and a provision for bad debts is
made
monthly at three percent of sales.
inventory was $84,000 on april 30 and an increase of $12,000 is planned for may 31 .
all inventory is marked to sell at cost plus fifty percent.
estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
depreciation for may is projected at $6,000.
brownsville’s budgeted gross profit in may is:
a.$120,000
b.$180,000
c.$198,000
d.$252,000
e.$240,000
3) jackson inc. listed the following data for 2013:
assuming jackson inc. applied overhead based on direct labor hours, the firm’s
predetermined overhead rate for 2013 is:
a.$14.20 per direct labor hour
b.$14.38 per direct labor hour
c.$15.24 per direct labor hour
d.$15.50 per direct labor hour
e.$15.85 per direct labor hour
4) based on the maintenance expenses of a company, which are to be analyzed for
purposes of constructing a flexible budget. examination of past records disclosed the
following costs and volume measures:
using the high-low method, the estimated variable cost per machine hour is:
a.$0.70
b.$0.60
c.$0.50
d.$0.90
e.$0.10
5) according to the ima statement of ethical professional practice, what should a
management accountant do if a significant ethical situation can’t be resolved?
a.the accountant should confront the guilty party and demand the unethical action be
stopped
b.the accountant should try to rationalize and understand the position of the other party
c.the accountant should say nothing about the matter until he or she has retired
d.the accountant should first discuss the matter with the immediate supervisor
6) which of the following is an advantage of the sales value at split-off method?
a.easy to calculate
b.market prices for some industries change constantly
c.the sales price might not be available
d.conceptually superior to the revenue recognition method
7) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, applied engineering and design factory overhead for the
high f model per unit is (rounded to the nearest cent):
a.$6.13
b.$11.86
c.$16.28
d.$32.46
e.$66.73
8) opportunity costs are:
a.not used for decision making
b.the same as variable costs
c.equal to historical costs
d.recorded in accounting records at fair value
e.relevant to decision making
9) a negotiated budgeting process is:
a.less effective than an authoritative budget
b.an alternative way to express a “bottom-up” approach to budget preparation
c.a combination of “top-down” and “bottom-up” approaches to budget preparation
d.less costly to implement than an imposed (i.e., authoritative) budget
10) which one of the following methods uses units of output to allocate joint costs to
joint products?
a.net realizable value method
b.physical units method
c.net sales value method
d.sales value at split-off method
e.activity-based costing
11) which of the following types of organizations can most benefit from value chain
analysis?
a.service firms
b.not-for-profit organizations
c.manufacturing firms
d.all types of organizations can benefit from value chain analysis
12) the budgeted income statement and budgeted balance sheet benefit a business
primarily in terms of the ability of the organization to:
a.meet stockholder requests for planning information from the organization
b.narrow the range of budgeted estimates to a manageable subset
c.deal with uncertainty inherent in the budgeting process
d.summarize the impact of the firm’s financial and operating activities for an upcoming
period
e.satisfy the disclosure requirements of generally accepted accounting principles (gaap)
13) process cost systems are used in all of the following industries except:
a.chemicals
b.ship building
c.oil refining
d.textiles
e.steel
14) cleaning care inc. expects to sell 10,000 mops. fixed costs (for the year) are
expected to be $10,000, unit sales price is expected to be $12, and unit variable costs
are budgeted at $7.
cleaning care’s margin of safety ratio (mos%) is:
a.20%
b.40%
c.80%
d.85%
e.90%
15) brownsville novelty store prepared the following budget information for the month
of may:
sales are budgeted at $360,000. all sales are on account and a provision for bad debts is
made
monthly at three percent of sales.
inventory was $84,000 on april 30 and an increase of $12,000 is planned for may 31 .
all inventory is marked to sell at cost plus fifty percent.
estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
depreciation for may is projected at $6,000.
brownsville’s budgeted cost of goods sold (cgs) in may is:
a.$120,000
b.$180,000
c.$198,000
d.$252,000
e.$240,000
16) the direct method of departmental cost allocation is the simplest of the three
methods because it:
a.ignores the reciprocal flows
b.uses the service flows only to service departments
c.uses a sequence of steps to allocate service department costs
d.all of the above
17) for the current year, power cords corp. expected to sell 42,000 industrial power
cords. fixed costs were expected to total $1,650,000; unit sales price was expected to be
$3,750; and unit variable costs were budgeted at $2,250.
power cord corp.’s margin of safety (mos) in sales dollars is:
a.$153,375,000
b.$187,550,000
c.$159,295,000
d.$171,100,000
e.$142,925,000