Standard direct labor prices are also referred to as direct labor rates.
The final component of the operating budget is the ending inventory and cost of goods
sold budget.
The costs of acquiring inventory are reported on the balance sheet as an asset labeled
“inventory” and are expensed only when products are sold.
The first step in developing activity-based product costs is to develop activity cost
pools.
The sales volume variance is the difference between the flexible budget and the static
budget.
The sources and uses of cash provided by operating activities represent the cash effect
of the revenues and expenses reported on the income statement.
Approximately what percentage of global business executives use a balanced scorecard
to monitor performance?
a. 16%
b. 41%
c. 66%
d. 91%
Match the following terms to the appropriate statement by placing the letter to the left
of each statement. a. Allocated cost f. Incremental analysis
b. Avoidable cost g. Information overload
c. Bottleneck process h. Opportunity cost
d. Common cost i. Sunk cost
e. Differential j. Throughput contribution
Computer Basics offers three types of on-line basic computer training: Office, Web
Design, and Programming. In the past, for every 20 students who sign up for training,
10 take the Office, 6 take Web Design, and 4 take Programming. Compute Basics has
calculated a breakeven point of 1,200 courses. How many of the 1,200 courses will be
Office?
a. 30
b. 60
c. 300
d. 600
Suppose your cell phone company offers a plan under which you can buy time in blocks
of 100 minutes. Every 100-minute block costs $15. If you use 101 minutes you will pay
$30. This is an example of a
a.Variable cost
b.Mixed cost.
c.Fixed cost.
d.Step cost.
Unit 2-1 – D
If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2,
avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are
$9,000, what is the total relevant cost for 300 products?
a. $15,200
b. $16,200
c. $24,200
d. $25,200
Segment margin income statements are most useful to managers when they are prepared
a. On a cash basis.
b. Using a segment (contribution) margin basis.
c. On a GAAP basis.
d. Using a function basis.
Cost that has been incurred in the past is referred to as
a. An avoidable cost.
b. A sunk cost.
c. An opportunity cost.
d. A relevant cost.
In a responsibility accounting environment, which of the following managers is
considered to have the broadest responsibility?
a. Cost center manager
b. Profit center manager
c. Investment center manager
d. Revenue center manager
Which of the following is not a qualitative issue that must be considered before
reaching a decision to outsource?
a. Reliability of the outsource provider.
b. Stability of the price offered by the outside supplier.
c. Opportunity costs of alternatives.
d. All of these answer choices are qualitative issues to be considered.
In monitoring product differentiation strategy and low-cost production strategy, a
difference is that
a.For the product differentiation strategy, information on quality is emphasized while
for low-cost production managers are more interested in the production process.
b.For the product differentiation strategy, information on the production process is
emphasized while for low-cost production managers are more interested in maintaining
quality.
c.For the product differentiation strategy, information on design is emphasized while for
low-cost production managers are more interested in quality.
d.For the product differentiation strategy, information on quality is emphasized while
for low-cost production managers are more interested in design.
Decision makers sometimes might need to sacrifice precision for timeliness because
a.Receiving highly accurate information after the deadline has passed would be of no
help.
b.The nature of many business decisions does not require precision in managerial
accounting reports.
c.Both receiving highly accurate information after the deadline has passed would be of
no help and the nature of many business decisions does not require precision in
managerial accounting reports.
d.Neither receiving highly accurate information after the deadline has passed would be
of no help nor the nature of many business decisions does not require precision in
managerial accounting reports.
Which of the following is not a step in calculating the unit product cost?
a. Calculate the equivalent units of production
b. Allocate the equivalent unit costs of production
c. Divide the total equivalent costs by the total units
d. Reconcile the costs of production
The goal of setting a transfer price is to
a. Maximize the overall profit of the organization.
b. Maximize the profit of the transferring division.
c. Motivate managers to behave in the best interest of the firm as a whole.
d. Ensure that all divisions have the products they need to operate.
Benton Corporation’s current asset and liability balances for the past two years are as
follows. Net income for the year was $150,000, depreciation expense was $22,000, and
gain on sale of land was $28,000.
Required:
Using the indirect method, prepare the cash flows provided by operating activities
section of the statement of cash flows.
Just because a project ‘s residual income is positive, that does not mean that it is earning
a return in excess of the corporate minimum.
Brand, Inc. makes portable generators. Budgeted sales are 20,000 for July, 25,000 for
August, 28,000 for September, and 31,000 for October. Brand maintains an ending
inventory equal to 10% of the following month ‘s sales. Ending inventory at June 30th
was 2,000.
Required
Prepare a production budget for the 3rd quarter ending September 30.
Because of rising salaries and cost of healthcare and other employee benefits, TJ
Manufacturing has decided to outsource one of its non-value added processes. As leader
of the team responsible for determining the best process to be outsourced, you must
write the memo to the CEO, Jon Duncan, explaining why your team chose to outsource
the payroll function. Explain to the CEO the qualitative and quantitative impacts of
your team ‘s decision on the business.
Return on investment is based on the fair market value of operating assets.
Calculate the fixed overhead spending variance.
(Unit 3-3) Colorado Furniture Company manufactures naturally-weathered reclaimed
wood furniture. The company produces two sizes of beds. Data for the company’s
activity during a typical period are presented below:
The company incurs $300,000 in fixed costs during the year. Assuming the sales mix is
constant, what will Colorado’s operating income be if sales volume increases by 10%?
An organization may be structured as a centralized or decentralized decision-making
environment. Classify each of the following as a characteristic of a centralized or
decentralized by placing an “X” in the appropriate column.
