Lydia’s Delivery Company
Lydia’s Delivery Company reports the following information for 2010:
Actual:
Standard:
Refer to Lydia’s Delivery Company. What is the variable overhead variance for fuel
costs?
A.$12.00 U
B.$12.00 F
C.$6.00 U
D.$6.00 F
In 1977, Congress addressed foreign bribes paid by U.S. Companies by passing which
of the following acts?
A.Foreign Anti-bribery Practices Act.
B.Foreign Corruption Act.
C.Foreign Corrupt Practices Act.
D.Foreign Bribery and Corruption Act.
Three Dog Bite Company:
Refer to Three Dog Bite Company. What are the total prevention costs?
A.$ 320,000
B.$1,430,000
C.$ 780,000
D.$2,055,000
Which of the following are benefits of financial models to users?
A.Users can use the model for business purposes without becoming overwhelmed by
the related number crunching.
B.Models allow an organization to study the impact of a possible business action by
reviewing the potential results before taking action.
C.Models help managers identify a bad project or decision ahead of time, before it
negatively impacts the company involved.
D.All of the answers are correct.
Observers of Japanese industry report that Japanese managers and owners have created
team orientation or esprit de corps with considerable
A.goal congruence
B.employee individualism
C.self-actualization
D.all of the above
Little League Baseball Manufacturer
The Little League Baseball Manufacturer purchases materials for the production of
customized little league baseball bats, hires workers to convert the materials to
customized finished baseball bats, and then offers the customized baseball bats for sale
to little league teams and the general public.
Refer to Little League Baseball Manufacturer.
Manufacturing costs such as cleaning supplies which are not easily traced to a specific
customized baseball bat fall into which of the following categories?
A.direct material costs.
B.direct labor costs.
C.manufacturing overhead costs.
D.opportunity costs.
What method of production eliminates the need for inventories because no production
takes place until the firm knows that it will sell the item?
A.First-in, last-out methods
B.Last-in, first-out methods
C.Just-in-time methods
D.Next-in, first-out methods
Fraudulent financial reporting that results in higher reported earnings sometimes
A.also overstates taxable income.
B.shifts income from a future period to the present period, and then overstates taxable
income in the present period that might be offset by lower taxable income in a future
period
C.sometimes overstates taxable income in early periods that likely increases the present
value of a company’s tax payments.
D.All of the answers are correct.
Because effective incentive compensation plans must induce individual behavior
compatible with increasing the firm’s wealth, for long-term incentives firms give
A.cash bonuses and profit sharing.
B.deferred compensation.
C.special awards.
D.reorganizations.
Activity-based costing first assigns costs to
A.activities.
B.products.
C.departments.
D.plants
Within the relevant range, variable costs
A.are the same total amount at different activity levels.
B.are a different amount per unit at different activity levels.
C.are the same amount per unit at any activity level.
D.None of these are correct.
The experience curve effect is found
A.when unit product costs are increasing.
B.whenever there are experienced workers.
C.in newer products or processes.
D.All of the answers are correct.
Estimating flexible selling expense budget and computing sales volume variance.
Florence Products estimates that it will incur the following selling expenses next
period:
Required:
a. Derive the cost equation for selling expenses. (Hint: y = a + bx + cy.)
b. Assume that Florence sells 62,000 units during the period. Budgeted sales totaled
75,000 units at a budgeted sales price of $5.50 per unit. Prepare a variance report to
show the difference between the master budget and the flexible budget.
Johnson Enterprises has three possible projects. Each project requires the same initial
investment of $1,000,000. The cash flows are as follows:
Ignoring taxes, compute the net present value of each project at a 15 percent cost of
capital. Which project should be chosen? Be sure to show your supporting calculations.
Treadway Commission
The 1987 recommendations of the Treadway Commission focused on publicly held
companies. For each area listed below, explain how a company can improve its overall
financial reporting process, increase the likelihood of preventing fraudulent financial
reporting, and detect it earlier when it occurs.
Refer to the Treadway Commission. Explain what the Treadway Commission means by
the “tone at the top.”
Waterbury Box Company
General Factory Administration and Maintenance are service departments in the
Waterbury Box Company. Management has decided to allocate maintenance costs on
the basis of the area in each department and general factory administration costs on the
basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
Refer to the Waterbury Box Company. What are the total service department costs
allocated using each method?
Describe three types of divisional incentive compensation plans.
Describe in detail the three critical success factors that relate to meeting customer
quality requirements.
Describe the use of spreadsheets in financial modeling.
Distinguish between variable costs and fixed costs, between short run and long run, and
define the relevant range.
The Wholesome Company had an unfavorable sales price variance of $100. The
budgeted selling price was $10 per unit, and the number of units sold was 50. What was
the actual selling price?
What makes a cost relevant for decision making?
What are the ethical standards that make up the Institute of Management Accountants’
Code of Ethics?