With a fixed cost, the cost per unit varies proportionately with changes in the level of
activity.
The payback period is used most often as a screening tool, by companies that have
established a maximum acceptable payback period.
A rolling budget always includes 12 months of data and as one month ends, it is
removed from the budget and the entire budget rolls forward one month.
Working capital is the difference between a firm’s total assets and total liabilities.
Calculations to measure customer profitability include customer net profit and customer
profit margin.
The original purchase price of an old machine that is being replaced must be considered
in capital budgeting decisions.
Activity-based management focuses on using the cost of performing the activities
required to produce and sell products to identify activities that are non-value added.
The direct labor efficiency variance is that part of the direct labor flexible budget
variance that is caused by using more or less direct labor than the standard allows.
Period costs are associated with manufacturing overhead.
A type of analysis that helps decision makers understand the impact of their choices is
referred to as incremental analysis.
The decision to replace an old automobile with a new one must be analyzed using
incremental analysis.
There are two approaches to presenting cash flows provided by operating activities: the
direct method and the indirect method.
A costing system where direct material and direct labor are recorded at actual cost and
overhead is applied to products using a predetermined overhead rate is referred to as
a. Normal costing
b. Variable costing
c. Full costing
d. Standard costing
Why is the original purchase price of an old machine that is being replaced never
included in capital budgeting decisions?
a. It is an opportunity cost, and thus not relevant
b. No future cash flows are associated with its purchase
c. It will affect future costs
d. None of these answer choices are correct
The average collection period reveals
a. How many days, on average, it takes between when an order is placed until the cash
is collected.
b. How many days, on average, the company takes to collect cash from a credit sale.
c. How many days, on average, the company takes to collect past due accounts.
d. How many days, on average, it takes between when an original contact is made to
collect an account until the cash is collected.
The variable overhead spending variance
a. Is the difference between the actual cost of variable overhead items and the amount
of variable overhead cost that is expected to be incurred at the actual level of activity
base experienced.
b. Has to do with the efficient use of the activity base rather than the efficient use of the
variable overhead item.
c. Captures whether the company has paid more or less for variable overhead items.
d. All of these answer choices are correct.
Jasmine Manufacturing produces the glass vases used by florists. Each vase requires 15
minutes of direct labor time for which glass blowers are paid $30 per hour. During
November, Jasmine produced 10,000 glass vases which required 2,550 hours of direct
labor. Jasmine paid wages to the glass blowers of $74,500 during November. What is
Jasmine’s direct labor rate variance for November?
a. $2,000 unfavorable
b. $2,000 favorable
c. $1,500 favorable
d. $1,500 unfavorable
Companies need to engage in target costing
a. At the beginning of an accounting period.
b. Before introducing a new product.
c. At the end of a product’s lifecycle.
d. Only if costs are primarily variable.
Which of the following would be considered a unit-level activity?
a. Preparing purchase orders.
b. Machine set-up
c. Quality tests
d. None of these answer choices are correct..
Which of the following is not a component of common stockholders’ equity?
a. Long-term debt
b. Common stock
c. Additional paid-in capital
d. Retained earnings
Finished Goods Inventory includes which of the following costs?
a. Direct material
b. Direct labor
c. Overhead
d. All of these answer choices are correct.
Which of the following is not a step in using activity-based costing to estimate
customer profitability?
a. Develop activity cost pools
b. Calculate equivalent units
c. Allocate selling costs to customers
d. Calculate customer profitability
The forefront of managerial activity is
a.Planning activities.
b.Controlling activities.
c.Evaluating activities.
d.Decision making.
Which of the following is not a reason wage rates may vary from the standard?
a. To get a job done on time, a manager may need to use more highly skilled,
higher-paid workers than prescribed by the standard.
b. If a manger must pay overtime to meet production requirements, a direct labor rate
variance will likely result.
c. At the time standards are set, managers generally do not have a good idea of the wage
rates they will need to pay.
d. All of these answer choices are correct.
A balanced scorecard should include five to seven measures in each of four
perspectives: Learning and growth, internal business processes, customer, and financial.
Required:
List five measures that relate to the financial perspective.
In a decentralized organization, upper managers need a way to evaluate the
performance of unit managers. Based on factors under the unit manager ‘s control,
organizational units are categorized as cost centers, profit centers, or investment
centers. Classify each of the following centers by placing an “X” in the appropriate
column.
Bluegill, Inc. produces spincast reels. The company’s controller has provided you with
the following information.
Required
Using the above cost information, prepare a cost of goods manufactured schedule.
Calculate cash flows provided (used) by operating activities using the direct method.
Which of the following is the correct journal entry to record manufacturing overhead
incurred?
Generally accepted accounting principles require companies to report selected
information about operating segments in the annual report.