Cost flows and physical flows of units are identical.
When a flexible manufacturing system (FMS) is used, worker tasks are more diverse
than under a traditional manufacturing system.
An effective reporting system is increasingly important in a decentralized organization.
The key concept to an ERP system is a central site for all the data of an organization.
Variable costs per unit remain unchanged with levels of production.
A total quality system should place an emphasis on inspection.
When indirect labor is recorded for a job in process, the work in process account is
debited.
The high-low method excludes outliers from the calculation of the slope of a regression
line.
In a job-order costing system, the net cost of normal spoilage is equal to
A. estimated disposal value plus the cost of spoiled work.
B. the cost of spoiled work minus estimated spoilage cost.
C. the units of spoiled work times the predetermined overhead rate.
D. the cost of spoiled work minus the estimated disposal value.
Activity-based costing and activity-based management are effective in helping
managers do all of the following except
A. trace technology costs to products.
B. promote excellence standards.
C. identify only value-added activities.
D. analyze performance problems.
Core competencies are not
A. internal functions crucial to the success and survival of a company.
B. attributes that keep a firm from competing.
C. different for every organization.
D. considered influences on corporate strategies.
Underapplied overhead resulting from unanticipated and immaterial price increases for
overhead items should be written off by
A. decreasing Cost of Goods Sold.
B. increasing Cost of Goods Sold.
C. decreasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods
Inventory.
D. increasing Cost of Goods Sold, Work in Process Inventory, and Finished Goods
Inventory.
A company has estimated its economic order quantity for Part A at 2,400 units for the
coming year. If ordering costs are $200 and carrying costs are $.50 per unit per year,
what is the estimated total annual usage?
A. 6,000 units
B. 28,800 units
C. 7,200 units
D. 2,400 units
Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C, D, E,
and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Shiny Floors sells the products after further processing, the following disposal costs
will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Shiny Floors Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to Product G?
A. $1,017
B. $1,550
C. $2,170
D. $4,263
Texas Company
Texas Company has established a target rate of return of 16% for all divisions. For the
most recent year, San Marcos Division generated sales of $10,000,000 and expenses of
$7,500,000. Total assets at the beginning of the year were $5,000,000 and total assets at
the end of the year were $7,000,000.
Refer to Texas Company. For the most recent year, what was San Marcos Division’s
return on investment?
A. 20.83%
B. 35.71%
C. 41.67%
D. 50.00%
The logical explanation for an entry that includes a debit to Manufacturing Overhead
control and a credit to Prepaid Insurance is
A. the insurance company sent the company a refund of its policy premium.
B. overhead for insurance was applied to production.
C. insurance for production equipment expired.
D. insurance was paid on production equipment.
Industrial Solutions Company
Industrial Solutions Company produces three products from the same process that has
joint processing costs of $4,100. Products R, S, and T are produced in the following
quantities: 250 gallons, 400 gallons, and 750 gallons. Industrial Solutions Company
also incurred advertising costs of $60,000. The ad was used to run sales for all three
products. The three products occupy floor space in the following ratio: 5:4:9. (Round all
answers to the nearest dollar.)
Refer to Industrial Solutions Company. Using gallons as the physical measurement,
what amount of joint processing cost is allocated to Product S?
A. $2,196
B. $1,171
C. $1,367
D. $ 732
Sensitivity analysis is
A. an appropriate response to uncertainty in cash flow projections.
B. useful in measuring the variance of the Fisher rate.
C. typically conducted in the post investment audit.
D. useful to compare projects requiring vastly different levels of initial investment.
An example of a recurring short-term plan is
A. a probable product line change.
B. expansion of plant and facilities.
C. a unit sales forecast.
D. a change in marketing strategies.
An objective of activity-based management is to
A. eliminate the majority of centralized activities in an organization.
B. reduce or eliminate non-value-added activities incurred to make a product or provide
a service.
C. institute responsibility accounting systems in decentralized organizations.
D. all of the above
Which of the following is not a product cost component?
A. rent on a factory building
B. indirect production labor wages
C. janitorial supplies used in a factory
D. commission on the sale of a product
Economic value added (EVA) is a more appropriate performance measure when there is
a large difference between the market value of invested capital and the book value of
assets.
Costs that are incurred after the split-off point in a production process are referred to as
______________________________.
Current assets minus current liabilities equals ___________________________.
The excess of budgeted or actual sales over sales at break-even point is referred to as
______________________________.
Data that reflects future financial and non-financial outcomes is referred to as
____________________ indicators.
Thompson Enterprises owns two luxury automobiles that are used by employees on
company business. Mileage and expenses, excluding depreciation, by quarters for the
most recent year are presented below:
Required: Determine the variable cost per mile (nearest tenth of a cent) and the fixed
costs per quarter, using the method of least squares.
A capital budgeting method that measures the time required for a project’s cash inflows
to equal the original investment is referred to as the _________________________.
Temporary profits that result when absorption costing is used and production exceeds
sales are referred to as _________________________.
The two costs of noncompliance are ___________________________________ and
___________________________________.
The proportion of value added processing time to total cycle time equals
__________________________________________________.
A device for determining what is happening in a process being controlled is referred to
as a(n) ____________________.