An overhead efficiency variance is related entirely to variable overhead.
Transfer prices can be used to promote goal congruence among operating segments of
an organization.
The value of discretionary costs is often measured using non-monetary measures.
Gap analysis is a beneficial tool in implementing a cost management system.
The Sarbanes-Oxley Act of 2002 provides legal protection for individuals who report
illegal organizational activities to appropriate persons or agencies.
Total quality management (TQM) and just-in-time (JIT) production systems are based
on the premise of ideal production standards.
Managers have no ability to control the budget variance.
Total variable product costs vary directly with levels of production.
A responsibility accounting system should include all revenues and costs of a division.
A profit center is typically an independent organizational unit.
Surfside Corporation
Surfside Corporation manufactures and sells two products: A and B. The operating
results of the company are as follows:
In addition, the company incurred total fixed costs in the amount of $9,000.
Refer to Surfside Corporation. If the company would have sold a total of 6,000 units,
consistent with CVP assumptions how many of those units would you expect to be
Product B?
A. 3,000
B. 4,000
C. 3,600
D. 3,500
As an organization moves to decentralize its operations, an effective reporting system
will have ____ when the organization was centralized.
A. about the same importance as
B. less importance than
C. more importance than
D. a level of importance that depends on organizational size as compared to
A company annually consumes 10,000 units of Part C. The carrying cost of this part is
$2 per year and the ordering costs are $100. The company uses an order quantity of 500
units. If the company operates 200 days per year, and the lead time for ordering Part C
is 5 days, what is the order point?
A. 250 units
B. 1,000 units
C. 500 units
D. 2,000 units
Which of the following is least likely to be a discretionary cost?
A. salaries of salespeople
B. advertising
C. maintenance
D. insurance
For a profitable company, an increase in the rate of depreciation on a specific project
could
A. increase the project’s profitability index.
B. increase the project’s payback period.
C. decrease the project’s net present value.
D. increase the project’s internal rate of return.
Which cost accumulation procedure is most applicable in continuous mass-production
manufacturing environments?
A. standard
B. actual
C. process
D. job order
Thunder Sports Enterprises
The Basketball Division of Thunder Sports Enterprises reported the following financial
data for the year:
Refer to Thunder Sports Enterprises. If the manager of the Basketball Division is
evaluated based on return on investment, how much would she be willing to pay for an
investment that promises to increase net segment income by $60,000?
A. $ 108,000
B. $ 300,000
C. $ 428,572
D. $1,200,000
Machine Master, Inc. had the following data regarding monthly power costs:
Assume that management expects 500 machine hours in May. Using the high-low
method, calculate May’s power cost using machine hours as the basis for prediction.
A. $700
B. $705
C. $710
D. $1,320
Chambers Company
Chambers Company produces two products from a joint process: X and Z. Joint
processing costs for this production cycle are $8,000.
If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Chambers Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product Z (round to the nearest dollar)?
A. $5,500
B. $4,000
C. $2,500
D. $4,757
Glassman Company
Glassman Company produces two products: A and B. The company has three overhead
functions that are required for both products.
Below is production information for Products A and B:
The company produces 800 units of Product A and 8,000 units of Product B each
period.
The overhead functions have the following hourly costs:
Refer to Glassman Company If total overhead is assigned to A and B on the basis of
direct labor hours, Product A will have an overhead cost per unit of
A. $51.32
B. $205.26
C. $461.88
D. None of the responses are correct.
Wyman Enterprises
Refer to Wyman Enterprises. For March, prime cost incurred was
A. $75,000.
B. $69,000.
C. $45,000.
D. $39,000.
Setting organizational goals and objectives and preparing a budget are aspects of
control
A. during an event.
B. before an event.
C. after an event.
D. before, during, and after an event.
Ardmore Company produces two main products jointly, A and B, and C, which is a
by-product of B. A and B are produced from the same raw material. C is manufactured
from the residue of the process creating B.
Costs before separation are apportioned between the two main products by the net
realizable value method. The net revenue realized from the sale of C is deducted from
the cost of B. Data for April were as follows:
Required: Determine the gross profit for April.
The transfer of authority, responsibility, and decision-making rights from the top to the
lower level of an organization is referred to as ____________________.
Schmidt Company manufactures a single product. All material is added at the beginning
of the process.
Required: Find ending WIP inventory, abnormal loss, and COGM. Assume that, for
conversion costs, abnormal shrinkage is 60 percent.
The balanced scorecard perspective that addresses how well the organization is
meeting specific customer-based criteria is the ______________________________
perspective.
Garfield Company
Garfield Company applies overhead based on direct labor hours and has the following
available for the current month:
Refer to Garfield Company. Compute all the appropriate variances using the
three-variance approach.
Ecology Solutions Corporation
The Green Division of Ecology Solutions Co. has developed a wind generator that
requires a special “S” ball bearing. The Ball Bearing Division of Ecology Solutions Co.
has the capability to produce such a ball bearing.
Unfortunately, the Ball Bearing Division is operating at capacity and will need to
reduce production of another existing product, the “T” bearing, by 1,000 units per
month to provide the 600 “S” bearings needed each month by the Green Division. The
“T” bearing currently sells for $50 per unit. Variable costs incurred to produce the “T”
bearing are $30 per unit; variable costs to produce the new “S” bearing would be $60
per unit.
The Green Division has found an external supplier that would furnish the needed “S”
bearings at $100 per unit. Assume that both the Green Division and Ball Bearing
Division are independent, autonomous investment centers.
Refer to Ecology Solutions Co. What is the minimum price that Ball Bearing Division
would consider to produce the “S” bearing if the Ball Bearing Division did not need to
forfeit any of its existing sales to produce the “S” bearing?
How does strategic staffing fit in with departmental staffing?
Three monetary measures used to allocate joint costs to products are
________________________________________,
________________________________________, and
____________________________________________________________.