When an asset is sold at a gain or loss, the book value of the assets is reported as a sale
in the investing section of the statement of cash flows.
Equivalent units (EU) of production is based on the percentage of completion for work
in process inventory at the end of the period.
The fabric used to manufacture a tote bag is an example of indirect material.
Although executives recognize the importance of nonfinancial performance measures,
companies are not particularly good at using them.
The statement of cash flows explains the change in the Cash account balance between
the beginning of the period and showing how cash was generated and spent.
Maddox Industries reported an increase in inventories of $20,000 and a decrease in
accounts payable of $10,000. Cost of goods sold totaled $120,000. Monroe uses the
direct method to determine the net cash provided by operating activities on the
statement of cash flows. What is the cost of goods sold adjusted to a cash basis?
a. $90,000
b. $110,000
c. $120,000
d. $150,000
Which of the following would probably not be included in the allocation of overhead
costs to products, but would be included in the “general” category?
a. Depreciation on factory equipment
b. Maintenance of factory equipment
c. Indirect material
d. Factory rent
Which of the following is an advantage of decentralization?
a. Managers at the operational level of the organization have the authority to identify
problems, recognize situational changes, and respond quickly.
b. Companies can develop their own managers internally by giving lower-level
managers practice in developing their decision-making skills.
c. Top management is free to focus on the long-term strategies of the organization.
d. All of these answer choices are correct.
A high inventory turnover might signal
a. A problem with old and obsolete inventory.
b. An overstock of inventory.
c. Poor inventory management.
d. None of these answer choices are correct.
The 2013 and 2014 balance sheets for Ottoman Manufacturing Company appear below
along with selected financial information:
Required: a. Calculate the acid-test ratio for 2014. b. Calculate the working capital for
2014. c. Calculate earnings per share for 2014.
Which of the following activities would be classified as non-value-added in the
manufacture of decorative pillows?
a. Cutting
b. Sewing
c. Storing
d. Stuffing
James Worman is preparing a direct labor budget. His sales budget shows total sales
units of 15,000 and sales dollars of $18,750. The direct materials purchases budget
shows materials to be purchased of 15,000 units and budgeted purchases cost of $3,750.
The production budget indicates a total of 12,000 units to be produced. Standard direct
labor hours per unit is .30 and the standard average wage rate is $8. What is budgeted
direct labor cost?
a. $22,500
b. $28,800
c. $32,550
d. $51,300
A traditional GAAP income statement does not help managers to predict the financial
results of their decisions. Which of the following is a reason for this shortcoming?
a.The GAAP statement is based on cost function rather than cost behavior.
b.The GAAP statement is based on classification rather than function.
c.The GAAP statement is based on cost behavior rather than cost function.
d.The GAAP statement is based on function rather than classification.
A contribution format income statement classifies costs by
a.Behavior
b.Function
c.Constraints
d.Product
Which of the following is not a characteristic of a non-value-added activity?
a. An activity may be non-value-added in one scenario but value-added in another.
b. Non-value-added activities may be decreased without affecting the quality of the
product.
c. Non-valued-added activities cannot be eliminated entirely.
d. Non-value-added activities always relate to fixed costs.
Any part of an organization that management wishes to evaluate is referred to as a
a. Department.
b. Segment.
c. Factory.
d. Center.
Which of the following is not a measure that relates to the internal business processes
perspective?
a. Return on investment
b. Cost per unit
c. Rework hours
d. Defect rate
The high accounts receivable turnover rate may indicate all of the following except
a. Fast collection of accounts receivables.
b. Greater liquidity.
c. Credit terms that are too tight.
d. All of these answer choices may be indications of a high accounts receivable turnover
rate.
If a cost is incurred to support the company as a whole, it is referred to as a
a. Common cost.
b. Traceable cost.
c. Direct cost.
d. None of these answer choices are correct.
If sales increase by 10%, then total contribution margin will
a. Increase more than 10%.
b. Increase less than 10%.
c. Increase by 10%.
d. Decrease.
In looking at the ‘œPresent Value of $1 Received in n Periods’ the rows represent
a. Different interest rates
b. Number of periods in the future
c. Discount factor
d. None of these answer choices are correct
The formula, Electricity cost = $10 + ($0.08 x kwh used) is the formula for a
a.Mixed cost.
b.Fixed cost.
c.Step cost.
d.None of these answer choices is correct.
Fabric used in the manufacture of baseball jerseys is an example of:
The current asset portion of Wilderness Outfitters, Inc.’s balance sheet is as follows (in
$000s).
Required: Prepare a horizontal analysis of Wilderness’s current assets, rounding your
answers to one decimal place.
Accepting special orders may produce additional revenues, but may also result in some
negative consequences. Discuss the quantitative and qualitative factors that impact the
decision to accept a special order.
Explain the time value of money and calculate present values of lump sums and
annuities.
Mountaineers, Inc. makes and sells high-quality backpacking tents. Sally Gimbrel, the
controller, is responsible for preparing Mountaineers ‘ master budget. She has received
the following sales forecast for 2014 from the sales manager.
Required:
Prepare Mountaineers ‘ sales budget for the first quarter.
Ayala Inc. computed an overhead rate for machining costs ($1,500,000) of $15 per
machine hour. Machining costs are driven by machine hours. If computed based on
direct labor hours, the overhead rate for machining costs would be $30 per direct labor
hour. The company produces two products, Hammer and Tong. Hammer requires
60,000 machine hours and 20,000 direct labor hours, while Tong requires 40,000
machine hours and 30,000 direct labor hours. Using activity-based costing, machining
costs assigned to each product is
Place an “x” in the column that corresponds to the type of activity level referred to in a
hospital setting.
When using a process costing system, explain the steps you use in assigning costs to
units completed and transferred out of a department and to ending work in process.