1) Russo Corporation manufactured 16,000 air conditioners during November. The
overhead cost-allocation base is $31.50 per machine-hour. The following variable
overhead data pertain to November:
What is the variable overhead efficiency variance?
A) $3,937.50 favorable
B) $3,937.50 unfavorable
C) $4,500 favorable
D) $4,500 unfavorable
2) Which of the following is a reason why budgets in multinational companies are not
used to evaluate the firm’s performance relative to its budgets?
A) Evaluations based on budgets can be meaningless due to factors such as exchange
rate risk and other volatility.
B) Evaluations based on budgets are not possible because of cultural differences in the
budgeting approach.
C) Evaluations based on relative regional performance are considered more meaningful
as compared to evaluations against budgets.
D) Evaluations based on budgets are harder when managers use sophisticated
techniques to minimize foreign currency exposure.
3) Product lines that produce different variations (models, styles, or colors) often
require specialized manufacturing activities that translate into ________.
A) fewer indirect costs for each product line
B) decisions to drop product variations
C) a greater number of direct manufacturing labor cost allocation rates
D) greater overhead costs for each product line
4) Executive training costs is an example of ________.
A) engineered costs
B) discretionary costs
C) downsizing costs
D) rightsizing costs
5) Netzone Company is in semiconductor industry and fabrication of silicon-wafer
chips splits off two types of memory chips, Standard and Premium. The following
information was collected for last quarter of the calendar year:
Direct materials processed:200 kgs (Both standard and premium chips weigh 10 grams
each)
The cost of purchasing 200 kgs of direct materials and processing it up to the splitoff
point to yield a total of 16,500 chips of good products was $1,950,000.
Beginning inventories totalled 100 chips for Standard and 50 chips for Premium.
Ending inventory amounts reflected 100 chips of Standard and 50 chips of Premium.
October costs per unit were the same as November.
When using a physical-volume measure, what is the approximate amount of joint costs
that will be allocated Standard chips?
A) $1,170,000
B) $1,818,818
C) $975,000
D) $1,181,818
6) Which of the following involves the process of making decisions for significant
financial investments in projects to develop new products, expand production capacity,
or remodel current production facilities?
A) capital budgeting
B) working capital management
C) master budgeting
D) capitalization
7) Deocomfort Corporation manufactured 55,500 door jambs during September. The
following fixed overhead data relates to September:
What is the flexible-budget amount?
A) $50,500
B) $51,060
C) $50,600
D) $55,500
8) Tours Corp offers towing services, auto routing, travel brochures, and other travel
services for one annual fee. This is an example of ________.
A) revenue tracing
B) revenue allocation
C) a bundled product
D) a business conglomerate
9) Which of the following statements is true of just-in-time production systems?
A) In a just-in-time production system, a master production schedule specifies the
quantity and timing of each item to be produced.
B) Sales budget triggers each step of the production process in a just in time production
system.
C) Defects arising at one workstation affect other workstations in the line quickly
because of the tight links between workstations.
D) Production is organized in manufacturing cells in a just in time production system,
which are production centers that use a “push-through” approach whereby finished
goods are manufactured on the basis of demand forecasts.
10) One reason indirect costs may be overapplied is because ________.
A) the actual allocation base quantity exceeds the budgeted quantity
B) budgeted indirect costs exceed actual indirect costs
C) requisitioned direct materials exceed budgeted material costs
D) Both A and B are correct.
11) Silicon Technologies, currently sells 17″ monitors for $270. It has costs of $210. A
competitor is bringing a new 17″ monitor to market that will sell for $230. Management
believes it must lower the price to $230 to compete in the market for 17″ monitors.
Silicon believes that the new price will cause sales to increase by 10%, even with a new
competitor in the market. Silicon’s sales are currently 5,000 monitors per year.
What is the target cost if the target operating income is 25% of sales?
A) $230.00
B) $207.00
C) $172.50
D) $115.00
12) Strategy specifies ________.
A) how an organization matches its own capabilities with the opportunities in the
marketplace
B) standard procedures to ensure quality products
C) incremental changes for improved performance
D) the demand created for products and services
13) Ms. Janice Meyers, the company president, has heard that there are multiple
breakeven points for every product. She does not believe this and has asked you to
provide the evidence of such a possibility. Some information about the company for
2011 is as follows:
What are breakeven sales in units using absorption costing if the production units are
actually 25,000?
A) 5,625 units
B) 6,667 units
C) 7,667 units
D) 7,931 units
14) Job costing ________.
A) cannot be used by the service industry
B) records the flow of costs for each product or service
C) allocates an equal amount of cost to each unit made during a time period
D) is used when each unit of output is identical
15) Bouvous Corp has two regional offices. The data for each are as follows:
What is the return on investment for the New Jersey Division?
A) 21%
B) 33.33%
C) 66.67%
D) 25%
16) Aqua Company produces two productsAlpha and Beta. Alpha has a high market
share and is produced in bulk. Production of Beta is based on customer orders and is
custom designed. Also, 55% of Beta’s cost is shared between design and setup costs,
while Alpha’s major portions of costs are direct costs. Alpha is using a single cost pool
to allocate indirect costs. Which of the following statements is true of Aqua?
A) Aqua will overcost Beta’s direct costs as it is using a single cost pool to allocate
indirect costs.
B) Aqua will undercost Alpha’s indirect costs because alpha has high direct costs.
C) Aqua will overcost Alpha’s indirect costs as it is using a single cost pool to allocate
indirect costs.
D) Aqua will overcost Beta’s indirect costs because beta has high indirect costs.