1) IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and
Responsibility.
2) The key to a company’s success is creating value for customers while differentiating
itself from its competitors.
3) Companies operating in competitive markets should ideally use cost-plus approach to
pricing.
4) Budgeting is a mechanical tool because the budgeting techniques are free of
emotions.
5) The implication of controlling a process at a Six Sigma level is that the process
produces only 3.4 defects per million products produced.
6) The market-share variance is the difference in actual contribution margin for actual
market size in units caused solely by actual market share being different from budgeted
market share.
7) Customer response time is the time it takes from the time a customer places an order
for a product or service to the time the product or service is delivered to the customer.
8) The market-share variance is the difference in budgeted contribution margin for
actual
market size in units caused solely by actual market share being different from budgeted
market share.
9) Implementing ABC system never demotivates employees.
10) Under standard costing, fixed overhead costs are treated as if they are a variable
cost.
11) In a profit center, the manager is accountable for investments, revenues, and costs.
12) Absorption costing is the required inventory method for external financial reporting
in most countries.
13) The choice of the capacity level used to allocate budgeted fixed manufacturing
costs to products can greatly affect the product-cost information available to managers.
14) Management control systems should be designed to support the organizational
responsibilities of individual managers.
15) The total of the manufacturing overhead costs listed above for September is:
A) $669,000
B) $366,000
C) $34,000
D) $59,000
16) Line managers supervising individual refineries are concerned with ________.
A) obtaining information about the firm’s opportunity costs
B) obtaining information about the firm’s sunk costs
C) obtaining information about the firm’s equipment downtime and product quality
D) obtaining information about customer satisfaction and market share
17) Using the high-low method, the estimate of the variable component of office
expense per escrow completed is closest to:
A) $26.75
B) $118.23
C) $36.11
D) $72.49
18) Comfort Manufacturing is a small textile manufacturer using machine-hours as the
single indirect-cost rate to allocate manufacturing overhead costs to the various jobs
contracted during the year. The following estimates are provided for the coming year
for the company and for the Winton High School band jacket job.
What are the total manufacturing costs of this job?
A) $1,970
B) $2,805
C) $2,905
D) $1,920
19) Which of the following is a drawback of decentralizing a multinational company?
A) It may lead to increased exchange rate risk.
B) It may result in lack of control and results in increasing risk.
C) It creates less responsiveness to the needs of a subunit’s customers, suppliers, and
employees.
D) It may lead to an increase in bureaucracy.
20) The cost function y = 150 + 10X ________.
A) has a slope coefficient of 150
B) has an intercept of 150
C) is a nonlinear
D) represents a fixed cost
21) ABC systems help managers to ________.
A) value ending inventory more accurately
B) identify new designs to reduce costs
C) evaluate direct material costs more efficiently
D) improve the inventory turnaround time
22) Increases in the carrying cost and decreases in the ordering cost per purchase order
result in ________.
A) smaller EOQ amounts
B) larger EOQ amounts
C) larger relevant total costs
D) smaller relevant total costs
23) Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for
kitchens and other applications within the home. Its costing system utilizes two cost
categories, direct materials and conversion costs. Each product must pass through the
rough cut department and the finish department. Direct materials are added at the
beginning of production. Conversion costs are allocated evenly throughout production.
Data for Finishing Department for March 2015 are:
Costs for Finishing department for March 2015 are:
What is the unit cost per equivalent unit of the beginning inventory in the Finishing
Department?
A) $200
B) $400
C) $800
D) $1,000
24) Terbium Corporation manufactures water toys. It plans to grow by producing
high-quality water toys that are delivered in a timely manner. There are a number of
other manufacturers who produce similar water toys. Terbium believes that
continuously improving its manufacturing processes and reengineering processes to
downsize and eliminate excess capacity are critical to implementing its strategy. Out of
the two basic strategies, Terbium’s strategy is ________.
A) product differentiation
B) product leadership
C) cost differentiation
D) cost leadership
25) Standard costing can provide managers with reliable and timely information on
variable distribution overhead ________.
A) efficiency variances and production variances
B) production-volume variances and spending variances
C) efficiency variances and spending variances
D) production-volume variances and sales variances
26) The Perize Corporation used regression analysis to predict the annual cost of
indirect materials. The results were as follows:
A) Y = $15,685 + $10.25X
B) Y = $3,500 + $5.15X
C) Y = $19,185 + $4.48X
D) Y = $12,285 + $10.25X
27) To the nearest whole dollar, what should be the total sales commissions at a sales
volume of 36,100 units? (Assume that this sales volume is within the relevant range.)
A) $525,000
B) $509,003
C) $533,250
D) $541,500
28) The time from when an order is received until it becomes a finished good is referred
to as ________.
A) work-in-process time
B) manufacturing cycle time
C) pass-through time
D) product design time