Which of the following is notone of the three major manufacturing cost categories?
A.Direct materials costs that can be easily traced to a product
B.Direct labor costs of workers who transform materials into finished products and
whose time can be easily traced to a product
C.Manufacturing overhead costs which represents all other manufacturing costs that do
not fit into the other categories
D.Opportunity costs which are the manufacturing costs forgone by accepting another
production alternative
Tying a managers’ compensation to the company’s stock performance aligns managers’
incentives with those of the which of the following groups?
A.shareholders.
B.creditors.
C.employees.
D.vendors.
A cost that changes in total as the level of activity changes is known as which of the
following?
A.fixed cost.
B.direct cost.
C.indirect cost.
D.variable cost.
Differential analysis focuses mostly on which of the following?
A.opportunity costs
B.cash outflows only.
C.both cash inflows and outflows.
D.accrual accounting.
Multiple products make using financial models more complex. To deal with this,
managers can
A.treat each product line as a separate entity.
B.assume a weighted average contribution margin.
C.use sales dollars as a measure of volume.
D.All of the answers are correct.
In a normal costing system, how is the predetermined fixed manufacturing overhead
rate calculated?
A.Divide actual fixed manufacturing overhead by the normal (or estimated) activity
level.
B.Divide estimated fixed manufacturing overhead by the actual activity level.
C.Divide estimated fixed manufacturing overhead by the normal (or estimated) activity
level.
D.Divide actual fixed manufacturing overhead by the actual activity level.
In profit planning and budgeting, which statement is true concerning a favorable
variance?
A.A favorable variance would increase operating profit, holding all other things
constant.
B.A favorable variance is always positive (good), holding all other things constant.
C.A favorable variance would decrease operating profit, holding all other things
constant.
D.A favorable variance is always negative (bad), holding all other things constant.
Which of the following represents a reason management would use JIT methods?
A.To keep large amounts of materials on hand for production.
B.To provide finished goods just in time for sale.
C.To hide defective units.
D.To prevent laying off workers during slow times.
When a fixed cost changes, which of the following will also generally change?
A.accounts receivable.
B.notes receivable.
C.marketable securities.
D.long-term assets.
Using full costs for pricing decisions can be justified in which of the following
circumstances?
A.When a firm enters into a long-term contractual relationship to supply a product.
B.For development and production of customized products and contracts with the
government.
C.When managers initially set prices to cover full costs plus a profit then adjust to
reflect market conditions.
D.All of the answers are correct.