ACC 576 Week 10 Quiz (All Possible Questions)
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ACC 576 Week 10 Quiz (All Possible Questions)
ACC 576 Week 10 Study
1. Wages earned by machine operators in producing the firm's product should be categorized as
2. Which of the following is assigned to goods that were either purchased or manufactured for resale?
3. In a traditional job order cost system, the issue of indirect materials to a production department increases
4. The accountant for Champion Brake, Inc. applies overhead based on machine hours. The budgeted overhead and machine hours for the year are $260,000 and 16,000, respectively. The actual overhead and machine hours incurred were $275,000 and 20,000. The cost of goods sold and inventory data compiled for the year is as follows: Direct Materials $ 50,000, COGS 450,000, WIP (units) 100,000, Finished Goods (units) 150,000. What is the amount of over/under applied overhead for the year?
5. If a product required a great deal of electricity to produce, and crude oil prices increased, which of the following costs most likely increased?
6. Fab Co. manufactures textiles. Among Fab's 2004 manufacturing costs were the following salaries and wages: Loom operators $120,000, Factory foremen 45,000, Machine mechanics 30,000. What was the amount of Fab's 2004 direct labor?
7. In a process cost system, the application of factory overhead usually would be recorded as an increase in
8. Jonathan Mfg. adopted a job-costing system. For the current year, budgeted cost driver activity levels for direct labor hours and direct labor costs were 20,000 and $100,000, respectively. In addition, budgeted variable and fixed factory overheads were $50,000 and $25,000, respectively. The actual costs and hours for the year were as follows: Direct labor hours 21,000, Direct labor costs $110,000, Machine hours 35,000. For a particular job, 1,500 direct labor hours were used. Using direct labor hours as the cost driver, what amount of overhead should be applied to this job?
9. Indirect labor is a
10. Hoyt Co. manufactured the following units: Saleable 5,000, Unsalable (normal spoilage) 200, Unsalable (abnormal spoilage) 300, the manufacturing cost totaled $99,000. What amount should Hoyt debit to finished goods?
11. In the past, four direct labor hours were required to produce each unit of product Y. Material costs were $200 per unit, the direct labor rate was $20 per hour, and factory overhead was three times the direct labor cost. In budgeting for next year, management is planning to outsource some manufacturing activities and to further automate others. Management estimates that these plans will reduce labor hours by 25%, increase the factory overhead rate to 3.6 times the direct labor costs, and increase material costs by $30 per unit. Management plans to manufacture 10,000 units. What amount should management budget for the cost of goods manufactured?
12. During the month of March 2005, Nale Co. used $300,000 of direct materials. On March 31, 2005, Nale's direct materials inventory was $50,000 more than it was on March 1, 2005. Direct material purchases during the month of March 2005 amounted to
13. Based on the following data, what is the gross profit for the company? Sales $1,000,000, Net purchases of raw materials 600,000, Cost of goods manufactured 800,000, Marketing and administrative expenses 250,000, Indirect manufacturing costs 500,000.
14. On January 1 Maples had two jobs in process: #506 with assigned costs of $10,500 and #507 with assigned costs of $14,250. During January three new jobs, #508 through #510, were started and three jobs, #506, #507, and #508, were completed. Materials and labor costs added during January were as follows: Manufacturing overhead is assigned at the rate of 200 percent of labor. What is the January cost of goods manufactured and transferred from work-in-process?
15. In June, Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes
16. In its April 2005 production, Hern Corp., which does not use a standard cost system, incurred total production costs of $900,000, of which Hern attributed $60,000 to normal spoilage and $30,000 to abnormal spoilage. Hern should account for this spoilage as
17. Mat Co. estimated its material handling costs at two activity levels as follows: What is Mat's estimated cost for handling 75,000 kilos?
18. When using a flexible budget, a decrease in production levels within a relevant range
19. A delivery company is implementing a system to compare the costs of purchasing and operating different vehicles in its fleet. Truck 415 is driven 125,000 miles per year at a variable cost of $0.13 per mile. Truck 415 has a capacity of 28,000 pounds and delivers 250 full loads per year. What amount is the truck's delivery cost per pound?
20. Sender, Inc. estimates parcel mailing costs using the data shown on the chart below. What is Sender's estimated cost for mailing 12,000 parcels?
21. When production levels are expected to increase within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following costs?
22. Day Mail Order Co. applied the high-low method of cost estimation to customer order data for the first 4 months of 2005. What is the estimated variable order filling cost component per order?
23. When production levels are expected to decline within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following?
24. In an activity-based costing system, cost reduction is accomplished by identifying and eliminating
25. Book Co. uses the activity-based costing approach for cost allocation and product costing purposes. Printing, cutting, and binding functions make up the manufacturing process. Machinery and equipment are arranged in operating cells that produce a complete product starting with raw materials. Which of the following are characteristic of Book's activity-based costing approach? I. Cost drivers are used as a basis for cost allocation. II. Costs are accumulated by department or function for the purposes of product costing. III. Activities that do not add value to the product are identified and reduced to the extent possible.
26. What is the normal effect on the numbers of cost pools and allocation bases when an activity-based cost (ABC) system replaces a traditional cost system?
27. In an activity-based costing system, what should be used to assign a department's manufacturing overhead costs to products produced in varying lot sizes?
28. Gram Co. develops computer programs to meet customers' special requirements. How should Gram categorize payments to employees who develop these programs?
29. Where one part of an organization provides an essential business process where previously it had been provided by multiple parts of that same organization, this is called
30. Which of the following items often provides a significant risk with off-shore operations?
31. A manufacturing company has several product lines. Traditionally, it has allocated manufacturing overhead costs between product lines based on total machine hours for each product line. Under a new activity-based costing system, which of the following overhead costs would be most likely to have a new cost driver assigned to it?
32. Nile Co.'s cost allocation and product costing procedures follow activity-based costing principles. Activities have been identified and classified as being either value-adding or nonvalue-adding as to each product. Which of the following activities, used in Nile's production process, is nonvalue-adding?
33. Which of the following items is a process management approach that involves radical change?
34. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would
35. The absorption costing method includes in work in process and finished goods inventories:
36. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would
37. Cay Co.'s 2005 fixed manufacturing overhead costs totaled $100,000, and variable selling costs totaled $80,000. Under direct costing, how should these costs be classified?
38. Using the variable costing method, which of the following costs are assigned to inventory?
39. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross profit, and total contribution margin approximated budgeted figures, whereas income was substantially greater than the budgeted amount. There was no beginning or ending inventories. The most likely explanation of the income increase is that, compared to budget, actual
40. Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods?
41. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross profit, and total contribution margin approximated the budgeted figures, whereas income was substantially below the budgeted amount. There was no beginning or ending inventories. The most likely explanation for the income shortfall is that, compared to budget, actual
42. A single-product company prepares income statements using both absorption and variable costing methods. Manufacturing overhead cost applied per unit produced in 2005 was the same as in 2004. The 2005 variable costing statement reported a profit, whereas the 2005 absorption costing statement reported a loss. The difference in reported income could be explained by the units produced in 2005 being
43. At the end of Killo Co.'s first year of operations, 1,000 units of inventory remained on hand. Variable and fixed manufacturing costs per unit were $90 and $20, respectively. If Killo uses absorption costing rather than direct (variable) costing, the result would be a higher pretax income of
44. Lynn Manufacturing Co. prepares income statements using both standard absorption and standard variable costing methods. For 2005, unit standard costs were unchanged from 2004. In 2005, the only beginning and ending inventories were finished goods of 5,000 units. How would Lynn's ratios using absorption costing compare with those using variable costing?
45. A direct labor overtime premium should be charged to a specific job when the overtime is caused by the
46. In a job cost system, manufacturing overhead is
47. Birk Co. uses a job order cost system. The following debits (credits) appeared in Birk's work in process account for the month of April 2005: Birk applies overhead to production at a predetermined rate of 80% of the direct labor cost. Job No. 5, the only job still in process on April 30, 2005, was charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5?
48. A job order cost system uses a predetermined factory overhead rate based on expected volume and expected fixed cost. At the end of the year, under applied overhead might be explained by which of the following situations?
49. A standard cost system may be used in
50. During the current year, the following manufacturing activity took place for a company's products: Beginning work in process: 10,000 units, 70% complete, Units started into production during the year: 150,000 units, Units completed during the year: 140,000 units, Ending work in process: 20,000 units, 25% complete. What was the number of equivalent units produced using the first-in, first-out method?
51. Yarn Co.'s inventories in process were at the following stages of completion on April 30, 2004:
52. The forming department is the first of a two-stage production process. Spoilage is identified when the units have completed the forming process. The costs of spoiled units are assigned to units completed and transferred to the second department in the period when spoilage is identified. The following information concerns forming's conversion costs in May 2005: Using the weighted average method, what was forming's conversion cost transferred to the second production department?
53. Weighted average and first in, first out (FIFO) equivalent units would be the same in a period when which of the following occurs?
54. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers current period costs
55. Black, Inc. employs a weighted average method in its process costing system. Black's work in process inventory on June 30 consists of 40,000 units. These units are 100% complete with respect to materials and 60% complete with respect to conversion costs. The equivalent unit costs are $5.00 for materials and $7.00 for conversion costs. What is the total cost of the June 30 work in process inventory?
56. A process costing system was used for a department that began operations in January 2005. Approximately the same number of physical units, at the same degree of completion, were in work in process at the end of both January and February. Monthly conversion costs are allocated between ending work in process and units completed. Compared to the FIFO method, would the weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations?
57. In process 2, material G is added when a batch is 60% complete. Ending work in process units, which are 50% complete, would be included in the computation of equivalent units for
58. The following information pertains to Lap Co.'s Palo Division for the month of April: All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for materials is
59. Which of the following is not a basic approach to allocating costs for costing inventory in joint-cost situations?
60. Kode Co. manufactures a major product that gives rise to a by-product called May. May's only separable cost is a $1 selling cost when a unit is sold for $4. Kode accounts for May's sales by deducting the $3 net amount from the cost of goods sold of the major product. There are no inventories. If Kode were to change its method of accounting for May from a by-product to a joint product, what would be the effect on Kode's overall gross margin?
61. Mighty, Inc. processes chickens for distribution to major grocery chains. The two major products resulting from the production process are white breast meat and legs. Joint costs of $600,000 are incurred during standard production runs each month, which produce a total of 100,000 pounds of white breast meat and 50,000 pounds of legs. Each pound of white breast meat sells for $2 and each pound of legs sells for $1. If there are no further processing costs incurred after the split-off point, what amount of the joint costs would be allocated to the white breast meat on a net realizable value basis?
62. Mig Co., which began operations in 2003, produces gasoline and a gasoline by-product. The following information is available pertaining to 2003 sales and production: Mig accounts for the by-product at the time of production. What are Mig's 2003 cost of sales for gasoline and the by-product?
63. LM Enterprises produces two products in a common production process, each of which is processed further after the split-off point. Joint costs incurred for the current month are $36,000. The following information for the current month was. What amount would be the joint cost allocated to product M, assuming that LM Enterprises uses the estimated net realizable value method to allocate costs?
64. A company manufactures two products, X and Y, through a joint process. The joint (common) costs incurred are $500,000 for a standard production run that generates 240,000 gallons of X and 160,000 gallons of Y. X sells for $4.00 per gallon, while Y sells for $6.50 per gallon. If there are no additional processing costs incurred after the split-off point, what is the amount of joint cost for each production run allocated to X on a physical-quantity basis?
65. The following information pertains to a by-product called Moy: The inventory of Moy was recorded at net realizable value when produced in 2004 and net proceeds from the sale were used to reduce joint costs. No units of Moy were produced in 2005. What amount should be recognized as profit on Moy's 2005 sales?
66. Johnson Co., distributor of candles, has reported the following budget assumptions for year 1: No change in candles inventory level; cash disbursement to candle manufacturer, $300,000; target accounts payable ending balance for year 1 is 150% of accounts payable beginning balance; and sales price is set at a markup of 20% of candle purchase price. The candle manufacturer is Johnson's only vendor, and all purchases are made on credit. The accounts payable has a balance of $100,000 at the beginning of year 1. What is the budgeted gross margin for year 1?
67. Lon Co.'s budget committee is preparing its master budget on the basis of the following projections: What are Lon's estimated cash disbursements for inventories?
68. When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon the level of productivity, an accountant would normally recommend
69. What is the required unit production level given the following factors?
70. Which of the following types of budgets is the last budget to be produced during the budgeting process?
71. Cook Co.'s total costs of operating five sales offices last year were $500,000, of which $70,000 represented fixed costs. Cook has determined that total costs are significantly influenced by the number of sales offices operated. Last year's costs and the number of sales offices can be used as the bases for predicting annual costs. What would be the budgeted costs for the coming year if Cook were to operate seven sales offices?
72. Lanta Restaurant compares monthly operating results with a static budget.When actual sales are less than budget, would Lanta usually report favorable variances on variable food costs and fixed supervisory salaries?
73. A static budget contains which of the following amounts?
74. The basic difference between a master budget and a flexible budget is that a master budget is
75. A company forecast first quarter sales of 10,000 units, second quarter sales of 15,000 units, third quarter sales of 12,000 units and fourth quarter sales of 9,000 units at $2 per unit. Past experience has shown that 60% of the sales will be in cash and 40% will be on credit. All credit sales are collected in the following quarter, and none are uncollectible. What amount of cash is forecasted to be collected in the second quarter?
76. Which of the following would be most impacted by the use of the percentage of sales forecasting method for budgeting purposes?
77. A 2005 cash budget is being prepared for the purchase of Toyi, a merchandise item. The budgeted data are as follows: Purchases will be made in 12 equal monthly amounts and paid for in the following month. What is the 2005 budgeted cash payment for the purchase of Toyi?
78. A flexible budget is appropriate for a
79. Dough Distributors has decided to increase its daily muffin purchases by 100 boxes. A box of muffins costs $2 and sells for $3 through regular stores. Any boxes not sold through regular stores are sold through Dough's thrift store for $1. Dough assigns the following probabilities to selling additional boxes: What is the expected value of Dough's decision to buy 100 additional boxes of muffins?
80. Under frost-free conditions, Cal Cultivators expects its strawberry crop to have a $60,000 market value. An unprotected crop subject to frost has an expected market value of $40,000. If Cal protects the strawberries against frost, then the market value of the crop is still expected to be $60,000 under frost-free conditions and $90,000 if there is a frost. What must be the probability of a frost for Cal to be indifferent to spending $10,000 for frost protection?
81. In describing the regression equation used for cost prediction, Y = a + bx, which of the following is correct?
82. A management accountant performs a linear regression of maintenance cost vs. production using a computer spreadsheet. The regression output shows an "intercept" value of $322,897. How should the accountant interpret this information?
83. The coefficient of determination, r squared, in a multiple regression equation is the
84. Box Co. uses regression analysis to estimate the functional relationship between an independent variable (cost driver) and overhead cost. Assume that the following equation is being used: y = A + Bx. What is the symbol for the independent variable?
85. In using regression analysis, which measure indicates the extent to which a change in the independent variable explains a change in the dependent variable?
86. The regression analysis results for ABC Co. are shown as y = 90x + 45. The standard error (Sb) is 30 and the coefficient of determination (r2 ) is 0.81. The budget calls for the production of 100 units. What is ABC's estimate of total costs?
87. The sales and cost information for Gamore Company are as follows: Gamore's breakeven point in the number of units is
88. State College is using cost-volume-profit analysis to determine tuition rates for the upcoming school year. Projected costs for the year are as follows: Based on these estimates, what is the approximate break-even point in number of students?
89. In 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000. Due to an adverse legal decision, Thor's 2005 liability insurance increased by $1,200,000 over 2004. Assuming the volume and other costs are unchanged, what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
90. Trendy Co. produced and sold 30,000 backpacks during the last year at an average price of $25 per unit. Unit variable costs were the following: Total fixed costs were $250,000. There was no year-end work-in-process inventory. If Trendy had spent an additional $15,000 on advertising, then sales would have increased by $30,000. If Trendy had made this investment, what change would have occurred in Trendy's pretax profit?
91. The most likely strategy to reduce the breakeven point would be to
92. At the breakeven point, the contribution margin equals total
93. Wren Co. manufactures and sells two products with selling prices and variable costs as follows: Wren's total annual fixed costs are $38,400. Wren sells four units of A for every unit of B. If the operating income last year was $28,800, what was the number of units Wren sold?
94. Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 sales?
95. A ceramics manufacturer sold cups last year for $7.50 each. Variable costs of manufacturing were $2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was $5,040. This year, the company expects the following changes: sales price per cup to be $9.00; variable manufacturing costs to increase 33.3%; fixed costs to increase 10%; and the income tax rate to remain at 40%. Sales in the coming year are expected to exceed last year's sales by 1,000 units. How many units does the company expect to sell this year?
96. A ceramics manufacturer sold cups last year for $7.50 each. The variable cost of manufacturing was $2.25 per unit. The company needed to sell 20,000 cups to break even. Its net income was $5,040. This year, the company expects the price per cup to be $9.00; the variable manufacturing cost to increase by 33.3%; and the fixed costs to increase by 10%. How many cups (rounded) does the company need to sell this year to break even?
97. A company that produces 10,000 units has fixed costs of $300,000, variable costs of $50 per unit, and a sales price of $85 per unit. After learning that its variable costs will increase by 20%, the company is considering an increase in production to 12,000 units. Which of the following statements is correct regarding the company's next steps?
98. Breakeven analysis assumes that over the relevant range
99. On January 1, 2005, Lake Co. increased its direct labor wage rates. All other budgeted costs and revenues were unchanged. How did this increase affect Lake's budgeted breakeven point and budgeted margin of safety?
100. In the profit-volume chart below, EF and GH represent the profit-volume graphs of a single-product company for 2004 and 2005, respectively. If the 2004 and 2005 unit sales are identical, how did the total fixed costs and unit variable costs of 2005 change as compared to 2004?
101. Cott Company has sales of $200,000, a contribution margin of 20%, and a margin of safety of $80,000. What is Cott's fixed cost?
102. Central Winery manufactured two products, A and B. The estimated demand for product A was 10,000 bottles, and for product B, 30,000 bottles. The estimated sales price per bottle for A was $6.00, and for B, $8.00. The actual demand for product A was 8,000 bottles, and for product B, 33,000 bottles. The actual price per bottle for A was $6.20, and for B, $7.70. What amount would be the total selling price variance for Central Winery?
103. The following direct labor information pertains to the manufacture of product Glu: What is the standard direct labor cost per unit of product Glu?
104. Selected costs associated with a product are as follows: What amount is the total direct labor price variance?
105. Relevant information for material A follows: What was the direct material quantity variance for material A?
106. Virgil Corp. uses a standard cost system. In May, Virgil purchased and used 17,500 pounds of materials at a cost of $70,000. The materials usage variance was $2,500 unfavorable, and the standard materials allowed for May production was 17,000 pounds. What was the materials price variance for May?
107. Yola Co. manufactures one product with a standard direct labor cost of four hours at $12.00 per hour. In June, 1,000 units were produced using 4,100 hours at $12.20 per hour. The unfavorable direct labor efficiency variance was
108. Smart Co. uses a static budget. When actual sales are less than budget, Smart would report favorable variances on which of the following expense categories?
109. Management has reviewed the standard cost variance analysis and is trying to explain an unfavorable labor efficiency variance of $8,000. Which of the following is the most likely cause of the variance?
110. A manufacturing company that produces trivets has established the following standards for the current year: During April, the company purchased 10,000 pounds of material for $33,000 and used 9,400 pounds to produce 4,500 trivets. Four thousand trivets were sold during April. What amount should be reported as the materials' quantity (usage) variance?
111. For the current period production levels, XL Molding Co. budgeted 8,500 board feet of production and used 9,000 board feet for actual production. Material cost was budgeted at $2 per foot. The actual cost for the period was $3 per foot. What was XL's material efficiency variance for the period?
112. The following information pertains to Roe Co.'s 2004 manufacturing operations: Roe's 2004 unfavorable variable overhead efficiency variance was
113. In 2005, a department's three-variance overhead standard costing system reported unfavorable spending and volume variances. The activity level selected for allocating overhead to the product was based on 80% of practical capacity. If 100% of practical capacity had been selected instead, how would the reported unfavorable spending and volume variances have been affected?
114. Which of the following standard costing variances would be least controllable by a production supervisor?
115. The following information is available on Crain Co.'s two product lines: Assuming the tables line is discontinued, and the factory space previously used to make tables is rented for $24,000 per year, operating income will increase by what amount?
116. Which of the following items is never relevant to a sell or process further decision?
117. Which one of the following costs, if any, is relevant when making financial decisions?
118. Allen Harvey, an accounting major, is considering a full-time internship during the spring semester of his junior year. The internship opportunity is located in the town where he attends school, so he would be able to continue to live in his apartment that costs $600 per month. The internship would pay $1,200 per month for January through May. If he does not take the internship, he will attend school at a cost of $4,000 for the semester. If Harvey decides to stay in school full-time during the spring semester, which one of the following would be the amount of his opportunity cost and the amount of his incremental (or differential) cost?
119. A company is considering outsourcing one of the component parts for its product. The company currently makes 10,000 parts per month. Current costs are as follows: The company decides to purchase the part for $8 per unit from another supplier and rents its idle capacity for $5,000/month. How will the company's monthly costs change?
120. A company is offered a one-time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10%, which is 15% less than the usual gross profit. What impact will this order have on total fixed costs and operating income?
121. Which of the following would be considered a relevant fixed cost in making a special order decision?
122. Clay Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs: The fixed costs include a normal $3,700 allocation for in-house design costs, although no in-house design will be done. Instead the job will require the use of external designers costing $7,750. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job?
123. A company receives an offer to purchase a special order of units of a product that normally sells for $10 each to regular customers. The cost of manufacturing the units is shown here. If all other conditions are favorable, what is the absolute lowest price that the company would be able to feasibly accept for the order if it has enough idle capacity to handle the order?
124. Rodder, Inc. manufactures a component in a router assembly. The selling price and unit cost data for the component are as follows: The company received a special one-time order for 1,000 components. Rodder has an alternative use for production capacity for the 1,000 components that would produce a contribution margin of $5,000. What amount is the lowest unit price Rodder should accept for the component?
125. Tennis rackets can be purchased for $60 each from an outside vendor. It costs the manufacturer $80 a piece to produce them, of which 30% is unavoidable fixed overhead cost. What are the relevant costs for this decision? Based only on these costs, which option should the company choose?
126. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Given the facts in case 2, what are the minimum and maximum transfer prices?
127. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Given the facts in case 1, what are the minimum and maximum transfer prices?
128. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Will the internal transfer likely take place? Answer for Case 1 and 2 separately.
129. Spring Co. had two divisions, A and B. Division A created Product X, which could be sold on the outside market for $25, and used variable costs of $15. Division B could take Product X and apply additional variable costs of $40 to create Product Y, which could be sold for $100. Division B received a special order for a large amount of Product Y. If Division A were operating at full capacity, which of the following prices should Division A charge Division B for the Product X needed to fill the special order?
130. Brent Co. has intracompany service transfers from Division Core, a cost center, to Division Pro, a profit center. Under stable economic conditions, which of the following transfer prices is likely to be most conducive to evaluating whether both divisions have met their responsibilities?
131. Which of the following techniques effectively measures improvements in product quality as a result of internal failure costs?
132. In a quality control program, which of the following is (are) categorized as internal failure costs? I. Rework. II. Responding to customer complaints. III. Statistical quality control procedures.
133. As a consequence of finding a more dependable supplier, Dee Co. reduced its safety stock of raw materials by 80%. What is the effect of this safety stock reduction on Dee's economic order quantity?
134. As part of a benchmarking process, a company's costs of quality for the current month have been identified as follows: What amount is the company's prevention cost for the current month?
135. The benefits of a just-in-time system for raw materials usually include
136. Which changes in costs are most conducive to switching from a traditional inventory ordering system to a just-in-time ordering system?
137. The economic order quantity formula assumes that
138. Bell Co. changed from a traditional manufacturing philosophy to a just-in-time philosophy.
139. What are the expected effects of this change on Bell's inventory turnover and inventory as a percentage of total assets reported on Bell's balance sheet?
140. Which quality definition can be described as "meeting or exceeding the needs and wants of customers?"
141. Key Co. changed from a traditional manufacturing operation with a job order costing system to a just-in-time operation with a back-flush costing system. What is (are) the expected effect(s) of these changes on Key's inspection costs and recording detail of costs tracked to jobs in process?
142. Nonfinancial performance measures are important to engineering and operations managers in assessing the quality levels of their products. Which of the following indicators can be used to measure product quality? I. Returns and allowances. II. Number and types of customer complaints. III. Production cycle time.
143. To evaluate its performance, the Blankie Co. is comparing its costs of quality from one year to the next. The relevant costs are as follows: Which of the following conclusions can Blankie draw about its quality program?
144. Which measures would be useful in evaluating the performance of a manufacturing system? I. Throughput time. II. Total setup time for machines/Total production time. III. Number of rework units/Total number of units completed.
145. Which of the following balanced scorecard perspectives examines a company's success in targeted market segments?
146. Under the balanced scorecard concept developed by Kaplan and Norton, employee satisfaction and retention are measures used under which of the following perspectives?
147. Which of the following performance measures is nonfinancial?
148. The management of a company would do which of the following to compare and contrast its financial information to published information reflecting optimal amounts?
149. A cost leadership strategy, in addition to focusing on the company's ability to sell a large volume of low-cost products, is often aided by all of the following characteristics except
150. Which of the following topics is the focus of managerial accounting?
151. SWOT analysis includes considerations of what four strategic dimensions?
152. Vince Inc. has developed and patented a new laser disc reading device that will be marketed internationally. Which of the following factors should Vince consider in pricing the device? I. Quality of the new device. II. Life of the new device. III. Customers' relative preference for quality compared to price.
153. Which of the following steps in the strategic planning process should be completed first?
154. The target capital structure of Traggle Co. is 50% debt, 10% preferred equity, and 40% common equity. The interest rate on debt is 6%, the yield on the preferred is 7%, the cost of common equity is 11.5%, and the tax rate is 40%. Traggle does not anticipate issuing any new stock. What is Traggle's weighted average cost of capital?
155. A company's target gross margin is 40% of the selling price of a product that costs $89 per unit. The product's selling price should be
156. A company has a tax rate of 40%. Information for the company is as follows: What is the weighted average cost of capital (WACC)?
157. A company has two divisions. Division A has an operating income of $500 and total assets of $1,000. Division B has an operating income of $400 and total assets of $1,600. The company's required rate of return is 10%. Division B's residual income would be which of the following amounts?
158. Wexford Co. has a subunit that reported the following data for year 1: The imputed interest rate is 12%. What is the division residual income for year 1?
159. Brewster Co. has the following financial information: What amount of sales is required for Brewster to achieve a 15% return on sales?
160. Related to the CFROI metric, "the required annual cash investment needed to replace fixed assets" is the definition of what?
161. Which of the following accurately reflects prevailing thought processes regarding the new value based metrics?
162. The following information pertains to Quest Co.'s Gold Division for 2004: Quest's return on investment was
163. North Bank is analyzing Belle Corp.'s financial statements for a possible extension of credit. Belle's quick ratio is significantly better than the industry average. Which one of the following factors should North consider as a possible limitation of using this ratio when evaluating Belle's creditworthiness?
164. To measure inventory management performance, a company monitors its inventory turnover ratio. Listed below are selected data from the company's accounting records: Beginning finished goods inventory for the current year was 15% of the prior year's annual sales, and ending finished goods inventory was 22% of the current year's annual sales. What was the company's inventory turnover at the end of the current period?
165. The DuPont method of ROI uses sales to analyze what two elements of return separately?
166. Galax, Inc. had an operating income of $5,000,000 before interest and taxes. Galax's net book value of plant assets on January 1 and December 31 were $22,000,000 and $18,000,000, respectively. Galax achieved a 25% return on investment for the year, with an investment turnover of 2.5. What were Galax's sales for the year?
167. How is contribution margin (CM) different from gross margin (GM)?
168. Which metric is often used as an alternative to ROI and is generally defined as "operating Income less (the required rate of return multiplied by invested capital)?"
169. Why is cost avoidance a faster way to increase profits than to increase revenue?
170. Which of the following types of risk are best addressed with insurance?
171. How is strategic risk best managed?
172. Which of the following types of risk are best addressed with hedging?
173. Which of the following terms describe or are consistent with systematic risk?
174. Jago Co. has two products that use the same manufacturing facilities and cannot be subcontracted. Each product has sufficient orders to utilize the entire manufacturing capacity. For short-run profit maximization, Jago should manufacture the product with the
175. What is the objective of the demand flow approach?
176. Which of the following production processes best describes lean manufacturing?
177. Which of the following statements correctly describes the structural differences between mass and lean manufacturing?
178. What tools does Six Sigma commonly use to achieve quality control?
179. When using PERT or CPM, activity slack is calculated as
180. When using PERT, project completion times are measured by a pessimistic, optimistic, and most probable estimate...
181. Which of the following roles is typically taken on by a project team member?
182. The process of adding resources to shorten selected activity times on the critical path is called
183. Which type of project risk is related to managing people, time, cost restrictions, and the interrelationships among activities?
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