Accounting

Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Investment, Residual Income A) Yes Yes B) No Yes C) Yes No D) No No

A. Yes Yes

Manufacturing overhead includes: Select one: A. all manufacturing costs except direct labor and direct materials. B. all direct material, direct labor and administrative costs. C. all manufacturing costs except direct labor. D. all selling and administrative costs.

A. all manufacturing costs except direct labor and direct materials.

The production department should generally be responsible for materials price variances that resulted from: A) rush orders arising from poor scheduling. B) purchases made in uneconomical lot-sizes. C) purchase of the wrong grade of materials. D) changes in the market prices of raw materials.

A. rush orders arising from poor scheduling

Which of the following is a true statement: A. Residual income should be used to evaluate a profit center but not a cost center. B. If a company contains a number of investment centers of differing sizes, return on investment (ROI) should be used rather than residual income to rank the financial performance of the divisions. C. Suppose a company evaluates divisional performance using both ROI and residual income. The company's minimum required rate of return for the purposes of residual income calculations is 12%. If a division has a residual income of $6,000, then its ROI is less than 12%. D. Residual income can be used most effectively in comparing the performance of divisions of different size.

B. If a company contains a number of investment centers of differing sizes, return on investment (ROI) should be used rather than residual income to rank the financial performance of the divisions.

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? Select one: A. The factory utilities of the department in which production takes place. B. The amount paid to the individual who stains a chair. C. The workman's compensation insurance of the supervisor who oversees production. D. The cost of the glue in a chair.

B. The amount paid to the individual who stains a chair.

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will: Select one: A. increase. B. not change. C. decrease. D. change but direction cannot be determined.

B. not change

Which of the following statements is true? Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory. A. Neither statement is true. B. Only statement 2 is true. C. Both statements are true. D. Only statement 1 is true.

C. Both statements are true

Poorly trained workers could have an unfavorable effect on which of the following variances? Labor Rate Variance, Materials Quantity Variance A) Yes Yes B) Yes No C) No Yes D) No No

C. No Yes

If manufacturing overhead is underapplied, then: Select one: A. actual manufacturing overhead cost is less than estimated manufacturing overhead cost. B. the Manufacturing Overhead account will have a credit balance at the end of the year. C. the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred. D. the predetermined overhead rate is too high.

C. the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

Which of the following statements is false: A) A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction and ultimately financial performance. B). Employee training to improve skills is an example of a learning and growth measure. C) The performance measures on a balanced scorecard tend to fall into four groups: financial measures, customer measures, internal business process measures, and learning and growth measures. D) Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as leading indicators of future financial performance.

D) Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as leading indicators of future financial performance.

When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true? Select one: A. Work in Process will decrease. B. Net income will decrease. C. Cost of Goods Sold will increase. D. Gross margin will increase.

D. Gross margin will increase.

Which of the following budgets are prepared before the sales budget? Budgeted Income Statement, Direct Labor Budget A)Yes Yes B)Yes No C)No Yes D)No No

D. No No

Which of the following activities would be classified as a batch-level activity? Select one: A. Designing a new product. B. Milling a part required for the final product. C. Training employees. D. Setting up equipment.

D. Setting up equipment.

Departmental overhead rates may not correctly assign overhead costs due to: Select one: A. difficulties associated with identifying cost pools for the first stage of the allocation process. B. the high correlation between direct labor-hours and the incurrence of overhead costs. C. the use of direct labor hours in allocating overhead costs to products rather than machine time or quantity of materials used. D. overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.

D. overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.

If variable manufacturing overhead is applied on the basis of direct labor hours and the variable overhead rate variance is favorable, then: A) the actual direct labor hours exceeded the standard direct labor hours allowed for the actual output. B) the standard direct labor hours allowed for the actual output exceeded the actual hours. C) the actual variable overhead rate exceeded the standard rate. D) the standard variable overhead rate exceeded the actual rate.

D. the standard variable overhead rate exceeded the actual rate

Within the relevant range, a difference between variable costs and fixed costs is: Select one: A. variable costs per unit fluctuate and fixed costs per unit remain constant. B. both total variable costs and total fixed costs fluctuate. C. both total variable costs and total fixed costs are constant. D. variable costs per unit are constant and fixed costs per unit fluctuate.

D. variable costs per unit are constant and fixed costs per unit fluctuate.

Overhead allocation based solely on a measure of volume such as direct labor-hours: Select one: a. is a key aspect of the activity-based costing model. b. will systematically overcost high-volume products and undercost low-volume products. c. will systematically overcost low-volume products and undercost high-volume products. d. must be used for external financial reporting.

b. will systematically overcost high-volume products and undercost low-volume products.

Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department? Select one: a. Machine-hours b. Direct labor-hours c. Number of orders processed d. Cost of materials purchased

c. Number of orders processed

If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in: Select one: a. unit contribution margin. b. revenue. c. variable expense. d. net operating income

d. net operating income