Managerial Acct. 801 FINAL
In the final analysis of a decision, quantitative measures are more important than qualitative measures. True or False
False
A favorable labor rate variance is created when: Multiple Choice actual labor hours worked exceed standard hours allowed. actual hours worked are less than standard hours allowed.** actual wages paid are less than amounts that should have been paid for the number of hours worked. actual units produced exceed budgeted production levels. actual units produced exceed standard hours allowed.
B
An opportunity cost may be described as: Multiple Choice a forgone benefit.** a historical cost. a specialized type of variable cost. a specialized type of fixed cost. a specialized type of semi-variable cost.
A
Factors in a decision problem that cannot be expressed in numerical terms are: Multiple Choice qualitative in nature. quantitative in nature. predictive in nature. sensitive in nature. uncertain in nature.
A
Hernandez, Incorporated recently completed 62,000 units of a product. The product consumed four pounds of direct material per finished unit. The standard price of the direct material was $7.50 per pound. If the firm purchased and consumed 251,000 pounds in manufacturing (cost = $1,824,600), the direct-material quantity variance would be figured as: Multiple Choice $22,500 U.** $22,500 F. $57,900 U. $57,900 F. none of the answers is correct.
A
Racine Corporation has excess capacity. If the firm desires to implement the general transfer-pricing rule, opportunity cost would be equal to: Multiple Choice zero.**Correct the direct expenses incurred in producing the goods. the total difference in the cost of production between two divisions. the contribution margin forgone from the lost external sale. the summation of variable cost plus fixed cost.
A
The last step in the decision-making process is to: Multiple Choice to evaluate decision effectiveness. to collect the data. to develop a decision model. to clarify the decision problem. to select an alternative.
A
Which type of variance has occurred, if actual material costs are less than projected material costs? Multiple Choice A favorable direct-material price variance An unfavorable direct-material price variance A favorable direct-materials quantity variance An unfavorable direct-materials quantity variance A favorable direct labor rate variance
A
A favorable labor efficiency variance is created when: Multiple Choice actual labor hours worked exceed standard hours allowed. actual hours worked are less than standard hours allowed.** actual wages paid are less than amounts that should have been paid. actual units produced exceed budgeted production levels. actual units produced exceed standard hours allowed.
B
Cornerstone, Incorporated has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative? Multiple Choice Sell "as is," $125,000 Clean and ship to outlet center, $23,000 Clean and ship to outlet center, $103,000 Clean and ship to outlet center, $148,000 Neither alternative is desirable, as both produce a loss for the firm
B
The cost of inventory currently owned by a company is an example of a (n): Multiple Choice opportunity cost. sunk cost. relevant cost. differential cost. future cost.
B
The term "opportunity cost" is best defined as: Multiple Choice the factor in a decision problem that cannot be expressed effectively in numerical terms. the benefit associated with a rejected alternative when making a choice.***Correct costs that have already been incurred. the difference in a cost item under two decision alternatives. the point in the production process where the joint products are identifiable as separate products.
B
Which of the following is the price at which products or services are transferred between two subunits in an organization? Multiple Choice Sales margin Transfer price* Merit pay Cash bonus Full (or absorption) cost
B
Which variance is created when actual labor hours worked exceed standard hours allowed? Multiple Choice Favorable labor efficiency variance Unfavorable labor efficiency variance Favorable direct-materials price variance Favorable direct labor rate variance Unfavorable direct labor rate variance
B
Allison is contemplating a job offer with an advertising agency where she will make $54,000 in her first year of employment. Alternatively, Allison can begin to work in her father's business where she will earn an annual salary of $38,000. If Allison decides to work with her father, the opportunity cost would be: Multiple Choice $0. $38,000. $54,000. $92,000. irrelevant in deciding which job offer to accept.
C
Grand's Auto Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has excess capacity, makes and sells this part for external customers at a variable cost of $27 and a selling price of $37. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $5. On the basis of this information, Southern would establish a transfer price of: Multiple Choice $22. $27. $32.** $37. None of the answers is correct.
C
In early July, Colin Marks purchased a $70 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was expected to cost approximately $22, and Marks would probably spend another $15 for a souvenir program and food. It is now December 14. The Shippers were having a miserable season and the temperature was expected to peak at 5 degrees on game day. Marks therefore decided to skip the game and took his wife to the movies, with tickets and dinner costing $50. The sunk cost associated with this decision situation is: Multiple Choice $20. $50. $70.**** $107. None of the answers is correct.
C
Which of the following costs can be ignored when making a decision? Multiple Choice Opportunity costs. Differential costs. Sunk costs.** Relevant costs. All future costs.
C
Macon Corporation has no excess capacity. If the firm desires to implement the general transfer-pricing rule, opportunity cost would be equal to: Multiple Choice zero. the direct expenses incurred in producing the goods. the total difference in the cost of production between two divisions. the contribution margin forgone from the lost external sale.**Correct the summation of variable cost plus fixed cost.
D
The term "management by exception" is best defined as: Multiple Choice choosing exceptional managers. controlling actions of subordinates through acceptance of management techniques. investigating unfavorable variances. devoting management time to investigate significant variances.** controlling costs so that non-zero variances are treated as "exceptional."
D
Variances are computed by taking the difference between which of the following? Multiple Choice Product cost and period cost Actual cost and differential cost Price factors and rate factors **Actual cost and standard cost Product cost and standard cost
D
Which of the following best defines the concept of a relevant cost? Multiple Choice A past cost that is the same among alternatives A past cost that differs among alternatives A future cost that is the same among alternatives A future cost that differs among alternatives***Correct A cost that is based on past experience
D
Which of the following describes the goal that should be pursued when setting transfer prices? Multiple Choice Maximize profits of the buying division Maximize profits of the selling division Allow top management to become actively involved when calculating the proper dollar amounts Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence)**Correct Minimize opportunity costs
D
Which of the following correctly lists all the information needed to calculate a labor rate variance? Multiple Choice Standard labor rate and actual hours worked Actual hours worked, and actual units produced Standard labor rate, actual labor rate, and actual units produced Actual labor rate and actual hours worked Actual labor rate, standard labor rate, and actual hours worked**
E
The City of Columbus should not consider the purchase price of its old vehicle when making the decision to replace it with a more cost effective new vehicle. True or False
True
