Accounting 2102
Barcelona Company...The company's required rate of return is 8%. What is the payback period for this project?
3.54 years
Tetley sells cases of tea...How many units should Lipton budget for production for the month of August?
32,600
Jackson Corporation...What amount of sales in units must Jackson generate in order for the presidents to receive a bonus?
39,000 units
Werth Company...How much is the break even point in units?
48,000
Ortega Company...The joint cost of the raw material is $190,000. Which of the products should be produced beyond the split-off point?
A B C No Yes No
Which of the following is true about variances?
A management by exception approach is more economical
An annuity is...
A series of equal payments
Which of the following is a problem with the ROI calculation?
An undue emphasis on ROI may lead managers to delay the purchase of modern equipment needed to stay competitive
Forman, Inc...How much is the incremental effect on profit if Forman buys the fruity breakfast bars?
DECREASE in profit of $11,360
Cosmos...How much is the incremental effect on profit if the company discontinues Veggie Treats?
DECREASE of $5,200
Eli uses standard costing...Assuming these amounts are NOT considered significant, the journal entry to close these accounts will include a...
Debit to COGS for $160
when the level of activity increases, the fixed cost per unit...
Decreases
Which of the following items do not require a cash outflow?
Depreciation
Yang, Inc...Which statements is true concerning the performance of Division 3?
Division 3 generated 9 cents of profit for every dollar of financed assets invested in the division
Which one of the following is not a key item for a successful balanced scorecard?
EVA (Economic Value Added)
An important concern in forming a cost pool is to:
Ensure that the costs in the pool are homogenous, or similar
An analysis of variances determined that fewer INDIRECT materials were used than allowed in the budget. Which variance will occur as a result?
Favorable controllable OH variance
Marco Diner produced and sold 2,000 bagels last month and had fixed costs of $6,000. If production and sales are expected to increase by 10%...
Fixed cost per unit will decrease
Downtown Company...How much is the controllable OH variance?
$1,100 favorable
A company estimates that ordering costs are $2.00 per order, picking costs are $1.00 per unique item ordered, packing costs are $.07 per item, and return costs are $40.00 per return...What is the customer profit (loss)?
$1,290.2
Fulton Company...Assume that the statutory tax rate is 35%. How much is net operating profit after tax?
$1,760,000
Chili-Time Company...What is the material quantity variance?
$1,834 favorable
Olsen Company...How much is the OH cost per HINGE if Olsen uses traditional cost system and applies OH based on direct labor cost using only one cost pool?
$1.50
Kramer, Inc...When preparing budgeted cash receipts and disbursements, how much should Kramer budget in June for cash receipts from sales?
$101,360
Grinding Gears...How much OH cost will be applied to WIP for OH during August for Grinding Gears using normal costing?
$117,000
Williams Corporation... How much is the annual after-tax net CF (ignoring salvage value in year 3)?
$128,100
The West division of Thunderbolt Company...If this division reported a ROI of 16.5%, NOPAT must be...
$132,000
CarMax Engine Shop...What is the most money the company would be willing to pay for the computer, assuming that it will be used for 3 years and will have no salvage or residual value at the end of the 3rd year?
$14,067
Sebastion Lumber...How much is the dollar amount of profitability of the Climax Builder account in May?
$14,086
Handy Wrappers...How much is the annual depreciation tax shield, assuming the straight-line method of depreciation?
$18,800
Border Designs...How much is the cost of raw materials transferred into production?
$187,200
Chili-Time Company...How much is the labor efficiency variance?
$2,240 unfavorable
BCS Company...How much is the predetermined OH rate?
$2.00
Olsen Company...How much is the OH cost per HINGE if Olsen uses activity-based costing?
$2.42
Magus Company...What is the amount of under- or over-applied OH for the year?
$20,000 Underapplied
Garland Industries...What would Garland's net income be for the month using variable costing?
$225,000
Image, Inc...If 800 clocks are sold during August, how much is the total CM?
$24,800
Werth Company...By how much can sales revenue drop before Werth incurs a loss?
$240,000
Garland Industries...What would Garland's NI be for the month using FULL costing?
$262,500
The South division of Laminx Company...If this division was not charged interest expense and reported a return on investment of 13% the amount of invested capital must be:
$3,230,769
Fox Company...What is the allocated cost of a single waterfront lot?
$30,150
Chili-Time Company...How much is the standard cost per unit?
$32.94
Carbon Factors...How much is Cost of Goods Manufactured for June using normal costing?
$347,300
Seeking Sound...How much is the target cost per unit?
$4,875
Ajax Manufacturing...The CM of the income statement prepared using variable costing is...
$440,000
Martinez, Inc...How much service cost will be allocated to the sorting department using the direct method?
$49,500
Prodigy Company...If the required rate of return is 8% what is the NPV of this project?
$5,960
Wiley Publishing...Jobs #28 and #29 were completed and sold in February. Using normal costing, how much is the balance in WIP at end of February?
$770
Garrard Company...What is the OH volume variance?
$8,000 favorable
Verret, Inc...How much is the break-even point in total sales dollars for Verret?
$80,000
Rocky's Tools...How much is the selling price of each socket set?
$88.40
Ajax Manufacturing...Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the full cost of ending inventory is...
$90,000
Where NOPAT is used to evaluate a subunit manager, it does NOT hold the investment center manager responsible for...
Interest Expense
The basic concept involved in time value of money calculations is that...
It is better to revive a dollar today than to receive a dollar in the future
What is the cause of the cost allocation death spiral?
It is caused by not realizing that when a product line that appears to be unprofitable is dropped, the allocated fixed costs that had been allocated to the product cannot be avoided
Which one of the following is a benefit of ABC for managers?
It often leads to cost control improvements
On a balanced scorecard, the measure of the number of new patents developed through research and development would be example of a measure in the...
Learning and growth dimension
The fundamental difference between managerial and financial accounting is that...
Managerial accounting provides information for decision makers within the organization, whereas financial accounting provides information for individuals outside the organization
Riverside...Which variance(s) should be investigated?
Materials price variance and labor efficiency variance
Carnival Magic, Inc...Which one of the divisions adds the most to shareholder value?
Nickel Division
Which of the following costs are NOT considered product costs under variable costing?
None of the above
Phoenix Computer's...If Phoenix decides to accept the special order at a unit sales price of $55, what is the effect on its monthly operating income?
Operating income will INCREASE by $400,000
A retailer purchased some trendy clothes that have gone out of style and must be marked down to 40% of the original selling price to be sold. Which is a sunk cost?
Original purchase price
How does a rolling forecast differ from a traditional budget?
Rolling forecasts are constantly refreshed by the latest estimates of economic trends and customer demand and by emerging data from the most recent quarter
Which of the following costs is not part of manufacturing OH
Salaries for the production supervisors
The person evaluating a manger should consider...
That managers will focus their attention on those measures that they know will be part of their evaluation
Phoenix Computer's products WizardCard...In deciding to accept this special order from Computer Marketing Corp., Phoenix should be LEAST concerned with...
The $45 average cost of manufacturing WizardCards
A project has unequal CFs, and a manger guesses that the IRR will be 10%. If the NPV is positive at 10%, then...
The IRR is > 10%
An investment is acceptable if...
The NPV of all CFs > or = to 0
Why is OH applied using a predetermined OH rate?
The actual amount of OH is not known until yearend and the company desires timely cost info
The OH volume variance indicates that...
The quantity of production differed from what was anticipated
Which of the following will have no effect on the break even point in units?
The sales volume increases
Which of the following is NOT a criterion that a company might use to determine whether or not a variance is exceptional?
The variance is unfavorable
ByteTown Computers...If the high-low method is used, what is the monthly total cost equation?
Total cost=$2,500 + ($2.00 x units produced)
Budget for the 60,000 unit product level was prepared for the Production Department...Which of the following is NOT an accurate amount to be included in a flexible budget prepared for the 70,000 unit level of production?
Total manufacturing costs of $133,000
The three elements of the profit margin are:
Total revenues, total VC, and total FC
One way to avoid the unfavorable behavioral problems associated with unitized fixed cost is to:
Use a lump-sum method of allocating FC
Which of the following is not an assumption underlying CVP analysis?
VC per unit changes over the relevant range
Which of the following is not a reason for a company to use variable costing?
Variable costing is required by GAAP
When is it beneficial for companies to accept an order that is priced at less than the product's FC?
When incremental revenue exceeds incremental cost (IR > IC)
Mortenson Machines...Which of the following is correct?
With the reduction in production, fixed manufacturing OH is spread out over FEWER units and unit cost INCREASES. With higher unit cost, COGS will be HIGH and profit LOW
An investment that costs $50,000 will return $15,000 net operating cash inflows per year for 5 years. Should the investment be undertaken?
Yes, the NPV is positive at $1,497
It is generally a good idea to allocate ___________ rather than ___________ service department costs.
budged, actual
A ___________ budget is not adjusted for the actual level of production, whereas a __________ budget is adjusted for the actual level of production.
static, flexible
The high-low method calculates the VC/unit as the...
Change in cost divided by change in activity level for two points
Activity based pricing seeks to...
Charge customers with the costs that they are creating
Which of the following is a period cost
Commissions paid on each unit sold
The incremental profit generated by the sale of one additional unit is equal to the...
Contribution Margin per unit
If actual OH cost incurred are less than the amount in the flexible budget, the...
Controllable OH variance is FAVORABLE
Barnard Inc...How much are the two components of ROI- PM and Investment Turnover?
12.2% and 2.4 times
Barcelona Company...The company's required rate of return is 8%. What is the ARR for this project?
16.5%
Production Department...Refer to above data. A performance report prepared for September operations using a flexible budget approach would show:
Actual production costs less than budgeted costs by $2,000- a favorable variance of $2,000
Setting the sales budget is very important because...
All of the above
In using variable costing, how much are fixed manufacturing costs classified?
As period costs
Which of the following lists an advantage AND disadvantage, respectively, of decentralization?
Better information and duplication of activities or services
Projects should be accepted when...
Both A and B (the IRR < cost of capital & NPV > 0)
The balanced scorecard challenges managers to...
Both B and C (perform on a variety of dimensions simultaneously & look forward as well as backward)
Which of the following is not a reason that traditional budgets can cause your company problems?
Budgets link short-term operational plans to medium-term strategic goals
Outdoor Sports...What is the effect on income if the offer from the customer is accepted?
INCREASE of $30,000
Which of the following are ways that managers can improve ROI?
INCREASE the Profit Margin and DECREASE assets
Projects with a negative NPV will always have a (n)...
IRR < Required Rate of Return
Which of the following costs would MOST LIKELY be allocated to products by a toy truck manufacturer in order to determine FC per unit?
Production supervisor's salary
Green Company...What will be the impact on profits of accepting the order?
Profit will increase by $65,000
The impact of prorating overapplied OH between the appropriate inventory accounts and COGS is to...
Reduce COGS, Increase income, & reduce inventory
Depreciation has an indirect effect on CF because it...
Reduces the amount of taxes a company must pay
When the level of activity increases, total fixed costs...
Remain the same
The theory behind responsibility accounting is that managers in profit centers are responsible for controllable...
Revenues and costs
