Accounting Final

In an ABC system, departmental managers are typically interviewed to determine how the departmental non-personnel costs should be distributed across the activity cost pools.

TRUE

Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of:

Return on Investment

Which of the following measures of performance encourages continued expansion by an investment center so long as it is able to earn a return in excess of the minimum required return on average operating assets?

Residual income (amt. of net income generated in excess of the min. rate of return)

Departmental overhead rates will correctly assign overhead costs in situations where a company has a range of products that differ in volume, lot size, or complexity of production.

FALSE

a flexible budget report should exclude variable costs because they can be expected to change w a change in the level of activity

FALSE

Providing the power require to run production equipment is an example of a:

Unit-level activity

An unfavorable materials quantity variance indicates that:

actual usage of material exceeds the standard material allowed for output

Costs that can be eliminated in whole or in part if a particular business segment is discontinued are called:

avoidable costs

Production order processing is an ex. of a:

batch-level activity

A budget that is based on the actual activity of a period is known as a

flexible budget

Designing a new product is an example of a

product-level activity

Testing a prototype of a new product is an ex. of a

product-level activity

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials - beginning inventory of raw materials

The general model for calculating a quantity variance is

standard price*(actual quantity of inputs used - standard quantity allowed for output)

Accepting a special order will improve overall net operating income if the revenue from the special order exceeds:

the INCREMENTAL costs associated with the order

The usual starting point for a master budget is

the sales forecast or sales budget

A favorable labor rate variance indicates that:

the standard rate exceeds the actual rate

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead variance is favorable, then:

the standard variable overhead rate exceeded the actual rate

In activity-based costing, the activity rate for an activity cost pool is computed by dividing the

total activity for the activity cost pool