Test 1 - Week 1

Wexford Co. has a subunit that reported the following data for year 1: Asset (investment) turnover1.5 timesSales$750,000Return on sales8% The imputed interest rate is 12%. What is the division residual income for year 1? A. $60,000. B. $30,000. C. $20,000. D. $0.

$0.

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? A. $0.00163 per pound. B. $0.00232 per pound. C. $0.58036 per pound. D. $1.72000 per pound.

$0.00232 per pound.

In Year 1, 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 Year 2 liability insurance increased by $1,200,000 over Year 1. Assuming the volume and other costs are unchanged, what should the Year 2 price be if Thor is to make the same $200,000 profit before income taxes? A. $120.00. B. $135.00. C. $150.00. D. $240.00.

$135.00. 80,000($120 - V) - $1,000,000=$200,000 V=$105 80,000(S - $105) - $2,200,000=$200,000 S=$135

Mat Co. estimated its material handling costs at two activity levels as follows: Kilos handled ; Cost 80,000 ; $160,000 60,000 ; $132,000 What is Mat's estimated cost for handling 75,000 kilos? A. $150,000. B. $153,000. C. $157,500. D. $165,000.

$153,000.

Day Mail Order Co. applied the high-low method of cost estimation to customer order data for the first 4 months of Year 1. What is the estimated variable order filling cost component per order? Month ; Orders ; Cost January 1,200 $3,120 February 1,300 $3,185 March 1,800 $4,320 April 1,700 $3,895 A. $2.00. B. $2.42. C. $2.48. D. $2.50.

$2.00

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 A. $0. B. $20,000. C. $70,000. D. $90,000.

$20,000.

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? A. $16,000. B. $24,000. C. $80,000. D. $96,000.

$24,000. $120,000 ($200,000 - $80,000). $120,000= Fixed cost/.20 $24,000= Fixed cost

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? A. $40. B. $240. C. $400. D. $640.

$240. Residual income is calculated as operating income less the investment (total assets here) multiplied by the required rate of return. Thus, Division B's residual income is $400 - .1($1,600) = $240.

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: Variable manufacturing costs$9Variable selling and administrative costs6Total$15 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? A. $3,000 increase. B. $4,200 increase. C. $3,000 decrease. D. $4,200 decrease.

$3,000 decrease. The $15,000 for advertising is just another fixed cost. The contribution margin ratio is used to determine 40% of the new revenue of $780,000 = $312,000 resulting in only $12,000 more in contribution margin as compared to a new fixed advertising cost $15,000. The difference between the $15,000 and the $12,000 is a $3,000 decrease in income.

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 A. $0. B. $250,000. C. $300,000. D. $350,000.

$350,000.

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 Year 1: April ; Description ; Amount 1 ; Balance ; $4,000 30 ; Direct materials ; 24,000 30 ; Direct labor ; 16,000 30 ; Factory overhead ; 12,800 30 ; To finished goods ; (48,000) 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, Year 1, was charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5? A. $3,000. B. $5,200. C. $8,800. D. $24,000.

$5,200. $4,000 + $24,000 + $16,000 + $12,800 - $48,000 (all attributable to Job No. 5, the only remaining job) =$8,800 Less direct labor charged to Job No. 5:(2,000) Less overhead charged to Job No. 5: .80($2,000 = (1,600) Equals materials charged to Job No. 5:$5,200

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? A. $55,000,000. B. $50,000,000. C. $45,000,000. D. $20,000,000.

$50,000,000. ROI = (income / sales) * asset turnover; and ROI = 25% = $5M / sales * 2.5. Thus, solving for sales, the result is $50M.

Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 sales? A.$50,000. B. $150,000. C. $200,000. D. $400,000.

$50,000. Breakeven sales=fixed cost/contribution margin ratio $800,000=$100,000/cmr .125=cmr Projected profit = .125($1,200,000) - $100,000 = $50,000

Sender, Inc. estimates parcel mailing costs using the data shown on the chart below. $75,000 ; 20,000 parcels $15,000 ; 0 parcels What is Sender's estimated cost for mailing 12,000 parcels? A. $36,000. B. $45,000. C. $51,000. D. $60,000.

$51,000.

Hoyt Co. manufactured the following units: Saleable 5,000 Unsaleable (normal spoilage) 200 Unsaleable (abnormal spoilage) 300 The manufacturing cost totaled $99,000. What amount should Hoyt debit to finished goods? A. $90,000. B. $93,600. C. $95,400. D. $99,000.

$93,600. The total units completed are 5,500 (5,000 + 200 + 300). Of this total, 5,200 are included in finished goods. Thus, 5,200/5,500 of the total cost incurred is included in finished goods. The remainder is a period cost. Debit to finished goods = $93,600 = (5,200/5,500)$99,000

Management would like to calculate return on investment (ROI) for the current year. The following information is available: Operating assets at the end of the year$ 6,600,000Operating assets at the beginning of the year5,400,000Sales1,150,000Operating expenses550,000 What percentage amount is the ROI? A. 9% B. 10% C. 11% D. 19%

10% In this question, the amount of interest expense is not given separately. Therefore, the Net income calculation must be based on Sales ($1,150,000) - Operating expenses ($550,000), or $600,000. The average operating assets for the year is computed as: Beginning $5,400,000 + Ending $6,600,000 = $12,000,000/2 = $6,000,000. Thus, the correct calculation is: $600,000/$6,000,000 = .10 (10%).

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? A. 17,111. B. 17,500. C. 19,250. D. 25,667.

19,250. To calculate the breakeven point, we must first find the fixed cost of the prior year. Fixed costs (FC) / contribution margin (CM) = breakeven point in units. Thus, using prior year data, FC / ($7.50 - $2.25) = 20,000 units. Solving for FC = $105,000. Current year FC = 1.1(prior year FC) = $115,500; thus, breakeven units for the current year = $115,500 / ($9 - $3) = $19,250.

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: Contribution margin per student$ 1,800Variable expenses per student1,000Total fixed expenses360,000 Based on these estimates, what is the approximate break-even point in number of students? A. 129 B. 200 C. 360 D. 450

200 $360,000/$1,800

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? A. 21,000 B. 21,600 C. 21,960 D. 22,600

22,600 1. Total Fixed Costs equals the CM at breakeven, thus: 20,000 breakeven units X ($7.50 sales price - $2.25 VC per unit) = $105,000 Fixed Costs. 2. The 40% Income Tax Rate means that Net Income is equal to 60% of Operating Income, calculated as: Operating Income x 60% = $5,040 or Operating Income = $5,040 / 60% = $8,400. Next, adding Fixed Costs to Operating Income = Total CM. Thus, $105,000 + $8,400 = $113,400 Total CM. The calculation of total units sold = Total CM/CM per unit. Thus, $113,400 / $5.25 = $21,600 total units sold. Finally, adding 1,000 units to the units sold in year 1 = 21,600 + 1,000 = 22,600 units expected to be sold in year 2.

The following information pertains to Quest Co.'s Gold Division for Year 1: Sales$311,000Variable cost250,000Traceable fixed costs50,000Average invested capital40,000Imputed interest rate10% Quest's return on investment was A. 10.00%. B. 13.33%. C. 27.50%. D. 30.00%.

27.50%. ROI = division income/average invested capital = ($311,000 - $250,000 - $50,000)/$40,000 = .275 Traceable fixed costs are deducted in determining division income. Corporate fixed costs would not be deducted. The imputed interest rate is not relevant to the question.

To measure inventory management performance, a company monitors its inventory turnover ratio. Listed below are selected data from the company's accounting records: Current Year: Annual Sales $2,525,000 Gross Profit Percent 40% Prior Year: Annual Sales $2,125,000 Gross Profit Percent 35% 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? A. 1.82. B. 2.31. C. 2.73. D. 3.47.

3.47. Inventory turnover is calculated by dividing the cost of goods sold by the average inventory. Cost of goods sold = $2,525,000(1 - .4) = $1,515,000; average inventory is [.15(2,125,000) + .22(2,525,000)] / 2 = $437,125. Thus, inventory turnover = $1,515,000 / $437,125.

A company estimates that it will sell 100,000 units of finished goods in March. Each finished good requires 5 feet of raw materials. The projected March 1 inventory balances are 10,000 units of finished goods and 40,000 feet of raw materials. Desired March 31 inventory levels are 9,000 units of finished goods and 42,000 feet of raw materials. What amount of raw materials should the company plan to purchase during March? A. 497,000 feet. B. 500,000 feet. C. 502,000 feet. D. 503,000 feet.

497,000 feet. Step 1: Determine the number of units the company must produce to meet the sales requirements, adjusting for beginning and ending finished goods inventory. Step 2: Determine the amount of raw material required to produce these units, adjusting for beginning and ending raw materials inventory. Given this process, we have: Step 1: +Sales + 100,000 units -Beg. FG inventory - 10,000 units +End. FG Inventory + 9,000 units =Units to Produce = 99,000 units Step 2: +RM req'd for Production + 495,000 ft. raw material* -Beg. RM Inventory - 40,000 ft. +End RM Inventory + 42,000 ft. =RM to purchase = 497,000 * 99,000 FG units x 5 ft. per unit = 495,000 ft. raw material

The sales and cost information for Gamore Company are as follows: Sales (250,000 units)$5,000,000Direct materials and direct labor1,500,000Factory overhead:Variable200,000Fixed350,000Selling and general expenses:Variable50,000Fixed300,000 Gamore's breakeven point in the number of units is A. 49,240. B. 50,000. C. 62,500. D. 92,860.

50,000. Given sales of $5,000,000 and total variable costs of 1,750,000, the contribution margin (CM) is the difference of $3,250,000. Then the CM is divided by the units: $3,250,000 / 250,000 units = $13 CM per unit. From here, the BE point in units is equal to the total fixed costs divided by the CM per unit: $650,000 / $13 = 50,000 units.

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? A. 6.50%. B. 6.77%. C. 7.10%. D. 8.30%.

7.10%. Thus, the cost of debt is 1.8% = 50% (6%) (1 - .4); the cost of owners' equity is split for the preferred 0.7% = 10% (7%); and the common 4.6% = 40% (11.5%). Thus, the WACC is 7.1% = 1.8% + 0.7% + 4.6%.

A company is trying to determine the cost of capital for a major expansion project. A survey of commercial lenders indicates that cost of debt is currently 8% based on the company's debt ratio of 40%. The company complies with this requirement and has determined that a stock issuance would require a 10% return in order to attract investors. Which of the following is the company's cost of capital? A. 8.8% B. 9.2% C. 10.6% D. 18.0%

9.2% Cost of debt is equal to 8%, and the debt ratio = debt/equity (40%). stock is to be issued at 10% and debt is weighted at 40% while stock is 60%. Therefore, cost of debt is 8% (.40) = 3.2%; equity is 10% (.60) = 6.0% and 3.2% + 6% = 9.2%.

Which of the following types of performance measures integrates financial performance, internal operations, learning and growth, and customer satisfaction? A. Total productivity B. Financial ratio analysis C. Balanced scorecard D. Benchmarking

Balanced scorecard

The management of a company would do which of the following to compare and contrast its financial information to published information reflecting optimal amounts? A. Budget B. Forecast C. Benchmark D. Utilize best practices

Benchmark

How is contribution margin (CM) different from gross margin (GM)? A. CM equals sales less cost of goods sold; GM equals sales less total expenses. B. CM equals sales less variable costs; GM equals sales less cost of goods sold. C. CM classifies cost by manufacturing v. non-manufacturing; GM classifies cost by variable and fixed cost behavior. D. CM is used for external reporting; GM is used internally for cost-volume-profit analysis.

CM equals sales less variable costs; GM equals sales less cost of goods sold.

Which of the following balanced scorecard perspectives examines a company's success in targeted market segments? A. Financial B. Customer C. Internal business process D. Learning and growth

Customer

A direct labor overtime premium should be charged to a specific job when the overtime is caused by the A. Increased overall level of activity. B. Customer's requirement for the early completion of a job. C. Management's failure to include the job in the production schedule. D. Management's requirement that the job be completed before the annual factory vacation closure.

Customer's requirement for the early completion of a job.

The most likely strategy to reduce the breakeven point would be to A. Increase both the fixed costs and the contribution margin. B. Decrease both the fixed costs and the contribution margin. C. Decrease the fixed costs and increase the contribution margin. D. Increase the fixed costs and decrease the contribution margin.

Decrease the fixed costs and increase the contribution margin.

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? 2005 total fixed costs ; 2005 unit variable costs A. Decreased ; Increased B. Decreased ; Decreased C. Increased ; Increased D. Increased ; Decreased

Decreased ; Increased

When using a flexible budget, a decrease in production levels within a relevant range A. Decreases variable cost per unit. B. Decreases total costs. C. Increases total fixed costs. D. Increases variable cost per unit.

Decreases total costs.

A standard cost system may be used in A. Neither process costing nor job order costing. B. Process costing, but not job order costing. C. Either job order costing or process costing. D. Job order costing, but not process costing.

Either job order costing or process costing.

In a traditional job order cost system, the issue of indirect materials to a production department increases A. Stores control. B. Work in process control. C. Factory overhead control. D. Factory overhead applied.

Factory overhead control.

At the breakeven point, the contribution margin equals total A. Variable costs. B. Sales revenues. C. Selling and administrative costs. D. Fixed costs.

Fixed costs.

Which of the following types of risk are best addressed with hedging? A. Strategic and operating risk. B. Foreign currency exchange. C. Disaster recovery. D. Liquidity.

Foreign currency exchange.

Lynn Manufacturing Co. prepares income statements using both standard absorption and standard variable costing methods. For Year 2, unit standard costs were unchanged from Year 1. In Year 2, 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? Current ratio ; Return on stockholders' equity A. Same ; Same B. Same ; Smaller C. Greater ; Same D. Greater ; Smaller

Greater ; Smaller

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: A. Lower total manufacturing costs for the manufacturing capacity. B. Lower total variable manufacturing costs for the manufacturing capacity. C. Greater gross profit per hour of manufacturing capacity. D. Greater contribution margin per hour of manufacturing capacity.

Greater contribution margin per hour of manufacturing capacity.

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. A. I only B. II only C. III only D. I, II, and III

I only

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. A. I and II only B. II and III only C. I and III only D. I, II, and III only

I, II, and III

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: Per Unit ; Total DM: $4 ; $40,000 DL: $3 ; $30,000 Fixed plant facility cost: $2 ; $20,000 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? A. Decrease $15,000. B. Decrease $10,000. C. Increase $5,000. D. Increase $10,000.

Increase $5,000. Variable costs are presumed to be avoidable and fixed costs are presumed to be unavoidable to start with. Then $5,000 for rent was avoidable when they decided to buy. Thus, the cost to buy is $95,000 = $80,000 + $15,000 in fixed cost that are presumed unavoidable versus a cost to make of $90,000.

Bell Co. changed from a traditional manufacturing philosophy to a just-in-time philosophy. 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? Inventory Turnover ; Inventory Percentage A. Decrease ; Decrease B. Decrease ; Increase C. Increase ; Decrease D. Increase ; Increase

Increase ; Decrease

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? Budgeted breakeven point ; Budgeted margin of safety Increase ; Increase Increase ; Decrease Decrease ; Decrease Decrease ; Increase

Increase ; Decrease

Why is cost avoidance a faster way to increase profits than to increase revenue? A. Cost avoidance is part of a well thought out strategic approach. B. Increasing revenue often results in at least some proportional cost increases. C. Cost avoidance targets committed costs. D. Efforts to increase revenue relate to committed costs only.

Increasing revenue often results in at least some proportional cost increases.

In its April Year 1 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 A. Period cost of $90,000. B. Inventoriable cost of $90,000. C. Period cost of $60,000 and inventoriable cost of $30,000. D. Inventoriable cost of $60,000 and period cost of $30,000.

Inventoriable cost of $60,000 and period cost of $30,000.

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, underapplied overhead might be explained by which of the following situations? Actual volume ; Actual fixed costs A. Greater than expected ; Greater than expected B. Greater than expected ; Less than expected C. Less than expected ; Greater than expected D. Less than expected ; Less than expected

Less than expected ; Greater than expected

A single-product company prepares income statements using both absorption and variable costing methods. Manufacturing overhead cost applied per unit produced in Year 2 was the same as in Year 1. The Year 2 variable costing statement reported a profit, whereas the Year 2 absorption costing statement reported a loss. The difference in reported income could be explained by the units produced in Year 2 being A.Less than the units sold in Year 2. B. Less than the activity level used for allocating overhead to the product. C. In excess of the activity level used for allocating overhead to the product. D. In excess of the units sold in Year 2.

Less than the units sold in Year 2.

Which of the following production processes best describes lean manufacturing? A. Making a small number of a high variety of unique products with relatively low-skilled labor. B. Making a large number of standardized products with highly skilled labor. C. Making small batches of a high variety of unique products with cross-trained labor. D. Making a large number of standardized products with relatively low-skilled labor.

Making small batches of a high variety of unique products with cross-trained labor.

Which of the following terms describe or are consistent with systematic risk? A. Portfolio risk. B. Market risk. C. Diversifiable risk. D. Company-specific risk.

Market risk.

Which of the following statements correctly describes the structural differences between mass and lean manufacturing? A. Mass production usually has lower setup times than lean production. B. Mass production usually has dedicated equipment and highly skilled laborers. C. Mass production usually has flexible equipment and highly skilled laborers. D. Mass production usually has higher setup times and dedicated equipment.

Mass production usually has higher setup times and dedicated equipment.

Which of the following types of risk are best addressed with insurance? A. Peril or hazard. B. Speculative risks. C. Price risk. D. Portfolio risk.

Peril or hazard.

In June, Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes A. Scrap, but not spoilage. B. Normal spoilage, but neither scrap nor abnormal spoilage. C. Scrap and normal spoilage, but not abnormal spoilage. D. Scrap, normal spoilage, and abnormal spoilage.

Scrap and normal spoilage, but not abnormal spoilage.

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 were no beginning or ending inventories. The most likely explanation of the income increase is that, compared to budget, actual A. Manufacturing fixed costs had increased. B. Selling and administrative fixed expenses had decreased. C. Sales prices and variable costs had increased proportionately. D. Sales prices had declined proportionately less than variable costs.

Selling and administrative fixed expenses had decreased.

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 were no beginning or ending inventories. The most likely explanation for the income shortfall is that, compared to budget, actual A. Sales prices and variable costs had declined proportionately. B. Sales prices had declined proportionately more than variable costs. C. Manufacturing fixed costs had increased. D. Selling and administrative fixed expenses had increased.

Selling and administrative fixed expenses had increased.

Which of the following methodologies would be most effective for a company that wants to reduce its rate of defective products? A. Break-even analysis B. Six Sigma C. Variable costing D. Sensitivity analysis

Six Sigma

What is the objective of the demand flow approach? A. To link process flows and manage them based on customer demand. B. To mathematically link "push-based" inventory features. C. To mathematically facilitate constraint management. D. To mathematically assist disruptive flow management in forecasting.

To link process flows and manage them based on customer demand.

What tools does Six Sigma commonly use to achieve quality control? A. Demand flow technology tools (e.g., continuous flow planning). B. Tools common to TQM (e.g., control charts). C. Constraint management optimization tools (e.g., capacity analysis). D. Push-model tools (e.g., forecasting using regression).

Tools common to TQM (e.g., control charts).

Breakeven analysis assumes that over the relevant range A. Unit revenues are nonlinear. B. Unit variable costs are constant. C. Total costs are constant. D. Total fixed costs are nonlinear.

Unit variable costs are constant.

In a process cost system, the application of factory overhead usually would be recorded as an increase in A. Finished goods inventory control. B. Factory overhead control. C. Cost of goods sold. D. Work-in-process inventory control.

Work-in-process inventory control.

In a job cost system, manufacturing overhead is An indirect cost of jobs ; A necessary element in production A. No ; Yes B. No ; No C. Yes ; Yes D. Yes ; No

Yes ; Yes

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? Accounts Receivable ; Marketable Securities ; Inventories A. Yes ; Yes ; Yes B. Yes ; Yes ; No C. Yes ; No ; Yes D. Yes ; No ; No

Yes ; Yes ; No

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? Fixed costs per unit ; Variable costs per unit A. Decrease ; Decrease B. No change ; No change C. No change ; Decrease D. Decrease ; No change

decrease ; no change