A306 Review

-Budgeted selling price per unit $10 -Actual selling price per unit $12 -Flexible budget sales in dollars $24,000 What is the sales price variance? A. $4,800F B. $4,800U C. $4,000U D. $4,000F E. None of the above

A

-Revenues 20,000 -Contribution margin 8,000 -Net operating income 3,500 -Average operating assets - NBV 22,000 -Average operating assets - gross 30,000 A segment has the above information. What is the ROI? A. 16% B. 12% C. 27% D. 36% E. None of the above

A

-Cost of merchandise -Store manager's salary -Sales commissions -Advertising in local newspapers -Salaries paid to sales staff -Central purchasing department -Advertising on national television -Store cleaning and maintenance Malabar Company specializes in imported novelty items from Asian countries. Malabar's management is deciding whether to open a new store in Chicago, IL. Costs relevant to the decision to open a new store in Chicago include: A. Sales commissions, cost of merchandise, salaries to sales staff B. Cost of merchandise, salary to store manager, advertising on national television C. Salary to store manager, store cleaning and maintenance, central purchasing department D. Central purchasing department, store cleaning and maintenance, advertising in local newspapers E. Advertising in local newspapers, store cleaning and maintenance, advertising on national television

A

If a company's revenue is $550,000, net operating income is $100,000 and period costs are $250,000, then: A. The company's gross margin totals $350,000 B. The company's product costs are $500,000 C. The company's product costs cannot be determined D. The company's contribution margin totals $300,000 E. The company's gross margin totals $300,000

A

If the selling price per unit and unit variable cost both increase by 10% and fixed costs decrease 5% and the volume sold does not change, what is the change to the Contribution Margin Ratio? A. Contribution Margin Ratio does not change B. Contribution Margin Ratio will decrease by 10% C. Contribution Margin Ratio will increase by 10% D. Contribution Margin Ratio will decrease by 5% E. Contribution Margin Ratio will increase by 5%

A

Region A -Profit margin 50% -Investment turnover 25% Region B -Profit margin 40% -Investment turnover 35% A manufacturing firm has the above information of its two regions. Which of the following is true? A. Region B is better because it has a higher ROI (14%) than Region A's ROI (12.5) B. Region B is better because it has a lower ROI (114%) than Region A's ROI (200%) C. Region A is better because it has a lower ROI (12.5%) than Region B's ROI (14%) D. Region A is better because it has a higher ROI (200%) than Region B's ROI (114%)

A

The benefits of decentralization includes all of the following except: A. It forces top levels of management to focus on individual units B. It empowers more employees at lower level of management C. It allows for better and more timely decision making D. It trains future managers

A

Which of the following statements is false? A. ABC costing systems are no longer used B. ABC costing is the backbone of how most companies allocate their fixed costs C. ABC costing systems use multiple pools to allocate fixed costs D. A and B E. B and C

A

11 - sofa -WIP - June 1 $2,550 -June DM $620 -June DL $415 22 - dresser -WIP - June 1 $1,550 -June DM $830 -June DL $1,035 33 - chair -WIP - June 1 $1,450 -June DM $1,240 -June DL $1,810 44 - table -WIP - June 1 $825 -June DM $1,570 -June DL $2,330 Ethan Allen uses job order costing. Overhead is charged to production at 60% of DM cost. Jobs 11, 33, and 44 were completed during June and transferred to FG. Jobs 11 and 44 have been delivered to customers. There were no FG inventories at the beginning of June. What was the balance in FG inventory on June 30? A. $3,794 B. $5,244 C. $10,043 D. $12,810

B

Chapman Company sells its product for $42 per unit. The company's unit product cost, based on the full capacity of 400,000 units, is as follows: direct materials $8, direct labor $10, MOH $12. A special order offering to buy 40,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $6 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Assume that ⅔ of the manufacturing overhead above fixed cost. In negotiating a price for the special order, what is the minimum acceptable selling price per unit? A. $22 B. $28 C. $30 D. $36

B

McGovern Construction is looking to calculate its margin of safety on its dump trucks. The CFO put together a list of items that might be relevant to the calculation. Which of the following is not relevant for calculating margin of safety? -Price per truck $120,000 -UCM per truck $15,000 -Variable selling costs related to dump trucks $5,500 -Actual sales $3,600,000 -Fixed costs $1,000,000 A. UCM per truck B. Variable selling cost related to dump trucks C. Fixed costs D. Actual sales

B

North -Revenue $218,000 -Direct materials 50,000 -Direct labor 75,000 -Traceable fixed costs 31,500 -Allocated fixed costs 30,000 South -Revenue $142,500 -Direct materials 45,000 -Direct labor 67,000 -Traceable fixed costs 22,600 -Allocated fixed costs 35,000 East -Revenue $92,000 -Direct materials 35,000 -Direct labor 42,000 -Traceable fixed costs 27,500 -Allocated fixed costs 15,000 West -Revenue $135,000 -Direct materials 57,000 -Direct labor 86,000 -Traceable fixed costs 20,500 -Allocated fixed costs 30,000 Which division(s) should Peter keep and which should he look to drop? A. Keep North, South, East and drop West B. Keep North and South and drop East and West C. Keep North and drop South, East, and West D. Keep South and drop North, East, and West E. Keep North and East and drop South and West

B

Product X -Selling price per unit $25 -Variable cost per unit $15 Product Y -Selling price per unit $35 -Variable cost per unit $20 Farris Company reported the above information for its 2 products. Due to labor constraints, demand for each of the products is greater than its supply. Product X requires 1 hour of labor to make and Product Y requires 3 hours of labor to make. Which of the following statements is true? A. Product X should be produced and sold because it has a lower cost than Product Y B. Product X should be produced and sold because it provides a higher contribution margin per labor hour than Product Y C. Product Y should be produced and sold because it provided a higher contribution margin per unit than Product X D. Product Y should be produced and sold because it provides more revenue than Product X

B

Relevant costs are often referred to as: A. Unavoidable costs B. Differential costs C. Sunk costs D. All of these

B

Sleek Boat -Units per year 5,000 -Machine hours/unit 2.5 -Materials cost/unit $2,500 -Labor cost/unit $800 Jet Boat -Units per year 7,000 -Machine hours/unit 5.0 -Materials cost/unit $1,500 -Labor cost/unit $200 The Gabriel James Company manufactures two types of boats. The company provides the following data pertinent to allocating its annual overhead cost of $460,000. Assume the cost driver is total materials cost. What is the amount of overhead cost allocated to the Jet Boat? A. $250,000 B. $210,000 C. $287,500 D. $172,500 E. $90,000

B

South -Revenue $390,000 -Variable COGS 210,000 -Variable selling expense 25,000 -Contribution margin 155,000 -Traceable fixed costs 130,000 -Allocated common costs 25,000 West Coast -Revenue $620,000 -Variable COGS 325,000 -Variable selling expense 38,000 -Contribution margin 257,000 -Traceable fixed costs 260,000 -Allocated common costs 25,000 East Coast -Revenue $560,000 -Variable COGS 379,000 -Variable selling expense 18,000 -Contribution margin 163,000 -Traceable fixed costs 140,000 -Allocated common costs 25,000 Pruitt Company sells its product in three regions of the country and provides the above performance info. In which regions should Pruitt discontinue selling its products? A. South B. West Coast C. East Coast D. None, it should continue to sell in all regions

B

The following estimates were used in preparing the predetermined OH rate at the beginning of the year: -Computer hours 85,000 -Fixed MOH $1,275,000 -Var MOH per computer hour $3.00 Actual operating data for the year included: -Computer hours 60,000 -MOH $1,350,000 What was the company's MOH allocation rate for the year? A. $15.00 B. $18.00 C. $22.50 D. $25.50

B

The internal rate of return measures A. How quickly the initial investment can be recouped B. The discount rate at which the net present value of the project is zero C. The profitability of an investment D. The rate at which future cash flows must be invested in order to obtain profitability

B

Timid Company has calculated its direct materials price variance to be $1,000 favorable and its direct materials quantity variance to be $3,000 unfavorable. Which of the following could explain both of these variances? A. The production manager has recently hired more skilled laborers B. The purchasing manager bought less expensive raw materials but they were of lower quality C. A machine in the factory malfunctioned resulting in considerable wasted direct materials D. The purchasing manager bought higher quality materials

B

When should a special order be accepted? A. Whenever the manufacturing facility has excess demand B. Potentially when the manufacturing facility has excess capacity C. Only if there are no unique costs for the special order D. Only if there is no opportunity cost in determining the total cost of the special order E. Whenever the unit contribution margin for the special order is less than the regular product unit contribution margin

B

Which of the following statements is false concerning capital budgeting? A. Capital projects may be evaluated using NPV and IRR which consider the time value of money B. The simple rate of return method of evaluating capital projects determines how long before the initial investment is recouped C. Capital budgeting evaluates expenditures with long term impacts D. Taxes affect both the amount and timing of cash flows in the capital budgeting process E. None of the statements are false

B

Which statement is true regarding budgets and budget variances? A. If sales volume exceeds expectations, actual profit will always be higher than budgeted profit B. For most organizations, a budget is the benchmark for evaluating actual performance C. A variance is the difference between a budgeted amount and a forecasted amount D. Any profit difference between the master and flexible budgets is due solely to the difference between budgeted and actual sales price E. A budget reconciliation is a report that uses variances to reconcile the difference between master budget profit and the flexible budget profit

B

11 - sofa -WIP - June 1 $2,550 -June DM $620 -June DL $415 22 - dresser -WIP - June 1 $1,550 -June DM $830 -June DL $1,035 33 - chair -WIP - June 1 $1,450 -June DM $1,240 -June DL $1,810 44 - table -WIP - June 1 $825 -June DM $1,570 -June DL $2,330 Ethan Allen uses job order costing. Overhead is charged to production at 60% of DM cost. Jobs 11, 33, and 44 were completed during June and transferred to FG. Jobs 11 and 44 have been delivered to customers. There were no FG inventories at the beginning of June. What is the selling price for Job 44 if the company marks up the cost by 40%? A. $2,267 B. $5,667 C. $7,934 D. $9,624

C

11 - sofa -WIP - June 1 $2,550 -June DM $620 -June DL $415 22 - dresser -WIP - June 1 $1,550 -June DM $830 -June DL $1,035 33 - chair -WIP - June 1 $1,450 -June DM $1,240 -June DL $1,810 44 - table -WIP - June 1 $825 -June DM $1,570 -June DL $2,330 Ethan Allen uses job order costing. Overhead is charged to production at 60% of DM cost. Jobs 11, 33, and 44 were completed during June and transferred to FG. Jobs 11 and 44 have been delivered to customers. There were no FG inventories at the beginning of June. What was COGS for the month of June? A. $6,249 B. $8,310 C. $9,624 D. $14,868

C

11 - sofa -WIP - June 1 $2,550 -June DM $620 -June DL $415 22 - dresser -WIP - June 1 $1,550 -June DM $830 -June DL $1,035 33 - chair -WIP - June 1 $1,450 -June DM $1,240 -June DL $1,810 44 - table -WIP - June 1 $825 -June DM $1,570 -June DL $2,330 Ethan Allen uses job order costing. Overhead is charged to production at 60% of DM cost. Jobs 11, 33, and 44 were completed during June and transferred to FG. Jobs 11 and 44 have been delivered to customers. There were no FG inventories at the beginning of June. What was the balance of WIP inventory on June 30? A. $1,865 B. $3,415 C. $3,913 D. $8,310

C

April and May production are expected to be 1,000 and 2,000 units, respectively. Each unit requires 1.1 yards of fabric on hand, and the Company desires to keep yards of fabric on hand equal to 10% of the following month's production. It is expected that ending raw materials inventory on March 31 will contain 110 yards of fabric. How many yards need to be purchased for April production? A. 990 yards B. 1,100 yards C. 1,210 yards D. 1,320 yards

C

Below are costs incurred by a manufacturing company: -Cost of raw materials used -Sales commission paid -Travel expenses for sales staff -Electricity used to operate machines in factory -Cost of packing materials -CEO salary Which costs are classified as product costs on a GAAP income statement? A. Costs of raw materials used, CEO salary, cost of packing materials B. CEO salary, sales commission paid, cost of raw materials used C. Electricity used to operate machines in the factory, cost of raw materials used, cost of packing materials D. Sales commission paid, travel expenses for sales staff, CEO salary E. Cost of packing materials, travel expenses for sales staff, sales commission paid

C

Company is considering a new labor saving machine to increase production efficiency. The machine rents for $3,000 per year and will save $15,000 in labor costs. Other costs related to the product are direct materials ($70,000), VMOH ($10,000), FMOH ($62,000). What is the financial advantage / disadvantage if the machine is rented (how much will NOI increase / decrease)? A. Decrease $3,000 B. Increase $15,000 C. Increase $12,000 D. Decrease $12,000

C

Company is considering a new labor saving machine to increase production efficiency. The machine rents for $3,000 per year and will save $15,000 in labor costs. Other costs related to the product are direct materials ($70,000), VMOH ($10,000), FMOH ($62,000). Which are the relevant costs for this decision? A. Sales and direct materials b. Direct materials and direct labor C. Direct labor and rent on new machine D. All expenses

C

During the month of April, direct labor cost totaled $16,000 and direct labor cost was 50% of prime cost. If total manufacturing costs during April were $78,000, the manufacturing overhead was: A. $62,000 B. $32,000 C. $46,000 D. $16,000

C

GAAP Income Statement -Revenues $350,000 -Gross Margin $189,000 -NOI $63,000 Contribution Margin Statements -Revenues $350,000 -Contribution Margin $148,000 -NOI $63,000 If the Scoop Shop sold 14,000 cakes at $25 per cake, how much will profit increase if 1 more cake is sold? A. $25.00 B. $13.50 C. $10.57 D. $4.50

C

JOLO Inc sells one product for $150. Unit fixed cost is $25 and unit variable cost is $90. Net operating income increases by what amount if ONE more unit is sold? A. $150 B. $125 C. $60 D. $35 E. Not enough information to determine

C

Purchases -January $80,000 -February $95,000 -March $90,000 -April $110,000 -May $115,000 -June $90,000 David purchases all of his products on credit. He estimates that he pays 70% of his accounts payable in the month of purchase, 20% in the month following the purchase, and 10% in the month thereafter. Below is information about expected purchases for the next 6 months. What are David's budgeted cash outflows for May and June? A. $115,000 for May and $90,000 for June B. $80,500 for May and $63,000 for June C. $111,500 for May and $97,000 for June D. $80,500 for May and $86,000 for June E. None of the above

C

Rego and Associates plans to invest $1,200,000 to modernize their call centers. They expect productivity to increase and generate 6,000 more billable hours annually. The current billing rate is $50 per hour. The effect of the investment on productivity will last for 5 years. The company uses a discount rate of 10% on its capital projects. Ignore taxes. What is the payback period on the project and the simple rate of return? A. Payback period is 3 years and SRR = 66.67% B. Payback period is 4 years and SRR = 33.33% C. Payback period is 4 years and SRR = 5.00% D. Payback period is 3 years and SRR = 125% E. Payback period is 3 years and SRR = 25%

C

Unit contribution margin is defined as: A. Total revenue dollars less total variable expense dollars B. Total revenue dollars less total fixed expense dollars C. Selling price per unit less unit variable cost D. Selling price per unit less unit variable cost E. Selling price per unit less unit fixed cost F. Total net operating income dollars less total fixed expense dollars

C

Vroom Inc manufactures motorcycles. The company is currently buying 13,000 units annually of a critical part that it needs from an outside supplier at $150 per unit. In addition, Vroom spends $250,000 annually to coordinate with this supplier. The company has the needed machinery and capacity to make this part in house. The variable cost per part including labor, materials, and variable overhead is $110. If the company makes the part in house, it would save the $250,000 of coordination costs with the supplier. How much would Vroom save (or lose) in total by making the part in house? A. Save $250,000 B. Lose $520,000 C. Save $770,000 D. Lose $1,430,000 E. Save $2,200,000

C

Which of the following budgets is not affected by the production budget? A. Direct material budget B. MOH budget C. Sales budget D. None of the above

C

Which of the following statements is false concerning capital budgeting? A. As it relates to capital expenditure decisions, cost of capital is the opportunity cost of capital required for the proposed investment B. Under the payback method to evaluate investments, we compute how long it takes to recoup the initial investment C. The two main non-discounted cash flows techniques used in capital budgeting are net present value (NPV) and cost-volume-profit (CVP) D. The simple rate of return is relatively straightforward to compute but ignores the time value of money E. Taxes affect the amount of cash flows

C

Which of the following statements is false? A. Creditors would be a user of financial accounting information B. Management accounting information is used to develop budgets C. Financial accounting information emphasizes decisions for the future D. Reports based on management accounting information are created when required

C

Which of the following statements is false? A. Prime costs are always direct costs B. Manufacturing costs can be direct or indirect C. Selling and administrative costs are only indirect D. Direct labor is both a prime cost and conversion cost

C

Which one of the following statements correctly indicates how to calculate breakeven volume (where profit will be zero)? A. Variable costs divided by unit contribution margin B. Profit divided by sales volume C. Fixed costs divided by unit contribution margin D. Variable costs divided by fixed costs

C

Which statement below regarding budgets is false? A. A budget is a plan for using the company's resources B. Strategic plans focus on long-term plans C. In a centralized decision-making environment, the manager delegates decision making to individuals with relevant experience and knowledge D. Firms spend considerable time and effort in preparing a revenue budget, as its accuracy is crucial in putting together a good master budget E. The purposes of budgets include planning and control

C

-Initial investment $325,000 -EUL of equipment in years 5 -Salvage value $0 -Additional annual revenues (cash) $250,000 -Additional annual operating expense (cash) $155,000 -Cost of capital 12% Holland Company owns the mineral rights to land that has a deposit of one. The company is deciding whether to purchase equipment and open a mine on the property. The mine would be depleted and closed in 5 years and the equipment would be sold for its salvage value. What is the amount of net operating cash flows to be used to calculate the NPV? A. $275,000 B. $250,000 C. $155,000 D. $95,000

D

-Postage on invoices sent to customers 100 -Rent on factory building 3,800 -Depreciation on admin office computers 500 -Bonuses paid to the VP of sales 1,500 -Raw materials purchased 1,000 -Wages paid to production employees 600 TJR Company makes multiple products in its factory. During the month of May, TJR Company reported the above costs. Related to a product made in the factory, what are the total indirect costs? A. $1,600 B. $2,100 C. $2,600 D. $5,900 E. $7,500

D

-Revenues $20,000 -Net operating income $8,000 -Average operating assets - NBV $75,000 -Required rate of return 6% Aloha's current year info is above. In the coming year, Aloha wants to increase its residual income (RI) by 40%. Assume Aloha will reduce average operating assets by $5,000 next year. How much would Aloha's net operating income need to change in the coming year? A. $9,400 B. $4,900 C. $9,100 D. $1,100

D

A company has a unit contribution margin of $5,000, total sales in June are estimated at $900,000, and fixed costs are $600,000. How many units must be sold to attain net operating income of $150,000? A. 30 units B. 120 units C. 130 units D. 150 units E. 180 units

D

ABC Company is considering an investment to automate its production process. The new equipment will allow ABC to save $75,000 each year in labor costs. The company requires a minimum payback period of 5 years. What is the maximum investment that can be made in the project to be selected? A. $15,000 B. $75,000 C. $150,000 D. $375,000

D

Are selling and administrative costs included in inventoriable or product costs? A. Yes, because admin costs are overhead B. Yes, because they are costs related to the product C. No, because they are usually fixed costs D. No, because selling and administrative costs are not related to making the product ready for sale E. None of the above

D

Budgeted sales in units -January 4,000 -February 3,000 -March 5,000 PL Inc provides you with the above information for one of its products. The budget assumes ending finished goods inventory equals 25% of the following month's sales. What is the budgeted production in units for February? A. 1,250 units B. 4,250 units C. 2,500 units D. 3,500 units E. None of the above

D

CS Inc is preparing its budget for next year. Below are the assumptions being used: -20,000 units will be sold at $52 per unit -Average selling price/unit will exceed the average purchase price of materials by 30% -Labor will be 1 hour per 20 units at $25 per hour -Fixed expenses (which includes $5,000 for depreciation) will equals 6% of budgeted revenues Net operating income is budgeted to be: A. $952,600 B. $640,600 C. $165,600 D. $152,600

D

For what purpose is a flexible budget used? A. To provide various possible outcomes for management to consider B. To adjust input prices so that future variances are eliminated C. To insure that profit does not drop below a predetermined level D. To identify the sources of variances

D

Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours were 20,000. What would be recorded as the cost of job WR53? A. $200 B. $350 C. $380 D. $730

D

Northern Optical ordinarily sells the X-lens for $50. The variable production cost is $10, the fixed production cost is $18 per unit, and the variable selling cost is $1. A customer has requested a special order for 10,000 units of the X-lens to be imprinted with the customer's logo. This special order would not involve any selling costs, but Northern Optical would have to purchase an imprinting machine for $50,000. There is ample idle capacity to fulfill the order and the imprinting machine has no further use after this order. What is the minimum price Northern Optical will accept? a. $34 B. $29 C. $16 D. $15

D

Pear Co estimates that it will require 160,000 direct labor hours to meet the coming period's estimated production level. In addition, the company estimates total fixed manufacturing overhead at $200,000 and variable manufacturing overhead costs of $2.75 per direct labor hour. Actual direct labor hours for the period were 150,000. How much manufacturing overhead was applied to jobs for the period? A. $200,000 B. $440,000 C. $640,000 D. $600,000 E. $412,500 F. $187,500

D

Rosemary Co estimates that it can save $40,000 per year in cash operating costs for the next four years if it buys a new machine that costs $120,000. The machine is expected to have a four-year life and zero salvage value. Rosemary depreciates all of its assets using straight-line depreciation. Rosemary's income tax rate is 50%. However, she does not consider income taxes when evaluating capital projects and uses a cost of capital of 8%. The net present value (NPV) associated with purchasing the new machine is closest to : a. $(4,080) B. $29,400 C. $(40,000) D. $12,480 E. None of the above

D

Shannon would like to open a full size Scoop Shop. Assume floor space is available at a rental rate of $30,000 per year in increments of 1,000 square feet. If Shannon needs 2,500 square feet, how much will she pay in rent for the year? A. $30,000 B. $60,000 C. $75,000 D. $90,000

D

The company is calculating its expected cash receipts for the month of June. Although you do not know the collection policy, which item below should not be included? A. Cash sales made during June B. Credit sales made during May C. Credit sales made during June D. Credit sales made during July

D

Towne Snow Removal's cost formula for its vehicle operating cost is $1,470 per month plus $399 per snow-day. For the month of November, the company's planned level of activity was 13 snow days, but the actual level of activity was 9 snow-days. The actual vehicle operating cost for the month was $5,320. The operating cost in the flexible budget for November would be closest to: A. $6,657 B. $5,230 C. $4,609 D. $5,061 E. None of the above

D

When a company is attempting to increase return on investment (ROI), it should work to: A. Decrease sales B. Decrease profits C. Increase costs D. Decrease operating assets

D

When making a make or buy decision, managers should consider: A. Alternative uses for any facility currently being used to make the product B. The costs of direct materials included in making the product C. Qualitative factors such as whether the supplier can deliver the item on time and to the company's quality standards D. All of the statements above

D

Which of the following budgets is affected by the sales budget? A. Production budget B. Cash budget C. Selling and administrative budget D. All of the above

D

Which of the following could be a constrained resource? A. Direct materials B. Factory space C. Machine hours D. All of the above

D

Which of the following is not an advantage of decentralization in an organization? A. Timely decisions B. Allows top management to focus on overall corporate strategy C. Empowers employees and leads to job satisfaction D. Lower-level managers make decisions without seeing the "big picture" E. Lower-level managers gain experience in decision-making (training)

D

If a company's revenue is $600,000, net operating income is $135,000, and product costs are $215,000, then: A. The company's gross margin totals $350,000 B. The company's period costs are $215,000 C. The company's period costs cannot be determined D. The company's contribution margin totals $465,000 E. The company's gross margin totals $385,000

E

Once variances from the budget are calculated, in general which ones should be investigated? A. Significant unfavorable variances expressed in dollars B. Significant favorable variances expressed as a percentage C. Variances that have occurred for multiple periods - indicating a trend D. Significant favorable variances expressed in dollars E. All of the above

E

Variance analysis provides management with food information. However, it is delayed. What is an example of a non-financial control/measure that a company might use to supplement variance analysis? A. Number of days without an accident B. Customer satisfaction surveys C. Product return information D. Number of sick days E. All of the above

E

Which statement best describes management accounting? A. Management accounting is mainly focused on past results B. Management accounting reports are rules based using GAAP C. The main users of management accounting information are outside the firm D. Management accounting reports are prepared following the National Management Accounting Standards (NMAS) E. Management accounting is primarily used for decision making

E

Which of the following statements are true? A. Opportunity cost is the value of the next best option B.Indirect manufacturing costs are called manufacturing overhead (MOH) C. All product costs are direct D. Sunk costs are relevant to a decision E. Costs on the financial income statement are organized by product and period F. A, B, and E

F

AirMeals Inc prepares in-flight meals for a number of major airlines. During the most recent week, the company prepared 4,000 dinners using 1,150 direct labor hours. The company paid these direct labor workers a total of $11,500 for this work. The budget assumed each meal takes 0.30 direct labor hours to prepare and direct labor workers will be paid $9.50 per hour. What is the labor rate variance for the most recent week? A. $575 U B. $100 U C. $475 F D. $575 F E. $11,500 F

A

Which statement is false? A. Changing a product mix is an example of a short-term decision B. Capacity costs are controllable over the long term C. While contribution margin is the appropriate measure of value for short term decisions, segment margin is the appropriate measure for long term decisions D. Firms must prepare income statements and balance sheets in accordance with GAAP, which requires firms to use absorption costing E. Because of indirect manufacturing costs are not traceable to individual products, companies must allocate them to products

A

Coffee Klatch is an espresso stand in a downtown office building. The monthly average variable cost % and fixed costs are 36% and $1,280, respectively. How much revenue needs to be generated to break even? A. $3,556 B. $2,000 C. $1,741 D. $1,280

B

_____ is/are the maximum volume of activity that a company can sustain. A. Resources B. Discretionary orders C. Inventory D. Employees E. Capacity

E

Which variance requires the master (planning) budget to calculate? A. Total profit variance and sales volume variance B. Total profit variance and all variable cost variances C. Sales volume variance and sales price variance D. Sales price variance and fixed cost spending variance E. All variable cost variances and fixed cost variances

A

Which of the following will not impact the calculation of the labor budget? A. Budgeted number of employees B. Expected timing of promotions C. Expected amount and timing of wage rate changes D. Expected number of units sold E. All of the above will impact the labor budget

D

During October, Diaz Company's sales volume increased by 40% compared to the previous month's volume. If the selling price per unit, unit variable cost, and total fixed cost remain the same, which of the following statements regarding October's results is false? A. The firm's contribution margin ratio was unchanged B. The firm's unit contribution margin increased C. The firm's total variable costs increased D. The firm's break even point was unchanged

B

Julia is deciding whether to remain in the home she has lived in for the past ten years, which is located very near her work, or to move into a newer home that is located in the suburbs further from her job. The old house was purchased for $160,000 and has a market value of $220,000. The new home can be purchased for $285,000. Which of the following is not relevant to Julia's decision? A. Driving distance to work B. Cost of the old house C. Market value of the old house D. Cost of the new home

B

Which of the following budget(s) consider the impact of finished goods inventory? A. Sales budget B. Production budget C. Raw material purchases budget D. Labor budget E. B and C

B

-Material price variance 800 F -Budgeted material per unit 1.5 feet -Actual units produced 100 units -Material spending variance 250 F -Budgeted material price $6 per foot -Budgeted units to be produced 120 units Determine the actual number of feet of material used. Round to nearest whole foot, if needed A. 138 feet B. 150 feet C. 242 feet D. 272 feet E. None of the above

C

A firm allocates its manufacturing overhead based on direct labor hours. The firm estimated fixed manufacturing overhead for the period to be $100,000 with 2,000 direct labor hours worked. At the end of the period, the firm actually incurred 1,750 direct labor hours. What is the predetermined overhead rate? A. $0.02 per direct labor hour B. $0.0175 per direct labor hour C. $50 per direct labor hour D. $57 per direct labor hour E. None of the above

C

Which statement below regarding budgets is false? A. Multi-year budgets are strategic plans that specify the direction in which a company desires to head B. Operating budgets are for one year C. In a centralized decision-making environment, the manager delegates decision making to individuals with relevant experience and knowledge D. Firms spend considerable time and effort in preparing a revenue budget, as its accuracy is crucial in putting together a good master budget E. The purposes of budgets include planning and control

C

Which responsibility center does a manager have control over costs and revenues, but not over investments? A. Revenue center B. Cost center C. Investment center D. Profit center E. None of the above

D