Accounting Final

A manager of an investment center is most likely to be evaluated using a:

financial measure such as residual income.

Which of the following is an example of a batch-level activity?

setting up machines(# of units doesnt matter)

Opportunity costs are always:

relevant costs

Advantage of Decentralization

-It delegates day-to-day problem solving to lower-level managers, thereby enabling top-level managers to concentrate on overall strategy. -It empowers lower-level managers to make decisions based on up-to-date information about day-to-day operations. -It eliminates layers of decision making and approvals so that organizations can respond more quickly to customers and changing circumstances.

True statements regarding that budgeted income

-Its net income will impact the ending retained earnings balance shown on the balance sheet. -Its interest expense flows from the financing section of the cash budget. -Its selling and administrative expenses may include depreciation expense.

LRV

AH(AR-SR)

VMRV

AH(AR-SR)

MPV

AQ(AP - SP)

The costs of testing and inspecting incoming raw materials would be classified as what type of quality cost?

Appraisal costs

In variable costing, a complete definition of unit product cost includes:

Direct materials, direct labor, and variable manufacturing overhead.

Learning & Growth

Employee absenteeism rate, Average number of workplace accidents per employee, Average training hours per employee, number of job applicants from under-represented groups, Average mentorship hours per employee

Which of the following statements is false regarding service department charges to operating departments?

Fixed costs should be charged to operating departments by multiplying a predetermined rate by the actual quantity of the service used.

Which of the following choices is true with respect to delivery cycle time?(wait time and queue time)

Includes both

A document that records the materials, labor, and manufacturing overhead charged to a specific job is called a:

Job cost sheet.

External Failure Cost

Product recalls, Cost of field servicing, Warranty repairs, Returns and allowances arising from poor quality, Warranty replacements. Costs are incurred because poor quality of conformance has occurred

Which of the following statements best describes a viable approach for reducing the cost of quality?

Making additional investments in prevention activities with the goal of realizing even larger reductions in external failure costs.

Appraisal Cost

Product testing, Inspection of goods, Depreciation of test equipment, Field testing at customer site

Which of the following measures would most likely appear in the balanced scorecard of a company focused on provided an operational excellence customer value proposition?

Manufacturing cycle efficiency (MCE)

ROI

Margin x Turnover

Residual Income

NOI - (Avg. Operating Assets x Minimum Required Rate of Return%)

margin

NOI / Sales

Which of the following choices is true with respect to manufacturing cycle efficiency (MCE)? (wait time and inspection time)

No wait time but Yes to inspection time

OEE

utilization rate x efficiency rate x quality rate

Which of the following financial measures would best be described as a type of profitability ratio?

Return on equity

Internal Failure Cost

Rework labor and overhead, Downtime caused by defects, Net cost of scrap, Disposal of production defects

MQV

SP(AQ-SQ)

LEV

SR(AH-SH)

VMEV

SR(AH-SH)

Gross Margin =

Sales - COGS

Contribution Margin =

Sales - Variable Expenses

Turnover

Sales / Average Operating Assets

On a cost-volume-profit (CVP) graph, the vertical distance between the total sales line and the total expense line represents which of the following?

The profit or loss

If a company has underapplied overhead, then the journal entry to dispose of it could possibly include:

a debit to Cost of Goods Sold.

Efficiency rate

actual run rate / ideal run rate

utilization rate

actual run time / machine time available

Quality rate

defect-free output / total output

Assume that a company in the process of creating a balanced scorecard noted that "customers are complaining about excessive delays with respect to receiving what they ordered." Which of the following measures would be most appropriate to include in a balanced scorecard in an effort to track improvement with respect to this concern?

delivery cycle time

The costs of spoilage and scrap would be classified as what type of quality cost?

internal failure costs

In the equation, y = a + bX, the X represents:

level of activity

On CVP graph, vertical distance between total expense line and fixed expense line represents

the total variable expenses

MCE

process time / throughput time

Advantages of self-imposed budgets

-They are often more accurate than estimates prepared by top managers because front-line workers have more intimate knowledge of day-to-day operations. -They generally increase motivation by allowing people to participate in setting their own goals. -They recognize individuals at all levels of the organization as members of the team whose views are valued by top management.

Which of the following statements is false? 1. The sum of the segment margins earned by all of a company's business segments will equal the company's overall net operating income. 2. Contribution margin − Traceable fixed expenses = segment margin. 3. Traceable fixed costs can become common fixed costs depending on how the segments are defined. 4. A segment's traceable fixed costs will disappear over time if the segment is eliminated.

1. The sum of the segment margins earned by all of a company's business segments will equal the company's overall net operating income.

Which of the following statements is false regarding absorption costing? 1. It assigns all manufacturing costs, both fixed and variable, to units of product. 2. It treats all nonmanufacturing costs as period costs. 3. It is typically used for external financial reporting. 4. It relies on a predetermined overhead rate to apply direct material cost to units of product.

4. It relies on a predetermined overhead rate to apply direct material cost to units of product.

Which of the following statements is false? 1. Conversion costs include manufacturing overhead. 2. Prime costs include direct labor. 3. Conversion costs include direct labor. 4. Prime costs include manufacturing overhead.

4. Prime costs include manufacturing overhead.

Which of the following measures would most likely appear in the Customer perspective of a company's balanced scorecard?

Customer defection rate

Customer

Customer defection rate, Percent of customers that strongly agree with the statement "Your employees treated me courteously.", percent of customers that strongly agree with the statement "Your company has a superior commitment to product safety.", number of customer referrals

In variable costing, a complete definition of unit product cost includes

DM, DL, and VMOH

Assume that a company in the process of creating a balanced scorecard noted that "customers are returning too many defective products." Which of the following measures would be most appropriate to include in a balanced scorecard in an effort to track improvement with respect to this concern?

Defect-free units as a percentage of completed units

Internal Business Process

Delivery cycle time, Number of modular product designs, Lost sales due to out-of-stock merchandise, Pounds of waste produced

The total manufacturing costs added to production within a schedule of cost of goods manufactured is calculated using which of the following equations?

Direct materials used in production + Direct labor + Manufacturing overhead applied to work in process

Which of the following measures would most likely appear in the balanced scorecard of a company focused on provided a product leadership customer value proposition?

Number of new products designed

Assume that a company in the process of creating a balanced scorecard noted that "our employees are not generating enough ideas to help improve what we do." Which of the following measures would be most appropriate to include in a balanced scorecard in an effort to track improvement with respect to this concern?

Number of process improvement suggestions per employee

When the units produced exceed the units sold, which of the following equations explains the difference between absorption costing and variable costing net operating income?

Number of units deferred in ending inventory × fixed manufacturing overhead cost per unit

Which of the following measures would managers hope to see decreasing over time?

Number of warranty claims

Which of the following financial measures reflects investors' perceptions of the company's performance and its future prospects?

Price-earnings ratio

Prevention Cost

Quality circles, Quality engineering, Statistical process control, technical support to suppliers, Systems development, Quality training. Costs are incurred in an effort to keep poor quality of conformance from occurring

Cost classifications used for decision making include:

Relevant and irrelevant cost.

Finacial

Sales from new customers, Average fuel cost per sales dollar, Return on assets, Residual income

T or F: A flexible budget is an estimate of what revenues and costs should have been given the actual level of activity for the period.

T

In a cost-volume-profit (CVP) graph, the intersection of the total sales line and the total expense line represents which of the following?

The break-even point

Assumption of Cost volume profit analysis

Total FC are constant within the relevant range Selling price is constant Variable Costs per unit are constant

T or F: Traditional cost systems usually overcost high volume products and undercost low volume products when compared to activity-based costing systems.

True

transfer price

Variable cost per unit + (Total contribution margin on lost sales(per unit x lost sales units) / Number of units transferred)

Which of the following is an example of a product-level activity?

advertising products(# product lines)

A responsibility center is best described as:

any part of an organization whose manager has control over and is accountable for cost, profit, or investments.

Which of the following is an example of a unit-level activity?

assembling products(have to do for each unit)

Every decision involves choosing between:

at least two alternatives

Overapplied or underapplied overhead is computed:

at the end of the period.

throughput time

process time + inspection time + move time + queue time

A manager of a cost center is most likely to be evaluated using a:

variance analysis performance report.

Delivery Cycle Time

wait time + throughput time