Accounting Final Exam

The following annual information is for Bendix Corporation: Product X Product Y Revenue per unit: $10.00 $15.00 Variable cost per unit: $2.50 $5.00 Total fixed costs: $100,000 What is the operating income for a year, assuming actual sales total 150,00 units, and the sales mix is two units of product X and one unit of product Y?

$1,150,000

Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. If sales increase by $19,500 in a year, profits will increased by:

$10,500

The following annual information is for Bendix Corporation: Product X Product Y Revenue per unit: $10.00 $15.00 Variable cost per unit: $2.50 $5.00 Total fixed costs: $100,000 If the sales mix consists of two units of Product X and one unit of Product Y, what is the weighted revenue per unit of composite product?

$11.66

Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The contribution margin per unit is:

$3.50

In compensation plans, a cash bonus:

-does not affect long-term pay -is based on individual or group performance -is usually triggered when performance exceeds a target

Which of the following statements is true about the static budget?

-it can be used to evaluate and compare actual results -it is based on planned production -it is based on standard costs

Constaints from the theory of contraints may include:

-linear square feet of display space for a retailer -direct labor in the service industry -the availability of direct materials in manufacturing

Which is the following is an example of variable manufacturing overhead?

-machine lubricants used in an automobile repair shop -glue used in a factory that manufactures furniture -thread used in a factory that manufactures clothes

The balanced scorecard is said to be "balanced" because is measures:

-short-term and long-term objectives -financial and non-financial objectives -internal and external objectives

Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The number of units that must be sold annually to achieve $52,500 of profits is:

20,000 units

The following annual information is for Bendix Corporation: Product X Product Y Revenue per unit: $10.00 $15.00 Variable cost per unit: $2.50 $5.00 Total fixed costs: $100,000 If the sales mix consists of two units of Product X and one unit of Product Y, what is the break-even point in units for a year?

4,000 units of Y and 8,000 units of X

Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The breakeven point in units for a year is:

5,000 units

Which best describes the purpose of a management accounting and control system (MACS)?

A MACS helps decision makers determine whether strategies and objectives are being met.

Which of the following types of information are used in management accounting?

All of the choices are correct.

_________ occur(s) when a superior simply tells subordinates what their budget will be.

Authoritative budgeting

A budget should/can do all of the following except:

Be prepared by managers from different functional areas working independently of each other

________ occur(s) when subordinates ask for excess resources above and beyond what they need to accomplish budget objectives.

Budget slack

Which of the following statements is not true?

Budgeting is done before strategy is set

In job order costing, only direct costs are used to determine the cost of a job.

False

In which order are the following developed? A = production plan B = materials purchasing plan C = demand forecast D - sales plan

First to last: C,D,A,B

Which of the following descriptors refer to management accounting information?

It is oriented to meeting the decision making needs of employees and managers inside the organization.

It only make sense to implement an ABC system when:

Its benefits exceed implementation costs

In zero-budgeting:

Managers must justify each item within the operating budget as if it were a new budget item

Which of the following is a sign that an ABC system may be useful?

Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity

How can the Vice-president of sales encourage the company's salespeople to promote the more profitable models?

Provide higher sales commissions for items with the greatest contribution margin per constrained resource.

What is a floor price?

The lowest price you would accept from a prospective customer for a special order product

Which of the following is not a role of the financial budgets in the master budget?

To estimate the financial consequences of capital investment plans

A direct costs is a cost that would disappear if the cost object to which it relates is removed.

True

Overhead costs such as factory rent and supervisory salaries are allocated to cost objects in a multi-product facility.

True

Sunk costs are always irrelevant costs for decision making.

True

Which of the following describes a variable cost?

Variable costs increase in total when the actual level of activity increases.

The implementation of just-in-time production results in all of the following except:

a slower pace for employees

For each cost pool, a(n) _________ is identified that is the primary factor causing overhead costs to increase during the accounting period.

activity

Goal congruence in an organization refers to:

alignment of employee and organizational objectives

When making decisions:

appropriate weight must be given to both quantitative and qualitative factors

Customer profitability:

are most accurately measured using activity based costing.

Differences between the costs calculated by activity-based costing systems and traditional costing systems will decrease when volume based assignments and cost driver assignments:

are similar in proportion to each other

Cost-volume-profit analysis is used PRIMARILY by management:

as a planning tool.

The person MOST likely to use management accounting information is a(n):

assembly department supervisor

Volume-based cost drivers in traditional cost systems distort product costs because they:

assume that all products use all overhead resources to a similar extent.

In the manufacture of cans of beans, all the following would likely be allocated to a cost object except:

beans

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis:

can be used eliminate nonvalue-added activities

The pricing waterfall:

charts the multiple revenue leaks from list price caused by allowances and discounts

For service organizations that bill customers at a predetermined average cost rate, activity-based cost systems can help to:

clarify appropriate cost assignments for various service activities

Managers are MOST likely to feel outside pressure to influence the numbers favorably when the information is used for:

compensation and promotions.

Kaizen costing includes:

continuous improvement

When deciding whether to discontinue a segment of a business, managers should focus on:

contribution margin and avoidable fixed costs of the segment.

All the statements below are true regarding Kaizen costing except that:

cost reduction targets are set and applied on an annual basis

The strategy most likely to reduce the break-even point would be to:

decrease the capacity-related (fixed) costs and increase the contribution margin per unit

When discussing the roles of budgets, a planning role in the budgeting process includes:

developing the master budget

Activity-based costing (ABC) can reduce cost: distortions because ABC:

develops cost drivers that link activities performed to the products manufactured

Costs are relevant to a particular decision if they:

differ across the decision alternatives being considered.

A cost that is always uniquely and unequivocally attributable to a single cost object is a:

direct cost

Many intangible assets:

do not appear on the balance sheet since it is difficult to place a reliable financial value on them

Assumptions of the human resources model of motivation include all of the following except:

employees prefer to follow highly-detailed, prescribed procedures

The predetermined overhead cost driver rate is calculated using _______ over head costs.

estimated

Management accounting information can be used for all of the following except:

evaluate the market price of the stock

Concerns about Kaizen costing include:

excessive pressures are put on employees

Which of the following is NOT a function of a management accounting system?

financial accounting

The 80/20 rule:

finds that 80% of revenues are generated by the top 20% of the customers

Depreciation on factory equipment is best characterized as:

fixed manufacturing overhead

Service companies:

focus more on customer costs and profitability than manufacturing companies.

When implementing a new management accounting and control system, it is best:

for management to involve employees in the implementation

The whale curve:

graphs profits verses customers

Empowering employees in management accounting and control system design requires all of the following except:

having highly-motivated employees in every position

Management accounting information is BEST described as:

identifying and helping to explain what is wrong.

When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when:

incremental revenues exceed incremental costs.

Behavioral considerations of a well-designed management accounting and control system include all of the following except:

information accuracy

In compensation plans, profit sharing:

is a group incentive compensation plan

Customer financial performance:

is improved by focusing on a combination of financial and nonfinancial metrics

Financial accounting:

is primarily oriented to external stakeholders, such as investors, creditors, regulators and tax authorities.

Typical sales person's compensation:

is usually based on sales revenue

Information is relevant in a MACS if:

it can be applied in a flexible manner

An organization develops a code od ethics primarily because:

it helps reduce ethical conflict by avoiding ambiguity and misunderstanding

An example of a direct cost for a service provided by an accounting firm, such as a tax return, would be:

labor of staff accountant who prepared the return

According to the hierarchy of ethical principles presented in the text, an action prohibited by ___________ should also be unacceptable to ____________.

legals rules, societal norms

A favorable efficiency variance for direct labor indicates that:

less direct labor hours were used during production than expected for actual output

The focus of ABC systems is on:

long-term decisions

The theory of constraints:

maintains that carefully managing production bottlenecks will increase operating income

Scarlet Corporation plans to grow by offering a device that is superior and unique from the competition. Scarlet believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy. To further Scarlet's strategy, measures on the balanced scorecard would MOST likely include:

manufacturing quality

Fixed costs:

may be either direct or indirect costs

Product lines that produce different variations (models, styles, or colors) often require specialized activities that translate into:

more overhead costs for each product line.

An example of direct cost in a car repair should would include:

parts used in repair

Pressures on managers to act unethically include all of the following except:

pressures to act in the long-run best interest of the shareholders

Examining internal operations to see where the company can improve processors to lower costs of serving customers is an example of:

process improvements

It is important that the product costs reflect the diversity and complexity of the manufacturing process so that:

product costs will reflect their relative consumption of resources

Scarlet Corporation plans to grow by offering a device that is superior and unique from the competition. Scarlet believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy. Scarlet's value proposition is:

product innovation and leadership

How can the Vice-president of sales at Glass Company encourage her salespeople to promote the more profitable model?

provide higher sales commissions for items with the greatest contribution margin per constrained resource.

Aggressive customers who demand low prices and customized services:

require high costs to serve

Design of an activity-based cost system requires that:

resources costs be linked to the activities performed and the cost of activities be linked to cost of objects.

All of the following situations cause major deterrents to effective ABC implementation except when:

senior management communicates their commitment to the change

Financial accounting information:

summarizes information but does not indicate whether anything is wrong.

When a subordinate is caught padding an expense reports, the supervisor should first:

take action that complies with the organization's code of ethics

A primary reason for assigning selling and distribution costs to products and customers for analytical purposes is:

that different products, and customers require different quantities of selling and distribution activities

Characteristics of just-in-time manufacturing include all of the following except:

the ability to process items in large batches

________ translate(s) an organization's mission, vision, and strategy into a comprehensive set of performance measures that provide the framework for implementing its strategy.

the balanced scorecard

Sunk costs include:

the original cost of the existing system

In incremental budgeting:

the prior year's budgeted amounts or actual results are used to build the new operating budget

The use of volume-based measures to assign overhead costs is more likely to:

undercost specialty low-volume and complex products

In a job order costing system, a manufacturing firm typically uses a cost driver rate to estimate the __________ used for a job.

variable overhead