Accounting FInal Exam
When the units produced are less than the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
Greater Than
Which of the following is the term used to describe the discount rate at which the present value of a project's cash inflows will equal the present value of its cash outflows?
Internal Rate of Return
When the units produced are equal to the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
Is equal to
All of the following are reasons for preparing a flexible budget with multiple cost drivers EXCEPT ________.
It eliminates the need to perform variance analysis
Residual income is a better measure for performance evaluation of an investment center manager than return on investment because ________.
It encourages managers to make investments that are profitable to the entire company.
Which method do managers use to estimate the fixed and variable components of mixed costs by analyzing past records of cost and activity data?
least-squares regression
The standard hours allowed is ________.
the direct labor-hours that should have been used to complete the actual output for the period.
The rate of return that is used to find the present value of a future cash flow is called the __________.
Discount Rate
When a manager has control over and is accountable for cost, profit or investments of an organization, it is called ________.
A responsibility center
The simple rate of return is also called all of the following except ________.
Annual Rate of Return
What are the most important areas on a CVP graph?
Area of Profit, Area of Loss, and break-even point
A major drawback of residual income is that it ________.
Can not be used to compare the performance of divisions of different sizes
A shift in sales mix from high-margin items to low margin items will result in total profits to?
Decrease
_________ is the elapsed time from receipt of a customer order to when the completed goods are shipped to the customer.
Delivery Cycle Time
In situations where no revenues are involved, which of the following is the most desirable alternative?
Least-Cost Decisions
When the units produced exceed the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
Less than
When the number of units produced is greater than the number of units sold, variable costing net operating income will be ________.
Less than the net operating income of absorption costing.
A negative net present value indicates that the project's return is ________.
Less than the required minimum rate of return
What is the measure to how sensitive net operating income is to a given percentage change in volume sales?
Operating Leverage
The potential benefit that is given up when one alternative is selected over another is called ________.
Opportunity Cost
Which of the following ignores the time value of money?
Payback Period
What equation is the CVP graph based off of?
Profit= Unit CM x Q - (Fixed Expenses)
Most companies compute the materials price variance when raw materials are _______.
Received from suppliers and transported to raw materials inventory.
Which of the following is used for measuring internal business process performance?
Reducing Waste
The difference between the actual total revenue and budgeted total revenue at the actual level of activity is called a(n) ________.
Revenue Variance
Which of the following is NOT another term used to describe preference decision making?
Screening Decisions
The difference between the actual cost and budgeted cost at the actual level of activity is called a(n) ________.
Spending Variance
Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are ________
Sunk Costs
The standard quantity per unit defines the ________.
The amount of direct materials that should be used for each unit of finished product including an allowance for inefficiencies, such as scrap and spoilage.
Break-Even Point is the point of which sales where _____ Equals ______?
Total Revenue equals Total Costs
Once the break-even point has been reached. Net Operating Will increase by the amount of _____ for each additional unit sold?
Unit Contribution Margin
Which of the following costing approaches is best suited for cost-volume-profit analysis?
Variable Costing
When computing variable manufacturing overhead variances, the standard rate represents the ________.
Variable portion of the predetermined overhead rate
The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service is called ________.
Vertical Integration
When a company does not have enough capacity to produce all of the products and sales volume demanded by their customers, this leads to ________.
Volume trade off decisions
What forms the basis for a financial advantage when making a business decision?
Whether or not the the differential benefits outweigh the differential costs
Absorption costing income statements ignore ________.
fixed and variable cost distinctions
The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for ________.
fixed overhead costs