Exam 4
A cost that remains constant per unit at various level of activity is a a) variable cost b) fixed cost c) mixed cost d) manufacturing cost
a) variable cost
Standard costs a) may show past cost experience. b) help establish expected future costs. c) are the budgeted cost per unit in the present. d) all of these answer choices are correct.
d) all of these answer choices are correct.
JRF, Inc. produces a product requiring 8 pounds of material costing $3.60 per pound. During Febrauary, JRF purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for Febrauary? a) $1,008 F b) $960 F c) $720 U d) $288 U
a) $1,008 F
Ryden Company's activity for the first 3 months are Jan 2,100 $3,6000 Feb 2,600 $4,350 March 2,900 $5,000 Using high-low method, what is the cost per machine hour? a) $1.75 b) $2.17 c) $1.73 d) $1.50
a) $1.75
Greenwond Inc. can make1,000 units of a necessary component with the following costs: Direct Materials $72,000 Direct Labor $18,000 Variable Overhead $9,000 Fixed Overhead ? The company can purchase the 1,000 units externally for $117,000. The avoidable fixed costs are $6,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the fixed overhead costs of making the component? a) $24,000 b) $18,000 c) $12,000 d) Cannot be determined.
a) $24,000
ISSAC Company has a contribution margin per unit of $21 and a contribution ratio of 60%. how much is the selling price of each unit a) $35 b) 52.50 c) 12.60 d) cannot determine without more information
a) $35
The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product. The direct materials quantity variance for last month was a) $4,000 favorable. b) $3,000 favorable. c) $4,000 unfavorable. d) $7,000 unfavorable.
a) $4,000 favorable.
Variable Costs for Hogan Inc are 25% of sales. its selling price is $70 per unit. If Hogan sells one more unit then break-even units, how much will the profit increase? a) 52.25 b) 17.50 c) 20 d) 280
a) 52.25
Klinc Inc wants to sell a sufficient quantity of products to earn a profit of 70,000. if the unit sales price is $10, unit variable cost is $8 and the total fixed costs are 120,000, how many units must be sold to earn income 70,000 a) 95,000 b) 70,000 c) 23,750 d) 950,000
a) 95,000
Hoot Division of Taylor Company's operating results include: controllable margin, $400,000; sales $4,400,000; and operating assets, $1,600,000. The Hoot Division's ROI is 25%. Management is considering a project with sales of $200,000, variable expenses of $120,000, fixed costs of $80,000; and an asset investment of $275,000. Should management accept this new project? a) No, since ROI will be lowered. b) Yes, since ROI will increase. c) Yes, since additional sales always mean more customers. d) No, since a loss will be incurred.
a) No, since ROI will be lowered.
Which of the following would generally not affect a make-or-buy decision? a) Selling expenses b) Direct labor c) Variable manufacturing costs d) Opportunity cost
a) Selling expenses
What does the controllable variance measure? a) Whether a company incurred more or less fixed overhead costs compared to the amount of overhead applied b) Whether a company incurred more or less overhead costs than budgeted c) The efficiency of using variable overhead resources d) Whether the production manager is able to control the production facility
a) Whether a company incurred more or less fixed overhead costs compared to the amount of overhead applied
In the performance report for cost centers a) controllable and noncontrollable costs are reported b) fixed costs are not reported c) no distinction is made between fixed and variable costs d) only materials and controllable costs are reported
a) controllable and noncontrollable costs are reported
a static budget is usually appropriate in evaluating a manager's effectiveness in controlling a) fixed manufacturing costs and fixed selling and administrative expenses b) variable manufacturing costs and variable selling and administrative expenses c) fixed manufacturing costs and variable selling and administrative expenses d) variable manufacturing costs and fixed selling and administrative expenses
a) fixed manufacturing costs and fixed selling and administrative expenses
which responsibility centers generate both revenues and costs? a) investment and profit centers b) profit and cost centers c) cost and investment centers d) only profit centers
a) investment and profit centers
Within the relevant range of activity, the behavior of total costs is assumed to be a) linear and upward sloping. b) linear and downward sloping. c) curvilinear and upward sloping. d) linear to a point and then level off.
a) linear and upward sloping.
The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the a) total labor variance. b) labor price variance. c) labor quantity variance. d) labor efficiency variance.
a) total labor variance.
Debit balance in variance account represent a) unfavorable variances b) favorable variances c) favorable for price variances; unfavorable for quantity variances d) favorable for quantity variances; unfavorable for price variances
a) unfavorable variances
A company purchases 16.000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials? a) $1.00 b) $0.25 c) $4.00 d) Cannot be determined from the data provided.
b) $0.25
Information on Francesca direct labor costs for the month of July is as follows: Actual Rate $12 Standard hours 11,000 Actual hours 10,000 Direct labor variance 4,000 unfavorable What was the standard rate for July? a) $12.36 b) $11.60 c) $12.40 d) $11.63
b) $11.60
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,700 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is a) $1,700 unfavorable. b) $3,000 favorable. c) $3,400 unfavorable. d) $3,000 unfavorable.
b) $3,000 favorable.
Crown Company's contribution margin is $8 per unit for A and $5 for B. A requires 2 machine hours and B requires 4 machine hours. a) $8 and $5 b) $4 and $1.25 c) $1.25 and $2 d) $2.50 and $2
b) $4 and $1.25
Kitzman Inc. produces a product requiring 3 direct labor hours at $15 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Kitzman actual payroll during January was $98,280. What is the labor quantity variance? Question options: a) $4,680 U b) $4,500 U c) $4,680 F d) $4,500 F
b) $4,500 U
The total variance is $35,000. The total materials variance is $8,000. The total labor variance is twice the total overhead variance. What is the total overhead variance? a) $4,500 b) $9,000 c) $13,500 d) $8,000
b) $9,000
A company desires to sella a sufficient quantity of products to earn a profit of 300,000. if the unit sales is $20, unit variable cost is $12 and the total fixed costs are 500,000, how many units must be sold to earn net income of 300,000 a) 66,666 b) 100,000 c) 40,000 d) 62,500
b) 100,000
budgeted overhead for Mangini Company at normal capacity of 30,000 direct labor hours is $6 per hour variable and $4 per hour fixed. In April , $310,000 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead controllable variance is a) 5,000 favoriable b) 2,000 favorable c) 10,000 favorable d) 10,000 unfavorable
b) 2,000 favorable
Aldo Manufacturing recorded operating data for its auto accessories division for the year. Sales Revenue $750,000 Contribution margin $150,000 Total direct fixed costs $90,000 Average total operating assets $400,000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $40,000, assuming fixed costs are held constant? Question options: a) 47.5% b) 25.0% c) 15.0% d) 13.3%
b) 25.0%
Hilbert Company recorded operating data for it's shoe division for the year. The company's desired return is 5% Sales $1,000,000 Contribution Margin $220,000 Total direct fixed costs $120,000 Average operating costs $400,000 Which one of the following reflects the controllable margin for the year? a) 22% b) 55% c) $100,000 d) $220,000
b) 55%
A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no salvage value at the end of its8-year useful life. If the equipment is purchased, annual revenues are expected to be $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $40,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is a) 31.3%. b) 6.25%. c) 3.125%. d) 15.6%.
b) 6.25%.
A company has total fixed costs of $150,00 and a contribution margin ratio of 20%. the total sales necessary to break even are a) 562,500 b) 750,000 c) 187,500 D) 150,000
b) 750,000
Use the following table, Period 8% 9% 10% 1 .926 .917 .909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 A company has a minimum required rate of return of 8% and is considering investing in a project that costs $68,337 and is expected to generate cash inflows of $27,000 each year for three years. The approximate internal rate of return on this project is a) 8%. b) 9%. c) 10%. d) less than the required8%.
b) 9%.
Messler industries is evaluating its mountain division, and investment center. The division has a $99,000 controllable margin and $600,000 of sales. How mush will Messler's average assets be when its ROI is 10% a) 891,000 b) 990,000 c) 600,000 d) 501,000
b) 990,000
Sutton Inc. can produce 100 units of a component part with the following costs: Direct Materials $130,000 Direct Labor $103,000 Variable Overhead $82,000 Fixed Overhead $62,000 If Sutton Inc. can purchase the units externally for $300,000, by what amount will its total costs change? a) An decrease of67,000 b) An increase of $15,000 c) An increase of $135,000 d) A decrease of $47,000
b) An increase of $15,000
The cash payback formula is a) Cost of capital investment ¸ Net income. b) Cost of capital investment ¸ Annual cash inflow. c) Average investment ¸ Net income. d) Average investment ¸ Annual cash inflow.
b) Cost of capital investment ¸ Annual cash inflow.
Suite Sixteen Makeup produces facial moisturizer. Each bottle of moisturizer costs $10 to produce and can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each. Suite Sixteen Makeup could sell the bottles of sunscreen for $22 each. a) Moisturizer must be processed further because its profit is $8 each. b) Moisturizer must not be processed further because costs increase more than revenue. c) Moisturizer must not be processed further because it decreases profit by $2 each. d) Moisturizer must be processed further because it increases profit by $3 each.
b) Moisturizer must not be processed further because costs increase more than revenue.
Karpentry Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $30 and Karpentry would sell it for $66. The cost to assemble the product is estimated at $21 per unit and the company believes the market would support a price of $85 on the assembled unit. What decision should Karpentry make? a) Sell before assembly, the company will be better off by $1 per unit. b) Sell before assembly, the company will be better off by $2 per unit. c) Process further, the company will be better off by $29 per unit. d) Process further, the company will be better off by $14 per unit.
b) Sell before assembly, the company will be better off by $2 per unit.
Which of the following statements is false? a) The overhead volume variance indicates whether plant facilities were used efficiently during the period. b) The costs that cause the overhead volume variance are usually controllable costs. c) The overhead volume variance relates solely to fixed costs. d) The overhead volume variance is favorable if standard hours allowed for output are greater than the standard hours at normal capacity.
b) The costs that cause the overhead volume variance are usually controllable costs.
flexible budget appropriate for a. direct labor (no) overhead (no) b. direct labor (yes) overhead (yes) c. direct labor (yes) overhead (no) d. Direct labor (no) overhead (yes) a) a b) b c) c d) d
b) b
The perspectives included in the balanced scorecard approach include all of the following except the a) internal process perspective. b) capacity utilization perspective. c) learning and growth perspective. d) customer perspective.
b) capacity utilization perspective.
Non financial information that management might evaluate in making a decision would not include a) employee turnover. b) contribution margin. c) the environment. d) the corporate profile in the community.
b) contribution margin.
when budgeted and actual results are not the same amount there is a budget a) error b) difference c) anomaly d) by-product
b) difference
The overhead volume variance relates only to a) variable overhead costs b) fixed overhead costs c) both variable and fixed overhead costs d) all manufactured costs
b) fixed overhead costs
A manager of a cost center is evaluated mainly on a) the profit that the center generates b) his or her ability to control costs c) the amount of investment it takes to support the cost center d) the amount of revenue that can be generated
b) his or her ability to control costs
Which of the following is not a true statement? a) incremental analysis might also be referred to as differential analysis b) incremental analysis is the same as CVP analysis c) incremental analysis is useful in making decisions d) incremental analysis focuses on decisions that involve a choice among alternative courses of actions
b) incremental analysis is the same as CVP analysis
the dollar amount of the controllable margin a) is usually higher than the contribution margin b) is usually lower than the contribution margin c) is always equal to the contribution margin d) cannot be a negative figure
b) is usually lower than the contribution margin
The source of data to serve as inputs in incremental analysis is generated by a) market analysts b) engineers c) accountants d) all of these answers are correct
d) all of these answers are correct
If a company anticipates that other sales will be affected by the acceptance of a special order, then a) lost sales should be considered in the incremental analysis. b) lost sales should not be considered in the incremental analysis. c) the order should not be accepted. d) the order will only be accepted if the plant is below capacity.
b) lost sales should not be considered in the incremental analysis.
a profit center is a) responsibility center that always reports a profit b) responsibility center that incurs costs and generates revenues c) evaluated by the rate of return earned one the investment allocated to the center d) referred to as a loss center when operations dont meet the company's objectives
b) responsibility center that incurs costs and generates revenues
To determine annual cash inflow, depreciation is a) subtracted from net income because it is an expense. b) subtracted from net income because it is an outflow of cash. c) added back to net income because it is an inflow of cash. d) added back to net income because it is not an outflow of cash.
b) subtracted from net income because it is an outflow of cash.
Flamingo Music produces 60,000 CDs on which to record music. The CDs have the following costs: Direct Materials $11,000 Direct Labor $15,000 Variable Overhead $3,000 Fixed Overhead $7,000 Flamingo could avoid $6,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the60,000 units externally, what is the maximum external price that Flamingo would expect to pay for the units? a) $30,000 b) $29,000 c) $35,000 d) $36,000
c) $35,000
The formula for the materials quantity variance is a) (SQ × AP) - (SQ × SP). b) (AQ × AP) - (AQ × SP). c) (AQ × SP) - (SQ × SP). d) (AQ × AP) - (SQ × SP).
c) (AQ × SP) - (SQ × SP).
how much sales is required to earn a net income of $160,000 if fixed costs are $300,000 and contribution margin ratio is 40% a) 766,667 b) 750,000 c) 1,150,000 d) 500,000
c) 1,150,000
Litchfeild Company reported the following results from the sale of 5000 hammers in May: sales 200000, variable costs 110000, fixed costs 60,000 and net income 30,000. Assume thy increase the selling price by 10%. how many hammers have to be sold to maintain the same net income a) 4,500 b) 6,364 c) 4,091 d) 5,000
c) 4,091
Which one of the following is correct? a) Cash flows are used to calculate the internal rate of return. b) Accrual income is used to calculate the payback period. c) Cash flows are used to calculate the annual rate of return. d) Accrual income is used to calculate the net present value.
c) Cash flows are used to calculate the annual rate of return.
Of the following choices, which contain both a traceable fixed cost and a common fixed cost? a) profit center manager's salary and time keeping costs for a responsibility center's employees b) Company president's salary and company personnel department costs c) Company personnel department costs and time keeping costs for a responsibility center's employees d) Depreciation on a responsibility center's equipment and supervisory salaries for the center
c) Company personnel department costs and time keeping costs for a responsibility center's employees
incremental analysis would be approbate for a) acceptance of an order at a special price b) a retain or replace equipment decison c) a sell or process further decesion d) all of these are correct
d) all of these are correct
Applying the high-low method, which months are relevant Jan 80,000 $96,000 Feb 50,000 $80,000 March 70,000 $94,000 April 90,000 $130,000 a) January and Febuary b) January and April c) February and April d) February and March
c) February and April
Under management by exception, which differences between planned and actual results should be investigated? a) Material and non controllable b) Controllable and non controllable c) Material and controllable d) All differences should be investigated
c) Material and controllable
Which of the following is not considered an advantage of using standard costs? a) Standard costs can reduce clerical costs. b) Standard costs can be useful in setting prices for finished goods. c) Standard costs can be used as a means of finding fault with performance. d) Standard costs can make employees "cost-conscious."
c) Standard costs can be used as a means of finding fault with performance.
Sales results that are evaluated by a static budget might show 1. favorable difference that are not justified 2. unfavorable difference that are just not justified a) 1 b) 2 c) both d) neither
c) both
The maintenance department of a manufacturing company is a(n) a) segment b) profit center c) cost center d) investment center
c) cost center
Which of the following is not a true statement? a) all costs are controllable at some level b) responsibility accounting applies to both profit and not-for-profit entities c) fewer costs are controllable as one moves up each higher level of managerial responsibilities D) the term segment is sometimes used to identify areas of responsibility in decentralized operations
c) fewer costs are controllable as one moves up each higher level of managerial responsibilities
the most rigrous of all standards is the a) normal standard b) realistic standard c) ideal standard d) conceivable standard
c) ideal standard
the process of evaluating financial data that change under alternative courses of action is called a) double entry analysis b) contribution margin analysis c) incremental analysis d) cost-benefit analysis
c) incremental analysis
Labor efficiency is measured by the a) materials quantity variance. b) total labor variance. c) labor quantity variance. d) labor rate variance.
c) labor quantity variance.
The amount by which actual or expected sales exceeds break-even sales is referred to as a) contribution margin b) unanticipated profit c) margin of safety d) target net income
c) margin of safety
Which of the following valuations of operating assets is not readily available from the accounting records? a) cost b) book value c) market value d) both cost and market value
c) market value
If a company's required minimum rate of return is 9%, and in using the net present value method, a project's net present value is zero, this indicates that the a) project's rate of return exceeds 9%. b) project's rate of return is less than the minimum rate required. c) project earns a rate of return of 9%. d) project earns a rate of return of 0%.
c) project earns a rate of return of 9%.
Ideal standards a) are rigorous but attainable. b) are the standards generally used in a master budget. c) reflect optimal performance under perfect operating conditions. d) will always motivate employees to achieve the maximum output.
c) reflect optimal performance under perfect operating conditions.
a responsibility report for a profit center will a) not show controllable fixed b) not show indirect fixed costs c) show noncontrollable fixed costs d) not show cumulative year-to-date results
c) show noncontrollable fixed costs
A cost the cannot be changed by any present or future decision a) incremental cost b) opportunity cost c) sunk cost d) variable cost
c) sunk cost
If actual direct materials costs are greater than standard direct materials costs, it means that a) actual costs were calculated incorrectly. b) the actual unit price of direct materials was greater than the standard unit price of direct materials. c) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. d) the purchasing agent or the production foreman is inefficient.
c) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.
incremental Analysis would not be appropriate for a) make or buy decision b) an allocation of limited resource decision c) elimination of an unprofitable segment d) analysis of manufacturing variances
d) analysis of manufacturing variances
if the actual direct materials costs are greater than the standard direct materials costs, it means that a) actual costs wer calculated incorrectly b) the actual unit price of direct material was greater than the standard unit price of direct materials c) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. d) the purchasing agent or the production foreman is inefficient
c) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.
A company is considering eliminating a product line. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. If the product line is discontinued, a) total net income will increase by the amount of the product lines fixed costs b) total net income will decrease by the amount of the product line's fixed costs c) the contribution margin of the product line will indicate the net income increase or decrease d) the company't total fixed costs will decrease
c) the contribution margin of the product line will indicate the net income increase or decrease
Which of the following statements about overhead variances is false? a) standard hours allowed are used in calculating the controllable variance b) standard hours allowed are used in calculating the volume variance c) the controllable variance pertains solely to fixed costs d) the total overhead variance pertains to both variable and fixed costs
c) the controllable variance pertains solely to fixed costs
In reporting variances, a) promptness is relatively unimportant. b) management normally investigates all variances. c) the reports should facilitate management by exception. d) the reports are not departmentalized.
c) the reports should facilitate management by exception.
If the standard hours allowed are less than the standard hours at normal capacity, the volume variance Question options: a) cannot be calculated. b) will be favorable. c) will be unfavorable. d) will be greater than the controllable variance.
c) will be unfavorable.
Rumsy Company is considereing buying equipment for $240,000 with useful life of 5 years and an estimated salvage value of $10,000. If annual expected income is $21,000 the denominator in computing the annual rate of return is a) $250,000 b) $120,000 c) $240,000 d) $125,000
d) $125,000
A company uses 20,000 pounds of materials for which it paid $5.00 a pound. The materials price variance was $15,000 unfavorable. What is the standard price per pound? a) $0.75 b) $5.75 c) $5.00 d) $4.25
d) $4.25
Toolworks has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Toolwork's used 3,100 pounds of materials at a total cost of $17,980. Toolwork's materials price variance is a) $200 U. b) $420 F. c) $600 F. d) $620 F.
d) $620 F.
Red Company produces1,000 units of a necessary component with the following costs: Direct Materials $34,000 Direct Labor $15,000 Variable Overhead $8,000 Fixed Overhead $10,000 Red's Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Red Company would accept to acquire the1,000 units externally? a) $57,000 b) $61,000 c) $59,000 d) $63,000
d) $63,000
At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,600 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials: a) $1,600 unfavorable. b) $1,600 favorable. c) $800 favorable. d) $800 unfavorable.
d) $800 unfavorable.
A company's planned activity level for next year is expected to be 200,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: Variable indirect materials $280,000 indirect labor $400,000 supplies $40,000 Fixed Depreciation $120,000 Taxes $30,000 Supervision $100,000 A flexible budget prepared at the 160,000 machine hours level of activity would show total manufacturing overhead costs of a) $576,000. b) $720,000. c) $696,000. d) $826,000.
d) $826,000.
Shine Company uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $276,000 fixed. If Shine had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs? a) $3,000 unfavorable b) $3,000 favorable c) $9,000 unfavorable d) $9,000 favorable
d) $9,000 favorable
The master budget of Handy Company shows that the planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect Labor $480,000 Machine Supplies $120,000 Indirect materials $140,000 Depreciation $80,000 Total Overhead $820,000 A flexible budget for a level of activity of 120,000 machine hours would show total manufacturing overhead costs of a) $940,000. b) $820,000. c) $984,000. d) $968,000.
d) $968,000.
the selection of levels of activity to depict a flexible budget 1. will be within the relevant range 2. is largely a matter of expendiency 3. is governed by GAAP a) 1 b) 2 c) 3 d) 1 and 2
d) 1 and 2
Hansen's variable cost are 30% of sales. The company is contemplating an advertising campaign that will cost $33,000. If sales are expected to increase $70,000 by how much will the company's net income increase? a) 37,000 b) 49,000 c) 12,000 d) 16,000
d) 16,000
JP Company is considering two capital investment proposals. Estimates regarding each project are provided The cash payback period for Project Echo is a) 20 years. b) 10 years. c) 5 years. d) 4 years.
d) 4 years.
A flexible budget can be prepared for which of the following budgets comprising the master budget? a) Sales b) Overhead c) Direct materials d) All of these answer choices are correct
d) All of these answer choices are correct
Carelli Company has old inventory on hand that cost $36,000. Its scrap value is $48,000. The inventory could be sold for $120,000 if manufactured further at an additional cost of $38,000. What should Carelli do? a) Sell the inventory for $48,000 scrap value b) Dispose of the inventory to avoid any further decline in value c) Hold the inventory at its $36,000 cost d) Manufacture further and sell it for $120,000.
d) Manufacture further and sell it for $120,000.
The purchasing agent of the Eldridge Company ordered materials of lower quality in an effort to economize on price. What variance will most likely result? a) Favorable materials quantity variance b) Favorable total materials variance c) Unfavorable materials price variance d) Unfavorable labor quantity variance
d) Unfavorable labor quantity variance
A company is deciding on whether to replace some old equipment with new equipment. Which of the following is not a relevant cost for incremental analysis? a) annual operating cost of the new equipment b) annual operating cost of the old equipment c) net cost of the new equipment d) accumulated depreciation on old equipment
d) accumulated depreciation on old equipment
Return on investment (ROI) is calculated by dividing a) contribution margin by sales b) controllable margin by sales c) contribution margin by average operating assets d) controllable margin by average operating assets
d) controllable margin by average operating assets
the customer perspective of the balanced scorecard approach a) is the most traditional view of the company b) evaluates the internal operating processes critical to the success of the organization c) evaluates how well the company develops and retains it's employees d) evaluates how well the company is performing from the viewpoint of those who buy its products and services
d) evaluates how well the company is performing from the viewpoint of those who buy its products and services
Which of the following is not an indirect fixed cost? a) company president's salary b) depreciation on the company building housing several profit centers c) company personnel department costs d) profit center supervisory salaries
d) profit center supervisory salaries
the matrix approach to variance analysis a) will yield slightly different variances then the formula approach b) in more accurate than the formula approach c) does not separate the price and quantity variance calculations d) provides a convenient structure for determining each variance
d) provides a convenient structure for determining each variance.
Top management can control a) only controllable costs b) only noncontrollable costs c) all costs d) some noncontrollable costs and all controllable costs
d) some noncontrollable costs and all controllable costs
If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then a) only variable costs are relevant. b) fixed costs are not relevant. c) the order will likely be accepted. d) the order will likely be rejected.
d) the order will likely be rejected.
De Longo Inc has excess capacity. Under what situation should the company accept a special order for less than current selling price a) never b) when additional fixed costs must be incurred to accommodate the order c) when the company thinks is can use the cheaper materials without the customer's knowledge d) when incremental revenues exceed incremental expenses
d) when incremental revenues exceed incremental expenses
