Unit 1 Quiz 1. A managerial managerial accountant accountant who communicates communicates information information objectively objectively is exercisin exercising g which of the following standards? a. obje object ctiv ivit ity y b. inte integr grit ity y c. comp compe eten tence d. con conde dent ntia iali lity ty 2. A managerial managerial accountant accountant who prepares prepares clear clear reports reports and recommendation recommendations s after analyzing relevant facts is exercising which of the following standards? a. obje object ctiv ivit ity y b. inte integr grit ity y c. comp compet eten ence ce d. con conde dent ntia iali lity ty . !ost account accounting ing standar standards ds a. are legal legal standards standards set by the "nstitute "nstitute of #anagement #anagement Accountants Accountants for for use in all manufacturing and professional businesses. b. are set by the !ost !ost Accounting Accounting $tandards $tandards %oard and are are legally legally binding on on all manufacturers& but not service organizations. c. do not exist except except for those legal legal pronouncements pronouncements for for companies companies bidding or pricing cost-related contracts with the government. d. are developed developed by the !ost Accounting Accounting $tandards $tandards %oard& %oard& issued by the the "nstitute of #anagement Accountants& and are legally binding on !#As. '. (hich of the the following ).$. legislation legislation relates relates to bribes being being o*ered o*ered to foreign foreign o+cials? a. ,ac-eteer ,ac-eteer "nuenced "nuenced and !orrupt !orrupt /rganizations /rganizations Act b. 0o 0orei reign gn "llegal "llegal Activi Activities ties Act Act c. Fo Foreign reign orrupt orrupt !ract !ractices ices "ct d. 0e 0ederal deral %ribery and !orrupt !orrupt ractices ractices Act . 3he "nstitute "nstitute of #anagement #anagement Accountant Accountants4 s4 !ode of 5thics a. is a legally legally enforceable enforceable contract contract with with all management management accountan accountants. ts. b. should be viewed as a goal for professional behavior behavior.. c. is a legally legally enforce enforceable able contra contract ct with all all !As. !As. d. provides provides ways to measure measure departur departures es from ethical ethical behavior behavior.. 6. 3he 0oreig 0oreign n !orrupt !orrupt ractices ractices Act Act is directed directed at a. U.#. corpora corporations tions operat operating ing overseas. overseas. b. foreign foreign busin businesses esses operat operating ing in the the ).$. c. all busine businesses sses dealin dealing g with ).$. consum consumers. ers. d. all ). $. $. businesses businesses with operations operations in foreign countries. countries. 7. 3he ethical standard standards s established for managemen managementt accountants accountants are in the areas areas of a. competence& competence& licensing& licensing& reporting& reporting& and education. education. b. budgeting& budgeting& cost allocation& allocation& product product costing& costing& and insider insider trading. trading. c. competence$ con%dentiality con%dentiality$$ integrity$ integrity$ and credibility. credibility. d. disclosure& disclosure& communication communication&& decision decision ma-ing& ma-ing& and planning. planning. 8. (hich ethical ethical standard standard is violated violated by an accountant accountant who who accepts a gift gift from from a client a. !r !red edib ibil ilit ity y b. !o !on nde dent ntia iali lity ty c. !o !om mpeten tence d. &nte &ntegr grit ity y
9. (hich ethical ethical standard has has been violated violated if an accountant accountant fails to prepare prepare nancial nancial statements according to industry standards? a. omp ompet eten ence ce b. !o !on nde dent ntia iali lity ty c. "nt "ntegr egrity d. !r !red edib ibil ilit ity y 1:. 1:. (hic (hich h eth ethic ical al stan standa dard rd is viol violat ated ed when when an acco accoun unta tant nt uses uses infor informa mati tion on from from a nancial statement he is preparing to advise a relative of a stoc- purchase? a. !o !omp mpet eten ence ce b. on%d on%dent entia ialit lity y c. "nte "ntegr griity d. !r !red edib ibil ilit ity y
Unit ' !ractice Questions 1. $elect the incorr incorrect ect statement statement concerning concerning cost objects. objects. ;oints ;oints < 1= a. (hen the cost cost object is the roduc roduction tion >epartment& >epartment& the cost cost of a production production supervisor4s salary would be a direct cost. b. A direct direct cost must be convenien conveniently tly and economically economically traceable to the cost object. c. (hen the cost cost object is a 3undra 3undra truc-& truc-& the cost of of the truc-4s engine engine is a direct cost. d. (hen the cost object is the )oyota )oyota !rinceton &ndiana &ndiana manufacturing plant the cost of overhead is an indirect cost. 2. (hich of the the following statements is corr correct ect concerning concerning xed xed costs? ;oints ;oints < 1= a. (ithin the the relevant relevant range& range& total xed xed costs always always increase increase when volume volume increases. b. " step cost cost may may be %xed %xed or variable variable.. c. 3he xed xed costs per unit unit will remain remain constant constant provided provided volume volume remains remains within the relevant range. d. (ithin the the relevant relevant range& range& total xed xed costs always always decrease decrease when volume volume increases. . A utility bill bill that includes includes a at charge charge for basic service plus a stated rate for for each -ilowatt hour of usage beyond a specied level is an example of a ;oints < 1= a. mixe mixed d cos cost. t. b. step step cost. st. c. vari variab able le cost cost.. d. indep indepen enden dentt cost. cost. '. uestion '.'. "n relation relation to the dollar dollar amount amount of 3undra 3undra tructruc- sales& which of the following classications is appropriate for the truc- tires used in production and for the salaries of production supervisors? 3ruc 3ruc- 3ires 3ires @ roduction roduction $upervisor $upervisor $alaries $alaries ;oints ;oints < 1= a. *ariable ariable costF costFixed ixed cost b. 0ixed ixed cost costariable ariable cost cost c. ariab ariable le cost# cost#ix ixed ed cost cost d. #ixed #ixed cost cost 0ixed ixed cost cost . 3he estimated estimated unit cost for for a company company planning planning to produce produce and sell at a level of of 12&::: units per month is as follows< !ost "tem 5stimated )nit !ost >irect material B2:
>irect labor 2 ariable manufacturing overhead 6 0ixed manufacturing overhead 12 ariable selling ' 0ixed selling ' (hat is the total estimated conversion costs per unit? ;oints < 1= a. B7: b. B8 c. B2 d. +, 6. (hich of the following following is not a product product cost for 3undra 3undra truc-s? truc-s? ;oints ;oints < 1= a. $tee $teeri ring ng whee wheell b. Clue c. #alary of product sales manager d. /verh erhea ead d 7. (hich of the the following types of rms rms has the highest highest degree degree of conversion conversion causing causing a major transformation from input to output? ;oints < 1= a. Dee4s Dee4s Dandsca Dandscapin ping g !ompany !ompany b. )oyota anufacturing ompany c. (al@# al@#ar artt $tor $tores es d. All All of the the abov above e 8. $elect the incorr incorrect ect statement statement concerning concerning the stages stages of the production production or or conversion process. ;oints < 1= a. " manufacturing manufacturing company/s company/s Finished Finished 0oods 0oods inventory inventory account is similar to a service company/s #upplies inventory account. b. 0irms such as as retailers retailers that engage engage in only low or moderate moderate degrees degrees of conversion ordinarily have only a single inventory account. c. 3he production production process process occurs in three three stages< raw material& worwor- in process& process& and nished goods. d. At the point point of sale& product product costs costs ow from an inventory inventory account account to !ost of Coods $old expense. 9. (hich of the following following would not not be classied as direct direct material for a 3undra 3undra truc-? truc-? ;oints < 1= a. !ost !o st of the the batt batter ery y b. ost of the glue used to secure the carpet in the cab of the truc c. !ost of freigh freightt paid paid on the tructruc- windshi windshield eld d. !ost !ost of the fuel fuel tantan1:. 1:. (hic (hich h of of the the foll follow owin ing g wou would ld be clas classi sie ed d as as dir direc ectt lab labor or for for the the prod produc ucti tion on of a 3undra truc-? ;oints < 1= a. (ages paid to assembly line ;production= ;production= wor-ers wor-ers b. %onuses paid to production production wor-ers wor-ers for exceeding exceeding production production goals c. rodu roductio ction n wor-e wor-ers4 rs4 $ocial $ocial $ecurity $ecurity taxes taxes d. "ll of the above above 11. 11. (hic (hich h of of the the foll follo owing wing cost costs s woul would d not not be clas classi sie ed d as over overhe head ad for for the the production of 3undra truc-s? ;oints < 1= a. $alar $alary y of plant plant manag manager er b. "ndir "ndirect ect labor labor costs costs c. #alary #alary of )oyota oyota hief 2xecutiv 2xecutive e 34cer 34cer d. >eprecia >epreciation tion of produc production tion machiner machinery y
12. 12. All All of of the the foll follow owin ing g ar are rea reaso sons ns why why ove overrhead head cost costs s ar are all alloc ocat ated ed to cost cost objects except< a. to compare compare alternative alternative courses courses of action for for management management planning planning and decision ma-ing. b. to identify identify the %xed and variable variable components components of the various various overhead costs. c. to determ determine ine the the full full cost of of the cost cost object. object. d. to motivate the manager manager in charge charge of the cost object to manage manage it e+ciently e+ciently.. 1. 1. A !om !omp pany any had had the the fol follo lowi wing ng inve invent ntor orie ies s at at the the begi beginn nnin ing g and and end end of of Eanuary< Eanuary< Eanuary 1 Eanuary 1 1 0inished goods B12&:: B11&7:: (or- in process 2&:: 2&1:: >irect material 1&':: 12&':: 3he following following additional additional manufacturin manufacturing g data were were available available for the month month of Eanuary< Eanuary< >irect material purchased B18&9:: >irect labor :&::: Actual factory overhead 17&:: (hat was the total cost of direct material used for Eanuary? ;oints < 1= a. +15$5 15$5 b. B18&9:: c. B17&9:: d. B6&:: 1'. 1'. % !om !ompa pany ny had the the fol follo lowi wing ng inve invent nto ories ries at the the beg begin inni ning ng and and end end of Eanuary< Eanuary< Eanuary 1 Eanuary 1 1 0inished goods B12&::: B117&::: (or- in process 2&::: 21&::: >irect material 1'&::: 12'&::: 3he following following additional additional manufacturin manufacturing g data were were available available for the month month of Eanuary< Eanuary< >irect material used B189&::: >irect labor ::&::: Actual factory overhead 17&::: (hat was % !ompany4s cost of goods manufactured for Eanuary? ;oints < 1= a. B67 B672&:: &::: b. B66 B66:&:: &::: c. B68&::: d. +678 +678$ $ 1. 1. ! !om !ompa pany ny had had the the foll follo owing wing inve invent ntor orie ies s at at the the begi beginn nnin ing g and and end end of of Eanuary< Eanuary< Eanuary 1 Eanuary 1 0inished goods B12&::: B117&::: (or- in process 2&::: 21&::: >irect material 1'&::: 12'&::: Assuming the !ost of Coods #anufactured for Eanuary was B66:&:::& what was ! !ompany4s cost of goods sold for Eanuary? ;oints < 1= a. B67 B676&:: &::: b. +668 +668$ $
c. d.
B666&::: B6 B62&:: &::: 16. 16. All All of of the the foll follow owin ing g ar are rea reaso sons ns for for usi using ng pred predet eter ermi mine ned d ove overrhead head rate rates s in in product costing except< a. to overcome overcome the problem problem of uctuations uctuations in activity levels levels that have have no impact on xed overhead costs. b. to overcome the problem problem caused by overhead containing containing both %xed and variable costs. c. to adjust for variations variations in actual overhea overhead d costs that that are unrelated unrelated to uctuations in activity. d. to allow management management to determine determine whether whether a product& product& product product line& line& or customer is protable. 17. 17. (hat (hat is the the bes bestt met metho hod d for for disp dispos osin ing g of sign signi ica cant nt unde undera rapp ppli lied ed fact factor ory y overhead? ;oints < 1= a. !harge !harge the underapp underapplied lied amount amount to cost of goods sold sold b. !rorate the underapplied amount to cost of goods sold$ %nished goods$ and wor in process c. rorate rorate the underappli underapplied ed amount amount to inventory inventory only ;wor;wor- in process process and nished goods= d. !harge !harge the underapplied underapplied amount amount to a loss loss account account at the end of of the period 18. 18. $ele $elect ct the the inco incorrrect ect stat statem emen entt con conce cern rnin ing g ove overa rapp ppli lied ed over overhe head ad.. ;oi ;oint nts s < 1= 1= a. )he overhead control account account will will have a debit balance. b. 3he amount amount of overhead overhead transferre transferred d to (" from from the overhead overhead control control account exceeded the actual amount of overhead incurred. c. /verapplied /verapplied overhead overhead must must be closed closed at year year@end @end because because a single single year4s year4s activity level was used to set the predetermined overhead rate. d. /verapplied /verapplied overhead overhead may result if the the company4s company4s actual utilization utilization of of capacity is greater than expected. 19. 19. "n dete deterrmini mining ng cost cost beha behavi vior or in busi busine ness& ss& the the cos costt fun funct ctio ion n is is oft often en expr xpresse essed d as y F a G bx. (hat does the HaH term represent? ;oints < 1= a. 3otal variable variable costs b. )otal %xed costs costs c. )nit )nit vari variab able le cost cost d. )nit )nit xed xed cost cost 2:. 2:. # !omp !ompan any y der deriv ived ed the the foll follo owing wing cost cost eIu eIuat atio ion n to to exp expla lain in its its mon month thly ly manufacturing overhead cost< /J F B8:&::: G B12#J& where #J F machine hours 3he standard standard time reIuired reIuired to manufacture manufacture one one unit is ' machine machine hours. hours. 3he company applies manufacturing overhead to production on the basis of machine hours and its normal annual production is :&::: units. (hat is the estimated variable manufacturing overhead cost for a month in which scheduled production is &::: units? ;oints < 1= a. B6 B6:&:: &::: b. B2 B2:&:: &::: c. +'7$ '7$ d. B8:&::: 21. 21. (hic (hich h met metho hod d of of sep separ arat atin ing g mix mixed ed cost costs s ens ensur ures es the the bes bestt tt ttin ing g reg regrressi ession on line? ;oints < 1= a. Jigh Jigh@l @low ow meth method od b. $catt $catter ergr graph aph metho method d c. ror rorat atio ion n meth method od
d.
9east s:uares regression method 22. ( !ompany is wor-ing on its annual prot plan for the coming year. 3he company wants to determine the cost behavior pattern of its maintenance costs. 3he prior year4s data regarding maintenance hours and costs are as follows. Jours of Activity #aintenance !osts Eanuary '8: B'&2:: 0ebruary 2: &::: #arch ':: &6:: April :: 2&82: #ay :: '&: Eune 1: 2&96: Euly 2: &:: August 2: '&'7: $eptember '9: '&26: /ctober '7: '&:: Kovember : &:: >ecember ': &16: )sing the high@low method& estimate the amount of maintenance cost per hour. ;oints < 1= a. B2&781 b. B7: c. +;., d. B:.1 2. L !ompany uses simple regression to separate its selling costs ;y= into xed and variable components based on units sold ;x=. A computer software program generated the following regression analysis results< Average x ':: Average y 6:: a 68'.6 $tandard error of a '9.1 b 7.288' $tandard error of b :.12126 $td error of the estimate '.'69 r2 :.9972' (hat eIuation should L !ompany use to estimate its selling costs? ;oints < 1= a. y F B&6:: G '::x b. y < +687.6, = ;.'887x c. y F B&6:: G 7.288'x d. y F B68'.6 G .12126x 2'. "n applying overhead& individual department rates would be used instead of a plant wide rate if ;oints < 1= a. the manufactured products di>er in the resources consumed from the individual departments in the plant. b. a company wants to adopt a standard cost system. c. a company4s manufacturing operations are highly automated. d. manufacturing overhead is the largest component of product cost. 2. (hich cost accumulation and reporting system treats the costs of all manufacturing components ;direct material& direct labor& and both variable and xed overhead= as product costs? ;oints < 1= a. "bsorption costing b. ariable costing
c. d.
#ixed costing Kone of the above 26. (hich cost accumulation and reporting system reports the total contribution margin? ;oints < 1= a. Absorption costing b. *ariable costing c. #ixed costing d. Kone of the above 27. (hich cost accumulation and reporting system is reIuired for external reporting and tax purposes? ;oints < 1= a. "bsorption costing b. ariable costing c. #ixed costing d. Kone of the above 28. 3he primary di*erence between absorption and variable costing lies in the treatment of< a. variable selling and administrative costs. b. variable overhead costs. c. %xed overhead costs. d. xed selling and administrative costs. 29. (hich cost accumulation and reporting system provides management an incentive to over@produce ;i.e.& produce more units than can be sold=? ;oints < 1= a. "bsorption costing b. ariable costing c. #ixed costing d. Kone of the above :. "n a period in which there is no change in inventory& which cost accumulation and reporting system will report higher prots? ;oints < 1= a. Absorption costing b. ariable costing c. #ixed costing d. ?one of the above
Unit ' Quiz 1. (hich of the following is not a reason to use predetermined overhead rates? a. to overcome the problems of assigning overhead to diverse types of products b. to compensate for uctuations in monthly overhead costs c. to provide a means for assigning overhead during the period rather than at the end of the period d. to smooth out the amount of overhead cost assigned to products when monthly production activity di*ers 2. 3he estimated maximum potential activity for a specied time is< a. theoretical capacity b. practical capacity c. normal capacity d. expected capacity . 3he measure of activity that allows for routine variations in manufacturing activity is< a. theoretical capacity
b. practical capacity c. normal capacity d. expected capacity '. 3he measure of production that considers historical and estimated future production levels and cyclical uctuations is referred to as< a. theoretical capacity b. practical capacity c. normal capacity d. expected capacity . A short@run measure of activity that represents a rm?s anticipated activity level for an upcoming period based upon expected demand is referred to as< a. theoretical capacity b. practical capacity c. normal capacity d. expected capacity 6. "f a rm produces more units than it sells& absorption costing& relative to variable costing& will result in a. higher income and assets. b. higher income but lower assets. c. lower income but higher assets. d. lower income and assets. 7. )nder absorption costing& if sales remain constant from period 1 to period 2& the company will report a larger income in period 2 when a. period ' production exceeds period 1 production. b. period 1 production exceeds period 2 production. c. variable production costs are larger in period 2 than period 1. d. xed production costs are larger in period 2 than period 1. 8. A basic concept of variable costing is that period costs should be currently expensed. (hat is the rationale behind this procedure? a. eriod costs are uncontrollable and should not be charged to a specic product. b. eriod costs are generally immaterial in amount and the cost of assigning the amounts to specic products would outweigh the benets. c. Allocation of period costs is arbitrary at best and could lead to erroneous decision by management. d. @ecause period costs will occur whether production occurs$ it is improper to allocate these costs to production and defer a current cost of doing business. 9. A rm presently has total sales of B1::&:::. "f its sales rise& its a. net income based on variable costing will go up more than its net income based on absorption costing. b. net income based on absorption costing will go up more than its net income based on variable costing. c. xed costs will also rise. d. per unit variable costs will rise. 1:. 0or its most recent scal year& a rm reported that its contribution margin was eIual to ': percent of sales and that its net income amounted to 1: percent of sales. "f its xed costs for the year were B6:&:::& how much were sales? a. B1:&::: b. +'$ c. B6::&:::
d. can4t be determined from the information given 11. 3he following information regarding xed production costs from a manufacturing rm is available for the current year< 0ixed costs in the beginning inventory B 16&::: 0ixed costs incurred this period 1::&::: (hich of the following statements is not true? a. 3he maximum amount of xed production costs that this rm could deduct using absorption costs in the current year is B116&:::. b. 3he maximum di*erence between this rm4s the current year income based on absorption costing and its income based on variable costing is B16&:::. c. Using variable costing$ this %rm will deduct no more than +16$ for %xed production costs. d. "f this rm produced substantially more units than it sold in the current year& variable costing will probably yield a lower income than absorption costing. 12. A rm has xed costs of B2::&::: and variable costs per unit of B6. "t plans on selling ':&::: units in the coming year. 3o realize a prot of B2:&:::& the rm must have a sales price per unit of at least a. B11.::. b. +11.,. c. B1:.::. d. B1:.:. 1. Jahn !orporation produces a single product that sells for B7.:: per unit. $tandard capacity is 1::&::: units per yearM 1::&::: units were produced and 8:&::: units were sold during the year. #anufacturing costs and selling and administrative expenses are presented below. 3here were no variances from the standard variable costs. Any under@ or overapplied overhead is written o* directly at year@end as an adjustment to cost of goods sold. Fixed *ariable costs costs B1.: per unit >irect material B: produced 1.:: per unit >irect labor : produced :.: per unit #anufacturing overhead B1:&::: produced $elling N Administration 8:&::: :.: per unit sold expense Jahn !orporation had no inventory at the beginning of the year. "n presenting inventory on the balance sheet at >ecember 1& the unit cost under absorption costing is a. B2.:. b. B.::. c. B.:. d. +7.,. 1'. (hat is the net income under variable costing? a. +,$ b. B8:&::: c. B9:&::: d. B12:&:::
1. a. b. c. d.
(hat is the net income under absorption costing? B:&::: +8$ B9:&::: B12:&:::
Unit A !ractice Questions 1. Activity@based management ;A%#= focuses on improving customer value and enhancing protability. (hich of the following is an impact of implementing A%# to control production processes? ;oints < 1= a. #ore e*ective performance evaluation b. #ore accurate cost determination and control c. #ore e+cient production processes d. "ll of the above 2. $elect the incorrect statement from the following. ;oints < 1= a. An activity is any repetitive action that is performed in fulllment of a business function. b. Kon@value@added activities increase the time spent on a product but do not increase its worth. c. )he objective of activity-based management is to eliminate all nonvalue-added activities. d. Activity analysis attempts to classify activities as value added or non@value@ added. . All of the following are non@value@added time except< ;oints < 1= a. inspection time. b. move time. c. processing time. d. wait time. '. (hich of the following correctly computes manufacturing cycle e+ciency? a. 3otal !ycle 3ime @ 3otal alue@Added 3ime. b. 3otal !ycle 3ime O 3otal alue@Added 3ime. c. 3otal alue@Added 3ime G 3otal Kon@alue@Added 3ime. d. )otal *alue-"dded )ime B )otal ycle )ime. . 3he need to rewor- products because of a poorly designed training program is an example of a non@value@added activity caused by ;oints < 1= a. systemic factors. b. physical factors. c. human factors. d. Kone of the above. 6. All of the following are examples of batch@level costs except< ;oints < 1= a. costs of engineering change orders. b. purchase order costs. c. inspection costs. d. movement costs. 7. $elect the incorrect matching of cost and cost level. ;oints < 1= a. )nit level < >irect material b. Facility level C 2:uipment maintenance c. roduct level < roduct development d. %atch level < $etup costs
8. (hich costing system assigns costs within multiple cost pools to products using multiple drivers? ;oints < 1= a. "ctivity-based costing b. ariable costing c. 3raditional costing d. Kone of the above 9. 5 !orporation& which ma-es electronic components for KA$A4s space shuttle& uses activity@based costing. /ne of its activities is described below< "ctivity
1 uality control
ost Driver
2st. Qty. Ee:uired for ost Eat of ost Driver urrent ontract
Ko. of units 21:&::: units
B:.1'
17&:: units
$elect the incorrect statement from the following. ;oints < 1= a. B2&': will be assigned to the contract on which the company is currently wor-ing. b. )he company/s annual estimated :uality control costs cannot be determined from the information provided. c. $ince the component is being built for the ).$. Covernment for use on the space shuttle& it is not unusual for the company to inspect every unit produced. d. "t is li-ely that the company uses a di*erent cost driver to assign other support costs such as setup costs. 1:. !ompany is considering using activity@based costing instead of its traditional costing system because it believes its current system may be providing misleading information. 3he following data shows the budgeted manufacturing overhead. "ctivity
ost Driver
#aterials handling $etup costs
Ko. of parts handled Ko. of setups #achine hours #achining costs ;#J= uality control Ko. of batches
@udgeted "ctivity
@udgeted ost
6&:::&:::
B72:&:::
7:
1&:::
:&:::
':&:::
:: )otal overhead cost
22&::: B1&8::&:::
3he company also estimates that it will wor- :&::: direct labor hours in the coming year. 3he following information is provided for one of the company4s products for the coming year< Direct material and Direct 9abor
>irect materials cost per unit
B'.' :
>irect labor cost per unit .: >DJ P B1O>DJ )otal #ales and production dataC 5xpected sales %atch size $etups 3otal parts per nished unit #achine hour reIuired
.7 B.1
2:&::: units &::: units 2 per batch parts 8: #J per batch
"f the organization uses a traditional full cost system& the cost per unit of this product for the coming year will be ;oints < 1= a. B6.9. b. +6.11. c. B.''. d. B.9. 11. "f the organization uses an activity@based cost system& the cost per unit of this product for the coming year will be ;oints < 1= a. +6.A. b. B6.21. c. B6.:8. d. B6.::. 12. 3he use of activity@based costing normally results in< ;oints < 1= a. substantially lower unit costs for low@volume products than is reported by traditional product costing. b. eIualizing setup costs for all product lines. c. decreased setup costs being charged to low@volume products. d. substantially greater unit costs for low-volume products than is reported by traditional product costing. 1. %ecause of the changes that are occurring in the basic operations of many rms& all of the following represent trends in the way indirect costs are allocated except< ;oints < 1= a. treating direct labor as an indirect manufacturing cost in an automated factory. b. using throughput time as an application base to increase awareness of the costs associated with lengthened throughput time. c. preferring plant-wide application rates that are applied to machine hours rather than incurring the cost of detailed allocations. d. using several machine cost pools to measure product costs on the basis of time in a machine center. 1'. Activity@%ased !osting is appropriate for which of the following organizations? ;oints < 1= a. 3ne that produces and sells a wide variety of products. b. /ne that produces and sells a single complex product. c. /ne that provides a single service to customers. d. All of the above
1. A number of barriers must be overcome to implement activity@based costing systems successfully. $elect the barrier that is not matched up properly with its type. ;oints < 1= a. 0ear of change "ndividual barrier b. ,egulatory agencies5nvironmental barrier c. !orporate culture issues /rganizational barrier d. "ll of the above barriers are properly classi%ed.
Unit A Quiz 1. (hen a rm redesigns a product to reduce the number of component parts& the rm is a. increasing consumer value. b. increasing the value added to the product. c. decreasing product variety. d. decreasing non-value-added costs. 2. Kon@value@added activities that are necessary to businesses& but not costs that customers are willing to pay for are -nown as a. business-value-added activities. b. long@term variable activities. c. short@term variable activities. d. superior business activities. . A value chart indicates a. all steps in a process and the time it taes for them to be completed. b. the value@added steps in a process and the time it ta-es for them to be completed. c. the time and cost of all value@added steps in a process. d. the time and costs of all value@added and non@value@added steps in a process. '. (hich of the following is not a drawbac- of mass customization? a. 3he choices are too numerous. b. 3he potential for errors is great. c. /nly a small percentage of available choices is normally selected. d. "ll of the above are drawbacs. . roduct costing systems in use over the last ': years a. concentrated on using multiple cost pools and cost drivers. b. were often technologically incapable of handling activity-based costing information. c. have generally been responsive to changes in the manufacturing environment. d. have been appropriate for managerial decision purposes as long as they met the reIuirements of generally accepted accounting principles. 6. "n allocating xed costs to products in activity@based costing& a. direct labor hours should always be used as the allocation base. b. a company should use the same allocation base that it uses for variable costs. c. a cost driver that is not volume-related should be used. d. machine hours should always be used. 7. )nder activity@based costing& benchmar-s for product cost should contain an allowance for
a. idle time. b. idle time and scrap materials. c. spoilage. d. ?one of the responses are correct. 8. Activity@based costing and activity@based management are e*ective in helping managers do all of the following except a. trace technology costs to products. b. promote excellence standards. c. identify only value-added activities. d. analyze performance problems. 9. 3raditional standard costs are inappropriate measures for performance evaluation in the Hnew eraH of manufacturing because they a. build in allowances for non-value-adding activities. b. are based on historical information. c. don4t reect current costs. d. are ideal goals. 1:. A -ey concept underlying cost driver analysis is that a. all cost drivers identied should be used for cost accumulation. b. the cost of measuring a driver does not exceed the bene%ts of using it. c. only costs occurring at the unit@level should be assigned to products or services. d. organizationalOfacility costs are non@value@added and should never be assigned to products or services. 11. (hen cost driver analysis is used& organizational prot or loss can be determined by subtracting a. organizational costs from total margin provided by products. b. organizational costs from total product revenue. c. total product costs from total product revenue. d. total unit& batch& productOprocess& and organizational level costs incurred for a period from total product revenue. 12. 3he areto principle is important to consider when an organization is a. assessing whether to employ activity@based costing versus attribute@based costing. b. evaluating the number of activities that are value@added versus those that are non@value@added. c. deciding whether to o>er a product in one color versus in ten colors. d. determining whether simultaneous engineering activities will be impacted by the H,ule of /ne.H 1. 5ngaging in which of the following will result in radical changes being made to an organization4s processes? a. !ontinuous improvement b. %enchmar-ing c. Eeengineering d. #ass customization 1'. (hich of the following is most li-ely to ma-e the implementation of A%!OA%# slow and di+cult? a. 3he development of new cost drivers that measure costs more e*ectively. b. " lac of involvement by or support from upper management. c. 3he need for dual costing systems. d. An inability to eliminate all business@value@added activities.
1. Activity@based costing and generally accepted accounting principles di*er in that A%! a. does not de%ne product costs in the same manner as 0""!. b. cannot be used to compute an income statement& but CAA can. c. is concerned only with costs generated from automated processes& but CAA is concerned with costs generated from both manual and automated processes. d. information is useful only to managers& while CAA information is useful to all organizational sta-eholders.
Unit 7 !ractice Questions 1. All of the following would most li-ely use a job order costing system except< ;oints < 1= a. a dental practice. b. an auto repair shop. c. a small appliance maer. d. an architectural rm. 2. (hich of the following costs is not charged to (or- in rocess in a normal cost system? a. "ctual overhead b. Actual direct materials c. Actual direct labor d. 5stimated indirect labor . (hich of the following product costs would be charged to (or- in rocess assuming a standard costing system? ;oints < 1= a. Actual direct material costs b. Actual overhead costs c. Actual direct labor costs d. "pplied overhead costs '. $elect the incorrect job order costing system characteristic. ;oints < 1= a. !osts are accumulated by job. b. " job may consist of multiple units provided all units are similar. c. !osts of di*erent jobs cannot logically be averaged so a uniIue cost must be determined for each job. d. Eobs are usually produced to distinct customer specications. . (hich of the following serves at a subsidiary ledger for the (or- in rocess account? ;oints < 1= a. $tandard cost card b. #aterial reIuisition form c. Eob reIuisition form d. ob order cost sheet 6. (hich of the following is not a source document used in job order costing systems? ;oints < 1= a. ost of production report b. 5mployee time sheet c. Eob cost sheet d. #aterial reIuisition form 7. $elect the response that represents the correct ow of costs in a job order costing system. a. ,aw materials& wor- in process& cost of goods sold& nished goods
b.
Eaw materials$ wor in process$ %nished goods$ cost of goods
sold c. ,aw materials& overhead& wor- in process d. >irect material& nished goods& wor- in process 8. 3he journal entry to apply overhead to production would include< ;oints < 1= a. a debit to #anufacturing /verhead !ontrol. b. credits to various accounts such as !ash& Accumulated >epreciation& and Accounts ayable. c. a credit to anufacturing 3verhead ontrol. d. a credit to (or- in rocess. 9. 3he journal entry to transfer production from the 0inishing >epartment to 0inished Coods would include a< ;oints < 1= a. credit to 0inished Coods. b. debit to !ost of Coods #anufactured. c. credit to (&! - Finishing. d. credit to !ost of Coods #anufactured. 1:. # !orporation manufactures a specialty line of jeans using a job@order@cost system. >uring #ay& the following costs were incurred in completing Eob #1< direct materials& B1&7::M direct labor& B'&8::M administrative& B1&'::M and selling& B&6::. /verhead was applied at the rate of B2 per machine hour& and Eob #1 reIuired 8:: machine hours. "f Eob #1 resulted in 7&::: good jeans& the cost of goods sold per unit would be ;oints < 1= a. +,.,. b. B6.:. c. B.7:. d. B8.:. 11. !ompany uses a normal cost system. 3he following information is from its nancial records for the year< 3otal manufacturing costs& B2&::&::: !ost of goods manufactured& B2&'2&::: Applied overhead& :Q of total manufacturing costs redetermined /J rate& 8:Q of direct labor cost Assuming the company4s wor- in process inventory at Eanuary 1 was 7 percent of its >ecember 1 wor- in process inventory& what is the carrying value of the company4s wor- in process inventory at >ecember 1? ;oints < 1= a. B7&::: b. B1::&::: c. B22&::: d. +A$ 12. (hich of the following costing systems does not involve computing cost variances? ;oints < 1= a. "ctual costing system b. Kormal costing system c. $tandard costing system d. All of the above systems involve computing cost variances 1. $elect the incorrect statement concerning standard costs and job order costing. ;oints < 1= a. A standard cost system determines product cost by using predetermined norms in the inventory accounts for prices andOor Iuantities of cost components.
b. $tandards can be used in a job order cost system only if a company typically engages in jobs that produce fairly similar products. c. Under 0""!$ standard cost job order systems may not substitute for actual or normal costing systems . d. $tandard cost variances can be computed for actual@to@standard di*erences regardless of whether standards have been established for both Iuantities and prices or for prices or rates only. 1'. (hich of the following statements is true concerning job order costing and management decision ma-ing? ;oints < 1= a. Eob order costing assists managers in their planning& controlling& decision ma-ing and performance evaluations functions. b. Eob order costing allows managers to trace costs associated with specic current jobs to better estimate costs of future jobs. c. Eob order costing provides a means by which managers can better control the costs associated with their operations. d. "ll of the above are true statements. 1. $elect the incorrect statement regarding the accounting for product losses. ;oints < 1= a. Kormal losses that are anticipated on all jobs are estimated and included in the development of the predetermined /J rate. b. ?ormal losses that are associated with a particular job are charged to a loss account in the period they are incurred. c. Abnormal losses are charged to a loss account in the period they are incurred. d. 3he di*erence between normal and abnormal loss is one of degree and therefore must be determined by management. 16. (hich of the following would least li-ely use a process costing system? ;oints < 1= a. #anufacturer of custom furniture b. #anufacturer of soft drin-s c. #anufacturer of gasoline d. #anufacturer of paper 17. (hich of the following is not a basic objective of process costing? ;oints < 1= a. !ompute an average cost per unit since units are homogeneous b. Allocate production costs between whole units and partial units c. $eparate production costs into xed and variable components d. >etermine the amount of production costs that should be transferred to the next department 18. $elect the incorrect statement regarding eIuivalent units of production ;5)=. ;oints < 1= a. 3wo units :Q complete are eIuivalent to one unit 1::Q complete. b. 5xcept in very rare instances& only one 5) calculation is needed per department. c. 5) eIuals the number of whole units of output that could have been produced during a period from the actual e*ort expended. d. 3he objective of 5) calculations is to eliminate the costing problemcaused by partially completed units. 19. 3he steps in process costing are listed below< !alculate physical units to be accounted for !alculate physical units accounted for !alculate eIuivalent units of production ;5)=
!alculate total costs to be accounted for !alculate the cost per 5) ? (hat is the missing step? ;oints < 1= a. Assign costs to whole and partial units in ending inventory b. Assign costs to whole units produced during the period c. Assign costs to units started and completed during the period d. Assign costs to units transferred out and units in ending inventory 2:. (hich of the following is true about the weighted average method of process costing? ;oints < 1= a. 3he calculation of 5) must ta-e into consideration the units in both beginning and ending inventory. b. 3he cost per 5) will include prior period costs if the department had beginning inventory. c. 3he most common alternative to the weighted average method is the last@in& rst@out method. d. 3he weighted average method refers to a method of determining which units were sold and which units remain in inventory. 21. R !ompany employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process and conversion costs are added proportionately. 3he production Iuantity schedule for April is reproduced below< )nits (or- in process on April 1 ;6:Q complete as to conversion costs= 1&::: )nits started during April &::: 3otal units to account for 6&::: )nits completed and transferred out '&::: (or- in process on April : ;2:Q complete as to conversion costs= 2&::: 3otal units accounted for 6&::: !osts pertaining to the month of April are as follows< %eginning inventory costs< ;>#& B'&6::M !onversion& B&6:= B 9:&16: !osts incurred during April ;>#& B'68&:::M !onversion B7'&:6:= B1&:'2&:6: )sing the weighted average method& the eIuivalent units for direct materials for April are< a. 6&::: units. b. &::: units. c. '&':: units. d. &8:: units. 22. )sing the weighted average method& the eIuivalent units for conversion costs for April are< a. 6&::: units.
b. c. d.
&::: units. '&':: units. &8:: units. 2. )sing the weighted average method& the eIuivalent unit materials cost for April is< ;oints < 1= a. B78.::. b. B87.1:. c. B1:.6. d. B18.. 2'. )sing the weighted average method& the '&::: units completed during April will be transferred out at an 5) unit cost of< ;oints < 1= a. B188.69. b. B22.6. c. B27.1. d. B28.:'. 2. D !ompany uses a process cost system to account for its manufacturing operations. All direct materials are added at the beginning of the process and conversion costs are added proportionately. 3he production Iuantity schedule for Eune is reproduced below< )nits (or- in process on Eune 1 ;2:Q complete as to conversion costs= 16&::: )nits started during Eune 1::&::: 3otal units to account for 116&::: )nits completed and transferred out from beginning inventory 16&::: )nits started and completed during Eune 76&::: (or- in process on Eune : ;':Q complete as to conversion costs= 2'&::: 3otal units accounted for 116&::: !osts pertaining to the month of Eune are as follows< %eginning inventory costs< ;>#& B'&6::M !onversion& B&6:= B 9:&16: !osts incurred during Eune ;>#& B'68&:::M !onversion B7'&:6:= B1&:'2&:6: )sing the 0"0/ method& the eIuivalent units for direct materials for Eune are< ;oints < 1= a. 116&::: units. b. 1::&::: units. c. 8&6:: units. d. 76&::: units. 26. )sing the 0"0/ method& the eIuivalent units for conversion costs for Eune are< ;oints < 1= a. 116&::: units. b. 1::&::: units.
c. d.
98&':: units. 76&::: units. 27. )sing the 0"0/ method& the direct materials cost per eIuivalent unit for units started and completed during Eune is< ;oints < 1= a. B6.16. b. B6.::. c. B.2. d. B'.68. 28. $elect the incorrect statement concerning process costing in a multidepartment setting. a. "n this environment& goods are transferred from a predecessor ;upstream= department to a successor ;downstream= department. b. 3ransferred out costs of the predecessor department become transferred in costs of the successor department. c. /ccasionally& successor departments will change the unit of measure used in predecessor departments. d. %y denition& successor departments may not add any additional raw materials to the units received from predecessor departments. 29. (hich of the following statements is true concerning process costing? ;oints < 1= a. !ompanies my substitute standard costs for actual costs. b. 5) calculations for standard process costing are identical to those of 0"0/ process costing. c. An advantage of standard process costing is that material& labor& and overhead variances can be computed to assist in performance evaluation. d. All of the above are true. :. An appropriate costing system for a company whose various product lines have di*erent direct materials but similar processing techniIues is li-ely a ;oints < 1= a. weighted average method of process costing. b. rst@in& rst out method of process costing. c. hybrid method of process costing. d. last@in& rst out method of process costing.
Unit 7 Quiz 1. (hich of the following organizations would be most li-ely to use a job@order costing system? a. the loan department of a ban b. the chec- clearing department of a banc. a manufacturer of processed cheese food d. a manufacturer of video cassette tapes 2. A company producing which of the following would be most li-ely to use a price standard for material? ;oints < 1= a. furniture b. ?F9-logo jacets c. custom@made picture frames d. none of the above . A company producing which of the following would be most li-ely to use a time standard for labor? ;oints < 1= a. mattresses
b. custom@made picture frames c. oral arrangements d. stained@glass windows '. "n a job@order costing system& the net cost of normal spoilage is eIual to ;oints < 1= a. estimated disposal value plus the cost of spoiled wor-. b. the cost of spoiled wor- minus estimated spoilage cost. c. the units of spoiled wor- times the predetermined overhead rate. d. the cost of spoiled wor minus the estimated disposal value. . 3he net cost of normal spoilage in a job@order costing system in which spoilage is common to all jobs should be ;oints < 1= a. assigned directly to the jobs that caused the spoilage. b. charged to manufacturing overhead during the period of the spoilage. c. charged to a loss account during the period of the spoilage. d. allocated only to jobs that are completed during the period. 6. $pears #anufacturing !ompany produces beach chairs. !hair frames are all the same size& but can be made from plastic& wood& or aluminum. ,egardless of frame choice& the same sailcloth is used for the seat on all chairs. $pears has set a standard for sailcloth of B9.9: per sIuare yard and each chair reIuires 1 sIuare yard of material. $pears produced :: plastic chairs& 1:: wooden chairs& and 2: aluminum chairs during Eune. 3he total cost for 1&::: sIuare yards of sailcloth during the month was B1:&:::. At the end of the month& : sIuare yards of sailcloth remained in inventory. 3he unfavorable material price variance for sailcloth purchases for the month was ;oints < 1= a. + 1. b. B '9. c. B1&:9:. d. B1&8. 7. Assuming that there was no sailcloth in inventory at the beginning of Eune& the unfavorable material Iuantity variance for the month was ;oints < 1= a. B '9. b. B ::. c. + 55. d. B1&:::. 8. 5Iuivalent units of production are eIual to the ;oints < 1= a. units completed by a production department in the period. b. number of units wor-ed on during the period by a production department. c. number of whole units that could have been completed if all wor of the period had been used to produce whole units. d. identiable units existing at the end of the period in a production department. 9. 3he weighted average method is thought by some accountants to be inferior to the 0"0/ method because it ;oints < 1= a. is more di+cult to apply. b. only considers the last units wor-ed on. c. ignores wor- performed in subseIuent periods. d. commingles costs of two periods. 1:. 3he rst step in determining the cost per 5) per cost component under the weighted average method is to ;oints < 1=
a. add the beginning (or in !rocess &nventory cost to the current period/s production cost. b. divide the current period4s production cost by the eIuivalent units. c. subtract the beginning (or- in rocess "nventory cost from the current period4s production cost. d. divide the current period4s production cost into the 5). 11. 3he di*erence between 5) calculated using 0"0/ and 5) calculated using weighted average is the eIuivalent units ;oints < 1= a. started and completed during the period. b. residing in beginning (or in !rocess &nventory. c. residing in ending (or- in rocess "nventory. d. uncompleted in (or- in rocess "nventory. 12. 5) calculations for standard process costing are the same as ;oints < 1= a. the 5) calculations for weighted average process costing. b. the 2U! calculations for F&F3 process costing. c. D"0/ inventory costing for merchandise. d. the 5) calculations for D"0/ process costing. 1. 3o compute eIuivalent units of production using the 0"0/ method of process costing& wor- for the current period must be stated in units ;oints < 1= a. completed during the period and units in ending inventory. b. completed from beginning inventory$ units started and completed during the period$ and units partially completed in ending inventory. c. started during the period and units transferred out during the period. d. processed during the period and units completed during the period. 1'. #aterial is added at the beginning of a process in a process costing system. 3he beginning (or- in rocess "nventory for the process was : percent complete as to conversion costs. )sing the 0"0/ method of costing& the number of eIuivalent units of material for the process during this period is eIual to the ;oints < 1= a. beginning inventory this period for the process. b. units started and completed this period in the process. c. units started this period in the process plus the beginning (or- in rocess "nventory. d. units started and completed this period plus the units in ending (or in !rocess &nventory. 1. Averaging the total cost of completed beginning wor-@in@process inventory and units started and completed over all units transferred out is -nown as ;oints < 1= a. strict 0"0/. b. modi%ed F&F3. c. weighted average costing. d. normal costing.
Unit , !ractice Questions 1. $elect the correct statement regarding standards. ;oints < 1= a. A standard is a benchmar- or norm used for planning and control. b. 3he di*erence between standard cost and actual cost is referred to as a variance. c. $tandards are developed for materials& labor& and overhead. d. "ll of the above
2. 3he document that summarizes the expected Iuantities and costs needed to produce a unit is called a ;oints < 1= a. bill of materials. b. total cost of ownership document. c. operations ow document. d. standard cost card. . 3his month , !ompany planned to produce &::: units of its product. 3he standard cost card calls for six pounds of material at B.: per pound. Actual production for the month was &1:: units& resulting in a favorable price variance of B8: and an unfavorable Iuantity variance of B12:. %ased on these variances& one could conclude that< ;oints < 1= a. more materials were purchased than were used. b. the actual cost of material was less than the standard cost. c. the actual usage of material was less than the standard allowed. d. the actual cost and usage of material were both less than standard. '. An unfavorable direct labor e+ciency variance could be caused by a ;n=< ;oints < 1= a. unfavorable variable overhead spending variance. b. unfavorable xed overhead volume variance. c. unfavorable material usage variance. d. favorable xed overhead volume variance. . 3he exible budget for the month of August was for 9&::: units with direct material at B1 per unit. >irect labor was budgeted at ' minutes per unit for a total of B81&:::. Actual output for the month was 8&:: units with B127&:: in direct material and B77&77 in direct labor expense. >irect labor hours of 6&7 were actually wor-ed during the month. ariance analysis would show< ;oints < 1= a. a favorable direct labor e+ciency variance of B1&27. b. an unfavorable direct labor e+ciency variance of B1&27. c. an unfavorable direct labor rate variance of +1$';,. d. none of the above. 6. 3he total xed overhead variance is the< ;oints < 1= a. measure of the lost prots from the lac- of sales volume. b. amount of the underapplied or overapplied %xed overhead costs. c. potential cost reduction that can be achieved from better cost control. d. measure of production ine+ciency. 7. ariable overhead is applied on the basis of standard direct labor hours. "f the direct labor e+ciency variance is favorable& the variable overhead e+ciency variance will be< ;oints < 1= a. unfavorable. b. favorable. c. zero. d. the same amount as the labor e+ciency variance. 8. S !ompany4s product has a labor standard of 2 hours per unit. 0or 2:11& it estimates its production will be 2::&::: units ;'::&::: >DJs=. "t budgets total overhead at B9::&:::& which results in a xed overhead rate of B1.: per hour. Actual data for the year include< Actual production& 198&::: units ;'':&::: >DJs=& Actual variable overhead& B2&:::& Actual xed overhead& B7&::: 3he variable overhead e+ciency variance for the year is< ;oints < 1= a. B66&::: unfavorable. b. B&2: favorable.
c. B&::: favorable. d. +AA$ unfavorable. 9. $tandard cost systems should be used for all of the following reasons except< ;oints < 1= a. motivation. b. decision@ma-ing. c. establishing blame. d. clerical e+ciency. 1:. $elect the correct statement from the following. ;oints < 1= a. "n extremely favorable variance is not necessarily a good variance. b. 3here is a movement in practice toward reporting variances less often than in the past. c. /nly unfavorable variances need to be investigated. d. 0or proper performance evaluation to be made& responsibility for variances should not be traced to specic managers. 11. 3he best basis upon which cost standards should be set to measure controllable production ine+ciencies is< ;oints < 1= a. engineering standards based on attainable performance. b. normal capacity. c. engineering standards. d. ideal capacity. 12. ariance analysis for conversion cost in automated plants normally focuses on< ;oints < 1= a. spending variances for overhead costs. b. e+ciency variances for machinery and production costs rather than labor costs. c. volume variance for production. d. all of the above. 1. A possible combination of materials or labor is called ;oints < 1= a. materials@time measurement. b. yield. c. mix. d. conversion. 1'. A measure of the di*erence between the actual total Iuantity of input and the standard total Iuantity allowed based on output is called the ;oints < 1= a. mix variance. b. yield variance. c. volume variance. d. none of the above. 1. $elect the correct eIuation for the labor mix variance. ;oints < 1= a. ;Actual mix x Actual hours x Actual rate= @ ;Actual mix x Actual hours x $tandard rate= b. ;Actual mix x Actual hours x $tandard rate= @ ;Actual mix x Actual hours x $tandard rate= c. G"ctual mix x "ctual hours x #tandard rateH - G#tandard mix x "ctual hours x #tandard rateH d. ;$tandard mix x Actual hours x $tandard rate= @ ;$tandard mix x $tandard hours x $tandard rate= 16. (hich income statement format better facilitates the determination of a company4s brea-@even point? ;oints < 1= a. Absorption costing income statement
b. c. d.
0ull costing income statement *ariable costing income statement Kone of the above 17. $elect the incorrect eIuation for computing the brea-even point. ;oints < 1= a. 3otal 0ixed !osts F 3otal !ontribution #argin b. 3otal ,evenue F 3otal !osts c. 3otal rot F B: d. )otal *ariable osts < )otal Fixed osts 18. A !ompany sells a product for B7.: whose variable cost is B2.2 per unit. 3he company needed to sell 2:&::: shirts to brea- even. (hat was the company4s total xed costs? ;oints < 1= a. +1,$ b. B1:&::: c. B'&::: d. B&81: 19. % !ompany sells a product for B7.: whose variable cost is B2.2 per unit. 3he company needed to sell 2:&::: shirts to brea- even and its net income was B&:': before tax. Jow many units did the company sell? ;oints < 1= a. 2&2': b. 2:&::: c. 2:&672 d. '$56 2:. ( !ompany manufactures a product that sells for B8:: per unit. 3he unit variable costs are B6:: and total xed costs are B6&6::&:::. 3he annual sales volume reIuired for ( !ompany to brea- even is< ;oints < 1= a. +'6$7$. b. B8&8::&:::. c. B6&6::&:::. d. Kone of the above. 21. 0 !ompany manufactures and sells 3@shirts. Dast year& the shirts sold for B7.: each& and the variable cost to manufacture them was B2.2 per unit. 3he company needed to sell 2:&::: shirts to brea- even. 3he net income last year was B&:':. 0 !ompany4s expectation for the coming year include the following< 3he selling price of the 3@shirts will be B9.:: ariable cost to manufacture will increase by one@third 0ixed costs will increase by 1:Q 3he income tax rate of ':Q will be unchanged 3he number of 3@shirts that must be sold to brea- even in the coming year is< ;oints < 1= a. 22&:::. b. 2:&:::. c. 15$',. d. 17&::. 22. A calculation used in a ! analysis determines the brea-@even point. /nce the brea-@even point has been reached& operating income will increase by the< ;oints < 1= a. contribution margin per unit for each additional unit sold. b. gross margin per unit for each additional unit sold. c. xed costs per unit for each additional unit sold. d. variable costs per unit for each additional unit sold.
2. A company sells a product for B9.:: which has a variable manufacturing cost of B.:: per unit. Dast year& the company needed to sell 2:&::: shirts to breaeven. Assuming the company is subject to a ':Q tax rate and wishes to earn B22&:: prot after tax for the coming year& what sales will be reIuired? ;oints < 1= a. B27&62 b. +'A6$', c. B21&7: d. B18:&::: 2'. L !ompany sold a product last year that had a B.:: unit contribution margin. A signicant change in the company4s production technology has caused a 1:Q increase in annual xed costs but a 2:Q decrease in unit variable costs. Assuming there was no change in the product4s B1:.:: selling price what is the company4s new contribution margin ratio? ;oints < 1= a. 6I b. :Q c. ':Q d. !an4t be determined from the information provided 2. A signicant change in S !ompany4s production technology caused its total xed costs of B6&7:8&716 to increase by 9Q. Jowever& the change caused a 2:Q unit cost decrease in direct labor and a 2Q decrease in the unit material cost leading to B2 increase in its B:: unit contribution margin. After incorporating these changes& what is S !ompany4s new brea-@even point? ;oints < 1= a. ''$, units b. 2:&6' units c. 2'&7 units d. 22&6 units 26. /ne !ompany sells two products& A and %. A has a unit contribution margin of B': while % has a unit contribution margin of B2. Dast year the company sold ':&::: units of roduct A and 6:&::: units of roduct %. (hat is the company4s weighted average contribution margin? ;oints < 1= a. ;B': G B2= O 2 b. ;B': x ':&:::= G ;B2 x 6:&:::= c. G+7 x .7H = G+', x .6H d. Kone of the above 27. 0or a protable company& the amount by which sales can decline before losses occur is -nown as the< ;oints < 1= a. sales volume variance. b. hurdle rate. c. marginal income rate. d. margin of safety. 28. !ompany sold 1:&::: units of its product for B1:: per unit. "t4s unit variable costs are B2: and its total xed costs are B6::&:::. Assuming the company has a ':Q tax rate& what is its degree of operating leverage? ;oints < 1= a. 7. b. :.2 c. 6.67 d. :.1 29. (hich of the following is not an assumption of ! analysis? ;oints < 1= a. All revenues and variable cost are linear.
b. c. d.
:. a. b. c. d.
#ixed costs can be accurately separated into their xed and variable components. #ales exceed production. Dabor productivity and mar-et conditions will not change. $elect the incorrect statement from the following. ;oints < 1= "f changes occur in selling price or cost& new computations must be made for brea-@even and ! analysis. "n the long@term& xed costs should be regarded as a long@term variable cost. 0ixed costs exist only in a short@term perspective. &n the future$ the only nonmonetary variable included in the breaeven model will be sales volume.
Unit , Quiz 1. An operations ow document ;oints < 1= a. trac-s the cost and Iuantity of material through an operation. b. trac-s the networ- of control points from receipt of a customer4s order through the delivery of the nished product. c. speci%es tass to mae a unit and the times allowed for each tas. d. charts the shortest path by which to arrange machines for completing products. 2. %ailey !orporation. incurred 2&:: direct labor hours to produce 6:: units of product. 5ach unit should ta-e ' direct labor hours. %ailey !orporation applies variable overhead to production on a direct labor hour basis. 3he variable overhead e+ciency variance ;oints < 1= a. will be unfavorable. b. will be favorable. c. will depend upon the capacity measure selected to assign overhead to production. d. is impossible to determine without additional information. . A variable overhead spending variance is caused by ;oints < 1= a. using more or fewer actual hours than the standard hours allowed for the production achieved. b. paying a higherOlower average actual overhead price per unit of the activity base than the standard price allowed per unit of the activity base. c. largerOsmaller waste and shrin-age. d. both b and c are causes. '. 0ixed overhead costs are ;oints < 1= a. best controlled on a unit@by@unit basis of products produced. b. mostly incurred to provide the capacity to produce and are best controlled on a total basis at the time they are originally negotiated. c. constant on a per@unit basis at all di*erent activity levels within the relevant range. d. best controlled as to spending during the production process. . "n analyzing manufacturing overhead variances& the volume variance is the di*erence between the ;oints < 1= a. amount shown in the exible budget and the amount shown in the debit side of the overhead control account. b. predetermined overhead application rate and the exible budget application rate times actual hours wor-ed.
c. budget allowance based on standard hours allowed for actual production for the period and the amount budgeted to be applied during the period. d. actual amount spent for overhead items during the period and the overhead amount applied to production during the period. 6. ariance analysis for overhead normally focuses on ;oints < 1= a. e4ciency variances for machinery and indirect production costs. b. volume variances for xed overhead costs. c. the controllable variance as a lump@sum amount. d. the di*erence between budgeted and applied variable overhead. 7. 3he use of separate variable and xed overhead rates is better than a combined rate because such a system ;oints < 1= a. is less expensive to operate and maintain. b. does not result in underapplied or overapplied overhead. c. is more e>ective in assigning overhead costs to products. d. is easier to develop. 8. "n a just@in@time inventory system& ;oints < 1= a. practical standards become ideal standards. b. ideal standards become expected standards. c. variances will not occur because of the zero@defects basis of E"3. d. standard costing cannot be used. 9. !onsider the eIuation L F $ales @ T;!#O$ales= ? ;$ales=U. (hat is L? ;oints < 1= a. net income b. xed costs c. contribution margin d. variable costs 1:. "f a rm4s net income does not change as its volume changes& the rm;4s= ;oints < 1= a. must be in the service industry. b. must have no xed costs. c. sales price must eIual B:. d. sales price must e:ual its variable costs. 11. "n a ! graph& the slope of the total revenue line indicates the ;oints < 1= a. rate at which prot changes as volume changes. b. rate at which the contribution margin changes as volume changes. c. ratio of increase of total xed costs. d. total costs per unit. 12. "f a company4s xed costs were to increase& the e*ect on a prot@volume graph would be that the ;oints < 1= a. contribution margin line would shift upward parallel to the present line. b. contribution margin line would shift downward parallel to the present line. c. slope of the contribution margin line would be more pronounced ;steeper=. d. slope of the contribution margin line would be less pronounced ;atter=. 1. #anagement is considering replacing an existing sales commission compensation plan with a xed salary plan. "f the change is adopted& the company4s ;oints < 1= a. brea-@even point must increase.
b. c. d.
margin of safety must decrease. operating leverage must increase. prot must increase. 1'. As projected net income increases the ;oints < 1= a. degree of operating leverage declines. b. margin of safety stays constant. c. brea-@even point goes down. d. contribution margin ratio goes up. 1. A managerial preference for a very low degree of operating leverage might indicate that a. an increase in sales volume is expected. b. a decrease in sales volume is expected. c. the rm is very unprotable. d. the rm has very high xed costs.
Unit 6 !ractice Questions 1. $hort@term planning that produces Hsingle useH plans such as the annual budget is referred to as ;oints < 1= a. strategic planning. b. managerial planning. c. tactical planning. d. internal planning. 2. A budget sets the resource constraints under which managers must operate for the upcoming budget period. 3he control phase includes all of the following except< ;oints < 1= a. ma-ing actual@to@budget comparisons. b. providing feedbac- to operating managers. c. investigating variances. d. assigning blame for poor performance. . All of the following are operating budgets except< ;oints < 1= a. selling and administrative budget. b. purchases budget. c. cash budget. d. sales budget. '. (hen preparing the series of annual operating budgets& management usually starts the process with the< ;oints < 1= a. cash budget. b. budgeted balance sheet. c. sales budget. d. production budget. . C !ompany has beginning inventory of '&::: units. #anagement estimates that &::: units will be sold during the rst Iuarter with a 1:Q increase in sales each Iuarter. "t is the company4s policy to maintain an ending inventory eIual to 2Q of the next Iuarter4s sales. 5ach unit sells for B.::. Jow much sales revenue should be budgeted for the third Iuarter? ;oints < 1= a. B8'&7:: b. B11&:: c. B126&::: d. +1';$, 6. D !ompany4s budget calls for the following production<
uarter 1'&::: units uarter '&::: units uarter 28&::: units uarter ''8&::: units 5ach unit of product reIuires three pounds of direct material. 3he company4s policy is to begin each Iuarter with an inventory of direct material eIual to :Q of that Iuarter4s direct material production reIuirements. %udgeted direct material purchases ;in pounds= for the third Iuarter would be< ;oints < 1= a. 117$6. b. 89&'::. c. 8&2::. d. 29&8::. 7. 3he following beginning and ending inventory levels ;in units= are planned for the upcoming scal year< %eginning of Sear 5nd of Sear ,aw material ':&::: :&::: (or-@in@process 1:&::: 1:&::: 0inished goods 8:&::: :&::: 3wo units of raw material are needed to produce each unit of nished product. "f the company plans to sell '8:&::: units during the upcoming scal year& the number of units it would have to manufacture during the year would be< ;oints < 1= a. 1:&::: units. b. '8:&::: units. c. 7,$ units. d. '':&::: units. 8. !ompany is planning to sell 2&::: units and produce 2&2:: units during the upcoming month. 5ach unit reIuires 2 ounces of raw material at a cost of B1.:: per ounce and one@half hour of direct labor at a rate of B12.: per hour. /verhead is applied at a rate of 12:Q of direct labor costs. 3he company has 2&::: ounces of raw material in its beginning inventory and wants to have 2&':: ounces in its ending inventory. Jow much direct labor cost should be budgeted for the upcoming month? ;oints < 1= a. B27&:: b. B16&:: c. +1A$;, d. B12&:: 9. 5 !ompany is planning to sell 2&::: units and produce 2&2:: units during the upcoming month. 5ach unit reIuires 2 ounces of raw material at a cost of B1.:: per ounce and one@half hour of direct labor at a rate of B12.: per hour. /verhead is applied at a rate of 12:Q of direct labor costs. 3he company has 2&::: ounces of raw material in its beginning inventory and wants to have 2&':: ounces in its ending inventory. Jow much overhead cost should be budgeted for the upcoming month? ;oints < 1= a. B27&:: b. +16$, c. B1&7: d. B12&:: 1:. 3he following credit sales are budgeted by E !ompany< Eanuary B12'&::: 0ebruary 12:&::: #arch 1&:::
April 1':&::: #ay 1'2&::: 3he company4s past experience indicates that :Q of receivables are collected in the month of sale& :Q in the month following the sale& and 2:Q in the second month following the sale. (hat amount should be budgeted as cash receipts for #arch? ;oints < 1= a. B1&::: b. +1'8$A c. B67&:: d. B6:&8:: 11. # !ompany budgeted direct materials purchases of B1:&::: in April and B2':&::: in #ay. "t is the company4s practice to pay for 7:Q of its purchases in the month of purchase and the remaining :Q in the following month. /ther costs are all paid during the month incurred. >uring #ay& the following items were budgeted< (ages expense B7&::: urchase of o+ce eIuipment 6&::: $elling and administrative expenses 2'&::: >epreciation expense 18&::: (hat amount should be budgeted for cash disbursements for #ay? ;oints < 1= a. B66&::: b. +A78$ c. B2'&::: d. B21&::: 12. $elect the correct formula to compute cost of goods manufactured. ;oints < 1= a. %eginning (" G ,aw #aterials urchased G >irect Dabor G 0actory /verhead @ 5nding (" b. %eginning 0inished Coods G !ost of Coods $old @ 5nding 0inished Coods c. ,aw #aterials )sed G >irect Dabor G 0actory /verhead d. @eginning (&! = Eaw aterials Used = Direct 9abor = Factory 3verhead - 2nding (&! 1. A continuous budget< ;oints < 1= a. presents a statement of expectations for a period but does not present a rm commitment. b. drops the current month or :uarter and adds a future month or a future :uarter as the current month or :uarter is completed. c. presents the plan for only one level of activity and does not adjust to changes in the level of activity. d. presents the plan for a range of activity so that the plan can be adjusted for changes in activity. 1'. All of the following are benets of budgeting except< ;oints < 1= a. budgeting provides assurance that the company will achieve its objectives. b. budgeting facilitates the coordination of activities. c. budgeting reIuires managers to plan ahead. d. budgeting provides specic benchmar-s for evaluating performance. 1. (hich of the following items should be included in a company4s budget manual? ;oints < 1= a. $ample budgetary forms b. !alendar of scheduled budgetary activities c. /riginal& revised& and approved budgets
d.
"ll of the above should be included.
Unit 6 Quiz 1. (hen actual performance varies from the budgeted performance& managers will be more li-ely to revise future budgets if the variances were ;oints < 1= a. controllable rather than uncontrollable. b. uncontrollable rather than controllable. c. favorable rather than unfavorable. d. small. 2. 3he amount of raw material purchased in a period may be di*erent than the amount of material used that period because ;oints < 1= a. the number of units sold may be di*erent from the number of units produced. b. nished goods inventory may uctuate during the period. c. the raw material inventory may increaseBdecrease during the period. d. companies often pay for material in the period after it is purchased. . A company that maintains a raw material inventory& which is based on the following month4s production needs& will purchase less material than it uses in a month where ;oints < 1= a. sales exceed production. b. production exceeds sales. c. planned production exceeds the next month/s planned production. d. planned production is less than the next month4s planned production. '. "f a company has a policy of maintaining an inventory of nished goods at a specied percentage of the next month4s budgeted sales& budgeted production for Eanuary will exceed budgeted sales for Eanuary when budgeted ;oints < 1= a. February sales exceed budgeted anuary sales. b. Eanuary sales exceed budgeted >ecember sales. c. Eanuary sales exceed budgeted 0ebruary sales. d. >ecember sales exceed budgeted Eanuary sales. . #atthews !ompany has a policy of maintaining an inventory of nished goods eIual to : percent of the following month4s sales. 0or the forthcoming month of #arch& #atthews has budgeted the beginning inventory at :&::: units and the ending inventory at &::: units. 3his suggests that ;oints < 1= a. 0ebruary sales are budgeted at 1:&::: units less than #arch sales. b. arch sales are budgeted at 1$ units less than "pril sales. c. 0ebruary sales are budgeted at &::: units less than #arch sales. d. #arch sales are budgeted at &::: units less than April sales. 6. 0or the month of Kovember& (hetzel !orporation. predicts total cash collections to be B1 million. Also for Kovember& (hetzel !orporation. estimates that its beginning cash balance will be B:&::: and that it will borrow cash in the amount of B7:&:::. "f (hetzel !orporation. estimates an ending cash balance of B:&::: for Kovember& what must its projected cash disbursements be? ;oints < 1= a. +1$5$ b. B1&12:&::: c. B1&:7:&::: d. B1&:2:&:::
7. 0or the month of #arch& ,obertson !orporation. predicts total cash collections to be B1. million. Also for #arch& ,obertson !orporation. estimates that its beginning cash balance will be B6:&::: and that it will borrow cash in the amount of B8:&:::. "f ,obertson !orporation. estimates an ending cash balance of B':&::: for #arch& what must its projected cash disbursements be? a. B1&2:&::: b. B1&8:&::: c. +1$6$ d. B1&6':&::: 8. $ullivan !ompany is preparing its #anufacturing /verhead budget for the second Iuarter of the year. %udgeted variable factory overhead is B.:: per unit producedM budgeted xed factory overhead is B7&::: per month& with B16&::: of this amount being factory depreciation. "f the budgeted cash disbursements for factory overhead for Eune are B8:&:::& then the budgeted production for Eune must be< ;oints < 1= a. 7&':: units b. 6&2:: units c. 6&:: units d. ;$ units 9. #ercy #edical !enter has provided you with the following budget information for April< !ash collections B876&::: April 1 cash balance 2&::: !ash disbursements 978&6:: #ercy has a policy of maintaining a minimum cash balance of B2:&::: and borrows only in B1&::: increments. Jow much will #ercy borrow in April? ;oints < 1= a. B8:&::: b. B79&6:: c. B99&::: d. +1$ 1:. %entonville #edical !enter has provided you with the following budget information for Euly< !ash collections B918&::: Euly 1 cash balance 2&::: !ash disbursements 1&:2:&':: %entonville has a policy of maintaining a minimum cash balance of B:&::: and borrows only in B1&::: increments. Jow much will %entonville borrow in Euly? ;oints < 1= a. B 7:&':: b. B 71&::: c. B1::&':: d. +11$ 11. Dindburgh !ompany manufactures toy airplanes. "nformation on Dindburgh !ompany4s labor costs follow< $ales commissions B per plane Administration B1:&::: per month "ndirect factory labor B per plane >irect factory labor B per plane 3he following information applies to the upcoming month of Euly for Dindburgh !ompany<
%udgeted production 1&2:: units %udget sales 1&::: units (hat amount of budgeted labor cost would appear in the Euly selling& general& and administrative expense budget? ;oints < 1= a. B1:&::: b. B16&::: c. +1,$ d. B2&::: 12. Dindburgh !ompany manufactures toy airplanes. "nformation on Dindburgh !ompany4s labor costs follow< $ales commissions B per plane Administration B1:&::: per month "ndirect factory labor B per plane >irect factory labor B per plane 3he following information applies to the upcoming month of Euly for Dindburgh !ompany< %udgeted production 1&2:: units %udget sales 1&::: units (hat is Dindburgh?s budgeted factory labor cost for Euly? ;oints < 1= a. B8&::: b. B1&6:: c. B2&6:: d. +5$6 1. %udgeted sales for 0leetwood !orporation for the rst Iuarter the year are shown below< EAK)A,S 05%,)A,S #A,!J )K"3$< &::: 2&::: 2&::: 3he company has a policy that reIuires the ending inventory in each period to be 1: percent of the following period4s sales. Assuming that the company follows this policy& what Iuantity of production should be scheduled for 0ebruary? ;oints < 1= a. 2'&:: units b. 2'&7:: units c. 2&::: units d. ',$; units 1'. %udgeted sales for ar-er !orporation for the second Iuarter the year are shown below< A,"D #AS E)K5 )K"3$< ':&::: :&::: 8&::: 3he company has a policy that reIuires the ending inventory in each period to be 1 percent of the following period4s sales. Assuming that the company follows this policy& what Iuantity of production should be scheduled for #ay? ;oints < 1= a. 28&8:: units b. 29&7:: units c. 2&::: units d. A1$' units 1. roduction of roduct % has been budgeted at 2::&::: units for Kovember. /ne unit of roduct % reIuires 2 lbs. of raw material. 3he projected beginning and ending materials inventory for Kovember are< %eginning inventory< 2&::: lbs. 5nding inventory< 1:&::: lbs. Jow many lbs. of material should be purchased during Kovember? ;oints < 1=
a. b. c. d.
192&::: 2:8&::: 78$ '16&:::
Unit ; !ractice Questions 1. (hich of the following is not a reIuired characteristic of relevant information? ;oints < 1= a. #ust be associated with the decision under consideration b. #ust have a connection to or bearing on some future endeavor c. #ust be important to the decision ma-er d. ust be veri%able by an independent reviewer or auditor 2. !ontribution to income that is foregone by not using a limited resource for its best alternative use is referred to as ;oints < 1= a. marginal cost. b. incremental cost. c. non@relevant cost. d. opportunity cost. . 3otal unit costs are< ;oints < 1= a. relevant for cost@volume@prot analysis. b. needed for determining sun- costs. c. non-relevant in marginal analysis. d. needed for determining product contribution. '. $un- costs are< ;oints < 1= a. relevant to decision ma-ing. b. not relevant to decision maing. c. non@relevant to long@run decisions but not to short@run decisions. d. xed costs. . "n eIuipment@replacement decisions& which one of the following does not a*ect the decision@ma-ing process? ;oints < 1= a. Jistorical cost of the old e:uipment b. !ost of the new eIuipment c. /perating costs of the new eIuipment d. !urrent disposal price of the old eIuipment 6. $elect the incorrect statement from the following. ;oints < 1= a. A cost that is the same for multiple alternatives under consideration is not relevant. b. )he cost of ac:uiring the machine that is currently used to produce a component is relevant in maing an outsourcing decision. c. 3he cost to acIuire a component in a ma-e or buy decision is relevant. d. 3he salvage or residual value of a piece of machinery is relevant in a -eep@or@ replace decision. 7. A company4s approach to a ma-e@buy decision ;oints < 1= a. involves an analysis of avoidable costs. b. depends on whether the company is operating at or below brea-even. c. should use absorption costing. d. should use activity@based costing. 8. !ompany currently manufactures all component parts used in the manufacture of various small appliances. A steel handle is used in three di*erent products. 3he current year budget for 2:&::: handles has the following unit cost<
>irect material B:.6: >irect labor :.': ariable overhead :.1: 0ixed overhead :.2: 3otal unit cost B1.: A steel company has o*ered to supply 2:&::: handles to !ompany for B1.2 each& which includes delivery. Accepting the o*er will< ;oints < 1= a. decrease the handle unit cost by B:.1. b. decrease the handle unit cost by B:.2. c. increase the handle unit cost by +.1,. d. "ncrease the handle unit cost by B:.:. 9. $elect the incorrect statement concerning scarce resource decisions. ;oints < 1= a. )nit contribution margin rather than gross margin is the appropriate measure of protability. b. $carce resources may include machine hours& s-illed labor hours& and raw materials. c. &f the objective is to maximize pro%ts$ a scarce resource is best used to produce and sell the product generating the highest contribution margin per unit. d. Although in the long run& a company may acIuire a higher Iuantity of the scarce resource& in the short run& management must ma-e the most e+cient use of the currently available resources. 1:. > !ompany recently expanded its manufacturing capacity& which will allow it to produce up to 1&::: units of roducts A and %. 3he sales department believes it can sell up to 1&::: units of either product this year. %ecause the two products are very similar& > !ompany will produce only one of the two products. 3he following information is available< er )nit >ata roduct A roduct % $elling price B88.2: B8:.:: ariable costs 2.8: 2.8: 0ixed costs will total B69&6:: if roduct A is produced but will be only B16&8:: if roduct % is produced. > !ompany is subject to a ':Q income tax rate. "f the company desires an after@tax prot of B2'&:::& how many units of roduct % will the company have to sell? ;oints < 1= a. '&'6: b. 12&29 c. 1A$118 d. 1&8 11. $elect the correct statement concerning special order decisions. ;oints < 1= a. $uch decisions must not violate the ,obinson@atman Act which prohibits companies from pricing the same product at di*erent levels when those amounts do not reect related cost di*erences. b. !ompanies may give ad hoc discounts if such concessions relate to real or imagined competitive pressures. c. $pecial order decisions often hinge on productive capacity issues. d. "ll of the above are correct. 12. , !ompany sells a product for B1:.:: that has the following unit cost< >irect material B1.6: >irect labor 2.': ariable overhead 1.2:
0ixed overhead 1.: 3otal unit cost B6.: A company that does not compete with , !ompany4s existing customers has made an o*er to purchase 1&::: units of the product at a proposed price of B6.::. , !ompany is currently selling all of the units it can produce to its existing customers. $elect the correct statement from the following. ;oints < 1= a. ,eject the o*er since the o*er price is less than the unit production cost. b. Accept the o*er since the o*er price exceeds the sum of the variable costs. c. Eeject the o>er to avoid a +7. per unit decrease in pro%t on the 1$ units. d. Accept the o*er since the o*er price exceeds the unit xed cost. 1. $elect the correct denition of segment margin from the following< ;oints < 1= a. ,evenue @ 5xpenses b. ,evenue @ ariable !osts c. Eevenue - *ariable osts - "voidable Fixed osts d. ,evenue @ ariable !osts @ )navoidable 0ixed !osts 1'. A product that results from a joint process may be classied as ;oints < 1= a. a joint product. b. a by@product. c. scrap. d. "ll of the above. 1. $elect the incorrect statement from the following. ;oints < 1= a. roducing rst@Iuality merchandise and factory seconds in a single operation can be viewed as a joint process. b. (aste is a residual output from many production processes whose sales value is comparable to that of by-products. c. %y@products are distinguished from scrap by their higher sales value. d. (hile joint cost allocations are necessary to determine nancial statement valuations& such allocations should not be used in ma-ing internal decisions. 16. $elect the incorrect statement concerning the split@o* point. ;oints < 1= a. 3he split@o* point is the point at which joint process outputs are rst identiable as individual products. b. "f joint output is processed beyond the split@o* point& additional costs will be incurred and must be assigned to the specic products for which those costs were incurred. c. " single joint process cannot have multiple spit-o> points. d. /utput may be sold at the split@o* point or processed further and then sold. 17. "n joint product costing and analysis& which one of the following costs is relevant when deciding the point at which a product should be sold in order to maximize prots? ;oints < 1= a. urchase costs of the materials reIuired for the joint products b. #eparable costs after the split-o> point c. Eoint costs to the split@o* point d. $ales salaries for the period when the units were produced 18. %efore committing resources to a joint process& management must rst decide whether total expected revenue from selling the joint output 4bas-et4 of products is li-ely to exceed the< a. selling expenses for the goods. b. joint costs and separate processing costs after split@o*.
c. d.
disposal costs for any waste generated. "ll of the above. 19. (hen estimating unit selling prices for use in allocating joint production costs& which of the following should be considered? ;oints < 1= a. !ompetitor prices b. !onsumers4 sensitivity to price changes c. !osts d. "ll of the above 2:. All of the following are common monetary measures for allocating joint costs to joint products except< ;oints < 1= a. approximated net realizable value at split@o*. b. gross margin at split-o>. c. net realizable value at split@o*. d. sales value at split@o*. 21. D$ !ompany manufactures two products& roduct D and roduct $ in a joint process. 3he joint ;common= costs incurred are B'2:&::: for a standard production run that generates 18:&::: units of D and 12:&::: units of $. roduct D sells for B2.': per unit while roduct $ sells for B.9: per unit. Assuming both products are sold at the split@o* point& the amount of joint cost of each production run allocated to roduct D on a net realizable value ;K,= basis is< ;oints < 1= a. B22&:::. b. B218&'::. c. +'1$6. d. B168&:::. 22. roducts A and % are manufactured in a joint process. 3he joint ;common= costs incurred are B22&::: for a standard production run that generates 1:8&::: gallons of roduct A which sells for B2.': per gallon and 72&::: gallons of roduct % which sells for B.9: per gallon. "f no additional costs are incurred after the split@ o* point& the amount of joint cost of each production run allocated to roduct % on a physical measure basis is< ;oints < 1= a. +1$8. b. B1':&:::. c. B11&2::. d. B28:&8::. 2. roducts L and S are manufactured in a joint process. 3he joint ;common= costs incurred are B'2:&::: for a standard production run that generates 18:&::: gallons of roduct L which sells for B2.': per gallon and 12:&::: gallons of roduct S which sells for B.9: per gallon. "f additional processing costs beyond the split@o* point are B1.': per gallon for roduct L and B:.9: per gallon for roduct S& the amount of joint cost allocated to roduct S on a net realizable value basis is< ;oints < 1= a. +'8$. b. B22&:::. c. B168&:::. d. B1':&:::. 2'. # !ompany incurs B1:&:::&::: in joint costs for its three products. 3he company estimates the products4 production& nal selling price& and separate costs after split@o* as follows<
Jow much of the joint costs should be allocated to roduct A under the approximated net realizable value at split@o*? ;Kote< round percentages to zero decimal places.= ;oints < 1= a. B'&6::&::: b. +7$1$ c. B1&::&::: d. Kone of the above 2. "nc. always generates a certain amount of waste due to the nature of its production activities regardless of which products it is producing at the time. After production in a recent month& the company sold B2:: of scrap. (hich of the following is the correct entry to record the sale of the scrap using the realized value approach? ;oints < 1= a. ash ' anufacturing 3verhead ' b. !ash 2:: 0inished Coods 2:: c. !ash 2:: $crap "nventory 2:: d. !ash 2:: (or- in rocess 2:: 26. $elect the incorrect statement concerning the accounting for by@product and scrap. ;oints < 1= a. ,educing joint cost by the K, of the by@productOscrap is the traditional method used to account for such goods. b. ,egardless of whether a company uses the K, or the realized value approach& the specic method used to account for by@product should be established before the joint cost is allocated to the joint products. c. 3wo common methods used to account for by@products are the K, approach and the realized value approach. d. Under the realized value approach$ the estimated selling price of the by-product is recognized prior its actual sale. 27. Kot@for@prot organizations may charge the entire cost of a joint activity to fund@raising if all of the following criteria are met except< ;oints < 1= a. amount. b. audience. c. content. d. purpose. 28. "f a majority of compensation or fees for anyone performing a part of an activity is tied to contributions raised& the activity automatically fails the ;oints < 1= a. purpose criterion and all costs of the activity must be charged to program activities. b. content criterion and all costs of the activity must be charged to fund@raising. c. purpose criterion and all costs of the activity must be charged to fund-raising. d. audience criterion and all costs of the activity must be charged to administrative activities.
Unit ; Quiz 1. An ad hoc sales discount is ;oints < 1=
2.
.
'.
.
a. an allowance for an inferior Iuality of mar-eted goods. b. a discount that an ad hoc committee must decide on. c. brought about by competitive pressures. d. none of the above. 5ichholtz !ompany uses 1:&::: units of a part in its production process. 3he costs to ma-e a part are< direct material& B12M direct labor& B2M variable overhead& B1M and applied xed overhead& B:. 5ichholtz has received a Iuote of B from a potential supplier for this part. "f 5ichholtz buys the part& 7: percent of the applied xed overhead would continue. 5ichholtz !ompany would be better o* by ;oints < 1= a. B:&::: to manufacture the part. b. B1:&::: to buy the part. c. +7$ to buy the part. d. B16:&::: to manufacture the part. !ollins !ompany uses 12&::: units of a part in its production process. 3he costs to ma-e a part are< direct material& B1M direct labor& B27M variable overhead& B1M and applied xed overhead& B2. 5ichholtz has received a Iuote of B6: from a potential supplier for this part. "f !ollins buys the part& 7 percent of the applied xed overhead would continue. !ollins !ompany would be better o* by ;oints < 1= a. B:&::: to manufacture the part. b. B'8&::: to buy the part. c. +6$ to buy the part. d. B216&::: to manufacture the part. %uxton !ompany is currently operating at a loss of B1&:::. 3he sales manager has received a special order for &::: units of product& which normally sells for B per unit. !osts associated with the product are< direct material& B6M direct labor& B1:M variable overhead& BM applied xed overhead& B'M and variable selling expenses& B2. 3he special order would allow the use of a slightly lower grade of direct material& thereby lowering the price per unit by B1.: and selling expenses would be decreased by B1. "f %uxton wants this special order to increase the total net income for the rm to B1:&:::& what sales price must be Iuoted for each of the &::: units? ;oints < 1= a. +'A., b. B2'.: c. B27.: d. B'.:: 3he $outhern >igital& "nc. produces a high@Iuality computer chip. )nit production costs ;based on capacity production of 1::&::: units per year= follow< >irect material B: >irect labor 2: /verhead ;2:Q variable= 1: /ther information< $ales price 1:: $CNA costs ;':Q variable= 1 Assume& for this Iuestion only& that the #emory >ivision is producing and selling at capacity. (hat is the minimum selling price that the division would consider on a Hspecial orderH of 1&::: chips on which no variable period costs would be incurred? ;oints < 1= a. B1:: b. B72 c. B81
d. +57 6. 3he $outhern >igital& "nc. produces a high@Iuality computer chip. )nit production costs ;based on capacity production of 1::&::: units per year= follow< >irect material B: >irect labor 2: /verhead ;2:Q variable= 1: /ther information< $ales price 1:: $CNA costs ;':Q variable= 1 Assume& for this Iuestion only& that the #emory >ivision is operating at a level of 7:&::: chips per year. (hat is the minimum price that the division would consider on a Hspecial orderH of 1&::: chips to be distributed through normal channels? ;oints < 1= a. +;8 b. B9 c. B1:: d. B81 7. 3he $outhern >igital& "nc. produces a high@Iuality computer chip. )nit production costs ;based on capacity production of 1::&::: units per year= follow< >irect material B: >irect labor 2: /verhead ;2:Q variable= 1: /ther information< $ales price 1:: $CNA costs ;':Q variable= 1 Assume& for this Iuestion only& that the #emory >ivision is presently operating at a level of 8:&::: chips per year. Accepting a Hspecial orderH on 2&::: chips at B88 will ;oints < 1= a. increase total corporate prots by B'&:::. b. increase total corporate pro%ts by +'$. c. decrease total corporate prots by B1'&:::. d. decrease total corporate prots by B2'&:::. 8. (hich of the following statements is true regarding by@products or scrap? ;oints < 1= a. rocess costing is the only method that should result in by@products or scrap. b. Eob order costing systems will never have by@products or scrap. c. ob order costing systems may have instances where by-products or scrap result from the production process. d. rocess costing will never have by@products or scrap from the production process. 9. 3he method of pricing by@productsOscrap where no value is assigned to these items until they are sold is -nown as the ;oints < 1= a. net realizable value at split@o* point method. b. sales value at split@o* method. c. realized value approach. d. approximated net realizable value at split@o* method. 1:. ,iley !ompany produces two products from a joint process< A and !. Eoint processing costs for this production cycle are B9&:::. Sards $ales rice >isposal 0urther 0inal $ales P $plit@/* !ost P rocessing rice $plit@/*
A 1&8:: B7.:: B'.: B1.: B8.:: ! 2&6:: 1:.:: 6.:: .: 12.2 "f A and ! are processed further& no disposal costs will be incurred or such costs will be borne by the buyer. 11. )sing sales value at split@o*& what amount of joint processing cost is allocated to roduct A ;round to the nearest dollar=? ;oints < 1= a. B2&98 b. B&682 c. B'&:: d. +6$6' 12. )sing sales value at split@o*& what amount of joint processing cost is allocated to roduct ! ;round to the nearest dollar=? a. +'$;18 b. B'&:: c. B6&:62 d. B6&282 1. )sing net realizable value at split@o*& what amount of joint processing cost is allocated to roduct ! ;round to the nearest dollar=? a. B2&718 b. B'&:: c. B6&:62 d. +6$'8' 1'. )sing approximated net realizable value at split@o*& what amount of joint processing cost is allocated to roduct A ;round to the nearest dollar=? ;oints < 1= a. B2&718 b. B2&9' c. +A$17 d. B'&:: 1. )sing approximated net realizable value at split@o*& what amount of joint processing cost is allocated to roduct ! ;round to the nearest dollar=? ;oints < 1= a. B'&:: b. +,$586 c. B6&:62 d. B6&282
Unit 8 !ractice Questions 1. $elect the incorrect statement concerning the historical relationship between cost accounting systems and nancial accounting systems. ;oints < 1= a. 3he two systems often compete. b. 0inancial accounting systems have been the dominant system. c. For %nancial reporting re:uirements$ cost information must be highly segmented. d. "nformation provided by the nancial reporting system is often of little value for cost management purposes. 2. A structure of interrelated elements that collects& organizes& and communicates data to managers so they can plan& control& ma-e decisions& and evaluate performance is a< ;oints < 1= a. cost management system ;!#$=. b. enterprise resource planning ;5,= system.
c. management control system ;#!$=. d. management information system G&#H. . (hich of the following is not a primary component of a management control system? ;oints < 1= a. Assessor b. @lac box c. 5*ector d. $ensor '. (hich of the following is not an organizational role of a cost management system? ;oints < 1= a. Jelp manage core competencies b. Din- plans and strategies to actual organizational performance c. Jelp identify tactics to fend o* organizational threats d. &dentify the organization/s mission . (hich of the following is not a primary goal of a cost management system? ;oints < 1= a. Assess productOservice life@cycle performance b. >evelop accurate product costs c. &dentify the company/s least pro%table customers d. #easure performance 6. 3he productOservice costs generated by the !#$ are used for which of the following purposes? ;oints < 1= a. repare nancial statements b. !reate a basis for performance measurements c. 5stablish prices for cost@plus contracts d. "ll of the above 7. 3he relative composition of an organization4s xed and variable costs and& thus& how costs change relative to changes in production or sales volume is referred to as its< ;oints < 1= a. cost behavior. b. cost horizon. c. cost pattern. d. cost structure. 8. 3he underlying set of assumptions about the entity and the goals& processes& practices& and values that its member share is referred to as its< ;oints < 1= a. mission. b. strategic plan. c. organizational culture. d. organizational structure. 9. 3he strategy of identifying and exploiting temporary opportunities for advantage is -nown as a ;oints < 1= a. confrontational strategy. b. cost leadership strategy. c. di*erentiation strategy. d. systematic strategy. 1:. !ore competencies which are the operational dimensions that are -ey to the company4s survival include< ;oints < 1= a. Iuality. b. customer service. c. cost control. d. all of the above.
11.
$elect the incorrect statement from the following. ;oints < 1= a. Jigh-tech companies can/t pursue a cost leadership strategy due to the high costs of technology. b. #anagement of high technology costs reIuires beating competitors to the mar-et with new products. c. /ften& getting products to mar-et Iuic-ly and protably reIuires a compromise between product innovation and superior product design. d. 3he faster a product gets to mar-et& the fewer competitive products will exist. 12. !ost control ;!ost Deadership=& product replacement ;roduct >i*erentiation=& and >istribution channel development ;!onfrontation= are activities for which product life cycle? ;oints < 1= a. %uild b. Jarvest c. Jold d. Crow 1. $toc- options are an example of a< ;oints < 1= a. cash incentive plan. b. short@term performance incentive. c. long-term performance incentive. d. none of the above. 1'. $elect the item that incorrectly details the shift in control emphasis in future competitive environments? ;oints < 1= a. !erformance easurementC From concentrating on multiple types of critical success measures to concentrating on %nancial results b. !ost $tandards< from using expected standards to using ideal standards c. %udgeting< 0rom developing annual budgets to developing rolling budgets d. roduct /*erings< 0rom developing a limited number of product styles to engaging in mass customization to entice a wide variety of customers 1. (hich of the following is not an objective of enterprise resource planning systems? ;oints < 1= a. #anage and coordinate a myriad of organizational activities b. #aintain the company4s various legacy information systems c. "mprove operational e+ciencies d. )ae advantage of cost savings from shared service centers 16. 5very company has upstream suppliers and downstream customers. 3hese relationships may be referred to as a ;oints < 1= a. total Iuality management system. b. -anban system. c. value chain. d. just@in@time networ-. 17. (hich of the following items is not included in annual inventory carrying costs? ;oints < 1= a. "nventory storage cost b. &nventory purchase cost c. "nsurance on inventory d. roperty taxes on inventory 18. 3he approach to producing inventory in which production is conducted in anticipation of customer orders is referred to as a ;oints < 1= a. just in time system. b. push system.
c. d. 19. 1= a. b. c. d.
value chain. pull system. 3he primary objective of a pull system of production is to minimize< ;oints <
the purchase cost of inventory. the number of parts needed to produce a product. the number of production supervisors needed in the factory. the cost of carrying inventory. 2:. (hich of the following is not a stage of development in a product4s life cycle? ;oints < 1= a. #aturity b. Crowth c. 2ntrenchment d. "ntroduction 21. "n which stage of the product life cycle are costs usually at their lowest level and prots at their highest levels? ;oints < 1= a. aturity b. Crowth c. 5ntrenchment d. "ntroduction 22. $elect the correct eIuation for a product4s target cost ;3!=. ;oints < 1= a. 3! F 5stimated selling price x ;Acceptable prot margin G $elling and administrative costs= b. 3! F 5stimated selling price O Acceptable prot margin G $elling and administrative costs= c. ) < 2stimated selling price - "cceptable pro%t margin - #elling and administrative costs d. 3! F 5stimated selling price G ;Acceptable prot margin @ $elling and administrative costs= 2. (hich of the following is a primary goal of just@in@time systems? ;oints < 1= a. 5liminating any production process that does not add value to the productOservice b. ,educing the total cost of productionOperformance while increasing Iuality c. !ontinuously improving productionOperformance e+ciency d. "ll of the above 2'. (hat is the optimal E"3 situation with regard to supplier relationships? ;oints < 1= a. Jave only one vendor for any given item b. )se at least two vendors for each item purchased to minimize chances of stoc-out c. AcIuire all items needed to produce the company4s products from a single vendor d. Kone of the above 2. A production system involving a networ- of robots and material conveyance devices monitored and controlled by computers that allows for rapid production and responsiveness to changes in production needs is referred to as< ;oints < 1= a. Kexible manufacturing system. b. computer@integrated manufacturing system. c. focused factory arrangement system. d. virtual reality manufacturing system.
26.
$elect the incorrect statement concerning lean enterprises. ;oints < 1= a. Dean manufacturing refers to ma-ing only those items in demand by customers and ma-ing those items without waste. b. 9ie &)$ one of the primary goals of lean manufacturing is to eliminate value-added activities. c. Dean enterprises see- to lower cycle times and increase Iuality. d. Dean manufacturing can lead to reduced product life cycles. 27. oints at which the processing levels are su+ciently slow to produce idle time in other processing mechanisms in the networ- are referred to as ;oints < 1= a. stress points. b. bottlenecs. c. tra+c jams. d. bac-ush points. 28. 3he annual demand for mantle cloc-s is estimated to be &::: units. 3he annual cost of carrying one unit in inventory is B1:& and the cost to initiate a production run is B1&:::. 3here are no cloc-s on hand and so the company plans to schedule four eIual production runs for the coming year. 3he company operates 2: business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. "f the company does not maintain a safety stoc-& the estimated total annual carrying costs for the mantle cloc- is< ;oints < 1= a. B1:&2:. b. +6$',. c. B&:::. d. B'&:::. 29. % !ompany needs help in determining the number of production runs it should schedule for the coming year. "t has no beginning inventory& annual demand of &::: units& annual cost of carrying one unit in inventory is B1:& and the estimated cost of setting up a production run is B1&:::. Jow many production runs are needed for the coming year? ;oints < 1= a. 7 b. , c. ' d. 2 :. (hen the level of safety stoc- is increased< ;oints < 1= a. lead time will increase. b. carrying costs will decrease. c. the fre:uency of stoc outs will decrease. d. lead time will decrease.
Unit 8 Quiz 1. A cost management system ;oints < 1= a. is nalized when the information currently being produced is the same as the information currently desired. b. can be generically designed to t the information needs of the majority of domestic ;but not global= organizations. c. must be continuously improved to adapt to changes in an organization/s internal and external environment. d. that has been appropriately designed from gap analysis& does not need to be changed unless there is a change in organizational management or culture.
2. (hich of the following indicates the mission being pursued by a subunit that is using cash? generating cash? ;oints < 1= a. save harvest b. build save c. harvest build d. build harvest . An increase in the use of technology has caused ;oints < 1= a. fewer costs to be susceptible to short-run control. b. companies to be more exible in responding to changing short@term conditions. c. managers to be less concerned about capacity utilization because of the increased ability to produce in large Iuantities. d. a decline in the amount of xed costs in an organization. '. 3he life cycles of many products are becoming shorter ;oints < 1= a. causing companies to recognize that it may be more advantageous to confront$ rather than compete with$ the competition. b. ma-ing products in the maturity stage of their life cycle the basis on which rms expect growth to be generated. c. so companies spend less and less on product design and development because products will not last as long as previously. d. meaning that tools such as benchmar-ing and target costing become less important in adapting to the competitive environment. . #ost managers evaluate decision alternatives based on how ;oints < 1= a. much the decision will increase or decrease organizational prots. b. the outcomes may a>ect selected performance measurement and reward criteria. c. much the outcome will reduce the organization4s cost of capital. d. easily the decision impacts can be Iuantied in the organization4s cost management system. 6. 3arget costing ;oints < 1= a. can be applied to services if they are su4ciently uniform. b. can be applied to services only if they are automated. c. can be applied to services that are performed in a manufacturing environment. d. cannot be applied to services. 7. (hich of the following statements is false concerning electronic data interchange? ;oints < 1= a. 5lectronic data interchange ;5>"= is essential in a pull system. b. /ne of the benets realized by 5>" organizations is a faster processing of transactions. c. 2lectronic data interchange is essential in a push system. d. 5lectronic data interchange refers to computer@to@computer exchange of information. 8. (hen E"3 is implemented& which of the following changes in the accounting system would not be expected? ;oints < 1= a. fewer cost allocations b. elimination of standard costs c. combining labor and overhead into one product cost category d. combing raw material and materials in wor-@in@process into one product cost category
9. "n which life@cycle stage are product Iuality improvements and stable selling prices li-ely to occur? ;oints < 1= a. introduction b. growth c. maturity d. decline 1:. 0rom a cost management view& research and development cost represents ;oints < 1= a. a life-cycle investment b. a period expense. c. an unearned revenue. d. a ris- reserve. 11. "n a E"3 manufacturing environment& product costing information is least important for use in ;oints < 1= a. wor in process inventory valuation. b. pricing decisions. c. product protability analysis. d. ma-e@or@buy decisions. 12. (ith E"3 manufacturing& which of the following costs would be considered a direct product cost? ;oints < 1= a. insurance on the plant b. utilities used for manufacturing c. janitors4 salaries d. salary of the plant supervisor 1. 3he E"3 environment has caused a reassessment of product costing techniIues. (hich of the following statements is true with respect to this reassessment? ;oints < 1= a. )raditional cost allocations based on direct labor are being :uestioned and criticized. b. 3he federal government& through the $5!& is responsible for the reassessment. c. 3he reassessment is caused by the replacement of machine hours with labor hours. d. Kone of the above is true. 1'. (hen a rm adopts the just@in@time method of management& ;oints < 1= a. employees are retrained on di*erent eIuipment& but the plant layout generally remains unchanged. b. new machinery and eIuipment must be purchased from franchised E"3 dealers. c. machinery and e:uipment are moved into small autonomous production lines called islands or cells. d. new& more e+cient machinery and eIuipment are purchased and installed in the original plant layout. 1. (hich of the following describes the e*ect on direct labor when management adopts the E"3 philosophy? ;oints < 1= a. 5ach direct labor person performs a single tas-& thereby allowing that person to reach his or her theoretical potential. b. %ecause each person runs a single machine in a E"3 environment& there are more employees classied as direct labor. c. 3he environment becomes more labor@intensive.
d. achine operators are expected to run several di>erent types of machines$ help set up for production runs$ and identify and repair machinery needing maintenance.
Unit 5 !ractice Questions 1. (hich of the following is not a major business trend promoting the increased use of business process reengineering? ;oints < 1= a. &ncreasing use of the corporate form of business organization b. Advancement of technology c. ursuit of increased Iuality d. "ncrease in price competition caused by globalization 2. %usiness process reengineering changes the way rms execute processes by< ;oints < 1= a. maing better use of technology. b. ma-ing less use of technology. c. using more employees. d. eliminating all but the most protable products in order to simply operations. . Clobal competition is forcing rms to downsize and restructure operations to< ;oints < 1= a. defend core competencies. b. remain cost competitive. c. eliminate non@value activities. d. all of the above. '. /ne of the grim realities of ever@improving e+ciency is that ;oints < 1= a. "nput costs are declining b. !ycle times are increasing c. Fewer worers are re:uired d. All of the above . 3he data& facts& experiences& and lessons learned important to an organization4s existence are referred to as< ;oints < 1= a. a data depository. b. an enterprise resource planning system. c. wor-force diversity. d. organizational memory. 6. >i*erent languages and cultures can impede communication within globally dispersed operations. (hy is accounting a useful coordinating mechanism? ;oints < 1= a. %ecause accounting represents an application of the universal language of mathematics b. %ecause the interpretation of accounting information need not depend on local culture c. %ecause accounting is the universal language of business d. "ll of the above 7. All of the following are objectives of enterprise resource planning ;5,= systems except< a. to automate accounting processes. b. to share data across the enterprise. c. to eliminate information system installation costs. d. to provide real@time access to company data.
8. "nstallation of an 5, system impacts the nancial function in all of the following ways except< a. Financial specialists have to %nd ways to %nance the ac:uisition of the 2E! system. b. 0inancial and system specialists become responsible for selecting and installing the software. c. 0inancial specialists will be responsible for analyzing the data repository to support management decisions. d. 0inance specialists are accountable for integrating externally purchased data with internally generated data. 9. (hich techniIue uses statistical techniIues to uncover answers to important Iuestions about business operations? ;oints < 1= a. business process reengineering ;%,= b. data mining c. employee to capital cost ratio ;5!!= d. enterprise resource planning system ;5,= 1:. Eoint ventures& eIuity investments& and technology swaps are examples of ;oints < 1= a. venture capitalists. b. licensing agreements. c. strategic alliances. d. exclusive buyer@seller agreements 11. An agreement involving two or more rms to jointly contribute to the supply chain ;oints < 1= a. involves the exploitation of partner -nowledge. b. includes partners with access to di*erent mar-ets. c. allows sharing of ris-s and rewards. d. all of the above. 12. !haracteristics of rms that are best suited to a successful implementation of open@boo- management include all of the following except< ;oints < 1= a. small size. b. centralized management. c. a history of employee empowerment. d. the presence of trust between employees and managers. 1. /pen@boo- management< ;oints < 1= a. decreases the transparency of information within an organization. b. reIuires accountants to change from a mind@set of sharing to guarding information. c. fre:uently uses games and meetings to mae information understandable to %nancially unsophisticated employees. d. centralizes both authority to ma-e decisions and responsibility for decision results. 1'. (hich of the following is not a common principle of open@boo- management? ;oints < 1= a. 3each employees to understand the company4s nancial results b. Din- nonnancial measures to nancial results c. 2mpower employees by allowing them to evaluate their own performance d. 3urn the management of the business into a game that employees can win
1. (hich of the following is not a general approach to controlling environmental costs? ;oints < 1= a. #igning the Lyoto !rotocol to reduce pollution b. !leaning up pollutants after they are produced c. "mproving processes to reduce the amount of waste produced d. reventing pollution by never producing polluting materials
Unit 5 Quiz 1. 5, stands for ;oints < 1= a. enterprise resource production. b. enterprise resource purchasing. c. enterprise resource planning. d. enterprise resource processing. 2. 5, systems are ;oints < 1= a. pacaged software. b. methods of examining processes. c. ways to downsize. d. ways to expand geographical operations. . 5, systems should help a company ;oints < 1= a. improve Iuality. b. improve service. c. reduce overhead. d. all of the above. '. >ata mining is used to ;oints < 1= a. uncover Iuality problems. b. study customer retention. c. identify cost drivers. d. all of the above. . >ata mining ;oints < 1= a. is pac-aged software. b. is a method of examining processes. c. uses statistical techni:ues to solve problems. d. is a way to downsize. 6. A strategic alliance is a ;oints < 1= a. pac-aged software. b. way for two companies to jointly contribute to the supply chain. c. way to downsize. d. method of examining processes. 7. $trategic alliances ta-e the form of ;oints < 1= a. joint ventures. b. technology swaps. c. licensing. d. all of the above. 8. VVVV allows a company to accomplish a technology swap. ;oints < 1= a. >ata mining b. #trategic alliance c. >iversity d. %,
