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Question 1
Under the balanced scorecard concept developed by Kaplan and Norton, employee satisfaction and retention are measures used under which of the following perspectives?
c. Learning and growth.
a. Financial.
b. Internal business.
c. Learning and growth.
d. Customer
Question 2
Which of the following terms represents the residual income that remains after the cost of all capital, including equity capital, has been deducted?
b. Economic value‐added.
a. Free cash flow.
b. Economic value‐added.
c. Net operating capital.
d. Market value‐added.
Question 3
The following selected data is for the Consumer Products Division of Gerriod Corp.
Sales $50,000,000
Average invested capital (total assets) 20,000,000
Net operating profit 3,000,000
Cost of capital 8%
Calculate the return on sales for the Consumer Products Division.
a. 6%
a. 6%
b. 12%
c. 20%
d. 40%
Question 4
Which of the following costs would decrease if production levels were increased within the relevant range?
b. Fixed costs per unit.
a. Total variable costs.
b. Fixed costs per unit.
c. Variable cost per unit.
d. Total fixed costs.
Question 5
The Cutting Department is the first stage of Mark Company’s production cycle. Conversion costs for this department were 80% complete as to the beginning work in process and 50% complete as to the ending work in process. Information as to conversion costs in the Cutting Department for January 2012 is as follows
UnitsConversion costs
Work in process at January 1, 2012 25,000 22,000
Units started and costs incurred during January 135,000 $143,000
Units completed and transferred to next department during January100,000
Using the FIFO method, what was the conversion cost of the work in process in the Cutting Department at January 31, 2012?
d. $39,000
a. $45,000
b. $33,000
c. $38,100
d. $39,000
Question 6
When using the first‐in, first‐out method of process costing, total equivalent units of production for a given period of time is equal to the number of units
d. In work in process at the beginning of the period, plus the number of units started during the period, plus the number of units remaining in work in process at the end of the period times the percent of work necessary to complete the items.
a. In work in process at the beginning of the period times the percent of work necessary to complete the items, plus the number of units started during the period, less the number of units remaining in work in process at the end of the period times the percent of work necessary to complete the items.
b. Transferred out during the period, plus the number of units remaining in work in process at the end of the period times the percent of work necessary to complete the items.
c. Started into process during the period, plus the number of units in work in process at the beginning of the period.
d. In work in process at the beginning of the period, plus the number of units started during the period, plus the number of units remaining in work in process at the end of the period times the percent of work necessary to complete the items.
Question 7
Lane Co. produces main products Kul and Wu. The process also yields by‐product Zef. Net realizable value of by‐product Zef is subtracted from joint production cost of Kul and Wu. The following information pertains to production in July 2012 at a joint cost of $54,000
Product Units produced Market value Additional cost after split‐off
Kul 1,000 $40,000 $0
Wu 1,500 $35,000 0
Zef 500 $7,000 3,000
If Lane uses the net realizable value method for allocating joint cost, how much of the joint cost should be allocated to product Kul?
b. $26,667
a. $20,000
b. $26,667
c. $18,800
d. $27,342
Question 8
The variable portion of the semivariable cost of electricity for a manufacturing plant is a
Conversion cost Period cost
b.
Yes No
a.
No Yes
b.
Yes No
c.
Yes Yes
d.
No No
Question 9
A company uses a standard costing system. At the end of the current year, the company provides the following overhead information
Actual overhead incurred
Variable $90,000
Fixed $62,000
Budgeted fixed overhead $65,000
Variable overhead rate (per direct labor hour) $8
Standard hours allowed for actual production 12,000
Actual labor hours used 11,000
What amount is variable overhead efficiency variance?
d. $8,000 favorable.
a. $8,000 unfavorable.
b. $6,000 favorable.
c. $2,000 unfavorable.
d. $8,000 favorable.
Question 10
Which of the statements best describes the concept of six‐sigma quality?
b. 3.4 defects per million.
a. 6.0 defects per million.
b. 3.4 defects per million.
c. 100 defects per million.
d. 10 defects per million.
Question 11
A company with three products classifies its costs as belonging to five functions design, production, marketing, distribution, and customer services. For pricing purposes, all company costs are assigned to the three products. The direct costs of each of the five functions are traced directly to the three products. The indirect costs of each of the five business functions are collected into five separate cost pools and then assigned to the three products using appropriate allocation bases. The allocation base that would most likely be the best for allocating the indirect costs of the distribution function is
c. Number of shipments.
a. Dollar sales volume.
b. Number of salespersons.
c. Number of shipments.
d. Number of customer phone calls.
Question 12
Comparing actual results with a budget based on achieved volume is possible with the use of a
c. Flexible budget.
a. Master budget.
b. Rolling budget.
c. Flexible budget.
d. Monthly budget.
Question 13
Crisper, Inc. plans to sell 80,000 bags of potato chips in June, and each of these bags requires five potatoes. Pertinent data includes
Bags of potato chips Potatoes
Actual June 1 inventory 15,000 bags 27,000 potatoes
Desired June 30 inventory 18,000 bags 23,000 potatoes
What number of units of raw material should Crisper plan to purchase?
a. 411,000
a. 411,000
b. 419,000
c. 381,000
d. 389,000
Question 14
Which of the following statements is true regarding opportunity cost?
c. Idle space that has no alternative use has an opportunity cost of zero.
a. The potential benefit is not sacrificed when selecting an alternative.
b. Opportunity cost is recorded in the accounts of an organization that has a full costing system.
c. Idle space that has no alternative use has an opportunity cost of zero.
d. Opportunity cost is representative of actual dollar outlay.
Question 15
In statistical analysis, a weighted‐average using probabilities as weights is the
c. Expected value.
a. Coefficient of variation.
b. Standard deviation.
c. Expected value.
d. Objective function.
Question 16
The regression analysis results for ABC Co. are shown as y = 90x + 45. The standard error (S ) is 30 and coefficient of determination (r ) is 0.81. The budget calls for production of 100 units. What is ABC’s estimate of total costs?
a. $9,045
a. $9,045
b. $3,090
c. $9,030
d. $4,590
Question 17
A company is offered a one‐time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10%, which is 15% less than the usual gross profit. What impact will this order have on total fixed costs and operating income?
c. Total fixed costs do not change and operating income increases.
a. Total fixed costs increase and operating income increases.
b. Total fixed costs do not change and operating income does not change.
c. Total fixed costs do not change and operating income increases.
d. Total fixed costs increase and operating income decreases.
Question 18
Ajax Division of Carlyle Corporation produces electric motors, 20% of which are sold to Bradley Division of Carlyle and the remainder to outside customers. Carlyle treats its divisions as profit centers and allows division managers to choose their sources of sale and supply. Corporate policy requires that all interdivisional sales and purchases be recorded at variable cost as a transfer price. Ajax Division’s estimated sales and standard cost data for the year ending December 31, 2012, based on the full capacity of 100,000 units, are as follows
Bradley Outsiders
Sales $900,000 $8,000,000
Variable costs (900,000) (3,600,000)
Fixed costs (300,000) (1,200,000)
Gross margin $(300,000) $3,200,000
Units sales 20,000 80,000
Carlyle is considering permitting the division managers to negotiate the transfer price for 2013. The managers agreed on a tentative transfer price of $75 per unit, to be reduced based on an equal sharing of the additional gross margin to Ajax resulting from sales to Bradley at $75 per unit instead of at variable cost. To evaluate this proposal, Carlyle would like to compare it with current policy based on 2012 results. Under the proposed action, the actual transfer price for 2012 sales of 20,000 motors would have been
b. $60.00
a. $55.00
b. $60.00
c. $67.50
d. $52.50
Question 19
A large manufacturing company has several autonomous divisions that sell their products in perfectly competitive external markets as well as internally to the other divisions of the company. Top management expects each of its divisional managers to take actions that will maximize the organization’s goals as well as their own goals. Top management also promotes a sustained level of management effort of all of its divisional managers. Under these circumstances, for products exchanged between divisions, the transfer price that will generally lead to optimal decisions for the manufacturing company would be a transfer price equal to the
b. Market price of the product.
a. Full cost of the product.
b. Market price of the product.
c. Variable cost of the product plus a markup.
d. Full cost of the product plus a markup.
Question 20
Johnson Co. is preparing its master budget for the first quarter of the next year. Budgeted sales and production for one of the company’s products are as follows
Month Sales Production
January 10,000 12,000
February 12,000 11,000
March 15,000 16,000
Each unit of this product requires four pounds of raw materials. Johnson’s policy is to have sufficient raw materials on hand at the end of each month for 40% of the following month’s production requirements. The January 1 raw materials inventory is expected to conform with this policy. How many pounds of raw materials should Johnson budget to purchase for January?
c. 46,400
a. 65,600
b. 11,600
c. 46,400
d. 48,000