Multiple Choice Question 38
A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to
determine the amount of money that should be spent on a project.
provide relevant revenue and cost data about each course of action.
decide which actions that management should consider.
assign responsibility for the decision.
Multiple Choice Question 45
In incremental analysis,
only costs are analyzed.
only revenues are analyzed.
both costs and revenues may be analyzed.
both costs and revenues that stay the same between alternate courses of action will be analyzed.
Multiple Choice Question 46
Incremental analysis is most useful
as a replacement technique for variance analysis.
in developing relevant information for management decisions.
in choosing between the net present value method and the internal rate of return method.
in evaluating the master budget.
Multiple Choice Question 53
It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?
Multiple Choice Question 69
Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000
If Carter purchases the component externally, $30,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?
Multiple Choice Question 79
Mink Manufacturing is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to assemble the product is estimated at $42 per unit and the company believes the market would support a price of $170 on the assembled unit. What decision should Mink make?
Multiple Choice Question 90
A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?
Depreciation expense on the old equipment
The current disposal price of the old equipment
The loss on the disposal of the old equipment
The book value of the old equipment
Part 3
Exercise 20-3
Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Average hourly billing rates are: auditing $83, tax $92, and consulting $104.
Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
Exercise 22-1
Stanton Company is planning to produce 2,400 units of product in 2012. Each unit requires 1.40 pounds of materials at $5.60 per pound and a half-hour of labor at $14.20 per hour. The overhead rate is 60% of direct labor.
(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
Direct materials $
Direct labor $
Overhead $
(b) Compute the standard cost of one unit of product
Standard cost $
Brief Exercise 23-3
In Harley Company it costs $31 per unit ($18 variable and $13 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 4,080 units at $24 each. Harley will incur special shipping costs of $1 per unit. Assuming that Harley has excess operating capacity.
Indicate the net income (loss) Harley would realize by accepting the special order
The special order should be
.
Accepted
Brief Exercise 23-4
Vintech Manufacturing incurs unit costs of $7 ($5 variable and $2 fixed) in making a subassembly part for its finished product. A supplier offers to make 13,100 of the part at $5.60 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.
Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
The decision should be to
Brief Exercise 23-6
Ridley Company has a factory machine with a book value of $97,300 and a remaining useful life of 5 years. A new machine is available at a cost of $196,200. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $605,600 to $368,700.
Prepare an analysis showing whether the old machine should be retained or replaced.
...
The old factory machine should be
Part 4:
Multiple Choice Question 49
Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?
Reduced legal liability for investors.
Most common form of organization.
Lower taxes.
Harder to transfer ownership.
Multiple Choice Question 64
The group of users of accounting information charged with achieving the goals of the business is its
creditors.
investors.
managers.
auditors.
Multiple Choice Question 110
Which of the following financial statements is concerned with the company at a point in time?
Multiple Choice Question 112
An income statement
reports the changes in assets, liabilities, and stockholders' equity over a period of time.
reports the assets, liabilities, and stockholders' equity at a specific date.
presents the revenues and expenses for a specific period of time.
summarizes the changes in retained earnings for a specific period of time.
.
Multiple Choice Question 118
The most important information needed to determine if companies can pay their current obligations is the
projected net income for next year.
relationship between current assets and current liabilities.
relationship between short-term and long-term liabilities.
net income for this year.
Multiple Choice Question 124
A liquidity ratio measures the
short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
ability of a company to survive over a long period of time.
percentage of total financing provided by creditors.
income or operating success of a company over a period of time.
Multiple Choice Question 165
The convention of consistency refers to consistent use of accounting principles
among firms.
throughout the accounting periods.
within industries.
among accounting periods.
Multiple Choice Question 90
Horizontal analysis is also known as
linear analysis.
vertical analysis.
trend analysis.
common size analysis.
Multiple Choice Question 92
Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time
Multiple Choice Question 111
Vertical analysis is a technique that expresses each item in a financial statement
as a percent of the item in the previous year.
in dollars and cents.
as a percent of a base amount.
starting with the highest value down to the lowest value.
Multiple Choice Question 41
Process costing is used when
the production process is continuous.
production is aimed at filling a specific customer order.
costs are to be assigned to specific jobs.
dissimilar products are involved.
Multiple Choice Question 43
An important feature of a job order cost system is that each job
Multiple Choice Question 49
In a process cost system, product costs are summarized:
when the products are sold.
after each unit is produced.
on job cost sheets.
on production cost reports.
Multiple Choice Question 33
An activity that has a direct cause-effect relationship with the resources consumed is a(n)
product activity.
cost driver.
overhead rate.
cost pool.
Multiple Choice Question 40
Activity-based costing
allocates overhead directly to products and services based on activity levels.
accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver.
allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.
Multiple Choice Question 40
A cost which remains constant per unit at various levels of activity is a
mixed cost.
fixed cost.
manufacturing cost.
variable cost.
Multiple Choice Question 105
The break-even point is where
total sales equal total variable costs.
total sales equal total fixed costs.
contribution margin equals total fixed costs.
total variable costs equal total fixed costs.
Multiple Choice Question 109
Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point?
Multiple Choice Question 94
When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using
variable costing.
product costing.
operations costing.
absorption costing.
Multiple Choice Question 122
If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production when using
Multiple Choice Question 50
An unrealistic budget is more likely to result when it
Answer of part-3 in excel.
A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to
determine the amount of money that should be spent on a project.
provide relevant revenue and cost data about each course of action.
decide which actions that management should consider.
assign responsibility for the decision.
Multiple Choice Question 45
In incremental analysis,
only costs are analyzed.
only revenues are analyzed.
both costs and revenues may be analyzed.
both costs and revenues that stay the same between alternate courses of action will be analyzed.
Multiple Choice Question 46
Incremental analysis is most useful
as a replacement technique for variance analysis.
in developing relevant information for management decisions.
in choosing between the net present value method and the internal rate of return method.
in evaluating the master budget.
Multiple Choice Question 53
It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?
Multiple Choice Question 69
Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000
If Carter purchases the component externally, $30,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?
Multiple Choice Question 79
Mink Manufacturing is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to assemble the product is estimated at $42 per unit and the company believes the market would support a price of $170 on the assembled unit. What decision should Mink make?
Multiple Choice Question 90
A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?
Depreciation expense on the old equipment
The current disposal price of the old equipment
The loss on the disposal of the old equipment
The book value of the old equipment
Part 3
Exercise 20-3
Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Average hourly billing rates are: auditing $83, tax $92, and consulting $104.
Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
Exercise 22-1
Stanton Company is planning to produce 2,400 units of product in 2012. Each unit requires 1.40 pounds of materials at $5.60 per pound and a half-hour of labor at $14.20 per hour. The overhead rate is 60% of direct labor.
(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
Direct materials $
Direct labor $
Overhead $
(b) Compute the standard cost of one unit of product
Standard cost $
Brief Exercise 23-3
In Harley Company it costs $31 per unit ($18 variable and $13 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 4,080 units at $24 each. Harley will incur special shipping costs of $1 per unit. Assuming that Harley has excess operating capacity.
Indicate the net income (loss) Harley would realize by accepting the special order
The special order should be
.
Accepted
Brief Exercise 23-4
Vintech Manufacturing incurs unit costs of $7 ($5 variable and $2 fixed) in making a subassembly part for its finished product. A supplier offers to make 13,100 of the part at $5.60 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.
Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
The decision should be to
Brief Exercise 23-6
Ridley Company has a factory machine with a book value of $97,300 and a remaining useful life of 5 years. A new machine is available at a cost of $196,200. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $605,600 to $368,700.
Prepare an analysis showing whether the old machine should be retained or replaced.
...
The old factory machine should be
Part 4:
Multiple Choice Question 49
Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?
Reduced legal liability for investors.
Most common form of organization.
Lower taxes.
Harder to transfer ownership.
Multiple Choice Question 64
The group of users of accounting information charged with achieving the goals of the business is its
creditors.
investors.
managers.
auditors.
Multiple Choice Question 110
Which of the following financial statements is concerned with the company at a point in time?
Multiple Choice Question 112
An income statement
reports the changes in assets, liabilities, and stockholders' equity over a period of time.
reports the assets, liabilities, and stockholders' equity at a specific date.
presents the revenues and expenses for a specific period of time.
summarizes the changes in retained earnings for a specific period of time.
.
Multiple Choice Question 118
The most important information needed to determine if companies can pay their current obligations is the
projected net income for next year.
relationship between current assets and current liabilities.
relationship between short-term and long-term liabilities.
net income for this year.
Multiple Choice Question 124
A liquidity ratio measures the
short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
ability of a company to survive over a long period of time.
percentage of total financing provided by creditors.
income or operating success of a company over a period of time.
Multiple Choice Question 165
The convention of consistency refers to consistent use of accounting principles
among firms.
throughout the accounting periods.
within industries.
among accounting periods.
Multiple Choice Question 90
Horizontal analysis is also known as
linear analysis.
vertical analysis.
trend analysis.
common size analysis.
Multiple Choice Question 92
Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time
Multiple Choice Question 111
Vertical analysis is a technique that expresses each item in a financial statement
as a percent of the item in the previous year.
in dollars and cents.
as a percent of a base amount.
starting with the highest value down to the lowest value.
Multiple Choice Question 41
Process costing is used when
the production process is continuous.
production is aimed at filling a specific customer order.
costs are to be assigned to specific jobs.
dissimilar products are involved.
Multiple Choice Question 43
An important feature of a job order cost system is that each job
Multiple Choice Question 49
In a process cost system, product costs are summarized:
when the products are sold.
after each unit is produced.
on job cost sheets.
on production cost reports.
Multiple Choice Question 33
An activity that has a direct cause-effect relationship with the resources consumed is a(n)
product activity.
cost driver.
overhead rate.
cost pool.
Multiple Choice Question 40
Activity-based costing
allocates overhead directly to products and services based on activity levels.
accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver.
allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.
Multiple Choice Question 40
A cost which remains constant per unit at various levels of activity is a
mixed cost.
fixed cost.
manufacturing cost.
variable cost.
Multiple Choice Question 105
The break-even point is where
total sales equal total variable costs.
total sales equal total fixed costs.
contribution margin equals total fixed costs.
total variable costs equal total fixed costs.
Multiple Choice Question 109
Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point?
Multiple Choice Question 94
When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using
variable costing.
product costing.
operations costing.
absorption costing.
Multiple Choice Question 122
If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production when using
Multiple Choice Question 50
An unrealistic budget is more likely to result when it
Answer of part-3 in excel.
