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3) Centralized operations are better for small companies due to the smaller scope of their operations. 4) Centralized companies split their operations into different divisions, or operating units, and top management delegates decision making to the division/unit managers. 5) One of the advantages of decentralization is that it allows top management to.
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5) The fixed overhead volume variance is a volume variance, not a cost variance. 6) The fixed overhead volume variance always shows underallocated fixed overhead costs. 7) The fixed overhead volume variance shows why the fixed overhead is underallocated or overallocated because it is a cost variance. 8) The fixed overhead volume variance.
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  Learning Objective 25-1 1) If a business is considering buying a new vehicle, the cost of insurance on the new vehicle is information that is relevant to the business decision. 2) When considering whether to have a new roof installed on a building, the money spent previously on roof repairs to the.
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4) Revenue at the market price less the desired operating income equals the product's target full product cost. 5) Price-setters emphasize a cost-plus pricing approach. 6) If a company is a price-taker, it has considerable flexibility in setting its products' prices. Variable manufacturing $100 per unit Variable marketing $15 per unit Fixed manufacturing $280,000 per year Fixed.
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13) Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially completed performance report for the first quarter. Actual Flexible Budget Flexible Budget Variance U/F % Variance U/F Sales Revenue $688,000 $700,000 Variable expenses 309,000 320,000 Contribution margin 379,000 380,000 Traceable fixed expenses 371,000 368,000 Division margin $8,000 $12,000 How much is the percentage flexible budget variance for sales revenue? A) 1.7 % F B) 1.7.
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5) When a manufacturing company uses standard costing system the Work-in-Process account records all transactions at standard cost amounts. 6) When a manufacturing company uses standard costing system, an unfavorable variance has the effect of being a contra expense. 7) Atlace Manufacturers uses standard costing system. Standards for direct materials are as.
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13) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct.
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20) Newman Automobiles Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $10,000,000 $500,000 Useful life 5 years 5 years Estimated annual net cash inflows for 5 years $2,000,000 $95,000 Residual value $50,000 $20,000 Depreciation method Straight-line Straight-line Required rate of return 12% 10% Calculate accounting rate of return for Proposal Y. A) 8.95% B) 10.21% C) 7.50% D) 6.57% 21) The following details are provided by a manufacturing.
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36) Kim Company's western territory's forecasted income statement for the upcoming year is as follows: Sales $850,000 Variable expenses (520,000) Contribution margin $330,000 Fixed expenses (480,000) Operating loss ($150,000) Kim Company's management is considering dropping the western territory and has determined that 80% of the fixed expenses are avoidable. What is the change in Kim Company's forecasted operating loss for the.
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3) Standard costs help motivate employees by serving as benchmarks against which their performance is measured. 4) A standard cost system helps management set performance standards. 5) An efficiency variance measures how well a company keeps unit prices of material and labor inputs within standards. 6) An efficiency variance measures how well the.
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21) Capital budgeting is: A) the process of planning the investment in long-term assets. B) preparing the budget for operating expenses. C) the process of evaluating the profitability of a business. D) the process of making pricing decisions for products. Learning Objective 26-2 1) The accounting rate of return method and the payback method are often.
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11) Which of following statements is true of short-term decision making? A) Fixed costs and variable costs must be analyzed separately. B) All costs behave in the same way. C) Unit manufacturing costs are variable costs. D) All costs involved in a decision are considered relevant. 12) Which of the following is a historical cost.
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13) Which of the following is a disadvantage of decentralization? A) increases the customer response time B) only the top management is allowed to make decisions C) demotivates employees as the decision making powers are not delegated D) problems in achieving goal congruence 14) Which of the following would most likely be evaluated using residual.
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34) Hilltop Golf Course is planning for the coming season. Investors would like to earn a 15% return on the company's $60,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $30,000,000 for the golfing season. About 600,000 rounds.
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19) Lightening Semiconductors produces 400,000 hi-tech computer chips per month. Each chip uses a component which Lightening makes in-house. The variable costs to make the component are $1.20 per unit, and the fixed costs run $1,200,000 per month. The company has been approached by a foreign producer who can supply.
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16) Faros Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Total Baseball Helmets Football Helmets Sales revenue $850,000 $500,000 $350,000 Variable expenses (530,000) (250,000) (280,000) Contribution margin $320,000 $250,000 $70,000 Fixed expenses (180,000) (90,000) (90,000) Operating income (loss) $140,000 $160,000 $(20,000) Assuming the Football Helmets line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the line is.
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3) A favorable variance of direct materials cost occurs when the actual direct materials cost incurred is more than the standard direct materials cost determined. 4) Favorable and unfavorable variances are netted together in the same way debits and credits are. 5) Favorable variances are added to unfavorable variances to create a.
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30) Clapton Corporation is considering an investment in new equipment costing $900,000. The equipment will be depreciated on a straight-line basis over a ten-year life and is expected to have a salvage value of $90,000. The equipment is expected to generate net cash flows of $140,000 for each of the.
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    Learning Objective 24-1 1) Direct material costs and direct labor costs cannot be easily traced to products. Therefore, they are allocated to products. 2) Manufacturing overhead costs, which are also known as indirect costs, cannot be cost-effectively traced to products. 3) The predetermined overhead allocation rate is an estimated overhead cost per unit.
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29) Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $39,000 per.
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21) Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. Additional information is as follows: Activity Allocation Base Cost Allocation Rate $ Materials handling Number of parts 0.08 Machining Machine.
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6) Freemen Company's western territory's forecasted income statement for the upcoming year is as follows: Sales $800,000 Variable expenses 500,000 Contribution margin $300,000 Fixed expenses 396,000 Operating income ($96,000) Freemen Company's management is considering dropping the western territory. This move would be financially advantageous only if the company could eliminate $96,000 of fixed costs or more. 7) Tyler Corporation has provided you.
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15) Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the fixed overhead volume variance. Actual fixed overhead $30,000 Budgeted fixed overhead $25,000 Allocated fixed overhead $28,000 Standard overhead allocation rate $7 per unit Standard direct labor hours per unit 2 DLHr Actual output 2,000 units A) $14,000 F B) $3,000 U C) $3,000 F D) $14,000 U 16) Zenith Fashions uses.
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5) The exceptions under management by exception can be expressed as a percentage of a budgeted amount or a dollar amount. 6) Managers who follow the management by exception principle investigate only those variances that are unfavorable. 7) The management technique whereby managers concentrate on results that are outside the accepted parameters.
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5) The balanced scorecard is a performance evaluation system that requires management to consider financial performance measures of performance, but not nonfinancial measures. 6) Key performance indicators (KPIs) are summary performance measures that help managers assess whether the company is achieving its goals. 7) A good balanced scorecard focuses only on lead.
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15) Increased number of repeat customers and increased rate of on-time deliveries are the indicators of: A) product quality. B) market share. C) customer satisfaction. D) skills and knowledge of the employees. 16) Which of the following affects the company's ability to make on-time deliveries? A) return on investment B) product's price C) warranty claims D) production cycle time 17).
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  Learning Objective 26-1 1) An operational asset used for a long period of time is known as a capital asset. 2) The acquisition or construction of a capital asset is known as a capital investment. 3) A post-audit in capital budgeting is a comparison of actual results of capital investments with the projected.
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3) A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability. 4) Regardless of the type of responsibility center, responsibility reports should focus on information, not blame. 5) Cost center responsibility reports generally focus on the static budget variance. 6) The flexible budget uses budgeted costs at the.
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11) Activity-based costing uses a common allocation base for all activities. 12) Indirect costs allocated to products using activity-based costing are more accurate than traditional allocation systems. 13) Companies with diverse products can obtain better costing information by using a single plant wide rate. 14) Traditional costing systems employ multiple allocation rates, but.
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31) Pitt Jones Company had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $60,000 2,000 hours Account billing (lines) $30,000 20,000 lines Account verification (accounts) $15,000 20,000 accounts Correspondence (letters) $10,000 1,000 letters The above activities are carried out at two of their regional offices.   Northeast Office Midwest Office Account inquiry (hours) 100 hours 200 hours Account billing (lines) 10,000 lines 7,000 lines Account verification (accounts) 1,000 accounts 600.
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6) The only difference between present value and future value is the amount of interest that is earned in the intervening time span. 7) Paramount Company is considering purchasing new equipment costing $700,000. The management has estimated that the equipment will generate cash flows as follows: Year 1 $200,000      2 200,000      3 250,000      4 250,000      5 150,000 Present.
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14) Rica Company is a price-taker and uses target pricing. Please refer to the following information: Production volume 600,000 units per year Market price $30 per unit Desired operating income 15% of total assets Total assets $13,900,000 Variable cost per unit $18 per unit Fixed cost per year $5,600,000 per year With the current cost structure, Rica cannot achieve its profit goals. It.
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15) The management of Alpha Company has calculated the following variances: Direct materials cost variance $8,000 U Direct materials efficiency variance 35,000 F Direct labor cost variance 15,000 F Direct labor efficiency variance 12,000 U Variable overhead cost variance 2,000 F Variable overhead efficiency variance 5,000 F Fixed overhead cost variance 3,050 F When determining the total production cost flexible budget variance, calculate the total.
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15) Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in their books. Sales Revenues: $750,000 Cost of Goods Sold (standard costing): $400,500 Marketing & Admin expenses: $150,000 Variances: Sales Revenue $6,000 F Direct Materials Cost Variance 400 U Direct Materials Efficiency Variance 375 F Direct Labor Cost Variance 675 U Direct Labor Efficiency Variance 150 F Variable Overhead Cost Variance 250 U Variable Overhead.
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26) Macaulay Company has three product lines—D, E, and F. The following information is available: D E F Sales $70,000 $40,000 $30,000 Variable costs (40,000) (20,000) (10,000) Contribution margin 30,000 20,000 20,000 Fixed expenses (15,000) (15,000) (25,000) Operating income (loss) $15,000 $5,000 ($5,000) Macaulay Company is thinking of dropping product line F because it is reporting an operating loss. Assume that $15,000 of total fixed costs could be eliminated by dropping F. What effect.
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11) Payback provides management with valuable information about the time period within which the cash invested will be recouped. 12) Net present value and internal rate of return consider the time value of money, so they are appropriate for longer-term capital investments 13) Which of the following best describes a post-audit in.
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