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Study Resources (Accounting)

21) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the residual income (RI) of Moon Corp. A) $1,156,000 B) $300,000 C) $151,800 D) $58,200 22) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the target rate of.
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38) Grace Company manufactures candles. The standard direct materials quantity required to produce one large candle is 1 pound at a cost of $5 per pound. Every candle requires 2 direct labor hours at a standard cost of $3 per direct labor hour. During November, 2015, 7,200 large candles were.
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45) A company sells two products with information as follows: A B Price per unit $12 $20 Variable cost per unit $10 $12 The products are machine-made. Four units of Product A can be made with one machine hour and two units of Product B can be made with one machine hour. The company has a maximum of 3,000.
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21) Which of the following is a responsibility that is common to the managers of cost, profit, and investment centers? A) generating revenues B) generating profits C) managing the invested capital D) controlling costs 22) Qvoware Inc. sells cosmetic products in the United States. Which one of the following is most likely to be a.
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1) Companies evaluate investment centers using the same measures as the profit centers. 2) Operating income alone does not indicate how efficiently a segment is using its assets. 3) Return on investment focuses on net income in the numerator of the ratio. 4) Managers of investment centers are responsible not only for generating.
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8) Verdant Avionics makes aircraft instrumentation. Their basic navigation radio requires $120 in variable costs and requires $3,000 per month in fixed costs. If they process the radio further to enhance its functionality, it will require an additional $40 per unit of variable costs, and $300 per month in fixed.
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1) Only unfavorable variances should be investigated, if substantial, to determine their causes. 2) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost. 3) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is.
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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 shows why the fixed overhead is underallocated or overallocated because it is a.
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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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11) The return on investment of a company can be improved by either increasing average total assets or decreasing operating income. 12) Residual income is used as a key performance indicator for evaluating an investment center's financial performance. 13) Recreation Equipment Company has several divisions that are investment centers. Data for the.
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4) Revenue at the market price minus 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. 7) Polynesia Company manufactures sonars for fishing boats. Its Model 70 sells.
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11) Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. 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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18) Lightning Semiconductors produces 400,000 hi-tech computer chips per month. Each chip uses a component which Lightning makes in-house. The variable costs to make the component are $1.20 per unit, and the fixed costs run to $1,200,000 per month. The company has been approached by a foreign producer who can.
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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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6) When a manufacturing company uses standard costing system, an unfavorable variance has the effect7) Atlace Manufacturers uses a standard costing system. Standards for direct materials are as follows: Raw material (pounds per unit of output) 2 Cost (per pound of raw material) $5 The company plans to produce 3,000 units of product, and has.
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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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21) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot..
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11) Companies use techniques like time-and-motion studies, and consult industry "best practices" when developing standards. This is referred to as benchmarking. 12) The static budget is used to compute flexible budget variance or price and efficiency variances. 13) Which of the following is the correct formula to measure cost variance? A) Cost Variance.
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5) The balanced scorecard is a performance evaluation system that requires management to consider financial 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 indicators,.
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16) Zenith Fashions uses standard costs for its manufacturing division. From the following data, calculate the total fixed overhead 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 Actual fixed overhead A) $2,000 U B) $2,000 F C) $14,000 U D) $14,000 F 17) Discount.
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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 Moving 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 value of $1: 6% 7% 8% 9% 10% 1 0.943 0.935 0.926 0.917 0.909 2 0.89 0.873 0.857 0.842 0.826 3 0.84 0.816 0.794 0.772 0.751 4 0.792 0.763 0.735 0.708 0.683 5 0.747 0.713 0.681 0.65 0.621 The.
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9) Responsibility report for revenue centers shows all costs incurred by the department and is useful when management needs to know the total cost of operating the department. 10) The performance report of a profit center includes both revenues and expenses. 11) Both the sales volume variance and the flexible budget variance.
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15) Which of the following perspectives of the balanced scorecard focuses on revenue growth and productivity? A) financial perspective B) customer perspective C) internal business perspective D) learning and growth perspective 16) Sales revenue growth, gross margin growth, and return on investment are the key performance indicators (KPIs) for the ________. A) financial perspective B) customer perspective C).
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5) Sand Corporation manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp. The following per unit data are available: Bedford Lamp Lowell Lamp Sale price $30 $40 Variable costs $18 $24 Machine hours required for 1 lamp 2 4 Total fixed costs are $40,000 and the machine hour capacity is 30,000 hours per year. The Lowell lamp has the highest.
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21) What does a favorable direct materials cost variance indicate? A) The actual quantity of materials used was less than the standard quantity. B) The actual cost of materials purchased was less than the standard cost of materials purchased. C) The actual cost of materials purchased was greater than the standard cost of.
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15) Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in its 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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1) A company in which the major planning and controlling decisions are made by top management is considered as a centralized company 2) In a decentralized company, all the planning and controlling decisions are made by top management. 3) Centralized operations are better for small companies due to the smaller scope of.
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21) Capital budgeting is the ________. A) process of planning the investment in long-term assets B) preparation of the budget for operating expenses C) process of evaluating the profitability of a business D) process of making pricing decisions for products 1) The accounting rate of return method and the payback method are often used as.
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11) The product line of a manufacturing company is most likely to be considered as a(n) ________. A) cost center B) profit center C) revenue center D) investment center 12) Responsibility reports for a profit center include ________. A) revenues only B) invested capital C) both revenues and costs D) returns on investments 13) Long-term investments are made by the.
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28) Seven Seas Sailboats Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas Sailboats manufactures the media center in-house. The company is considering the possibility of outsourcing the production of media centers in order to close down some of its facilities.
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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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15) Faros Hats Inc. has two product lines—baseball helmets and football helmets. The income statement data for the most recent year is as follows: 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) If $50,000 of fixed costs will be eliminated by dropping the Football Helmets line, how will dropping Football Helmets.
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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 is called management by ________. A) variance B) standard C) exception D) budget 8) Which of the following variances considers only the cost variance to.
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25) Macaulay Roller Skates 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) The company is thinking of dropping product line F because it is reporting an operating loss. Assuming fixed costs are unavoidable, if Macaulay drops product line F, and rents.
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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 will have to reduce either.
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