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Study Resources (Accounting)

21) Julio Company's after-tax operating income was $882 million.  Total assets were $5,900 million and total stockholders' equity was $4,050 million.  Julio Company's cost of capital was 10%.  Julio Company uses total assets as the measure of invested capital.  What is Julio Company's EVA? A) $187 million B) $292 million C) $597 million D).
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11) When measuring invested capital, managers in practice predominantly use ________. A) Net book value at current cost B) Net book value at historical cost C) Gross book value at historical cost D) Gross book value at future cost 12) Historical cost is widely used for asset valuation because ________. A) it reports the replacement cost.
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21) The Petunia Company makes mugs for which the following standards have been developed: Standard Inputs ExpectedStandard Price Expected                   For Each Unit of Output                 Per Unit of Input Direct Materials5 ounces$2 per ounce Direct Labor2.5 hours$8 per hour Production of 400 mugs was expected in August, but 440 mugs were actually completed.  Direct materials purchased and.
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21) Possible definitions of invested capital include total assets and total stockholders' equity. 22) The proponents of gross book value maintain that it facilitates comparisons between years and between plants or divisions. 23) The rate of return on net book value decreases as equipment ages. 24) The rate of return on gross book.
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21) Sonny Corporation and Cher Corporation are movie companies.  Comparative data for 20X0 and 20X1 are given below: SonnyCher Corporation     Corporation Sales revenue20X0$8,000,000$4,400,000 20X19,600,0006,175,000 Number of employees20X010,0005,500 20X19,0006,500 Assume that each 20X0 dollar is equivalent to 1.60 of each 20X1 dollar, due to inflation.  Taking inflation into account, what is Sonny Corporation's 20X0 productivity measure in terms of.
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8.3   Questions 1) A company that has an activity-based costing system with multiple cost drivers will prepare a(n) ________ budget. A) financial planning B) short-range planning C) activity-based flexible D) strategic 2) When should a company use an activity-based flexible budget with multiple cost drivers instead of a simple flexible budget with one cost driver? A) when.
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11) Given the following information: Variable overhead costs incurred$20,570 Material purchased and used2,900 pounds Direct labor costs incurred$24,500 Direct labor hours incurred2,450 hours Finished units produced500 units Actual material cost$37 per pound Standard direct labor cost$9 per hour Standard material cost$40 per pound Standard variable overhead$8 per hour Standard pounds of material in a finished unit6 pounds Standard direct labor hours.
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10.4   Questions 1) In return on investment calculations, we should measure invested capital ________ because ________. A) at the end of the period; it is easiest B) at the end of the period; income is measured at the end of the period C) at the beginning of the period; it is a lead indicator D).
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11) What is the first step in applying the net-present-value method to investment projects? A) Identify the amount and timing of relevant future cash inflows. B) Identify the amount and timing of relevant future cash inflows and outflows. C) Find the present value of each expected cash flow. D) Find the discount rate to.
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10.5   Questions 1) The following information pertains to Jupiter Company: Total assets$50,000 Total current liabilities30,000 Total expenses60,000 Total liabilities45,000 Total revenues100,000 Invested capital is defined as total assets.  What is the capital turnover? A) 0.40 B) 0.63 C) 1.79 D) 2.00 2) The following information pertains to Alan Company: Total assets$100,000 Total current liabilities30,000 Total expenses60,000 Total liabilities35,000 Total revenues80,000 Invested capital is defined as total assets.  What.
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21) The entire firm may be a responsibility center for the firm's president. 22) Responsibility centers usually have a single goal that the management control system monitors. 23) A profit center can exist in a nonprofit organization. 24) No cost is completely under the control of a segment manager. 25) Evaluations of the responsibility.
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26) The opportunity cost of transferring an item internally is the contribution to profit that the selling segment foregoes by transferring the item internally. 27) In cases of constrained capacity, the opportunity cost of transferring a product internally is zero. 28) When a division has idle production capacity, the transfer price that.
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  11.1   Questions 1) Long-term planning for making investments that require large amounts of resources is called ________. A) operating budgeting B) capital budgeting C) strategic analysis D) sensitivity analysis 2) The phases of capital budgeting do NOT include ________. A) a post-audit of the investment B) the selection of the investment to undertake C) the identification of potential investments D).
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8) Performance-based rewards can be monetary or nonmonetary. 9) Managers tend to focus their efforts in areas where performance is measured and where their performance affects rewards. 10) According to agency theory, employment contracts will balance three factors that include risk, incentive and the cost of measuring performance. 11) The greater the influence.
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8.4   Questions 1) The difference between static budget amounts and flexible budget amounts are ________.  The difference between flexible budget amounts and actual results are ________. A) static variances; flexible budget variances B) master variances; flexible budget variances C) quantity variances; static budget variances D) activity level variances; flexible budget variances 2) Actual results may differ.
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8.7   Questions 1) The flexible budget variance for variable overhead costs is composed of a(n) ________ variance and a(n) ________ variance. A) efficiency; effective B) spending; rate C) quantity; efficiency D) spending; efficiency 2) The variable overhead efficiency variance depends on whether the quantity of the cost driver used is more or less than ________. A) the.
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11) When compared to a decentralized organization, there are really no advantages to a centralized organization. 12) Some level of decentralization in an organizational structure creates benefits for most organizations. 13) Higher-level managers have the best information concerning local conditions. 14) Local managers in decentralized organizations tend to duplicate services that may be.
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10.2   Questions 1) Which of the following statements about management control systems is FALSE? A) In designing management control systems, top managers must consider the system's impact on the employee behavior desired by the organization. B) The management control system should be designed to achieve the best possible alignment between local manager decisions.
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11) A responsibility center for which a separate measure of revenues and costs is obtained is called a(n) ________. A) cost center B) contribution center C) contribution margin center D) segment 12) The manager of a(n) ________ responsibility center is responsible for the income and invested capital from the center. A) profit B) cost C) investment D) accounting 13) Responsibility.
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31) Return on sales can be increased by increasing expenses. 32) Capital turnover can be increased by decreasing investment. 33) Increasing capital turnover is one of the advantages of implementing the JIT philosophy. 34) Cost of capital is the company's cost of inventory multiplied by the amount of investment. 35) Return on investment tells.
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8.6   Questions 1) The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________. A) standard inputs allowed and expected inputs allowed at actual output B) quantity of inputs actually used and the quantity of inputs that should have been used for the expected.
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9.7   Questions 1) A popular approach to performance measurement that integrates financial and nonfinancial measures and links them to the organization's goals and objectives is called the ________. A) balanced scorecard B) balanced contribution approach C) quality control approach D) TQM approach 2) The balanced scorecard focuses management attention on the ________. A) measures of productivity B) measures.
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8.2   Questions 1) To calculate the numbers in a flexible budget, managers use ________. A) cost functions developed from regression analysis B) flexible budget formulas C) cost functions obtained from the high-low method D) all of the above 2) When preparing a flexible budget income statement, ________ costs are constant at different levels of activity. A) variable B).
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9.3   Questions 1) For most organizations, effective performance measurement requires ________ and ________ measures of performance. A) rolling; static B) flexible; static C) strategic; continuous D) financial; nonfinancial 2) An example of a nonfinancial goal is ________. A) increase customer satisfaction B) increase profits C) increase segment margin D) increase required return on investment 3) Effective performance measures have all the.
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8.5   Questions 1) Favorable flexible budget variances for costs may indicate that costs are well-managed.  On the other hand, these same variances can indicate ________. A) the company is spending too little for vital activities, such as maintenance of machines. B) the company is cutting costs to drive up profits in the short.
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10.8   Questions 1) Multinational companies use transfer prices to minimize worldwide income taxes, ________ and ________. A) tariffs; financial restrictions imposed by U.S. government B) tariffs; import duties C) financial restrictions imposed by U.S. government; import duties D) foreign bribes; import duties 2) A division of Saskowski Company is located in Bulgaria.  The country places restrictions.
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11) Efficiency is indicated by the ________ variances. A) sales activity B) static budget C) flexible budget D) strategic budget 12) Effectiveness is indicated by the ________ variances. A) sales activity B) static budget C) flexible budget D) price 13) Blue Company planned to sell 35,000 units.  Actual sales were 30,000 units.  Based on this information, Blue Company was ________. A).
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  10.1   Questions 1) ________ is the process by which organizations concentrate decision making within a particular location or group. A) Management by objective B) Balanced scorecard C) Decentralization D) Centralization 2) Which of the following statements is NOT a benefit of decentralization? A) Lower-level managers are able to make faster and better decisions on local decisions than.
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21) Standard cost systems value products according to actual costs. 22) Currently attainable standards are levels of performance that can be achieved by realistic levels of effort. 23) The unfavorable variances resulting from ideal standards are intended to constantly remind personnel of the continuous need for improvement. 24) Variances are signals that actual.
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9.8   Questions 1) Most nonprofit organizations face substantial difficulty implementing management control systems.  What is the main reason? A) The outputs of nonprofit organizations are easy to measure. B) The outputs of nonprofit organizations are difficult to measure. C) The outputs of nonprofit organizations cannot be measured. D) The inputs of nonprofit organizations cannot be.
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9.6   Questions 1) To identify defective products, companies incur inspection costs or ________ costs. A) prevention B) appraisal C) internal failure D) external failure 2) ________ costs involve efforts to improve product design for more efficient production processes. A) Prevention B) Appraisal C) Internal failure D) External failure 3) The traditional approach to quality control in the United States was to.
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21) A static budget has multiple levels of activity. 22) A favorable expense variance is when budgeted expenses are less than actual expenses. 23) A flexible budget is different from a variable budget. 24) A flexible budget adjusts for changes in sales volume and other cost-driver activities. 25) Differentiate between a static budget variance.
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27) The Bargain Dollar Company owns a chain of department stores.  Costs for the department store in Cleveland, Ohio are listed below.  Identify each cost as one of the following: A. Variable cost B. Fixed cost controllable by store manager C. Fixed cost controllable by others(not store manager) D. Unallocated cost _____ 1. Property taxes.
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11) Operating income divided by sales is ________. A) residual income B) capital turnover C) return on investment D) return on sales 12) Residual income is defined as ________. A) sales less operating expenses B) operating income divided by revenue C) net operating profit after tax less a capital charge D) net operating profit after tax 13) The following information.
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31) Direct Material        Direct Labor Std. price per unit of input$12 per foot$14 per hour Actual price per unit of input$14 per foot$13 per hour Std. inputs allowed per unit of output5 feet3 hours Actual units of input2,500 feet1,550 hours Actual units of output600 units Required: Compute the price and quantity variances for direct materials and direct labor. 32).
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  9.1   Questions 1) ________ is the logical integration of techniques to gather and report data for planning and control decisions and to evaluate performance. A) An internal control system B) A quality control system C) A financial reporting system D) A management control system 2) A management control system includes the techniques to gather and use.
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11) Good performance measures should only focus on long-term concerns. 12) Good performance measures should be reasonably subjective. 13) Financial performance measures are often lagging indicators that arrive too late to help prevent problems. 14) Some management experts have said that the only sustainable competitive advantage is the rate at which a company's.
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9.4   Questions 1) ________ costs include those costs that a manager's decisions and actions can influence to a reasonable degree. A) uncontrollable B) controllable C) third party D) allocated 2) ________ costs provide evidence about a manager's performance.  ________ costs do not provide evidence about a manager's performance. A) Allocated; Unallocated B) Controllable; Uncontrollable C) Uncontrollable; Controllable D) Allocated; Third.
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11) Variances should be investigated if they ________. A) are favorable B) are unfavorable C) are smaller than the prior period D) exceed certain dollar or percentage deviations from the budget 12) Favorable variances do not require investigation. 13) Favorable flexible budget variances are always good news. 14) Sales-activity variances measure how efficient managers have been in.
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10.6   Questions 1) Which of the following is NOT a goal of transfer pricing systems? A) preserve segment autonomy B) eliminate segment autonomy C) increase performance of company as a whole D) guide managers to make best possible decisions regarding whether to buy or sell products inside or outside the organization 2) Transfer prices are ________. A).
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16) Steven Company's records reveal the following: Division A Market price of finished part to outsiders$75 Variable costs per part$51 Contribution margin per part$24 Division B Sale price of finished product per unit$105 Variable costs: Division A(1 part)51 Division B Processing27 Division B Selling12 Contribution margin per unit$15 The variable costs of Division B will be incurred whether it buys from Division.
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9.2   Questions 1) To design a management control system that meets an organization's needs, managers must identify what motivates employees, ________ and ________. A) develop performance measures based on these employee motivators; establish a monitoring and reporting structure for the performance measures B) develop performance measures to encourage managerial effort; establish a monitoring.
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21) Fixed costs not controllable by a segment manager usually include depreciation and property taxes on the building used by the segment. 22) When evaluating a segment manager, unallocated costs usually include central corporate costs. 23) The following information is available for Wildwood Consulting Company and its two offices: EuclidRoyal Office                   Office Net sales$250,000$400,000 Fixed costs: Controllable.
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41) The following information is available for the Jaeger Company: Sales$2,000,000 Invested capital$500,000 Return on investment20% Required: A) Compute capital turnover. B) Compute operating income. C) Compute return on sales. 42) Nelson Company has two divisions. The following information is available: North Division            South Division Revenue$300,000$500,000 After-tax operating income100,00090,000 Average invested capital100,000200,000 Invested capital at end of period200,000300,000 Cost of capital20%15% Required: Compute the following for each.
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11) Warranty costs are a form of ________ costs. A) prevention B) appraisal C) internal failure D) external failure 12) Which of the following costs is NOT an appraisal cost for quality control? A) inspection of purchased materials B) testing of purchased materials C) warranty D) product quality audit 13) Which of the following is NOT a type of quality.
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9.5   Questions 1) To calculate the contribution by segment, take contribution controllable by segment managers minus ________. A) unallocated costs B) variable operating expenses C) fixed costs controllable by others D) fixed costs controllable by segment managers 2) To calculate income before taxes for a segmented company as a whole, take contribution by segments and subtract.
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31) Productivity is a measure of inputs divided by outputs. 32) Cycle time is an important cost driver. 33) Increased productivity can be shown by maintaining the number of inputs but increasing the number of outputs. 34) To increase productivity, service organizations focus on increasing the productivity of labor. 35) A measure of labor.
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11) The following information is available for Price Supplies Inc. and its two divisions, Durable Goods and Nondurable Goods. WholeDurableNondurable Company           Goods            Goods Net sales$100,000$50,000$50,000 Fixed costs controllable by Division Manager16,50012,5004,000 Fixed costs not controlled by Division Manager8,0005,0003,000 Variable costs: Cost of merchandise sold24,50017,5007,000 Operating expenses16,40010,0006,400 Unallocated costs1,000 What is the contribution controllable by the manager of the Nondurable Goods.
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