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Study Resources (Accounting)

50) Hudson Company has two divisions. The following information is available: North Division      South Division Revenue for year$300,000$500,000 Operating income before taxes for year$100,000$90,000 Average invested capital for year$100,000$200,000 Invested capital at end of year$200,000$300,000 Tax rate30%30% After-tax cost of capital for year20%15% Required: 1. Using operating income after taxes as the income measure, compute the following for each division: A) Return.
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7) Which of the following statements about performance reports and variances is FALSE? A) They are most effective when managers use them positively to encourage employees to improve performance. B) When they are used negatively, employees will resist and undermine these techniques. C) These tools should be used to find weaknesses and deficiencies.
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39) Shaley Company has two divisions and the following information available: a. Net sales were $130,000. $90,000 was attributed to the Jewel Division. b. Variable costs were $80,000. 40% was attributed to the Song Division. c. Total separable fixed costs controllable by division managers were $30,000, of which $20,000 applied to the Jewel.
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31) If the total sales-activity variance and the static-budget variance are equal, there is no flexible budget variance. 32) The following data are for the month of January for the Soloway Company. Assume the cost driver is the number of units sold. Static budget data: Sales of 9,000 pairs at $90 per pair Variable.
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4) Transfer prices are ________. A) revenues of the segment producing the transferred product B) costs of the segment acquiring the transferred product C) costs of the segment producing the transferred product D) revenues of the segment producing the transferred product and costs of the segment acquiring the transferred product 5) A transfer price exists.
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47) Cash collections from customers in any given month include the current month's cash sales and expected collections on credit sales. 48) The first step in preparing the master budget is the preparation of the budgeted income statement. 49) The Pinsky Company has the following information available: Month         Budgeted Sales March$150,000 April153,000 May151,000 June254,500 July252,500 The gross profit rate is.
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21) Which of the following statements about productivity is FALSE? A) Productivity is a measure of outputs divided by inputs. B) The fewer inputs needed to produce a given output, the more productive the organization. C) Inputs and outputs are difficult to measure. D) Productivity measures can be compared over time without making adjustments.
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37) Paul Company's expected sales for April are $27,600. Other information follows: Budgeted Operating Expenses       Amount Wages$2,000 Advertising1,680 Patent amortization1,440 Rent2,560 Marketing5% of sales Which of the following operating expenses is a noncash expense? A) Advertising B) Rent C) Patent amortization D) Wages 38) Mark Company has the following information: Month          Budgeted Purchases January$40,000 February29,000 March30,520 April29,480 May27,680 Purchases are paid as follows: 10% in the month of purchase 50% one month after.
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2) Julie Company's revenues for the year are $300 and average invested capital for the year is $240. Expenses are currently 50% of revenues. Julie Company's current return on investment is ________. A) 50% B) 62.5% C) 80% D) 100% 3) Maury Company's revenues are $300 for the year. Average invested capital for the year.
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  9.1   Questions 1) Elements of the planning and control process for a management control system do NOT include ________. A) measure, monitor and report B) plan and execute C) evaluate and reward D) feedback and control 2) Planning in the management control system does NOT include ________. A) defining goals B) establishing plans to achieve goals C) carrying out.
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11) Higher-level managers have the best information concerning local conditions. 12) Local managers in decentralized organizations tend to duplicate services that may be less expensive if centralized. 13) The costs of accumulating and processing information frequently decline under decentralization. 14) Managers in decentralized units may waste time negotiating with other units about goods.
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14) The following information is available for Half Price Books Inc. and its two divisions, Books and Periodicals: WholeBooksPeriodicals Company     Division     Division Net Sales$100,000$50,000$50,000 Fixed Costs Controllable By Division Manager26,50022,5004,000 Fixed Costs Not Controlled By Division Manager18,00015,0003,000 Variable Costs: Cost of Merchandise Sold24,50017,5007,000 Operating Expenses17,40010,0007,400 Unallocated Costs4,000 What is the contribution margin for the Periodicals Division? A) $29,600 B) $32,600 C) $35,600 D) $43,000 15) Assume you are preparing.
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12) Cornell Company had the following information available for its specialty product: Standards for one unit of product: Direct Materials: 5 pounds at $2 per pound Direct Labor: 0.50 hour at $16 per hour Materials and Labor Used to produce 8,500 units: Direct Materials: 46,000 pounds at $3 per pound Direct Labor: 4,000 hours at ?.
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9.6   Questions 1) Which of the following is NOT an appraisal cost for quality control? A) inspection and testing of purchased materials B) product quality audits C) maintenance of test equipment D) training program for material suppliers 2) Which of the following is NOT a prevention activity for quality control? A) improvements in production processes B) engineering analyses.
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32) Return on investment equals operating income divided by investment. 33) Return on sales can be computed by multiplying return on investment by the capital turnover. 34) Return on investment equals return on sales divided by capital turnover. 35) Return on sales equals revenue divided by income. 36) Capital turnover equals revenue divided by.
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27) Donald Company has the following information: Cash Balance, May 31$45,000 Dividends paid in June12,000 Cash paid for operating expenses in June36,800 Equipment depreciation expense in June4,500 Patent amortization expense in June2,000 Cash collections on sales in June99,000 Merchandise purchases paid in June56,200 Purchase equipment for cash in June17,500 Donald Company wants to keep a minimum cash balance of.
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  10.1   Questions 1) The concentration of decision-making authority only at the highest levels of the organization is called ________. A) management by objective B) balanced scorecard C) decentralization D) centralization 2) All of the following are disadvantages of decentralization EXCEPT for ________. A) Local managers make decisions that are not in the organization's best interests. B) Managers spend.
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37) CIS Company has the following information available: Quality engineering of products$20,000 Technical support provided by CIS to suppliers$2,000 Cost of field servicing$80,000 Supervision of testing activities$30,000 Net cost of spoilage$55,000 Depreciation of testing equipment$4,500 Plant utilities in inspection area$100,000 Retesting of reworked products$200,000 Lost sales arising from a reputation for poor quality products$1,000,000 Reinspection of reworked products$44,000 Warranty replacements$3,000 Returns and.
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6) A flexible budget is different from a variable budget. 7) A flexible budget adjusts for changes in sales volume and other cost-drivers. 8.3   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).
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17) The activity-based budgeting system emphasizes ________. A) the resources needed by a company B) the preparation of budgets by function C) the attainment of long-range goals D) activities and their consumption of resources 18) ________ models are mathematical models that can react to any set of assumptions about sales, costs and product mix. A) Strategic B).
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2) The following information is available for Maher Manufacturing Company. -- Direct materials price standard is $3.25 per pound. -- Direct materials quantity standard is six pounds per finished unit. -- Budgeted production is 25,000 finished units. -- 175,000 pounds of direct materials were purchased for $525,000. -- 175,000 pounds of direct materials were used.
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8.4   Questions 1) The activity-level variance for fixed costs equals zero when ________. A) the actual level of output equals the static budget level of output B) the actual level of output is greater than the static budget level of output C) the actual level of output is less than the static budget level.
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6) Financial performance measures are usually not included in a balanced scorecard. 7) Describe a balanced scorecard and identify the categories of key performance indicators advocated by Kaplan and Norton. 9.8   Questions 1) Management control systems in nonprofit organizations will probably never be as highly developed as those in profit-seeking firms. Which of.
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27) Corbin Company has prepared the following sales budget: Month          Cash Sales         Credit Sales September$99,000$250,000 October225,000180,000 November310,000210,000 December94,000170,000 Collections of credit sales are 50% in the month of sale, 40% in the month following sale, and 10% two months following sale. No uncollectible accounts are expected. What is the expected balance in Accounts Receivable at November 30? A) $77,500 B).
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31) Productivity is a measure of inputs divided by outputs. 32) Increased productivity can be shown by maintaining the number of inputs but increasing the number of outputs. 33) A measure of labor productivity is sales revenue divided by the number of employees. 34) When comparing productivity measures over time, changes in the.
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  8.1   Questions 1) An example of a favorable variance is ________. A) actual revenues are less than expected revenues B) actual expenses are less than expected expenses C) actual material prices are greater than expected material prices D) expected labor costs are less than actual labor costs 2) Spending less than budgeted for maintenance costs will.
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22) The following information pertains to Sanjay Company: Total assets$50,000 Total current liabilities$30,000 Total expenses$60,000 Total liabilities$45,000 Total revenues$100,000 Invested capital is defined as total assets. What is the capital turnover? A) 0.40 B) 0.63 C) 1.79 D) 2.00 23) The following information pertains to Kumperor Company: Average total assets$100,000 Total current liabilities$30,000 Total expenses$60,000 Total liabilities$35,000 Total revenues$80,000 Invested capital is defined as total assets. What.
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8) The components of a successful organization are organizational learning, business process improvement, ________ and ________. A) profitability; organizational culture B) profitability; customer satisfaction C) customer satisfaction; financial strength D) goal congruence; managerial effort 9) A well-designed management control system ignores nonfinancial objectives and focuses on financial objectives to develop and report performance measures. 10) Nonfinancial.
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7) The financial budget is used by managers to ________. A) manage financial affairs B) manage employee hiring patterns C) manage the cash balance D) plan for future stock dividends 8) The total amount of cash collections from customers by month appears on the ________. A) sales budget B) operating expense budget C) cash budget D) budgeted balance sheet 9).
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7) 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 8) The variable overhead efficiency variance depends on whether the quantity of the cost driver used is more or less than ________. A) the standard.
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24) The following information is available for Halquist Stone Company and its two divisions, Crushed Stone and Fieldstone. WholeCrushed Company       Stone    Fieldstone Net sales$100,000$60,000$40,000 Fixed costs controllable by Division Manager16,50012,5004,000 Fixed costs controlled by others8,0005,0003,000 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 Crushed Stone Division? A) $20,000 B) $32,500 C) $35,000 D) $42,500 25) The.
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3) Profit-center managers always have more decentralized decision-making authority than cost-center managers. 4) In designing management control systems, top managers should consider the system's impact on the behavior of employees. 10.3   Questions 1) Managers' incentives for performance are defined as the ________. A) relationship between cost and perceived benefit B) relationship between goal congruence and.
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4) Wendell Company has the following information available for the past quarter: Division ADivision BDivision C Sales$250,000$400,000$350,000 Variable expenses52%30%40% Fixed expenses controllable by division manager$60,000$200,000$175,000 Fixed expenses controllable by others$10,000$5,000$7,500 Unallocated expenses for all three divisions are $25,000. What is the contribution by Division C? A) $2,500 B) $27,500 C) $35,000 D) $210,000 5) A manager at a local home improvement.
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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 party 3) Which of the following statements about responsibility centers is FALSE? A) Responsibility centers usually have one goal. B) Management control systems monitor responsibility center.
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14) Ideal standards make no provision for waste, spoilage and machine breakdowns. 15) Ideal standards have an adverse effect on employee motivation. 16) As the terms are used in the budgeting process, it is possible for a company to be efficient at the same time it is ineffective. 17) Efficiency is the degree.
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4) Yellow Cake Company planned to produce and sell 900 units at a total cost of $180,000. Actual production and sales were 900 units at a cost of $170,000. The company was ________. A) efficient and ineffective B) inefficient and ineffective C) inefficient and effective D) efficient and effective 5) ________ is the degree to.
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53) Olson Company has the following data: Month        Budgeted Purchases January$225,000 February190,000 March200,000 April220,000 May150,000 Purchases are paid as follows: 10% in the month of purchase 80% one month after purchase 10% two months after purchase Required: Prepare a schedule of cash disbursements for purchases for March, April and May. 54) Jorgensen Company has the following data: Month                  Budgeted Sales April$154,000 May160,000 June142,000 July136,000 Budgeted Operating Expenses Per Month Wages$12,600 Advertising27,200 Depreciation19,000 Rent20,400 Freight-out20% of sales Sales.
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34) Property taxes on a building used by a segment are not considered when evaluating the performance of the segment manager. 35) Fixed costs not controllable by a segment manager usually include depreciation and property taxes on the building used by the segment. 36) When evaluating a segment manager, unallocated costs usually.
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11) Potter Company has the following information: Actual operating loss at 5,000 units$(11,000) Budgeted operating income at 5,000 units$5,000 Budgeted operating income at 10,000 units$12,000 Planned level of operations10,000 units Actual level of operations5,000 units Assume the cost driver of product costs is units of production. What is the flexible budget variance for operating income? A) $5,000.
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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 pertains to the Vertigo Company: Total assets$150,000 Total current liabilities$110,000 Total expenses$70,000 Total liabilities$115,000 Total revenues$80,000 Return on sales equals ________. A) 12.5% B) 50.0% C).
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21) The following data are for Sandy Corporation: Flexible Budget for Actual     Static Budget     Actual Sales Activity Units18,00016,00018,000 Sales$360,000$320,000$360,000 Variable costs234,000192,000216,000 Contribution margin$126,000$128,000$144,000 Fixed costs76,00080,00080,000 Operating income$50,000$48,000$64,000 The static budget variance for operating income is ________. A) $2,000 Favorable B) $2,000 Unfavorable C) $16,000 Favorable D) $16,000 Unfavorable 22) If the flexible budget variance was $6,000 Favorable and the sales activity variance was $3,000 Favorable, then.
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12) The term "cost center" may be used to describe responsibility centers that are assigned responsibility for capital investment. 13) A set of machines may be a responsibility center for a production supervisor. 14) The entire firm may be a responsibility center for the firm's president. 15) Responsibility centers usually have a single.
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40) The following data was obtained for a company that makes statues: Standard Inputs ExpectedStandard Price                     For Each Unit of Output              Per Unit of Input Direct material5 pounds$12 per pound Direct labor1.5 hours$12 per hour During the month of July, the company actually produced 1,000 statutes, which is 100 units less than expected. Direct material purchased.
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11) The purpose of performance measures is to set direction and to motivate managers. 12) The first and most basic component in a management control system is the employee's goals. 13) In the management control system, feedback and learning affect all elements of the system. 14) Measures of performance do not have to.
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11) Total quality management (TQM) ________. A) does not advocate high quality levels for all products B) is not used in the development of organizational goals C) promotes maximizing the cost of quality D) focuses on the prevention of defects and on the achievement of customer satisfaction 12) Inspection costs of incoming raw materials are.
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