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Learning Objective 18-2 1) Activity-based costing systems and traditional costing systems will produce the same results for product cost and profitability, although they use different methods of calculation. 2) Target cost is the price that customers are willing to pay and target price is the desired cost to produce the product. 3).
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31) Taizhong Semiconductor Company mass produces several common computer chips.  Type A sells for $1.20 per unit.  Variable cost is $0.95 per unit and the fixed costs are $32,000 per month.  Taizhong currently sells 140,000 units per month.  Under intense pressure to boost profits, the production manager has a plan.
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Learning Objective 18-4 1) Inspection of incoming materials and production loss caused by downtime are examples of prevention costs. 2) Internal failure costs occur when poor-quality goods or services are not detected until after delivery to customers. 3) Costs spent to avoid poor quality goods are considered internal failure costs. 4) Internal failure.
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51) Which of the following would NOT be considered an activity for the purposes of an activity-based costing system? A) Materials handling B) Machine processing C) Direct materials cost D) Packaging 52) Which of the following would most likely be treated as an activity in an activity-based costing system? A) Direct labor cost B) Machine processing C) Direct.
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21) Bakersfield Manufacturing produces agricultural tools including a hand tiller.  Their current full-product cost for a hand tiller is $20.   Bakersfield wishes to make a 15% profit on the selling price.  Bakersfield uses a target pricing strategy.  The current competitive market price for this product is $22.  What does Bakersfield.
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11) Chambers Company sells glass vases at a wholesale price of $2.50 per unit.  Variable cost is $1.75 per unit.  Chambers' fixed costs are $6,500 per month.  If Chambers wishes to make operating income of $2,500, how many units must be sold? A) 11,500 B) 11,750 C) 12,000 D) 12,500 12) Chambers Company sells glass.
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11) Which of the following is NOT a fixed cost? A) Property taxes B) Salary of plant manager C) Direct materials cost D) Straight-line depreciation 12) A 15% increase in production volume will result in a: A) 15% increase in the variable cost per unit. B) 15% increase in total mixed costs. C) 15% increase in total manufacturing.
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21) Johnson Production Company uses just-in-time production and accounting methods.  On June 1, Johnson paid $6,000 for factory repair and maintenance costs in cash. Which of the following journal entries correctly records this transaction? A) Debit $6,000 to Cash, credit $6,000 to Manufacturing overhead. B) Debit $6,000 to Raw and in-process inventory,.
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Learning Objective 20-4 1) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows:              Volume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in.
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11) In making a short-term decision, which of the following is MOST important? A) Separate variable costs from fixed costs B) Focus on total costs C) Use a conventional absorption costing approach D) Focus on the bottom line net income 12) Which of the following describes a sunk cost? A) One that is relevant to a.
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56) AAA Metal Bearings produces two sizes of metal bearings (sold by the crate)-standard and heavy.  The standard bearings require $200 of direct materials per unit (per crate) and the heavy bearings require $245 of direct materials per unit.  The operation is mechanized and there is no direct labor.  Previously.
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31) Seven Seas Company manufactures 100 luxury yachts per month.  Included in each yacht is a compact media center.  Seven Seas manufactures the 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.
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11) Origami Company is a price-taker and uses target pricing.  Please refer to the following information: Production volume 500,000 Units per year Market price $24.00 Per unit Desired operating profit 12% Of total assets Total assets $12,500,000 How much is the target full cost in total for the year? A) $1,440,000 B) $10,500,000 C) $12,000,000 D) $1,500,000 12) Origami Company is a price-taker.
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31) Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology.  At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place: 1.Purchase $40,000 of materials on account. 2.Pay out $25,000 of direct labor costs. 3.Incur.
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41) Grove Company makes special equipment used in cell towers.  Each unit sells for $400.  Grove uses just-in-time inventory procedures: they produce and sell 10,000 units per year.  They have provided the following income statement data: An African cell phone company has offered a one-time deal to buy 200 units.
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11) Which of the following BEST describes a post-audit? A) An audit of an operating unit of a company B) An audit performed after financial statements have been issued C) An analysis of an investment's cash flows prior to committing to the initial investment D) An analysis of an investment that is made after.
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Learning Objective 19-1 1) Peterson Company has both fixed and variable costs.  If the volume doubles, the total fixed costs will double. 2) Total variable costs change in response to changes in the volume of production. 3) The mixed cost per unit is constant throughout the relevant range of activity. 4) Fixed costs.
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41) In making product mix decisions under constraining factors, which of the following is the key to choosing the product type to be maximized? A) Revenue per unit B) Contribution margin per unit of product C) Contribution margin per unit of the constraining factor D) Gross profit per unit using absorption costing 42) Custom Furniture.
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21) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows: lume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in Indonesia has offered to.
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Learning Objective 19-6 1) When a company produces more units than it sells, absorption costing income will exceed variable costing income. 2) The only difference between absorption costing and variable costing is the way that fixed manufacturing overhead costs are treated. 3) Which of the following accurately describes absorption costing? A) Only variable.
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11) Which of the following is NOT an internal failure cost? A) Production losses caused by downtime B) Warranty costs C) Rework costs D) Rejected product units 12) Which of the following categories includes costs incurred in detecting poor quality goods or services? A) External failure costs B) Prevention costs C) Appraisal costs D) Internal failure costs 13) Which of.
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Learning Objective 20-3 1) A company has two different products that sell to separate markets.  Financial data are as follows: Product A Product B Total Revenue $12,000 $8,000 $20,000 Variable cost ($7,500) ($8,100) ($15,600) Fixed cost (allocated) ($3,000) ($1,000) ($4,000) Operating income $1,500 ($1,100) $400 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because.
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11) Fairfield Company management has budgeted the following amounts for its next fiscal year: Total fixed expenses $832,500 Sale price per unit $40 Variable expenses per unit $25 If Fairfield Company spends an additional $30,000 on advertising, sales volume should increase by 2,500 units. What effect will this decision have on operating income? A) Operating income will decrease.
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11) Which of the following is CORRECT about a just-in-time production system? A) Customer orders drive the production process. B) Goods are produced ahead of time to protect against running out of inventory. C) Materials are purchased in large quantities. D) Inventory levels are maintained at high levels. 12) Which of the following pertains to.
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Learning Objective 18-3 1) Just-in-time methodology depends on maintaining higher inventory levels to ensure that the manufacturing process isn't interrupted by supply shortages. 2) Just-in-time production systems are organized into independent work cells that have all the resources needed to complete the manufacturing process. 3) The traditional manufacturing process focuses on small.
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41) Orlando Avionics makes three types of radios for small aircraft-model A, model B, and model C.  The manufacturing operations are mechanized and there is no direct labor.  Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system.  Direct materials costs per unit for each model are.
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31) Orleans Company has a normal range of production volumes between 100,000 units and 180,000 units per month.  That is considered the relevant range for production cost analysis.  If the company expands significantly beyond 180,000 units per month, which of the following would be the most likely expectation? A) The fixed.
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21) The cost of training personnel is an example of an: A) appraisal cost. B) prevention cost. C) internal failure cost. D) external failure cost. 22) Losses caused by downtime in the production process are considered a(n): A) external failure cost. B) prevention cost. C) appraisal cost. D) internal failure cost. 23) Perkins Company has been experiencing lost sales and.
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31) Nemesis Company manufactures water skis.  Nemesis pursues a target pricing strategy.  Please review the data below: Current market price$180 per pair Current manufacturing cost$110 per pair Current non-manufacturing cost$25 per pair Desired profit30% of price Which of the following would be the desired cost reduction?  (Please round all amounts to nearest cent.) A) $12.50 B) $16.00 C).
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31) Clay 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 $25 $35 Variable costs $17 $23 Machine hours required for 1 lamp 2 4 Total fixed costs are $30,000, and Clay can sell a maximum of 10,000 units of each style of lamp annually.  Machine.
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Learning Objective 20-2 1) Special sales orders increase operating income if the revenue from the order exceeds the incremental variable and fixed costs incurred to fill the order. 2) In deciding whether to accept a special sales order, management should consider the quantitative data ONLY and disregard qualitative factors. 3) Fixed costs.
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21) Easy Cook Company manufactures two products: toaster ovens and bread machines.  The following data are available: Toaster Ovens Bread Machines Sale price $60 $135 Variable costs $38 $62 Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month.  What is the.
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