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23) MTM Manufacturing produces two types of pre-fabricated exterior walls:  deluxe and standard. The assignment basis for overhead costs has been direct labor hours. For 2011, MTM compiled the following data for the two products: DeluxeStandard Sales in units5,00040,000 Sales price per unit$13,000.00$9,500.00 Direct material and direct labor costs per unit$3,600.00$2,600.00 Manufacturing overhead costs.
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6) After the change, a decreased amount of work-in-process inventory is projected because: A) of reduced cycle times resulting from a more continuous production flow. B) of lower financing costs and the reduced need for storage and handling. C) larger batches can be processed faster and more efficiently. D) All of the above are.
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11) Target costing was pioneered: A) in Detroit in the 1990s. B) in Japan in the 1960s. C) in Japan in the 1980s. D) in Silicon Valley in the 1980s. 12) Concerns about target costing include all EXCEPT that: A) attention may be diverted away from other company goals. B) excessive pressure is put on suppliers. C) development.
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Objective 10 1) Companies generally use two approaches to customer satisfaction surveys: telephone interviews and personal interviews. 2) Customer loyalty is characterized by a customer's attitude toward a product or company. 3) Customer loyalty may be low regardless of the customer's attitude toward the product or the company in highly competitive industries, characterized.
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Objective 6 1) In general, service companies are ideal candidates for activity-based costing. 2) For service organizations, activity-based cost systems clarify appropriate cost assignments to services and customers and help to identify the profitability of various products and customers. 3) For service organizations that bill customers at a predetermined average cost rate, activity-based.
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6) What are some nonfinancial measures that a company might use in order to motivate achieving the objective of anticipating future customer needs? Objective 6 1) Environmental costing computes the cost effects an organization has on the environment. 2) Which of the following is an implicit environmental cost? A) direct costs of modifying technology.
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Objective 8 1) Companies base salespeople's compensation on net income because it is simple to measure. 2) Companies can use time-driven ABC costing systems to create customer-specific profit and loss statements. 3) Salespersons' incentives that set minimum quotas and commissions based on sales revenue, and tie bonuses and rewards to achieving sales revenues.
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  Objective 1 1) Marketing, selling, distribution, and administrative expenses are dependent on the volume and mix of products that the company produces. 2) Many costs of marketing, selling, and distribution expenses are incurred not to support individual products or product lines, but rather to support customers, market segments or distribution channels. 3) Many.
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Objective 5 1) In a service company, marketing and selling costs are customer independent. 2) For service companies, in contrast, customer behavior determines the quantity of demands for organizational resources that produce and deliver the service to customers. 3) A bank customer with a high checking account balance and few transactions is a.
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3) The buildup of inventories decreases the cycle time of production. 4) Process layouts are characterized by long production paths, high inventory levels and small batches of unique products. 5)  Processing cycle efficiency is calculated as processing time divided by the sum of processing time, moving time, storage time, and inspection time. 6).
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7) Brent Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue. The new CFO has discovered that Brent's customers differ greatly in their ordering patterns and interaction with Brent's sales force. Because the CFO believes Brent's cost system does not accurately assign MSDA.
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20) How do traditional costing and target costing differ in determining the selling price of a product? 21) In target costing, what are at least two techniques used to achieve target costing goals? 22) What is the primary reason a firm would adopt target costing? Objective 3 1) Target costing uses the total-life-cycle concept.
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Objective 3 1)  Value is defined as any action or process for which a customer would be willing to pay. 2)  In lean manufacturing, any resource spending that does not create value for the end customer is wasteful and must be eliminated. 3) The quality movement was pioneered by: A) Eli Whitney. B) Henry Ford. C).
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17) Carey Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells.  The following estimates have been prepared to evaluate the benefits from the reorganization: Before the changeAfter the change Total annual sales$700,000$850,000 Costs as percentage of sales: Direct materials10%9% Direct labor6%4% Support costs9%7% Work-in-process inventory$200,000$120,000 Inventory carrying costs are estimated to be 12% per year. Required: a.Why do the.
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15) Bingington Corporation is using the Kaizen approach to budgeting for 2011. The budgeted income statement for the month ended January 31, 2011 is as follows: Sales (360,000 units)$1,080,000 Less: Cost of goods sold720,000 Gross margin360,000 Operating expenses (includes $54,000 of fixed costs)270,000 Net income$  90,000 Under the Kaizen approach, cost of goods sold and variable.
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5) Kaizen costing requires relevant financial results to be shared with front-line employees. 6) Kaizen costing includes: A) cost control system concept. B) standards set annually or semiannually. C) continuous improvement. D) comparing actual costs to standard costs. 7) One goal of ________ is to design costs out of products in the research, development, and engineering.
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Objective 6 1) Which of the following is NOT an option to transform breakeven or loss customers into profitable ones? A) Improve the process used to produce, sell, deliver and service the customer. B) Use less menu-based pricing that allows customers to select features and services it wishes to pay for. C) Improve margins.
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7) Jackie Company's CFO provided the following information on last year's sales for two customers that purchased a variety of products from the company. Scarborough Schultz Sales $900,000 $800,000 Cost of Goods Sold 360,000 160,000 MSDA expenses, excluding sale commissions 640,000 130,000 a. Which customer is more profitable for the company? b. Compare a sales incentive.
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Objective 7 1) Benchmarking requires that organizational members first look to the best practices of other organizations for guidance on improving and then understand their current operations and approaches to conducting business, 2) ________ can be a cost beneficial way to gather information because the company can avoid mistakes other companies have.
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Objective 6 1) Careful attention to motivation is a key step for the organization and its employees to align their respective goals. 2) The human resources model of motivation is strongly influenced by Japanese management practices. 3) The scientific school of management recognizes that employees want respect and a feeling that they make.
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Objective 3 1) A major role for management accounting and control systems is to motivate behavior consistent with the desires of the organization. 2) When implementing a new management accounting and control system, it is BEST: A) to allow management to implement their ideas. B) for management to involve employees in the implementation. C) to.
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Objective 9 1) Duration of the relationship is a critical parameter for calculating customer lifetime value. 2) Additional costs to serve and retain the customer in year t is represented in the customer lifetime value equation as ct. 3) Customer lifetime value is the discounted net cash flows from the customer for all.
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11) The research development and engineering cycle of the total life-cycle concept which focuses on developing prototypes and production processes is the: A) research, development, and engineering cycle. B) manufacturing cycle. C) product design stage. D) product development stage. 12) Total-life-cycle costing is the name given to: A) a method of cost planning to reduce manufacturing.
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11) Lance Allot, vice-president of Arthur Industries, a computer manufacturer in England, has been trying to figure out whether one of his branch managers, Ms. Gwen, has been achieving the company-wide return on sales target of 20 percent. Mr. Allot has just been given data from his new target costing.
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Objective 5 1) The objective to discover and develop new, more effective, or safer products/services can be measured by the time spent with key customers at targeted accounts learning about their future opportunities and needs. 2) The objective to reduce product development cycle time can be measured by the number of products.
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Objective 5 1) Ethics is a discipline that focuses on the investigation of standards of conduct and moral judgment. 2) A primary purpose of an organization's code of ethics is to encourage behavior that is consistent with the company's ethical and cultural norms. 3) An organization's code of ethics should not be integrated.
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18) Under traditional costing systems, selling and administrative costs have been largely ignored because they: A) are hard to quantify except at exorbitant cost of measurement. B) have been negligible in amount relative to total costs. C) in the past they have been inventoriable for financial reporting purposes under GAAP. D) relate to a.
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9) At Deutschland Electronics, product lines are charged for call center overhead costs based on sales revenue. Last year's summary of call center operations revealed the following: Surveillance ProductsSpecialty Products Number of calls for information1,0004,000 Average call length for information 3 minutes8 minutes Number of calls for warranties3001,200 Average call length for warranties7 minutes15 minutes Sales.
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3) The pricing waterfall: A) charts the multiple sources of revenue by customer. B) charts multiple list prices offered to different customers. C) charts the multiple revenue leaks from list price caused by allowances and discounts. D) charts multiple types of customer costs. 4) Which of the following is NOT part of the pricing waterfall.
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6) High cost to serve customers: A) have high order quantities. B) have large amounts of post sales support. C) order standard products. D) have little to no pre-sales support. 7) Low cost to serve customers: A) have low order quantities. B) have large amounts of post sales support. C) order standard products. D) have customized delivery. 8) Staley company.
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  Objective 1 1) Total-life-cycle costing manages costs along the entire value chain. 2) Deciding how to allocate organizational resources over a product's life cycle is primarily determined during the manufacturing stage. 3) A product can have an initial life-cycle cost that is relatively high, but a manufacturing cost that is relatively low. 4) As.
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Objective 2 1) The 80/20 rules states that the top 20% of customers generate 80% of revenues. 2) The 40-1 rule demonstrates that the top customers generate revenues at a rate of 40-1 over all other customers. 3) Measuring customer profitability can be accomplished through an activity based costing study. 4) MSDA expenses as.
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9) Committed costs can change because demands for the capacity resource change or because of changes in efficiency in performing activities. 10) Updates to a time-driven ABC system might be triggered by: A) significant shifts in cost estimates. B) change in top management. C) new fiscal year. D) interviews and surveys. 11) A time-driven ABC system: A).
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Objective 1 1) The theory of constraints focuses on long-term initiatives to increase operating income. 2) The theory of constraints: A) emphasizes long-term optimization. B) maintains that carefully managing production bottlenecks will increase operating income. C) helps managers make special one-time decisions. D) suggests that some component parts should be outsourced. 3) Constraints from the theory of.
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Objective 4 1) Breakeven time measures the length of time from the project's beginning until the product has been introduced and generated enough profit to pay back the investment originally made in its development 2) Breakeven time brings together the two elements of R&D and profitability. 3) What does the breakeven time (BET).
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Objective 2 1) In traditional costing, the company attempts to achieve a particular cost target. 2) Target costing starts by estimating expected product costs. 3) Suppliers play a key role in the success of target costing. 4) Supply chain management may result in buyers and suppliers sharing information about each other's companies. 5) Guiding the.
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Objective 4 1) When management implements their own ideas without involving employees, goal congruence may not occur. 2) Companies who adopt a MACS generally agree with the human resources model of motivation. 3) Individuals are motivated by both financial and nonfinancial means of compensation. 4) The impetus for developing ways to improve employees' morale.
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3) Implementing a just-in-time manufacturing system requires a major cultural change for an organization. 4) High levels of inventory result in all EXCEPT: A) high moving, handling, and storage costs. B) increased product obsolescence and damage. C) increased financing costs. D) idle facilities. 5) The implementation of just-in-time production results in all of the following EXCEPT: A).
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10) Why is a cost-of-quality report useful? 11) Discuss cost reductions that can result from reducing work-in-process inventory. Objective 6 1) Under kaizen costing, cost reduction targets are set and applied monthly and continuous improvement (kaizen) methods are applied all year long to meet targets. 2) Under traditional costing, supervisors and engineers are assumed.
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11) To promote ethical decision making: A) consequences of unethical behavior should be left undefined to allow for flexibility. B) a statement of the organization's code of ethics should be communicated to each employee. C) violators of the code of ethics should be allowed several warnings before severe consequences are imposed. D) management should.
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Objective 5 1) Capacity cost rates also change when the denominator, practical capacity, changes. 2) Practical capacity is generally smaller than theoretical capacity. 3) Updates to time-driven ABC models are triggered by events that require the estimates in the model to be modified, such as a significant change in costs of resources supplied. 4).
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11) Which BEST describes the purpose of a management accounting and control system (MACS)? A) A MACS defines the value chain and identifies nonvalue-added activities for a business. B) A MACS helps decision makers determine whether strategies and objectives are being met. C) A MACS offers a system of controls to ensure employees.
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