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Objective 4 1) If cost driver rates were based on actual short-term usage, periods of lower demand would result in lower cost driver rates. 2) Use of a single cost driver rate will always distort product costs. 3) Costing system distortions relate to the handling of indirect costs. A) the routine service. B) the specialized.
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Objective 7 1) (Appendix) The direct allocation method recognizes possible interactions between service departments when allocating service department's costs to production departments. 2) (Appendix) The direct method of allocating service department costs assigns indirect costs to products in two stages.  In the first stage, production department costs are allocated to the service.
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EJL Herbal Remedies sells several products for an average price of $17 per unit. Average variable costs per unit are as follows: Direct material $5.00 Direct labor $1.00 Indirect manufacturing costs $0.50 Selling commissions $3.00 EJL's annual fixed costs total $82,500. 18) The contribution margin per unit is: A) $7.50. B) $10.50. C) $12. D) $14. 19) The number of units that.
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76) Which costs are relevant for making decisions that affect the short-term? The long-term? Why? 77) Are sunk costs considered relevant when choosing among alternatives? Explain. 78) Explain what revenues and costs are relevant when choosing among alternatives. 79) Bob's Textile Company sells shirts for men and boys. The average selling price and.
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  Objective 1 1) Overhead costs such as factory rent and supervisory salaries are allocated to cost objects in a multi-product facility. 2) In job order costing, only direct costs are used to determine the cost of a job. 3) Job order costing: A) can only be used in manufacturing. B) records the flow of costs.
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11) Brilliant Accents Company manufactures and sells three styles of kitchen faucets:  brass, chrome, and white.  Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of brass, chrome, and white faucets, respectively.  The following additional data apply: BRASSCHROME WHITE Projected sales in units30,00050,00040,000 PER UNIT data: Selling price$40$20$30 Direct materials$  8$  4$ .
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42) Lois Manufacturing is a small clothing manufacturer using machine hours as the single cost driver to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Harford County School Uniform job. CompanyHarford County.
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4) Nonprofit and government organizations: A) cannot use the Balanced Scorecard because they have no customers. B) cannot use the Balanced Scorecard because they have no financial objective. C) may use the Balanced Scorecard by adding a social impact perspective to the top of the strategy map. D) may use the Balanced Scorecard by.
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10) Noble Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2011, overhead cost estimates total $420,000 for an annual production capacity of 12 million pages. For 2011 Noble Printers has decided to evaluate the use of additional cost pools. After analyzing overhead costs, it was.
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Objective 5 1) ________ describe(s) specifically how success in achieving objectives in a Balanced Scorecard is determined. A) Measures B) The value proposition C) Targets D) The Balanced Scorecard 2) ________ establish the level of performance or rate of improvement required for a measure in the Balanced Scorecard. A) Critical success factors B) The value proposition C) The Balanced.
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26) Alistar's Best reported the following for 2011: Revenues $16,000 Variable manufacturing costs $8,000 Variable nonmanufacturing costs $2,000 Fixed manufacturing costs $4,000 Fixed nonmanufacturing costs $1,200 Required: a. Compute the contribution margin. b. Compute the gross margin. c. Compute the operating income. 27) In 2011, SSPC Company has sales of 8,000 units at $10 each, variable costs totaling $20,000, and fixed costs of $30,000. In.
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Objective 2 1) Product lines that produce different variations (models, styles, or colors) often require specialized activities that translate into lower overhead costs for each product line. 2) Specialized engineering drawings of products, product quality specifications and quality control testing, inventoried raw materials, and material control systems are examples of activities that.
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Donnelly Company has three products, R2, R4, and R2D2. The following information is available: Product R2 Product R4 Product R2D2 Sales $30,000 $45,000 $12,000 Variable costs 18,000 24,000 7,500 Contribution margin 12,000 21,000 4,500 Fixed costs:    Avoidable 4,500 9,000 3,000    Unavoidable 3,000 4,500 2,700 Operating income $4,500 $7,500 $ (1,200) 53) Donnelly Company is thinking of dropping Product R2D2 because it is reporting a loss. Assuming Donnelly drops Product R2D2 and does not replace it, operating.
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25) Using the three cost pools to allocate overhead costs, what is the total manufacturing overhead cost estimate for Wellington Drugs during 2011? A) $5,400 B) $9,100 C) $10,800 D) $10,192 26) When overhead costs are assigned using the single cost driver, number of pages printed, then A) Baldwin Printers will want to retain this highly-profitable.
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11) Distinguish between direct and indirect costs.  Give examples of each with regard to a specific product. Objective 3 1) The practical capacity of a cost driver is the short-term capacity made available by the amount of resources committed to an overhead activity. 2) Determining cost pools and realistic cost driver rates is.
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7) Cost-volume-profit analysis is used PRIMARILY by management: A) as a planning tool. B) for control purposes. C) to establish a target net income for next year. D) to attain extremely accurate financial results. 8) Contribution margin equals revenues minus: A) product costs. B) period costs. C) variable costs. D) fixed costs. 9) The break-even point is the level at.
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Marine Industrial Coatings, Inc. is considering replacing its existing computer system with a new computer system. The new system can offer considerable savings in computer processing and inventory management costs. Information about the existing system and the new system follow: Existing Computer New Computer Original cost $10,000 $15,000 Annual operating cost $  3,500 $  2,000 Accumulated depreciation $  6,000 --- Current.
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21) A processing cycle efficiency (PCE) of 18% indicates better efficiency than a PCE of 50%. 22) Problems involving two or more constraints are often solved using linear programming. 23) In linear programming, total fixed costs will remain unchanged regardless of the production plan. A) are relevant. B) are differential. C) have future implications. D) are.
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11) Misleading product cost numbers are MOST likely the result of misallocating: A) direct material costs. B) direct manufacturing labor costs. C) overhead costs. D) All of the above are correct. 12) Undercosting of a product is MOST likely to result from: A) misallocating direct labor costs. B) underpricing the product. C) overcosting another product. D) understating total product.
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Products M5 and A8 each are assigned $100.00 in overhead costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, M5 requires 45 minutes less setup time than A8. 35) According to an ABC system, A8 is ________ under the traditional cost system. A) undercosted B) overcosted C).
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10) Transaction drivers count how often an activity is performed. Duration drivers represent the amount of time required to perform an activity. Intensity drivers directly charge for the resources used each time an activity is performed. Also, a weighted index approach might be used to simulate an intensity driver. a. Give an example of.
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15) Using too few balanced scorecard measures: A) will not balance desired outcomes with performance drivers of those outcomes. B) is better than using too many scorecard measures. C) results in a lack of linkage between drivers in the process and learning and growth .perspectives D) All of the above are correct. 16) Successful implementation.
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11) Currently, most companies consider annual salary costs as: A) a fixed cost. B) a variable cost. C) an opportunity cost. D) a period cost. 12) Which of the following describes a variable cost? A) Variable cost are always indirect costs. B) Variable costs increase in total when the actual level of activity increases. C) Variable costs include.
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74) Conecuh Sausage Company is considering replacing its giant sausage mixer with a new one. The following data have been compiled to evaluate the decision. Existing New Original cost $16,000 $20,000 Annual operating cost $8,000 $4,400 Remaining life 10 years 10 years Disposal value now $6,000 --- Salvage Value in 10 years 0 Required: a. What costs are relevant? b. What costs are sunk? c. What are the net cash.
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  Objective 1 1) Traditional cost systems use actual departments or cost centers for defining cost pools to accumulate and redistribute costs. 2) Activity-based cost systems use cost centers to accumulate costs. 3) Traditional cost systems are likely to overcost simple products with higher production volume. 4) The first step in designing an activity-based cost.
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67) Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced each year with production costs as follows: Direct materials $ 45,000 Direct labor 15,000 Variable support costs 35,000 Fixed support costs 25,000 Total costs  $120,000 Quiett Truck has the option of purchasing part WB23 from an outside supplier at $11.20.
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Sheppard Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to products. Manufacturing overhead costs are allocated on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2011, the following estimates were.
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Wisconsin Electronics has received an order for 1,000 specially designed TV/VCR combinations.  The following standards were compiled for this order: Direct materials: Part #123 $25 per TV/VCR Part #456 $50 per TV/VCR Direct labor: 2.0 hours per TV/VCR at $15 per hour Manufacturing overhead: $40 per direct labor hour 24) The estimated direct labor cost for.
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Tony's Skate Corporation manufactures two models of skate boards: a standard and a deluxe model. The following activity and cost information has been compiled. Product Number of Setups Number of Components Number of total Direct Labor Hours Standard 20 10 375 Deluxe 30 15 225 Overhead costs $50,000 $70,000                                                                                     15) Assume a traditional costing system applies the $120,000 of overhead.
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69) Kirkland Company manufactures a part for use in its production. When 10,000 units are produced, the costs per unit are: Direct materials $0.60 Direct manufacturing labor 3.00 Variable manufacturing support 1.20 Fixed manufacturing support 1.60     Total  $6.40 Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The.
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8) Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not? 9) Transaction drivers, duration drivers, and intensity drivers. a. For machine maintenance, identify a transaction driver, a duration driver, and an intensity driver. b. Explain when the intensity driver should be used. c. Explain the.
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12) Brilliant Accents Company manufactures and sells three styles of kitchen faucets:  brass, chrome, and white.  Production takes 25, 25, and 10 machine hours to manufacture 1000-unit batches of brass, chrome, and white faucets, respectively.  The following additional data apply: BRASSCHROME WHITE Projected sales in units#30,000#50,000#40,000 PER UNIT data: Selling price$40$20$30 Direct materials$  8$  4$ .
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Objective 4 1) Reducing the number of production runs provides an economic benefit even though resources remain at the same level. 2) Prepackaged ABC software packages must be customized to the products, services and related activities of the company. 3) Activity-based management (ABM) includes decisions about all of the following EXCEPT: A) pricing and.
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  Objective 1 1) In markets where the organization faces a market-determined price, the organization can set its price using cost plus pricing. 2) The most widespread use of cost information is in budgeting. 3) Governments are frequent users of cost reimbursement contracts. Objective 2 1) The salary of the company president is a fixed manufacturing.
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11) A company produces three products; if one product is undercosted then: A) one product is overcosted. B) one or two products are overcosted. C) two products are overcosted. D) no products are overcosted. 12) In general, factories producing a more varied and complex mix of products have higher costs than factories producing only a.
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44) Elfie Enterprises uses three cost pools to allocate manufacturing overhead costs. The following estimates were provided for the coming year.                       Manufacturing Cost Pool           Overhead CostsCost driverActivity level Supervision of direct labor$320,000Direct labor hours800,000 Machine maintenance$120,000Machine hours960,000 Facility rent$200,000Square feet of area100,000      Total overhead costs$640,000 The accounting records show the Lacio Job consumed the following.
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42) Relevant costs in a make-or-buy decision of a part include: A) setup overhead costs for the manufacture of the product using the outsourced part. B) currently used manufacturing capacity that has alternative uses when part is outsourced. C) annual plant insurance costs that will remain the same. D) corporate office costs that will.
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5) If a Balanced Scorecard's implementation team is really committed, they can initially develop the perfect scorecard. 6) The measurement of the objectives for the Balanced Scorecard: A) creates focus for the future. B) communicates an important message to all employees. C) focuses the entire organization on strategic implementation of company's outcomes. D) All of.
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5) The selection of activity cost drivers requires making choices related to the usage of transaction drivers, duration drivers, and intensity drivers. 6) The goal of a properly constructed ABC system is to: A) have the most accurate cost system. B) identify more indirect overhead costs. C) develop the best cost system for an.
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Objective 4 1) Opportunity costs are implicit costs. 2) When a firm maximizes profits it will simultaneously minimize opportunity costs. 3) Sunk costs are always irrelevant costs for decision making. 4) An example of a sunk cost is the historical cost paid for equipment. 5) For decision-making, differential costs assist in choosing between alternatives. 6) For.
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29) Jeffrey's, Inc., sells a single product. The company's most recent income statement is given below. Sales $200,000 Less variable expenses (120,000) Contribution margin 80,000 Less fixed expenses (50,000) Net income $ 30,000   Required: a. Contribution margin ratio is _______________ b. Break-even point in total sales dollars is _______________ c. To achieve $40,000 in net income, sales must total _______________ d..
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15) A single predetermined manufacturing cost driver rate based on total plant direct labor hours is: A) $  4 per direct labor hour. B) $10 per direct labor hour. C) $20 per direct labor hour. D) $40 per direct labor hour.. 16) A predetermined manufacturing cost driver rate for the Machining Department based on the.
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