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18) Department income totals $200,000, investment in the department is $2,000,000, and the company's cost of capital is 8%.   Required: a. Calculate the return on investment (ROI). b. Calculate economic value added. c. Assume there is a capital project that requires a $200,000 investment for a $18,000 return. Would the department manager be more.
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Objective 11 1) Gain sharing is a system for distributing cash bonuses from a pool when the total amount available is a function of performance relative to some target. 2) For some employees, pay may not be a motivator. 3) Management accounting must gather relevant and reliable performance information to administer intrinsic rewards. 4).
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Objective 5 1) A major goal of transfer pricing is to motivate the decision maker to act in the organization's best interests. 2) Transfer prices based on actual costs provide no incentive to the supplying division to control costs. 3) If external markets exist, then market-based transfer prices are the most appropriate. 4) Negotiated.
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11) The PRIMARY reason for using cost variances is: A) that they diagnose the cause of a problem and what should be done to correct it. B) for superiors to communicate expectations to lower level employees. C) to administer appropriate disciplinary action. D) for financial control of operating activities. 12) A favorable cost variance of.
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11) A cost center is a business segment: A) that usually evaluates employee performance by comparing the center's actual costs with target or standard costs for the amount and type of work done. B) in which interperiod cost comparisons can be misleading if the output level and production mix are constant. C) that.
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49) Explain what each of the following variances indicates, and discuss what conditions might have caused each variance. Direct material price variance: $1,000 U Direct material quantity variance: $1,500 F Direct labor rate variance: $800 F Direct labor efficiency variance: $300 U 50) What is the primary role of the flexible budget? 1 .
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46) Tao Industries, Inc. developed standard costs for direct material and direct labor. In 2012 Tao estimated the following standard costs for one of their major products, the 50-gallon plastic container.   Standard quantityStandard price Direct materials0.25 pounds$40 per pound Direct labor0.03 hours$18 per hour During August, Tao produced and sold 8,000 containers using 1,900.
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11) To the extent that an ethical hierarchy exists, ________ have the least authority. A) societal norms B) groups norms C) personal norms D) legal rules 12) Codes of ethics developed by professional organizations reflect broad moral principles such as: A) loyalty. B) discretion. C) competence. D) All of the above are correct. 13) When a manager's and employee's goals.
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The management accountant for the Martino Organics has prepared the following segmented income statement for the most current year. Produce Fish & Meat Sundries Total Sales $80,000 $120,000 $60,000 $220,000 Variable expenses 36,000 65,000 20,000 121,000 Contribution margin 44,000 55,000 40,000 99,000 Other costs 18,000 21,000   8,000 47,000 Segment margin 26,000 34,000 32,000 52,000 Allocated avoidable costs   2,000 3,000   3,000 8,000 Segment income 24,000 31,000 29,000 44,000 Allocated corporate costs 7,000   7,000   7,000 21,000     Corporate profit $17,000 $ 24,000 $ 22,000 $ 23,000 11) If the Produce department had been eliminated prior.
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11.Which of the following is the most authoritative source of accounting standards for cities and counties? a.Current practices widely used by not-for-profit entities b.GASB Statements and Interpretations c.AICPA Industry Audit Guides d.Implementation guides published by GASB staff 12.Concepts statements issued by the GASB and the FASAB emphasize which of the following objectives of governmental financial.
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Objective 7 1) Residual income equals reported accounting income less the economic cost of the investment used to generate that income. 2) Return on investment is the ratio of income to investment, with varying definitions of income and investment. 3) The financial measure, economic value added, evaluates income relative to the level of.
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Multiple Choice 1.Which of the following is a distinguishing characteristic of a nonbusiness organization? a.Its revenues do not exceed its expenses b.There is an absence of ownership interests that can be sold, transferred, or redeemed c.It does not depreciate its capital assets d.It does not charge fees for any of its services 2.Which of the following.
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17.              (Discussion problem on fund accounting) Discuss the nature and purpose of "fund accounting." 18.(Matching organizational characteristics with different types of organizations.) Listed below are some identifying characteristics of organizations.  Indicate with a check mark (?) in the appropriate column(s) those characteristics that apply to each type of organization.  Some characteristics may apply.
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The following information pertains to the October operating budget for Flockhart Corporation. ?Budgeted sales for October $100,000 and November $200,000. ?Collections for sales are 60% in the month of sale and 40% the next month. ?Gross margin is 30% of sales. ?Administrative costs are $10,000 each month. ?Beginning accounts receivable (October 1) $20,000. ?Beginning.
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42) For the next quarter, Charter Manufacturing projects the following information (in units). JulyAug.Sept. Retail demand8,0008,00012,000 Dealer demand16,00020,00024,000 Shop capacity26,00026,00026,000 Painting capacity              1242,00024,00024,000 Demand drives production for that month and cannot be carried over from one month to another.  Retail customers are satisfied first. Required: a.              Prepare a schedule that shows the number of retail and dealer units.
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10) Sun Inc. sells a single product. The company's 2012 income statement is given below. Sales (4,000 units) $800,000 Less flexible (variable) expenses $200,000 Less capacity-related (fixed) expenses $300,000 In an attempt to improve performance, Jo, the manager is considering a number of alternative actions. Each situation is to be evaluated separately.   Required: a. Calculate operating.
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21) Aggregate planning: A) determines the projected financial statements. B) compares the sales plan with the demand forecast. C) assesses the feasibility of the proposed production plan. D) provides a detailed production schedule for all product lines. 22) Discretionary expenditures: A) are usually planned for first. B) are amounts paid for the use of flexible resources. C) are.
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Objective 6 The Jordan Company manufacturers only one type of shoe and has two divisions, the Sole Division and the Assembly Division. The Sole Division manufactures soles and then "sells" them to the Assembly Division, which completes the shoes and sells them to retailers. The market price for the Assembly Division.
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Objective 7 1) Hierarchical organizations with many layers of management are referred to as flat organizations. 2) When sales people are evaluated strictly on sales quotas: A) they will attempt to sell as much high price merchandise as possible. B) they are likely to have buy-in. C) they always become unmotivated. D) none of the above Objective.
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Objective 2 1) Budgets can play both planning and control roles for management. 2) When discussing the roles of budgets, a planning role in the budgeting process includes: A) measuring outcomes against planned amounts. B) developing the master budget. C) assessing performance. D) reporting actual amounts at the end of the budgeting period. 3) When discussing the.
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44) The following information pertains to Maxi Corporation: Month    Sales    Purchases July$40,000$20,000 August30,00015,000 September20,00010,000 October50,00025,000 November60,00030,000 December70,00035,000 ? Cash is collected from customers in the following manner: Month of sale20% Month following the sale50% Two months following sale28% Amount uncollectible2% ? Thirty percent of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.  A 2%.
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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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11) Asset turnover, the productivity component of return on investment (ROI), is: A) 20%. B) 80%. C) 25%. D) 125%. 12) The return on investment (ROI) is: A) 20%. B) 80%. C) 25%. D) 125%. 13) Economic value added: A) encourages segment managers to accept only new capital projects with a return on investment (ROI) that exceed the current ROI. B) of.
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11) ________ provide(s) the starting point for developing the operating budget. A) The demand forecast B) Projected income statement C) The production plan D) Expected cash flows 12) A demand forecast is: A) an estimate of sales demand at a specified selling price for each product. B) developed primarily to prepare next year's marketing campaign. C) an estimate.
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Objective 3 1) For an organization to be successful, activities within sales, manufacturing, and customer service need to be coordinated. 2) Organizations use nonfinancial control to provide a summary measure of how well their systems of operations control are working. 3) Properly chosen nonfinancial measures anticipate and explain financial results. 4) A support department,.
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  Objective 1 1) Once authorized, discretionary spending budgets are committed or fixed and do not vary with levels of production or service. 2) A budget is a qualitative expression of the cash inflows and outflows that show whether the current operating plan will meet the firm's organizational objectives. 3) A budget should/can do.
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Objective 2 1) In a decentralized organization, front-line employees are trained to respond to changes in the business environment. 2) The amount of decentralization in an organization reflects the organization's trust in its employees and other factors. 3) When an organization moves to decentralized decision making, control moves from results control to task.
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Objective 4 1) Budgets can be prepared for any time period, but are usually developed for one year. 2) In ________, as one budget period passes, planners delete that budget period from the master budget and add another one. A) zero-based budgeting B) periodic budgeting C) incremental budgeting D) continuous budgeting 3) Although planners update or revise.
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10) Empowering employees in management accounting and control system design requires all of the following EXCEPT: A) allowing employees to participate in decision making. B) having highly-motivated employees in every position. C) ensuring that employees understand the information they are using and generating. D) enabling employees' comprehension of performance measure computations. 11) The dimensions of.
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Objective 6 1) Variance analysis explains the difference between planned costs and actual costs by evaluating differences between standard prices and actual prices and budgeted quantities and actual quantities. 2) It is most meaningful to compare cost targets in the master budget to actual cost results. 3) A favorable variance indicates management's attention.
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The actual information pertains to the month of June. As part of the budgeting process, Petrified Products Company developed the following master budget for June. The manager, Pete, is in the process of preparing the flexible budget and understanding the results. Master Budget Flexible Budget Actual Results Sales volume (in units)      25,000        20,000 ========= Sales volume.
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31) August's direct material planning variance was: A) $268,640 favorable. B) $270,600 unfavorable. C) $1,360 unfavorable. D) indeterminable using the above information. 32) August's direct labor rate variance was: A) $125 unfavorable. B) $125 favorable. C) $142,375 favorable. D) None of the above is correct. 33) August's direct labor efficiency variance was: A) $125 unfavorable. B) $125 favorable. C) $142,375 favorable. D) None of.
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5) ________ mean(s) that the organization will attempt to reach much higher goals with the current budget. A) Authoritative budgeting B) Stretch targets C) Consultative budgeting D) Budget slack 6) ________ occur(s) when managers ask subordinates to discuss their ideas about the budget, but no joint decision-making occurs. A) Authoritative budgeting B) Stretch targets C) Consultative budgeting D) Budget.
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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 4 1) For the segment manager to be properly evaluated, common costs should NOT be allocated to the various segments, even if an arbitrary allocation is required. 2) Contribution margin is the best measure of the controllable contribution of a profit center toward organizational profit. 3) If a product line was eliminated,.
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Objective 5 1) Sensitivity analysis is the process of selectively varying a plan's or a budget's key estimates for the purpose of identifying over what range a decision option is preferred. 2) ________ is the process of varying key estimates to identify those estimates that are the most critical to a decision. A).
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20) Incentive compensation is MOST suited to: A) all centralized organizations. B) centralized organizations where the employees are skilled and empowered. C) all decentralized organizations. D) decentralized organizations where the employees are skilled and empowered to react to conditions and make decisions. 21) A control system in which organizational participants focus on data coming out.
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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 1 1) Financial control involves the use of financial measures to assess organizational and management performance. 2) Financial measures identify what is wrong with an organization, not simply provide a signal that something needs attention. 3) Nonfinancial measures can highlight falling sales and profits in an organization, but only financial measures can.
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Objective 7 1) In the service sector, ________ rather than machines usually represent(s) the capacity constraint, which underscores the importance of budgeting even in nonmanufacturing organizations. A) people B) knowledge C) familiarity with processes D) potential for sales 2) ________ occur(s) when a superior simply tells subordinates what their budget will be. A) Traditional budgeting B) Stretch goals C).
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36) Profit sharing Knight Medical Devices makes devices and equipment that it sells to hospitals. The organization has a profit-sharing plan that is worded as follows: The company will make available a profit-sharing pool that will be the lower of the following two items: 1. 40% of income before taxes in excess.
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48) Grey Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.   Flexible       ----------Variances------------              Actual BudgetPrice/RateQuantity/EfficiencyResults Material A$30,000$1,000F$3,000U$32,000 Material B40,000500U1,500F39,000 Direct labor50,000500U2,500F48,000 Required: a. Explain what each of the following variances indicates. 1. For Material A, the.
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