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11. An organization chart assists in management control.  12. A report for a responsibility center includes costs and revenues that are not controlled by a manager.  13. Performance reports allow comparisons between actual performance and budget expectations.  14. If a performance report contains items that are in a manager's control, the entire responsibility accounting system can be.
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1. A performance management and evaluation system is mainly utilized to account for and report on financial performance.  2. A performance management and evaluation system allows a company to identify how well it is doing, where it is going, and what improvements will make it more profitable.  3. While measuring performance, managers must be able.
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115. Kristen Roper oversees her company's largest and most profitable investment center. She has asked you, as her staff accountant, to compute the center's ROI, residual income, and EVA for the month of August 2014, using the following information (rounded to two decimal places): August 2014 Pretax operating income $300,000 August 2014 sales 450,000 Assets at.
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51. Which of the following is true of cost-benefit analysis? A. It supports only short-run decision making.B. It considers quantitative costs and benefits, not qualitative.C. It conveys that the benefits from a project should exceed its costs.D. It supports only long-run decision making. 52. All of the following are qualitative factors that may be used by decision makers.
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117. Golf Pro Inc. makes wood drivers for the professional golfer. Because of the clientele of users, only the finest materials can be used, and the quality of craftsmanship must be high. The following cost, quantity, and time standards have been set for 2014:Direct materials: 2 board-feet of wood @ $20.
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101. Relevant costs in a sell-or-process-further decision include A. only costs of additional processing.B. both additional revenues and additional costs.C. total revenues after additional processing.D. joint product costs. 102. All of the following are relevant in a sell-or-process-further decision except A. sales value at the split-off point.B. sales value after further processing.C. additional processing costs.D. joint costs. 103. Wizard Company produces several cleaning products. Each.
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107. Differentiate between the variable overhead spending variance and the variance overhead efficiency variance. 108. Discuss the keys to preparing a performance report based on standard costs and related variances. 109. The effective evaluation of managers' performance depends on both human factors and company policies. Using variances from standard costs in a manager's performance report.
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111. Using the following information, prepare a traditional income statement and a variable costing income statement: Sales $5,000,000 Variable cost of goods sold 2,100,000 Variable selling expenses 850,000 Fixed selling expenses 250,000 Fixed manufacturing costs 700,000 Traditional Income Statement Sales $5,000,000 Cost of goods sold   2,800,000 Gross margin $2,200,000 Variable selling expenses 850,000 Fixed selling expenses     250,000 Operating income $  1,100,000 112. Using the following information, prepare a single report setting forth the variable.
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81. Compute the return on investment (rounded to nearest percent) for the Tim Tom investment center from the information given below. Tim Tom Subsidiary Total sales $1,600 Operating income $180 Average assets invested $850 Profit margin ? Asset turnover ? ROI ?  A. 21%B. 18%C. 15%D. 12% 82. Compute the profit margin (rounded to nearest percent) for Titania Corporation’s Investment center using the following information. Titania Corporation Total sales $1,600 Operating income $100 Average assets.
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104. What are some items that can affect an investment center's EVA calculation, and how can EVA be improved? 105. Provide three examples of something that an organization might want to measure and a performance measurement that could be utilized in each example. 106. What is the business purpose of the balanced scorecard, and how.
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123. Ronald Company has a standard costing system and keeps all its costs up to date. The company specializes in producing herbal medicines. The standard variable costs for producing 1 liter herbal oil are as follows: Direct materials (2 units at $2.00 per unit) $ 4.00 Direct labor (1 hour at $5.00 per hour) 5.00 Variable.
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61. Which of the following typically would be considered an incremental cost? A. Fixed costB. Direct product costC. Sunk costD. Administrative overhead cost 62. In a proposal to increase the production of clock radios, the sales managers of Rinaldo Electronics reported the total additional cost required to meet the increased production level. The increase in total cost is.
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111. Nexus Star Inc. produces various kinds of oils. One of its product, Product X, is made from castor oil, beeswax, aloe vera, and a base compound.  For the next 12 months, the company's purchasing agent believes that the cost of ingredients will be as follows:  Ingredient Standard Cost Castor oil $6.50 per.
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113. As the staff accountant for Investment Center 916, calculate the October 2014 ROI, using the following information: October 2014 profit margin 35% October 2014 sales $2,480,000 Assets at September 30, 2014 1,879,500 Assets at October 31, 2014 1,850,000 114. As the staff accountant for Investment Centers Beta and Gamma, compute the residual income for each investment center, using the following.
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124. Outdoors Inc. manufactures steel hitches for camping trailers. The company's direct labor rates have been set by the terms of the current labor contract. Direct labor rate standards have been assigned for each job classification. In May 2014, a young apprentice was being trained during regular working hours to become.
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50. In standard costing, A. the standards are developed only for overhead costs.B. the standards are developed primarily from past costs.C. comparisons with actual costs usually are not performed.D. debit and credit entries to inventory accounts are made at standard costs. 51. An expression of the hourly labor pay cost per function or job classification that is expected.
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31. In a decision to eliminate a segment, remaining segments must have sufficient contribution margin to cover their own direct costs and the common costs.  32. The objective of a sales mix decision is to select the alternative that maximizes the contribution margin per constrained resource.  33. When resources like direct materials, labor, or time.
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100. Identify and describe the five different responsibility centers, and provide one example of each. 101. Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control? 102. Identify the following and show the formula for calculating each: a. ROIb. RIc. EVA 103. What are some.
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71. Which of the following represents the number of sales dollars generated by each dollar invested in assets? A. Asset turnoverB. Average assets investedC. Profit marginD. Operating income 72. Other things remaining constant, which of the following will improve the return on investment? A. Decreasing assetsB. Increasing salesC. Decreasing costsD. All of these choices 73. Determine the October 2014 ROI for an investment center with.
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80. Harrison Inc. has computed direct labor standards for the manufacture of its product to be 4 hours of labor per product at a cost of $15 per hour. During March, Harrison produced 45 products in 190 hours and incurred direct labor costs of $2,720. Harrison's direct labor efficiency variance was A. $150.
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108. Write a brief note on the performance-based pay. 109. Match the following terms with their respective formulas. 1. Sales Variable cost      Contribution margin 2. Operating income Assets invested      Economic value added 3. After-tax profit [Cost of capital (Total assets Current liabilities)]      Flexible budget 4. (Variable cost per unit Number of units produced) + Budgeted fixed cost      Return on.
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21. Another name for a flexible budget is a variable budget.  22. A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.  23. In a service company, standard unit cost related of a service will typically include direct materials,.
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119. The C.M. Landscaping Co. uses chicken manure to fortify the soil around trees bearing rare fruit. The price standard used is $3.50 per 10 pound sack of chicken manure. During the current year, the actual purchase price averaged $3.65 per sack, according to the company's purchasing agent. The company purchased.
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90. Which of the following is indicated by a favorable fixed overhead volume variance of a manufacturing company? A. The creation of excess inventoryB. The actual overhead exceeded the budgeted overheadC. Sales exceeded productionD. Variable overhead costs were less than fixed overhead costs 91. The total fixed overhead variance is comprised of the A. variable overhead efficiency and fixed variances.B. fixed.
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115. Rose Corporation provides you the following budgeted cost information for July, 2014. Budgeted variable costs Per unit      Direct materials $5      Direct labor $4      Overhead $8 Budgeted fixed overhead $90,000 The company has a normal capacity of producing 9,000 units. However, in July, the.
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122. Fredman Company has a standard costing system and keeps all its costs up to date. The company's main product is cotton bed spreads, which are made in a single department. The standard variable costs for one unit of product are as follows: Direct materials (3 yards at $12.50 per yard) $37.50 Direct labor.
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11. The purchasing agent is responsible for developing the direct materials quantity standard.  12. When a manufacturing company employs standard costs, all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs rather than in terms of standard costs incurred.  13. The standard overhead cost.
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103. Discuss standard costing. As part of your discussion, define a standard cost. In addition, compare and contrast standard costs and predetermined overhead costs. Include in your discussion at least three reasons why standard costs are introduced into a cost accounting system. How is a standard cost accounting system useful to.
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70. Candy Stores Inc. gives you the following information:The standard material cost is $7 per pound for a 15 pound bag of chocolate. The following is the actual cost and usage data: Direct materials purchased and used 186,000 pounds Price paid for direct materials $6.00 per pound Number of bags produced 12,000 units Using the above information.
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40. A standard costing system A. is used by management for cost planning, but not for cost control purposes.B. is a system in which all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs incurred.C. depends on actual costs rather than planned costs.D. is employed.
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91. An example of a constrained resource that may lead to the need for a sales mix decision is  A. labor hours. B. machine hours. C. a common part/ingredient with limited availability.D. all of these options. 92. Smith Company is conducting a sales mix analysis. The first step in this analysis involves which of the following formulas?.
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41. A performance management and evaluation system is a set of procedures that account for and report on A. qualitative performance.B. standard performance.C. employee performance.D. financial and nonfinancial performance. 42. The use of quantitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome is known as A. responsibility accounting.B. an asset turnover.C. a performance center.D. a.
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31. The direct labor efficiency variance is the difference between standard hours allowed and actual hours worked for good units produced, multiplied by the standard labor rate.  32. The total overhead cost variance is the difference between what actual overhead cost is and what it should have cost according to the flexible budget.
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1. Total costs and savings are examples of qualitative factors.  2. Only quantitative data are used in the decision-making process.  3. In choosing among alternatives, managers are guided by historical cost information.  4. Sunk costs are irrelevant for decision making.  5. The cost of a previously purchased machine is an example of a sunk cost.  6. Opportunity costs are ignored for.
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1. Standard costs are based solely on actual costs incurred in past.  2. A variance is the difference between standard costs and actual costs.  3. Cost centers have well-defined links between the cost of the resources and the resulting products.  4. Standard costs are realistically predetermined costs of direct materials, direct labor, and overhead that usually are.
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21. A special order should be accepted only if it maximizes operating income.  22. Special order decisions are about whether to accept or reject special orders at prices below the normal market prices.  23. Sales commission expenses are included in special order decision analysis even if the customer approached the company directly.  24. Examples of relevant fixed.
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61. Variable costing is utilized to evaluate the performance of A. investment centers.B. revenue centers.C. cost centers.D. profit centers. 62. How is the contribution margin calculated when utilizing variable costing? A. Sales less variable cost of goods soldB. Sales less variable cost of goods sold, less variable selling and administrative expensesC. Sales less cost of goods soldD. Sales less variable cost of goods.
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121. Camping for Fun Inc. produces a variety of camping products on a year-round basis. The best-selling item is a compact portable camping stove made from sheets of rust-free aluminum. Production of this stove requires two main operations: cutting/assembly and coating. The basic direct materials used are aluminum sheeting, a polyurethane.
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91. Compute the May 2014 EVA for an investment center with the following information: Pre-tax operating income for May 2014 $18,000,500 Income tax expense for May 2014 5,100,000 Assets at May 31, 2014 13,200,500 Current liabilities at May 31, 2014 10,000,000 Long-term liabilities at May 31, 2014 3,500,000 Minimum desired rate of return 19%  A. $12,292,405B. $12,710,500C. $11,931,500D. $12,235,500 92. Which of the following determines a company’s competitive advantage.
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51. Many organizations utilize responsibility accounting A. to increasing the responsibilities of the accountants.B. to assist in performance management and evaluation.C. as a substitute to performance measurement.D. as an alternative to generally accepted accounting principles. 52. In general, there are ________ types of responsibility centers. A. twoB. fiveC. tenD. three 53. The way in which the performance of a cost center is evaluated is similar.
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113. Keerin Inc., produces a complete line of women's athletic apparel. Sweat suits are very popular in the northern states. During August, the company's records revealed the following information about the production of sweat suits: Standards:  Direct materials 5 yards @ $2.50 per yard Direct labor 1 hour @ $9.50 per hour Overhead:     Variable $5.50 per.
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60. James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. Direct materials quantity standard 5 pounds per product Direct labor time standard 3 hours per product Direct materials price standard $9 per pound Direct labor rate standard $8 per hour Standard variable overhead rate $10 per labor.
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21. Unlike ROI, residual income is expressed in dollars.  22. For residual income figures to be comparable on a companywide basis, all investment centers must have equal access to resources and similar asset investment bases.  23. ROI, residual income, and economic value added all represent performance measures that can be utilized to determine investment center.
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11. Costs that vary among alternatives are irrelevant for decision making.  12. Information that is the same for all alternatives is considered relevant to the decision process.  13. Outsourcing can reduce operating costs of a company.  14. Fixed costs are often irrelevant in make-or-buy decisions.  15. Outsourcing is the use of suppliers outside the organization to perform services or.
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31. The balanced scorecard links the perspectives of an organization's stakeholders with the organization's mission and vision, performance measures, strategic plan, and resources.  32. An organization's four basic stakeholder groups include investors, employees, internal business processes, and customers.  33. To succeed, an organization must add value for all of its stakeholders in the short term.
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71. When faced with a make-or-buy decision, managers need the following information about buying except A. purchase price of itemB. rent or cash flow to be generated from vacated factory spaceC. salvage value of unused machineryD. depreciation previously charged to machinery to be discarded 72. Candidates for outsourcing would include A. custodial services.B. payroll processing.C. information management.D. all of these choices. 73. Cooper Co. makes.
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117. Calculate ROI, residual income, and EVA for each of the investment centers listed. (Round to two decimal places.) Investment Center 1 Investment Center 2 Pretax Operating income $ 50,000 $ 70,000 Assets invested 125,000 180,000 Income taxes 15,000 21,000 Cost of capital in dollars 13,000 25,000 Desired ROI 56% 48% 118. As the staff accountant for NYC Investment Center #1, compute the center's EVA, using the following information: Pretax.
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41. The point where joint products or services become separable and identifiable is known as identifiable point.  42. If the incremental costs of processing further are greater than the incremental revenue, the decision of selling the product at the split-off point is justified.  43. If the incremental revenues are greater than the incremental costs, the.
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