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Study Resources (Accounting)

Learning Objective 24-4 1) Companies evaluate investment centers using the same measures as the profit centers. 2) Operating income alone does not indicate how efficiently a segment is using its assets. 3) Return on investment focuses on net income in the numerator of the ratio. 4) Managers of investment centers are responsible not only.
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Learning Objective 24-2 1) Performance evaluation systems provide top management with a framework for maintaining control over the entire organization. 2) Communicating the expectations of top management to segment managers improves goal congruence. 3) The practice of comparing a company's achievements against the best practices in the industry is known as goal congruence. 4).
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11) Companies use techniques like time-and-motion studies, and consult industry "best practices" when developing standards. This is referred to as benchmarking. 12) The static budget is used to compute flexible budget variance or price and efficiency variances. 13) Which of the following is the correct formula to measure cost variance? A) Cost Variance.
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11) The return on investment of a company can be improved by either increasing average total assets or decreasing operating income. 12) Residual income is used as a key performance indicator for evaluating an investment center's financial performance. 13) Recreation Equipment Company has several divisions that are investment centers. Data for the.
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Learning Objective 24-5 1) The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its customers. 2) The primary objective in setting transfer prices is to achieve goal congruence by selecting a price that will maximize the overall company profits. 3) A cost-based.
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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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21) What does a favorable direct materials cost variance indicate? A) The actual quantity of materials used was less than the standard quantity. B) The actual cost of materials purchased was less than the standard cost of materials purchased. C) The actual cost of materials purchased was greater than the standard cost of.
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Learning Objective 23-3 1) Only unfavorable variances should be investigated, if substantial, to determine their causes. 2) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost. 3) A favorable direct materials cost variance occurs when the actual direct materials cost.
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11) The product line of a manufacturing company is most likely to be considered as a(n) ________. A) cost center B) profit center C) revenue center D) investment center 12) Responsibility reports for a profit center include ________. A) revenues only B) invested capital C) both revenues and costs D) returns on investments 13) Long-term investments are made by the.
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21) Which of the following is a responsibility that is common to the managers of cost, profit, and investment centers? A) generating revenues B) generating profits C) managing the invested capital D) controlling costs 22) Qvoware Inc. sells cosmetic products in the United States. Which one of the following is most likely to be a.
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11) Rica Company is a price-taker and uses a target-pricing approach. Refer to the following information: Production volume 600,000 units per year Market price $30 per unit Desired operating income 15% of total assets Total assets $13,900,000 What is the target full product cost in total for the year? Assume all units produced are sold. A) $18,000,000 B) $15,915,000 C) $13,900,000 D) $2,085,000 12) Rica Company is.
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11) The management of Zeta Fire Alarms Company has calculated the following variances: Direct materials cost variance $8,000 U Direct materials efficiency variance 35,000 F Direct labor cost variance 15,000 F Direct labor efficiency variance 12,000 U Total variable overhead variance 7,000 F Total fixed overhead variance 3,050 F What is the total direct labor variance of the company? A) $15,000 F B) $10,050 F C).
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21) Healthier Living Company manufactures two products—toaster ovens and bread machines. The following data are available: Toaster Ovens Bread Machines Sale price $80 $150 Variable costs $40 $70 Healthier Living can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Healthier Living's production capacity is 1,800 machine hours per month. What is the contribution.
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Learning Objective 25-3 1) A company has two different products that sell to separate markets. Financial data are as follows: Product A Product B Total Revenue $15,000 $9,000 $24,000 Variable cost (8,000) (9,200) (17,200) Fixed cost (allocated) (4,000) (1,000) (5,000) Operating income $3,000 $(1,200) $1,800 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because the contribution margin of Product B.
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Learning Objective 26-21 1) An operational asset used for a long period of time is known as a capital asset. 2) The acquisition or construction of a capital asset is known as a capital investment. 3) A post-audit in capital budgeting is a comparison of the actual results of capital investments with the.
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Learning Objective 23-5 1) Fixed overhead volume variance is a flexible budget variance. 2) The aggregate of direct materials cost and efficiency variances results in total direct materials variance. 3) The total production cost flexible budget variance is obtained by adding direct labor efficiency variance and fixed overhead volume variance. 4) The total fixed.
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Learning Objective 24-3 1) Management by exception directs the management's attention to important differences between the actual and the budgeted amounts. 2) Uncontrollable costs are the costs that can be influenced by the decisions of a manager. 3) Cost center responsibility reports typically focus on the flexible budget variance. 4) A unique factor of.
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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 traditional costing 42) Custom Furniture.
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41) An unfavorable sales volume variance in operating income suggests a(n) ________. A) increase in number of actual units sold when compared to the expected number of units sold B) decrease in number of actual units sold when compared to the expected number of units sold C) increase in variable expenses per unit D).
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Learning Objective 25-2 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 only consider the quantitative data and disregard qualitative factors. 3) Fixed costs are.
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Learning Objective 24-1 1) A company in which the major planning and controlling decisions are made by top management is considered as a centralized company 2) In a decentralized company, all the planning and controlling decisions are made by top management. 3) Centralized operations are better for small companies due to the smaller.
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Learning Objective 26-2 1) The accounting rate of return method and the payback method are often used as preliminary screening measures but are insufficient to fully evaluate a capital investment. 2) All else being equal, investments with longer payback periods are preferable. 3) Net cash inflows from a capital investment arise from.
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21) Which of the following is a key performance indicator of the financial perspective in a balanced scorecard? A) hours of employee training B) number of warranty claims C) percentage of market share D) return on investment 22) Which of the following is a key performance indicator of the internal business perspective in a balanced.
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11) Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue. 12) Milliken Inc. provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sale Revenue $556,500 $525,000 $450,000 ? Calculate the sales volume variance. A) $31,500 F B) $31,500 U C) $75,000 U D) $106,500 F 13).
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21) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot..
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11) Elite Brands Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,000 units Estimated variable overhead costs $13,500 Estimated direct labor hours (DLHr) 600 hours At the end.
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21) Cheong Automobiles Company fabricates inexpensive automobiles for sale to third world countries. Each vehicle 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 per unit Fixed costs $14,000 per month A factory in Indonesia has offered to supply Cheong with ready-made.
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21) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the residual income (RI) of Moon Corp. A) $1,156,000 B) $300,000 C) $151,800 D) $58,200 22) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the target rate of.
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Learning Objective 23-4 1) When management is investigating overhead variances, they need to further determine whether cost increases were controllable or if the cost standard needs to be updated. 2) The fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of.
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21) Onyx Décor Company has prepared a static budget at the beginning of the month. At the end of the month, following information has been retrieved from the records. Static budget: Sales volume: 2,000 units: Price: $50 per unit Variable expense: $12 per unit: Fixed expenses: $25,000 per month Operating income: $51,000 Actual results: Sales volume:.
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11) Atlas Inc. uses a standard costing system. Atlas's year ending balances at December 31, 2015 are shown here: What is the standard net operating income of the company for the year ended December 31, 2015? A) $8,780 B) $6,290 C) $8,470 D) $7,530 12) Alpine Productions uses a standard costing system for recording transactions..
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Learning Objective 25-4 1) Doro Fill Company fabricates inexpensive automobiles for sale to third world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows: Volume 800 units per month Variable cost per unit $7 per unit Fixed costs $15,000 per month A factory in Indonesia has offered to supply.
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11) Kevin Couriers Company prepared the following static budget for the year 2015: Static Budget Units/Volume 5,000 Per Unit Sales Revenue $3.00 $15,000 Variable Expenses 1.50 7,500 Contribution Margin 7,500 Fixed Expenses 4,000 Operating Income/(Loss) $3,500 If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income. A) $3,500 B) $10,500 C) $6,500 D) $4,000 12) Ibis Paper Company prepared the following static budget for the.
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Learning Objective 23-2 1) A standard is a price, cost, or quantity that is expected under normal conditions. 2) A standard cost system is an accounting system that uses standards for product costs. 3) Standard costs help motivate employees by serving as benchmarks against which their performance is measured. 4) A standard cost system.
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31) The Carolina Products Company has completed the flexible budget analysis for the second quarter, which is as given below. Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance  Static Budget Units/Volume 12,800 0 12,800 800 F 12,000 Sales Revenue $62,720 $1,280 U $64,000 $4,000 F $60,000 Variable Expenses 27,520 640 U 26,880 1,680 U 25,200 Contribution Margin $35,200 $1,920 U $37,120 $2,320 F $34,800 Fixed Expenses 34,100 100 U 34,000 0 34,000 Operating Income/(loss) $1,100 $2,020 U $3,120 $2,320 F $800 Which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses? A) decrease.
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11) Which of following statements is true of short-term decision making? A) Fixed costs and variable costs must be analyzed separately. B) All costs behave in the same way. C) Unit manufacturing costs are variable costs. D) All costs involved in a decision are considered relevant. 12) Which of the following is a historical cost.
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11) Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct.
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Learning Objective 23-6 1) A favorable variance has a debit balance and is a contra-revenue. 2) An unfavorable variance for an expense means more expense has been incurred than planned. 3) Favorable variances have credit balances. They are contra-expenses and therefore decrease the expense Cost of Goods Sold. 4) When a manufacturing company uses.
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11) Which of the following is most likely a key performance indicator of the internal business perspective of the balanced scorecard? A) number of units produced per hour B) employee turnover C) cash flow D) number of cross-trained employees 12) One part of the balanced scorecard helps management answer the question, "How do we look.
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11) Payback provides management with valuable information about the time period within which the cash invested will be recouped. 12) Net present value and internal rate of return consider the time value of money, so they are appropriate for longer-term capital investments 13) Which of the following best describes a post-audit in.
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