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Study Resources (Accounting)

11) Activity-based costing uses a common allocation base for all activities. 12) Indirect costs allocated to products using activity-based costing are more accurate than traditional allocation systems. 13) Companies with diverse products can obtain better costing information by using a single plant wide rate. 14) Traditional costing systems employ multiple allocation rates, but.
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31) The Carolina Products Company has completed the flexible budget analysis for the 2nd 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 in price per unit B) increase in variable.
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Learning Objective 24-4 1) Management by exception directs management's attention to important differences between actual and budgeted amounts. 2) Uncontrollable costs are the costs that can be influenced by the decisions of a manager. 3) A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability. 4) Regardless of the.
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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 How much 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).
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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) The favorable variances have credit balances. They are contra-expenses and therefore decrease the expense Cost of Goods Sold. 4) When a manufacturing company.
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41) An unfavorable sales volume variance in operating income suggests a(n): A) increase in number of actual 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) decrease in fixed costs. 42) Global Engineering's actual operating income for.
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Learning Objective 22-5 1) Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis. 2) Sensitivity analysis is a what-if technique. 3) A company with different segments using different software configurations can easily combine budget data of different segments to create the master budget. 4) Which of the following.
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11) Elite Brands Company uses standard costs for their 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 volume6,000 units Estimated variable overhead costs$13,500 Estimated direct labor hours (DLHr)600 hours At the end.
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Learning Objective 24-3 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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8) The manager of a profit center is responsible for generating revenues and managing the center's invested capital. 9) The responsibilities of a manager of an investment center are to generate profits and to efficiently manage the center's invested capital. 10) The product line of a manufacturing company is most likely to.
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31) Pitt Jones Company had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $60,000 2,000 hours Account billing (lines) $30,000 20,000 lines Account verification (accounts) $15,000 20,000 accounts Correspondence (letters) $10,000 1,000 letters The above activities are carried out at two of their regional offices.   Northeast Office Midwest Office Account inquiry (hours) 100 hours 200 hours Account billing (lines) 10,000 lines 7,000 lines Account verification (accounts) 1,000 accounts 600.
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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) Which of the following four perspectives of the balanced score card enables the management to answer the question: "How can we continue to improve and create value?" A) financial perspective B) customer perspective C) internal business perspective D) learning and growth perspective 12) Which of the following internal business perspective key performance indicators (KPIs).
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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 relevant to.
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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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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) Healthier Cook 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 Cook can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Healthier Cook's production capacity is 1,800 machine hours per month. What is the.
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11) Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. It has provided the following information. How much is the sales volume variance for the 36 inch long pipe? A) $1,850.
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Learning Objective 23-1 1) A static budget is prepared for only one level of sales volume. 2) A favorable variance reflects a decrease in operating income. 3) A variance is the difference between an actual amount and a budgeted amount. 4) A flexible budget summarizes revenues and expenses for various levels of sales volume.
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21) Onyx 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: 1,800.
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21) Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. Additional information is as follows: Activity Allocation Base Cost Allocation Rate $ Materials handling Number of parts 0.08 Machining Machine.
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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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3) While calculating the cash payments for budgeted selling and administrative expenses, non-cash expenses like depreciation are also considered. 4) Freightcan Holders has provided the following extracts from their budget for the first quarter of the forthcoming year: Jan Feb March Sales (30% cash) $500,000 $750,000 $1,000,000 The company collects 60% of credit sales in the same month and.
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5) Freighters Inc. has the following budgeted figures: Calculate cost of goods sold for the month of February. A) $40,250 B) $52,000 C) $33,750 D) $39,000 6) Freighters Inc. has the following budgeted figures: Calculate the ending merchandise inventory for the month of March. A) $38,750 B) $52,000 C) $33,750 D) $39,000 7) Gamma Corp. is preparing their budget for the 1st.
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11) To evaluate the performance of an investment center, a business needs key performance indicators that measure: A) manufacturing efficiency and product defect rate. B) operating income and efficient use of assets. C) customer satisfaction and market share. D) generation of sales revenues and control of operating expenses. 12) Which of the following is the.
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35) When a company is preparing a budgeted statement of cash flows, the payments to suppliers for purchases of inventory can be obtained from: A) the cash budget. B) the sales budget. C) budgeted cash collections. D) the budgeted balance sheet. 36) When a company is preparing a budgeted statement of cash flows, the payments.
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41) Which of the following is the key to choose the product type to be maximized, in making product mix decisions under constraining factors? 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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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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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 costs incurred is less than the standard direct materials cost. 3) A favorable variance of direct materials cost occurs when the actual direct materials.
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41) Sprint Company makes special equipment used in cell towers. Each unit sells for $400. Sprint produces and sells 12,500 units per year. They have provided the following income statement data: Traditional CostingContribution Margin Revenue$5,000,000Revenue$5,000,000 Cost of goods sold3,000,000Variable Expenses Gross Profit2,000,000Manufacturing1,000,000 Selling & admin expenses650,000Selling & admin400,000 Contribution Margin3,600,000 Fixed Expenses Manufacturing2,000,000 Selling & admin250,000 Operating income$1,350,000Operating income$1,350,000 A foreign.
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41) Cardec, a leading manufacturer of car spare parts, divided its manufacturing process into two departments: 1) Production 2) Packing. Estimated overhead costs for the Production and Packing department amounted to $25,000,000 and $20,000,000, respectively. The company produces two types of parts: Part-1 and Part-2. The total estimated labor hours.
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11) Kevin 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 Company prepared the following static budget for the month of.
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Learning Objective 24-6 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 overall company profits. 3) In many cases,.
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11) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. 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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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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11) The management of Zeta 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 Calculate the total direct labor variance of Zeta Company. A) $15,000 F B) $10,050 F C) $27,000 F D) $3,000.
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Learning Objective 25-4 1) Doro Fill Company fabricates inexpensive automobiles for sale to 3rd 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 Dora.
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Learning Objective 24-1 1) Direct material costs and direct labor costs cannot be easily traced to products. Therefore, they are allocated to products. 2) Manufacturing overhead costs, which are also known as indirect costs, cannot be cost-effectively traced to products. 3) The predetermined overhead allocation rate is an estimated overhead cost per unit.
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8) While preparing the budgeted income statement of a merchandiser, the amount of cost of goods sold can be taken from: A) the budgeted balance sheet. B) the budgeted cash flow statement. C) the inventory, purchases and COGS budget. D) the payment for cost of goods sold. 9) Uncle's Caps, a merchandiser, wants to prepare.
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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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11) Atlas Inc. uses a standard costing system. Atlas's year ending balances at December 31, 2015 are shown here: Calculate standard net operating income of the company for the year ended. A) $8,780 B) $6,290 C) $8,470 D) $7,530 12) Alpine Productions uses a standard costing system for recording transactions. Alpine reported the following data for.
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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 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 24-5 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) Managers of investment centers are responsible not only for generating profits, but also for ensuring efficient use of assets of the.
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