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Study Resources (Accounting)

20.1   Evaluate relevant data and decide on the economic order quantity (EOQ). 1) Ordering costs consist of the costs of goods acquired from suppliers including freight and transportation costs. 2) Purchasing costs consist of the costs of preparing and issuing a purchase order. 3) Carrying costs arise when a customer demands a unit.
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9) How much will external failure costs change assuming 400,000 units of materials are received and that the product failures with customers are cut in half with the new receiving method? A) $10,000 increase B) $200,000 decrease C) $320,000 decrease D) $400,000 decrease E) $500,000 decrease Use the information below to answer the following question(s). Imperial Products.
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  Use the information below to answer the following question(s). Regal Products has a budget of $900,000 in the current year for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and.
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16) Complete Microfilm Products manufactures microfilm cameras. For October there were no beginning inventories of direct materials, and no beginning or ending work in process. Only one indirect manufacturing cost category is currently in use, "Conversion Costs." Conversion costs - October $90,400 Direct materials purchased - October $250,400 Units produced - October 80,000 units Units sold -.
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11) Which of the following statements related to the theory of constraints is/are true? A) Sales less direct materials costs equals throughput contribution. B) Throughput contribution equals sales plus direct materials, and the theory of constraints focuses on revenue and cost management when an organization is faced with bottlenecks. C) Throughput contribution equals.
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19.2   Analyze quality-control problems using three methods. 1) A cause-and-effect diagram is used to help identify potential causes of failure or defects. Diff: 2      Type: TF 2) A control chart identifies potential causes of failures or defects. Diff: 2      Type: TF 3) When using a control chart, the observations outside the upper and lower.
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21) Palmateer Industries makes an electronic component in two departments, Machining and Assembly. The capacity per month is 30,000 units in the Machining Department and 20,000 in the Assembly Department. The only variable cost of the product is the direct material of $100 per unit. All direct material cost is.
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20.3   Analyze the relevant benefits and costs of JIT alternatives. 1) Just-in-Time (JIT) Production is also called "lean production." 2) Just-in-Time (JIT) Production is a system in which each component on a production line is produced immediately as needed by the next step in the production line. 3) The lack of buffer inventory.
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31) An accounting measure of income divided by an accounting measure of investment is called A) accrual accounting rate of return. B) bailout payback. C) book-value method. D) rate of return on assets method. E) net previous value. 32) A rental company replaces its heavy drilling machine every four years (no salvage value). It is contemplating.
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50) The two basic aspects of quality are quality of design and conformance quality. Define and give an example of each. 51) The Door Company manufactures doors. Classify each of the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs. a.Retesting of reworked products b.Downtime due to.
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19.5   Evaluate the strengths and weaknesses of the theory of constraints (TOC) and activity-based costing (ABC) for managing bottlenecks. 1) The theory of constraints describes methods of reducing bottlenecks by identifying and reducing fixed costs previously viewed as variable. Diff: 2      Type: TF 2) The theory of constraints analyzes fixed costs and considers.
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19.4   Evaluate methods using time as a competitive tool. 1) The operational measures of time reveal how quickly customers respond to a company's new products. Diff: 2      Type: TF 2) Customer response time is the time between when a company first markets a new product, and when sales exceed supplies on hand (test.
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31) Disc Company sells 400 discs per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 900 units. What is the reorder point? A) 950 units B) 1,200 units C) 3,500 units D) 4,500 units E) 5,600 units 32) Owen-King Company sells optical equipment. Lens Company manufactures special glass lens. Owen-King Company orders.
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44) Fisher Ltd. is considering the purchase of new equipment. Details of the investment follow: a.Calculate payback. b.Calculate accrual accounting rate of return based on the initial investment. c.Calculate the net present value. a. b. c. 45) Hiroshima Inc. is evaluating 3 investment alternatives. Each alternative requires a cash outflow of $176,000 and is to.
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26) Cyclone Electronics manufactures automobile radios. All processing is initiated when an order is received. For March there were no beginning inventories. Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct Materials are purchased under a just-in-time system. Backflush costing is used with a finished goods trigger.
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31) Which of the following results of net present value analyses is the least acceptable? A) $(15,000) B) $(1,000) C) $12,000 D) $0 E) $20,000 Use the information below to answer the following question(s). Wet Water Company drills residential and commercial wells. The company is in the process of analyzing the purchase of a new drill. Information.
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21.1   Apply the concept of the time value of money to capital budgeting decisions. 1) In capital budgeting decisions, revenues and costs are analyzed over the short-run. 2) Accrual accounting measures income on a year-to-year basis. 3) Cost systems with an exclusive period-by-period focus are more likely to identify project costs over multiple.
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11) Three tools used to detect quality problems include control charts, Pareto charts, and cause and effect diagrams. Briefly explain each of these tools. 12) Baby Care Products has just completed a very successful program of improving quality in its manufacturing operations. The next step is to improve the operations.
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11) Shrinkage is measured by comparing the cost of inventory on the books to the cost of inventory physically counted. 12) All inventory costs are available in financial accounting systems. 13) To determine the Economic Order Quantity, the relevant ordering costs are minimized and the relevant carrying costs are maximized. 14) The.
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58) Harry's Picture manufactures various picture frames. Each new employee takes 5 hours to make the first picture frame and 4 hours to make the second. The manufacturing overhead charge per hour is $20. Required: a.What is the learning-curve percentage, assuming the cumulative average method? b.What is the time needed to build 8.
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72) Acme Industries is currently experiencing problems with its inventory of anvils. Its manager, Willy Coy currently orders the anvils in batches of 10,000. Four orders are placed during the year to meet the estimated sales demand of 40,000 units. Each order costs $20 and each unit costs $2 to.
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29) Falcon Industries manufactures customized industrial compounds. All processing is initiated when an order is received. For April there were no beginning inventories. Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct Materials are purchased under a just-in-time system. Backflush costing is used with a finished goods.
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21.3   Apply the concept of relevance to DCF methods of capital budgeting. 1) Initial machine investment costs include cash outflows for installation and transportation. 2) Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds. 3) In determining whether to keep a machine or replace.
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20.4   Differentiate a materials requirements planning (MRP) strategy from an enterprise resource planning (ERP) strategy of supply-chain management. 1) The term, supply-chain, describes the flow of goods, services and information from cradle to grave, regardless of whether those activities occur in the same organization or in other organizations. 2) An Enterprise Resource.
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21.2   Evaluate discounted cash flow (DCF) and non-DCF methods to calculate rate of return (ROR). 1) Internal rate-of-return is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time. 2) The primary advantage.
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40) Next Service Centre is considering purchasing a new computer network for $82,000. It will require additional working capital of $13,000. Its anticipated eight-year life will generate additional client revenue of $33,000 annually with operating costs, excludingdepreciation, of $15,000. At the end of eight years, it will have a salvage.
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41) The economic-order quantity decision model A) calculates the amount of inventory that may be purchased with the monetary constraint. B) determines the minimum amount of inventory to purchase. C) determines the maximum amount of inventory to keep on hand. D) determines the optimal amount of inventory to order. E) calculates the numbers of employees.
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33) Brix, Inc. prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased in.
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21) In selecting capital projects, organizations choose A) the alternative that matches the RRR. B) the alternative that has revenues that exceed its costs. C) the alternative that has the highest revenues. D) the alternative that has the longest time horizon, but also exceeds the RRR. E) the alternative that provides benefits that exceed predicted.
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11) All of the following are potential financial benefits of just-in-time EXCEPT A) lower investments in inventories. B) higher investments in "efficient" storage space. C) reducing the risk of rework. D) reducing the handling costs of inventories. E) reducing manufacturing lead time. 12) Which of the following would NOT be typical when a JIT production system.
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21) The simplest version of the economic-order-quantity decision model assumes all of the following EXCEPT A) the same fixed quantity is ordered at each reorder point. B) demand ordering costs and carrying costs are certain. C) purchase order lead time is certain. D) no stockouts occur. E) purchasing costs per unit depend on the quantity.
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20.2   Resolve conflicts that can arise from the results of EOQ and performance models. 1) Goal-congruence problems may occur when an inconsistency evolves between the decision model used and the model used to evaluate the performance of the person implementing the decision. 2) If annual carrying costs are excluded when evaluating.
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24) Dutch Oven is a bakery company. All processing is in batches of 6 dozen. For March, there were no beginning inventories. Ending direct materials totalled $1,500. Conversion Costs and Direct Materials are the only baking cost accounts. Direct Materials are purchased under a just-in-time system. The company uses backflush.
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41) Lion Enterprises Inc. is evaluating 3 investment alternatives. Each alternative requires a cash outflow of $102,000. The cash inflows are summarized below (ignore taxes): Project A Project B Project C Year 1 $55,000 $30,000 $0 Year 2 $40,000 $30,000 $0 Year 3 $20,000 $30,000 $45,000 Year 4 $5,000 $30,000 $55,000 Year 5 $2,000 $30,000 $65,000 The company has a required rate of return of 9%. Required: 42) Briefly describe the processes in the Capital Budgeting.
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11) Projects with shorter paybacks always generate more cash flows. 12) If the internal rate of return is less than the hurdle rate, the net present value of the project will be negative. 13) Which of the following is not one of the methods that aid management in analyzing the expected results.
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18) The manufacturing manager of New Technology Company is concerned about the company's newest plant. When the plant began operations three years ago it had the best of everything. It had modern equipment, well-trained employees, engineered work and assembly stations and a controlled environment. During the first two years the.
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