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1.Differential revenue is the amount of income that would result from the best available alternative proposed use ofcash. a.True b.False 2.Differential revenue is the amount of increase or decrease in revenue expected from a particular course of actionas compared with an alternative. a.True b.False 3.If the total unit cost of manufacturing Product Y is currently $36.
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130.  MZE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra-largequantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are$112,500 ($3 per unit at normal plant capacity) and variable costs and expenses are.
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130.  The Canine Company has total estimated factory overhead for the year of $2,400,000, divided into four activities:fabrication, $1,200,000; assembly, $480,000; setup, $400,000; and materials handling, $320,000. Caninemanufactures two products, Standard Crates and Deluxe Crates. The activity-base usage quantities for eachproduct by each activity are as follows: ? Fabrication ? Assembly ? Setup Materials handling Standard 20,000 dlh 60,000 dlh 120.
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66.What is the amount of income or loss from acceptance of the offer? a.$97,500 income b.$94,500 loss c. $37,500 income d. $37,500 loss Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptanceof the offer will not affect normal production or domestic sales prices. The following.
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106.What is the contribution margin per machine hour for Tales? a.$4 b.$7 c. $28 d. $35 107.What is the contribution per machine hour for Wales? a. $35 b. $28 c. $17 d. $7 108.Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin itcan earn per month? a. $49,000 b. $70,000 c. $56,000 d. $34,000 109.Assume.
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81.For higher levels of management, responsibility accounting reports a.are more detailed than for lower levels of management b.are more summarized than for lower levels of management c.contain about the same level of detail as reports for lower levels of management d.are rarely provided or reviewed 82.Most manufacturing plants are considered cost centers because they have.
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121.The profit margin for Chicks is a. 25% b. 22% c. 15% d. 27.5% 122.The investment turnover for Chicks is a. 1.3 b. 1.5 c. 1.0 d. 1.1 123.The residual income for Chicks is a. $165,000 b. $302,500 c. $137,500 d. $191,500 The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expensesof $3,600,000. The company has established a.
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161.What is the investment turnover? a. 16.0 b. 3.05 c. 0.33 d. 27.5 162.The balanced scorecard measures a.only financial information b.only nonfinancial information c.both financial and nonfinancial information d.external and internal information 163.Which of the following is nota commonly used approach to setting transfer prices? a.market price approach b.revenue price approach c.negotiated price approach d.cost price approach 164.Determining the transfer price as the price at.
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141.The Southern Division of Knucklehead Company has a rate of return on investment of 15% and an investmentturnover of 1.2. What is the profit margin? a. 1.5% b. 12.5% c. 0.67% d. 6.67% 142.The best measure of managerial efficiency in the use of investments in assets is a.rate of return on stockholders' equity b.investment turnover c.income from operations d.inventory.
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61.The DuPont formula uses financial information to measure the performance of a business. a.True b.False 62.The DuPont formula uses financial and nonfinancial information to measure the performance of a business. a.True b.False 63.The balanced scorecard is a set of financial and nonfinancial measures that reflect the performance of thebusiness. a.True b.False 64.The objective of transfer pricing is to encourage.
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116.The cost per unit for the production and sale of the company's product is a. $12.11 b. $12.88 c. $15.00 d. $13.50 117.The unit selling price for the company's product is a. $15.00 b. $13.82 c. $15.80 d. $14.76 118.The markup percentage on total cost for the company's product isa. 21.0% b. 22.7% c. 15.8% d. 24.0% 119.Contractors who sell to government agencies would.
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130.  Yakking Co. manufactures mobile cellular equipment and develops a price for the product by using the variable costconcept. Yakking incurs variable costs of $1,900,000 in the production of 100,000 units while fixed costs total$50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a.
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151.What is the rate of return on investment for Division A? a. 9.3% b. 99.3% c. 74.6% d. 4.6% 152.What is the profit margin for Division A? a. 11.1% b. 10.0% c. 9.0% d. 0.90% 153.What is the investment turnover for Division A? a. 0.93 b. 9.3 c. 1.07 d. 10.7 Division D of Saunders Company has sales of $350,000, cost of goods sold of.
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11.A cost that will notbe affected by later decisions is termed a sunk cost. a.True b.False 12.A cost that will notbe affected by later decisions is termed an opportunity cost. a.True b.False 13.The amount of income that would result from an alternative use of cash is called opportunity cost. a.True b.False 14.Since the costs of producing an intermediate product.
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176.  The budget for Department 6 of Cardinal Company for the current month ending March 31 is as follows: Materials $208,000 Factory wages 265,000 Supervisory salaries 67,800 Depreciation of plant and equipment 35,000 Power and light 22,500 Insurance and property taxes 15,500 Maintenance 9,700 During March, the costs incurred in Department 6 of Cardinal Company were materials, $204,000; factory wages,$285,000; supervisory salaries, $63,600; depreciation of.
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46.The amount of increase or decrease in revenue that is expected from a particular course of action as comparedwith an alternative is a.manufacturing margin b.contribution margin c.differential cost d.differential revenue 47.The amount of increase or decrease in cost that is expected from a particular course of action as compared with analternative is a.period cost b.product cost c.differential cost d.discretionary.
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31.Cost-plus methods determine the normal selling price by estimating a cost amount per unit and adding a markup. a.True b.False 32.A bottleneck begins when demand for the company’s product exceeds the ability to produce the product. a.True b.False 33.A bottleneck happens when a key piece of manufacturing machinery can produce 1,000 units per hour and demandfor.
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Match each definition that follows with the term (a-e) it defines. a.  Controllable revenues b.  Profit margin c.  Investment turnover d.  Rate of return on investments e.  Residual income 182.  Income from operations minus minimum acceptable income from operations 183.  Income from operations divided by invested assets 184.  Ratio of income from operations to sales 185.  Earned by profit.
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76.Should the special order be accepted? a.cannot determine from the data given b.yes c.no d.there would be no difference in accepting or rejecting the special order 77.Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard, Inc. at a price of $65 perboard. Mighty Safe is considering making its own boards. The costs to.
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56.What is the differential revenue of producing Product D? a.$6.75 per pound b.$22.25 per pound c.$18.00 per pound d.$6.25 per pound 57.Grace Co. can further process Product B to produce Product C. Product B is currently selling for $60 per poundand costs $38 per pound to produce. Product C would sell for $95 per pound.
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101.The income from operations for the Locomotive Division is a. $57,960 b. $14,790 c. $27,240 d. $47,280 102.The net income for Train Corporation is a. $83,180 b. $35,940 c. $48,390 d. $60,840 103.Responsibility accounting reports for profit centers will include a.costs only b.revenues only c.expenses and fixed assets d.revenues, expenses, net income or loss from operations 104.Some organizations use internal service departments to provide like.
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An activity base is used to charge service department expenses. Match each of the following activity baseswith the appropriate department (a-h). a.  Purchasing b.  Payroll accounting c.  Human resources d.  Maintenance e.  Information systems f.   Marketing g.  President’s Office h.  Transportation 182.  Number of work orders 183.  Number of employees 184.  Number of payroll checks 185.  Number of purchase requisitions 186.  Allocated equally.
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182.  Several items are missing from the following table of rate of return on investment and residual income. Determinethe missing items, identifying each item by the appropriate letter (a–l). Round percentage values to one decimalpoint ? Division InvestedAssets IncomefromOper. Rate ofReturnon Inv. Min.Rate ofReturn Min. Amt.of IncomefromOper. ResidualIncome East (a) (b) (c) 16% $128,000 $10,000 West $850,000 $153,000 (d) 12% (e) (f) North $825,000 (g) 20% (h) (i) $24,000 South (j) $129,000 24% (k) $60,000 (l) 183.  .
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130.  Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit 0.30 0.15 0.10 Contribution margin per unit $0.60 $0.45 $0.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 (a)          Using.
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130.  The Turtle Company has total estimated factory overhead for the year of $1,200,000, divided into four activities:fabrication, $600,000; assembly, $240,000; setup, $200,000; and materials handling, $160,000. Turtle manufacturestwo products, Boogie Boards and Surf Boards. The activity-base usage quantities for each product by each activityare as follows: Fabrication Assembly Setup Materials Handling Boogie Boards 10,000 dlh 30,000.
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130.  Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. Thecosts and expenses of producing 25,000 units of Product K are as follows: Variable costs: Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total $8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% rate.
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181.A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costsare apportioned on the basis of the number of reports. The payroll costs for the year were $231,000, and theaccounting costs for the year totaled $75,500. The departments and the number of payroll.
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130.  Hadley Company is considering the disposal of equipment that is no longer needed for operations. The equipmentoriginally cost $600,000 and accumulated depreciation to date totals $460,000. An offer has been received to leasethe machine for its remaining useful life for a total of $290,000, after which the equipment will.
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182.  Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expensesof $79,500, and invested assets of $750,000. Calculate: (a)  The rate of return on investment for Division G. (b)  The profit margin for Division G. (c)  The investment turnover for Division G. 183.  The sales, income from.
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176.  Piano Company’s costs were over budget by $47,000. The Piano Company is divided in two regions. The firstregion’s costs were over budget by $5,000. Determine the amount that the second region’s cost was over or underbudget. 177.  Xang Company’s costs were over budget by $46,000. The Xang Company is divided.
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111.How much service department cost would be allocated to the Macro Division? a. $405,000 b. $175,000 c. $130,000 d. $305,000 112.What will the income of the Micro Division be after all service department allocations? a. $305,000 b. $650,000 c. $345,000 d. $610,000 113.How much service department cost would be allocated to the Super Division?a. $350,000 b. $100,000 c. $125,000 d. $550,000 114.What will the.
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71.Which of the following would be most effective in a small owner/manager-operated business? a.profit centers b.centralization c.investment centers d.cost centers 72.Businesses that are separated into two or more manageable units in which managers have authority andresponsibility for operations are said to be a.decentralized b.consolidated c.diversified d.centralized 73.Which of the following is nota disadvantage of decentralized operation? a.competition among managers b.duplication of operations c.price.
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91.The costs of services charged to a profit center on the basis of its use of those services are a.operating expenses b.noncontrollable charges c.service department charges d.activity charges 92.Division A reported income from operations of $975,000 and total service department charges of $675,000. As aresult, a.net income was $300,000 b.the gross profit margin was $300,000 c.income from operations.
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131.In an investment center, the manager has responsibility and authority for making decisions that affect a.costs only b.revenues only c.assets only d.costs, revenues, and assets 132.The profit margin is the a.ratio of income from operations to sales b.ratio of income from operations to invested assets c.ratio of assets to liabilities d.ratio of sales to invested assets 133.The investment turnover is.
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21.When a segment of a company is showing a net loss, it is always best to discontinue the segment in order not tocontinue with losses. a.True b.False 22.Discontinuing a segment or product may notbe the best choice when the segment is contributing to fixed expenses. a.True b.False 23.Make-or-buy decisions should be made only with related parties. a.True b.False 24.Depending.
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182.  Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division forthe year ended December 31, are as follows: Division A Division B Revenues $190,000 $125,500 Operating expenses 112,500 92,750 Service department charges 29,500 12,625 Invested assets 225,000 99,000 (a)        Prepare condensed income statements for the past year for each division. (b)        Using the DuPont formula, determine the.
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130.  The Eastwood Cake Factory sells chocolate cakes, birthday decorated cakes, and specialty cakes. The factory isexperiencing a bottleneck and is trying to determine which cake is more profitable. Even though the company mayhave to limit the orders that it takes, Eastwood is concerned about customer service and satisfaction. ? Chocolate Cake ? Birthday.
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130.  Snipe Company has been purchasing a component, Part Q for $19.20 per unit. Snipe is currently operating at 70%of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing aunit of Part Q is estimated as follows: Direct materials $11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory.
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182.  Paduka Industries has several divisions. The Eastern Division has $350,000 of invested assets, income fromoperations of $200,000, and residual income of $151,000.  Determine the minimum acceptable rate of return ondivisional assets. 183.  The Bottlebrush Company has income from operations of $60,000, invested assets of $345,000, and sales of$786,000. Use the.
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Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither ofdecentralization. a.  Advantage of decentralization b.  Disadvantage of decentralization c.  Neither an advantage or disadvantage 182.  Responsibilities delegated to unit managers 183.  Internal price wars 184.  Operational issues are made by managers closest to the operations 185.  Separate office staff 186. .
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96.If the company meets the new target cost number, how much will it have to cut costs per unit, if any? a.$1 b.$3 c.$2 d.$0 97.Using the variable cost concept, determine the markup per unit for 30,000 units using the following data: Variable cost per unit$15.00 Total fixed costs$90,000 Desired profita. $10$150,000 b. $15 c. $8 d. $23 The Swan Company produces.
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182.  The following financial information was summarized from the accounting records of Buddy Corporation for thecurrent year ended December 31: ? BeagleDivision DalmatianDivision CorporateTotal Cost of goods sold $47,200 $30,270 ? Direct operating expenses 27,000 20,400 ? Net sales 99,000 87,000 ? Interest expense ? ? $ 2,040 General overhead ? ? 18,160 Income tax ? ? 4,700 Calculate: (a)  The gross profit for the Dalmatian Division. (b)  The income from operations from the Dalmatian Division. (c)  The gross profit for the.
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86.What cost concept used in applying the cost-plus approach to product pricing covers selling expenses,administrative expenses, and desired profit in the markup? a.total cost concept b.product cost concept c.variable cost concept d.sunk cost concept 87.What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturingcosts in the cost amount to.
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182.  Ralston Company has income from operations of $75,000, invested assets of $360,000, and sales of $790,000. Use the DuPont formula to calculate the rate of return on investment, and show (a) the profit margin, (b) theinvestment turnover, and (c) rate of return on investment. Round the profit margin percentage to.
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182.  The sales, income from operations, and invested assets for each division of Grosbeak Company are as follows: Sales Income fromOperations InvestedAssets Division E $5,000,000 $550,000 $2,400,000 Division F 4,800,000 860,000 2,500,000 Division G 7,000,000 860,000 2,900,000 (a)        Using the DuPont formula, determine the profit margin, investment turnover,and rate of return on investment for each division. Round profit marginpercentage to two decimal places, investment turnover to.
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