QUESTION 1 |
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Managerial accounting must conform to which of the following standards? |
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Generally Accepted Accounting Principles (GAAP) |
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International Financial Reporting Standards (IFRS) |
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Internal Revenue Service tax code |
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None of the above |
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2.5 points |
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QUESTION 2 |
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Which of the following mathematical expressions best describes a mixed cost? |
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Y = bX |
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Y = a |
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Y = a + bX |
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Y = ai |
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2.5 points |
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QUESTION 3 |
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The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following? |
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An increase in fixed cost |
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An increase in general and administrative expenses. |
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An increase in direct labor hours. |
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A decrease in contribution margin. |
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2.5 points |
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QUESTION 4 |
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An increase in volume within the relevant range will cause: |
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Unit fixed costs to increase. |
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Unit variable costs to decrease. |
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Total fixed costs to stay the same. |
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Total variable costs to decrease. |
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2.5 points |
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QUESTION 5 |
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Which of the following is one of the three major components of product costs? |
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Research and development expenses |
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Manufacturing overhead |
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Marketing costs related to specific products |
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Selling, general and administrative expenses |
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2.5 points |
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QUESTION 6 |
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Which of the following would be classified as a fixed selling and administrative cost? |
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Sales Commissions |
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Depreciation on office equipment |
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Depreciation on factory equipment |
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Wages of production supervisor |
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2.5 points |
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QUESTION 7 |
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In the following equation for total cost, Y = a + bX, “a” represents which of the following? |
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Total Cost |
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Fixed Cost |
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Variable Cost |
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Volume |
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2.5 points |
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QUESTION 8 |
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Managerial accounting is primarily focused on: |
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Providing information for internal and external users |
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Providing general purpose financial statements |
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Providing special-purpose information and reports |
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Following generally accepted accounting principles |
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2.5 points |
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QUESTION 9 |
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Examples of activity cost drivers include all of the following except: |
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Inspecting incoming raw materials |
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Machine time spent working on a product |
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Deciding how to arrange raw materials inventory within the warehouse |
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Receiving (loading) raw materials into the warehouse |
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2.5 points |
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QUESTION 10 |
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The following information pertains to Marvolo, Inc.: |
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Selling price per unit |
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$100 |
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Variable costs per unit |
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$75 |
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Total fixed costs |
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$425,000 |
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Tax rate |
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40% |
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The sales volume required to obtain a target after-tax profit of $108,000 is: |
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6,000 units |
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8,572 units |
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24,200 units |
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20,000 units |
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2.5 points |
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QUESTION 11 |
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The scatter diagram method of cost estimation: |
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Uses only the high and low data points |
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Is superior to other methods in its ability to distinguish between discretionary and committed fixed costs |
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Requires the use of judgment |
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Provides a measure of the goodness of fit |
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2.5 points |
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QUESTION 12 |
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What is the purpose for using predetermined overhead rates? |
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Delays in product costing can be avoided |
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Variation in cost assignment due to seasonality can be prevented |
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Variation in cost assignment due to short-term variations in volume can be prevented |
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Use of predetermined overhead rates serves all the above purposes |
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2.5 points |
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QUESTION 13 |
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Which of the following aspects of manufacturing must be understood in order to implement activity based costing in a production setting? |
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The production process |
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The activities that occur in the production process must be known |
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The cost drivers that generate activities within the production process |
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All of the above |
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2.5 points |
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QUESTION 14 |
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Determine the unit break-even point, assuming fixed costs are $60,000 per period, variable costs are $16.00 per unit, and the sales price is $25.00 per unit. |
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5,000 |
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6,667 |
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15,000 |
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12,000 |
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2.5 points |
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QUESTION 15 |
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Total contribution margin is calculated by subtracting: |
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Cost of goods sold from total revenues |
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Fixed costs from total revenues |
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Total manufacturing costs from total revenues |
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Total variable costs from total revenues |
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2.5 points |
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QUESTION 16 |
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Wesley’s income statement is as follows: |
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Sales (10,000 units) |
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$150,000 |
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Less variable costs |
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-48,000 |
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Contribution margin |
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$102,000 |
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Less fixed costs |
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-24,000 |
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Net income |
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$78,000 |
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If sales increase by 1,000 units, profits will: |
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Increase by $12,000 |
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Increase by $10,200 |
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Increase by $4,800 |
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Increase by $8,000 |
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2.5 points |
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QUESTION 17 |
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The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following? |
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A shift in costs from variable costs to fixed costs. |
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A shift in costs from fixed costs to variable costs. |
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An increase in total manufacturing costs. |
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An increase in employment |
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2.5 points |
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QUESTION 18 |
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Financial accounting is primarily focused on: |
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Providing the Internal Revenue Service with information to determine the amount of taxes owed |
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Providing investors with useful information for valuing securities |
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Providing information for internal users |
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None of the above |
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2.5 points |
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QUESTION 19 |
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When finished goods are sold, there is an increase in which of the following accounts? |
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Cost of Goods Sold |
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Cost of Goods Manufactured |
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Finished Goods Inventory |
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Work-in-Process |
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2.5 points |
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QUESTION 20 |
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As volume increases, which of the following statements is not correct? |
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Variable cost per unit will remain the same. |
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Total fixed will remain the same. |
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Average cost per unit will increase. |
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Total variable costs will increase. |
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2.5 points |
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QUESTION 21 |
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Peoria Corporation reported the following on their contribution format income statement: |
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Sales (12,000 units) |
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$350,000 |
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Less: variable expenses |
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200,000 |
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Contribution margin |
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$150,000 |
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Less: fixed expenses |
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125,000 |
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Net operating income |
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$25,000 |
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What is the contribution margin ratio? |
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38.57% |
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42.86% |
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57.14% |
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4.30% |
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2.5 points |
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QUESTION 22 |
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Chattanooga, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: |
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Maintenance |
$800,000 |
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Inspection 400,000 |
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The following data have been assembled for use in developing a bid for a proposed job: |
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Direct materials |
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$6,000 |
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Direct labor |
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$16,000 |
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Machine-hours |
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400 |
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Number of inspections |
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4 |
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Direct labor-hours |
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800 |
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The total estimate for machine-hours for all jobs during the year is 25,000, and for inspections is 800. These are the cost drivers for maintenance and inspection costs, respectively |
Using the appropriate cost drivers, the total cost of the potential job is: |
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$22,000 |
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$62,800 |
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$33,600 |
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$36,800 |
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2.5 points |
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QUESTION 23 |
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The following information pertains to Oliwander’s 2014 operations: |
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Selling price per unit |
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$50 |
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Variable costs per unit |
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$20 |
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Total fixed costs |
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$110,000 |
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Oliwander’s break-even point in units is: |
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2,000 units |
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3,333 units |
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3,667 units |
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60,000 units |
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2.5 points |
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QUESTION 24 |
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The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows: |
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Direct materials |
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$4 |
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Direct labor |
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16 |
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Variable manufacturing overhead |
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12 |
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Average fixed manufacturing overhead |
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12 |
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Total |
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$44 |
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The Quick Assembly Company has offered to sell Chateau 4,000 telephones for $31 per unit. If Chateau accepts the offer, $20,000 of fixed overhead will be eliminated. |
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Chateau should: |
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Make the telephones; the savings is $4,000 |
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Buy the telephones; the savings is $35,000 |
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Buy the telephones; the savings is $24,000 |
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Make the telephones; the savings is $24,000 |
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2.5 points |
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QUESTION 25 |
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Direct labor used in manufacturing digital cameras would best be classified as what type of cost? |
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Variable cost |
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Fixed cost |
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Mixed cost |
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Step cost |
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2.5 points |
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QUESTION 26 |
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If a trucking company were operating at capacity, but had an opportunity to fill a one-time high volume special order, which of the following ramifications could occur? |
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Lost revenues from regular customers |
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Long-term revenue loss from customers who change service to competitors |
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Questions from regular customers about commitment to service |
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eAll of the above |
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2.5 points |
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QUESTION 27 |
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From a managerial accounting standpoint, which of the following areas of the Sarbanes-Oxley Act of 2002 (SOX) are most pertinent? |
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External auditing standards |
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Review of internal controls |
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Codes of ethics for financial officers |
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Penalties for fraud |
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2.5 points |
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QUESTION 28 |
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Future costs that differ among competing alternatives are: |
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Absorption costs |
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Relevant costs |
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Replacement costs |
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Variable overhead costs |
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2.5 points |
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QUESTION 29 |
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According to Michael Porter, which of the following is an example of cost leadership as a business strategy? |
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A regional beer brewer that caters to local tastes. |
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A glass manufacturer utilizing research and development to identify new applications for glass and ceramics. |
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An online bookseller utilizing efficient scale facilities and overhead cost control p.9. |
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A manufacturer focused on designing and building corporate jet aircraft. |
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2.5 points |
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QUESTION 30 |
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Activity-based costing’s primary benefit is that it provides: |
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Absolutely accurate product costing information |
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Data for external financial reporting purposes |
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More precise cost data for internal decision-making purposes |
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All of the above |
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2.5 points |
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QUESTION 31 |
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The most appropriate cost driver for the activity of cleaning (bussing) tables in a restaurant is: |
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The number of cooks in the kitchen |
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The number of tables cleaned |
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The number of employees assigned to the job of cleaning tables |
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The amount of money deposited to the bank each day |
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2.5 points |
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QUESTION 32 |
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Cari German uses gas to heat her home. She has accumulated the following information regarding her monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month. |
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Month |
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Heating Degree-Days |
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Gas Bill |
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February |
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1,900 |
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$254 |
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April |
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600 |
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$101 |
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What will be the increase in Cari’s monthly gas bill per heating degree-day using the high-low method? |
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$0.33 |
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$0.12 |
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$46.00 |
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$153.00 |
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2.5 points |
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QUESTION 33 |
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All of the following are assumptions used in cost-volume-profit analysis, except: |
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All costs are classified as fixed or variable |
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The total cost function is linear |
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The total revenue function is linear |
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All of the above are assumptions used in cost-volume-profit analysis |
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2.5 points |
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QUESTION 34 |
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Gross margin is calculated by subtracting: |
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Total variable costs from total revenues |
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Total manufacturing overhead costs from total revenues |
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Fixed costs from total revenues |
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Cost of goods sold from total revenues |
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2.5 points |
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QUESTION 35 |
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The total contribution margin at the break-even point: |
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Equals total fixed costs |
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Is zero |
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Is greater than total variable costs |
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Plus total fixed costs equal total revenues |
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2.5 points |
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QUESTION 36 |
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Partially completed goods that are in the process of being converted into a finish product are defined as: |
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Work-in-process inventories |
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Conversion inventories |
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Raw materials inventories |
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Operational inventories |
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2.5 points |
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QUESTION 37 |
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Which of the following is not included in work-in-process inventory? |
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Direct materials costs |
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Applied manufacturing overhead |
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Direct manufacturing labor costs |
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Sales commissions |
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2.5 points |
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QUESTION 38 |
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Which of the following procedures best describes activity-based costing? |
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All overhead costs are recorded as expenses as incurred. |
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Overhead costs are assigned directly to products. |
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Overhead costs are assigned to activities; then costs are assigned to products. |
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Overhead costs are assigned to departments; then costs are assigned to products. |
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2.5 points |
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QUESTION 39 |
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The contribution margin ratio is: |
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The difference between price and variable cost per unit |
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The percentage difference between sales and cost of goods sold |
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The portion (or percent) of revenues available for covering fixed costs and providing a profit |
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The percentage difference between total revenues and total costs |
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2.5 points |
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QUESTION 40 |
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Although adding more activity cost pools to an activity-based costing system may improve the precision of product costing, this increase in precision must be judged against: |
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The cost of the product |
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The price of the product |
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The cost of developing and maintaining the additional cost pools |
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All of the above |
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