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charter oak acc102 final exam




Question;Question 1;1.;1.;1. Accepting;a special order is profitable whenever the revenue from the special order;exceeds;A) The;average unit cost of production multiplied by the number of units in the order.;B) The;incremental cost of producing the order.;C) The;materials and direct labor costs of producing the order.;D) The;fixed manufacturing costs for the period.;Answer;A;B;C;D;4 points;Question 2;1.;2. Which;of the following would be an example of a sunk cost?;A) The;cost of a new oil burner that replaced a destroyed one.;B) The cost of an old inefficient oil burner;that will be replaced by a more modern and efficient one.;C) Depreciation;expense.;D) Lost;revenue from a bad debt.;Answer;A;B;C;D;4 points;Question 3;1.;3. Hardware;Hut manufactured 100 personal computers at a cost of $55,000. It;can sell them as is for $90,000 or install hard disks in them and;sell them for $130,000. The;$55,000 original manufacturing cost is;A) An;out-of-pocket cost because it has already been paid.;B) A;sunk cost because it is not relevant to the decision.;C) An;incremental cost because it is relevant to the decision.;D) A;fixed cost because it will remain the same no matter which action is;Answer;A;B;C;D;4 points;Question 4;1.;Use the following to answer question 4;Louis Industries normally produces and;sells 5,000 keyboards for personal computers each month. Variable manufacturing;costs amount to $24 per unit, and fixed costs are $144,000 per month. The;regular sales price of the keyboards is $85 per unit. Louis has been approached;by a foreign company that wants to purchase an additional 1,000 keyboards per;month at a reduced price. Filling this special order would not affect Louis's;regular sales volume or fixed manufacturing costs.;4. Refer to the information above.;Assume that the price offered by the foreign company is $42 per unit. Accepting;the special order will cause Louis's operating income to;A) Increase by $18,000.;B) Decrease by $2,000.;C) Decrease by $33,000.;D) Decrease by $35,000.;Answer;A;B;C;D;4 points;Question 5;1.;5.;An example of a revenue center is;A) The accounting department in a manufacturing;company;B) The maintenance department of a university;C) The furniture department of a retail department store;D) The human resources department in a hospital;Answer;A;B;C;D;4 points;Question 6;1.;Use the following to answer questions;6-7;Tap's Department Store prepares monthly;income statements by sales departments. These income statements are organized;to show contribution margin, performance margin, and responsibility margin for;each sales department, as well as operating income for the store as a whole.;6. Refer to the information above. The monthly;salaries of the employees of the store's Accounting Department should be;classified as a;A) Common fixed cost.;B) Traceable fixed cost.;C) Committed fixed cost.;D) Controllable fixed cost.;Answer;A;B;C;D;4 points;Question 7;1.;Use the following to answer questions;6-7;Tap's Department Store prepares monthly;income statements by sales departments. These income statements are organized;to show contribution margin, performance margin, and responsibility margin for;each sales department, as well as operating income for the store as a whole.;7. Refer to the information above. Depreciation of;the fixtures and equipment used exclusively in a particular sales department;should be classified as a;A) Common fixed cost.;B) Variable cost.;C) Controllable fixed cost.;D) Committed fixed cost.;Answer;A;B;C;D;4 points;Question 8;1.;8.;Flexible budgeting may be used for profit centers by applying;cost-volume-profit relationships to the actual level of;A) Units produced.;B) Resources consumed.;C) Costs incurred.;D) Sales achieved.;Answer;A;B;C;D;4 points;Question 9;1.;9.;Skyways, Inc. uses a flexible budget. Skyways produced 15,000 units in May;incurring direct materials cost of $19,200. Its master budget for the year;projected direct materials cost of $360,000, at a production volume of 288,000;units. A flexible budget for May should reflect direct materials cost of;A) $19,200.;B) $18,750.;C) $21,000.;D) $18,150.;Answer;A;B;C;D;4 points;Question 10;1.;10.;If the standard quantity of materials is 79,200 units @ $0.15 per unit and the;actual quantity is 90,000 units @ $0.12 per unit then the total materials cost;variance is;A) 2,700 Favorable;B) 1,620 Unfavorable;C) 1,080 Favorable;D) 2,700 Unfavorable;Answer;A;B;C;D;4 points;Question 11;1.;11.;Excessive overtime hours worked by direct labor workers often results in;A) An unfavorable labor rate variance.;B) A favorable labor rate variance.;C) A favorable materials price variance.;D) An unfavorable materials price variance.;Answer;A;B;C;D;4 points;Question 12;1.;12.;A labor efficiency (usage) variance is most likely to occur if;A) Employees are paid at an overtime wage rate.;B) Employees are inefficient and units must be reworked.;C) Labor cost per unit exceeds materials costs per;unit.;D) Employee turnover rates are low.;Answer;A;B;C;D;4 points;Question 13;1.;13.;Residual income can be defined as;A) That income left over after dividends are paid;out;B) Operating earnings minus return on investment;C) Operating earnings minus a minimum acceptable;return;D) Operating earnings minus a minimum acceptable return times invested;capital;Answer;A;B;C;D;4 points;Question 14;1.;14.;Lacy Stores has sales of $1,640,000, cost of sales of;$680,000, and operating expenses of $304,000. What;is Lacy's return on sales?;A) 58.5%.;B) 41.5%.;C) 60%.;D) 40%.;Answer;A;B;C;D;4 points;Question 15;1.;Use the following to answer questions;15-17;The;following information regarding Winn, Inc. is available;Sales.;$1,600,000;Cost;of goods sold.;700,000;Operating;expenses.;500,000;Operating;income.;400,000;Average;invested capital.;2,500,000;15. Refer to the information above. What is the;return on investment for Winn, Inc?;A) 64%.;B) 25%.;C) 16%.;D) 8%.;Answer;A;B;C;D;4 points;Question 16;1.;Use the following to answer questions;15-17;The;following information regarding Winn, Inc. is available;Sales.;$1,600,000;Cost;of goods sold.;700,000;Operating;expenses.;500,000;Operating;income.;400,000;Average;invested capital.;2,500,000;16. Refer to the information above. What is the;return on sales for Winn, Inc.?;A) 16%.;B) 25%.;C) 48%.;D) 60%.;Answer;A;B;C;D;4 points;Question 17;1.;Use the following to answer questions;15-17;The;following information regarding Winn, Inc. is available;Sales.;$1,600,000;Cost;of goods sold.;700,000;Operating;expenses.;500,000;Operating;income.;400,000;Average;invested capital.;2,500,000;17. Refer to the information above. What is the;capital turnover for Winn, Inc.?;A) 32%.;B) 48%.;C) 64%.;D) 84%.;Answer;A;B;C;D;4 points;Question 18;1.;18. Calculate the residual income assuming the;following information;Operating;earnings.;$300,000;Minimum;acceptable return.;15%;Invested;capital.;1,500,000;A) $225,000.;B) $100,000.;C);$75,000.;D) $45,000.;Answer;A;B;C;D;4 points;Question 19;1.;19.;When using the net present value method for evaluating an investment, an;increase in the required rate of return will;A) Make it more difficult to accept the investment.;B) Make it less difficult to accept the investment.;C) Not effect the decision if the length of the;investment's benefits remain constant.;D) Not be a consideration because it is not used in;the net present value method.;Answer;A;B;C;D;4 points;Question 20;1.;20.;Hempstead Corporation is considering the purchase of new equipment costing;initially $74,000. The equipment has an estimated life of 6 years with no;salvage value. Straight-line depreciation is to be used. Net annual after tax;cash flow is estimated to be $24,000 for 6 years. The payback period is;A) 1.2300 years.;B) 3.0833 years.;C) 5.0799 years.;D) 6.0000 years.;Answer;A;B;C;D;4 points;Question 21;1.;21.;An investment cost $60,000 with no salvage value, a 5 year useful life and had;an expected annual increase in net income of $5,000. Straight line depreciation;is used. What is the expected rate of return on this investment?;A) 2.8%;B) 20%;C) 8.3%;D) 10.4%;Answer;A;B;C;D;4 points;Question 22;1.;22.;A machine cost $44,000 and had a useful life of 4 years and a residual value of;$8,000. What is the net present value of the machine if the annual cash flow is;$16,000 and the company uses a discount rate of 10%. The annuity table shows;the present value of $1 at 10% for 4 years is 0.683. The present value of an;ordinary annuity of $1 discounted at 10% for 4 years is 3.170.;A) $56,184;B) $50,720;C) $12,184;D) ($7,712);Answer;A;B;C;D;4 points;Question 23;1.;23. An unfavorable overhead volume;variance results from;Answer;A) An unfavorable overhead spending variance;B) Poor decisions made by the production manager.;C) Producing at levels of output which exceed;normal output levels;D) Producing at levels of output which fall short;of normal output levels;4 points;Question 24;1.;24. Standard costs;Answer;A) Are the same for all companies in a given;industry;B) Are the costs that should be incurred to;produce a product under normal conditions.;C) May be used in job order cost systems but not;in process cost accounting systems;D) Should be revised upward when actual costs are;higher then expected because of waste and inefficiency.;4 points;Question 25;1.;25. If the actual amount of direct;materials used in production was less than the standard amount allowed for;units produced, there was;Answer;A) A favorable materials price variance;B) A unfavorable total materials variance;C) An unfavorable materials quantity variance;D) A favorable materials quantity variance;4 points;Question 26;1.;26. The term "out of pocket;cost" is often used to describe costs which have not yet been incurred and;which may vary among alternative courses of action>;Answer;True;False;2 points;Question 27;1.;27. In determining whether to scrap or;to rebuild defective units of product, the cost already incurred in producing;the defective units is not relevant.;Answer;True;False;2 points;Question 28;1.;28. Products resulting from a shared;manufacturing process are referred to as complimentary products.;Answer;True;False;2 points;Question 29;1.;29. Incremental analysis rarely;requires the decision maker to exercise judgment.;Answer;True;False;2 points;Question 30;1.;30. Opportunity costs refer to benefits;actually obtained by deciding to pursue alternative courses of action.;Answer;True;False;2 points;Question 31;1.;31. Profit centers generate revenues;and expenses.;Answer;True;False;2 points;Question 32;1.;32. Responsibility margin is useful in;evaluating the consequences of short-run marketing strategies, while;contribution margin is more useful in evaluating long - term profitability.;Answer;True;False;2 points;Question 33;1.;33. The responsibility margin is the;contribution margin less common fixed costs.;Answer;True;False;2 points;Question 34;1.;34. In an income statement segmented by;sales departments, salaries to departmental salespeople would be an example of;common" fixed cost.;Answer;True;False;2 points;Question 35;1.;35. Return on assets and residual;income are two commonly used measures of an investment cost center's;performance.;Answer;True;False;2 points;Question 36;1.;36. The typical starting point of a master;budget would be to prepare a budgeted balance sheet.;Answer;True;False;2 points;Question 37;1.;37. A debt service budget;summarizes cash payments required for interest, and includes those required to;pay down the principal.;Answer;True;False;2 points;Question 38;1.;38. Flexible budgeting may be viewed as;combining the concepts of budgeting with cost-volume-profit analysis.;Answer;True;False;2 points;Question 39;1.;39. A favorable variance occurs when;actual costs are less than standard costs.;Answer;True;False;2 points;Question 40;1.;40. A standard cost is the per unit;cost actually incurred under normal operating conditions.;Answer;True;False;2 points;Question 41;1.;41. Return on investment (ROI) tells us;how much earnings can be expected for the average invested dollar.;Answer;True;False;2 points;Question 42;1.;42. The balance scorecard approach;attempts to measure whether an organization is meeting its strategic goals.;Answer;True;False;2 points;Question 43;1.;43. Operating earnings rather than net;income is used to compute return on sales.;Answer;True;False;2 points;Question 44;1.;44. The value chain starts with the;supplier and ends with the consumer.;Answer;True;False;2 points;Question 45;1.;45. Capital investment refers to large;expenditures to purchase plant assets. develop new products, or sell more;company stock.;Answer;True;False;2 points;Question 46;1.;46. The present value of a future cash;flow is the amount you would pay today for the right to receive the future;amount.;Answer;True;False;2 points;Question 47;1.;47. In selecting among alternative;investment opportunities, the investment with the shortest payback period is;the most desirable alternative?;Answer;True;False;2 points;Question 48;1.;48. When straight line depreciation is;used, the average carrying value of an asset with no salvage value is equal to;the asset's original cost divided by its estimated useful life.;Answer;True;False;2 points;Question 49;1.;49. The recognition of depreciation;expense often causes the annual net income of an investment to be less than the;amount of its annual net cash flows.;Answer;True;False;2 points;Question 50;1.;50. To determine the average investment;over the life of an asset, divide the total depreciation of the investment by;two.;Answer;True;False


Paper#42638 | Written in 18-Jul-2015

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