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Charteroak ACC102 final exam

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Question;Question 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.AnswerABCD4 points Question 2 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.AnswerABCD4 points Question 3 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 isAnswerABCD4 points Question 4Use 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.AnswerABCD4 points Question 55. An example of a revenue center isA) The accounting department in a manufacturing companyB) The maintenance department of a universityC) The furniture department of a retail department storeD) The human resources department in a hospitalAnswerABCD4 points Question 6Use 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.AnswerABCD4 points Question 7Use 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.AnswerABCD4 points Question 88. 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.AnswerABCD4 points Question 99. 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.AnswerABCD4 points Question 1010. 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 isA) 2,700 FavorableB) 1,620 UnfavorableC) 1,080 FavorableD) 2,700 UnfavorableAnswerABCD4 points Question 1111. 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.AnswerABCD4 points Question 1212. 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.AnswerABCD4 points Question 1313. Residual income can be defined asA) That income left over after dividends are paid outB) Operating earnings minus return on investmentC) Operating earnings minus a minimum acceptable returnD) Operating earnings minus a minimum acceptable return times invested capitalAnswerABCD4 points Question 1414. 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%.AnswerABCD4 points Question 15Use the following to answer questions 15-17:The following information regarding Winn, Inc. is available:Sales.$1,600,000Cost of goods sold.700,000Operating expenses.500,000Operating income.400,000Average invested capital.2,500,00015. Refer to the information above. What is the return on investment for Winn, Inc?A) 64%.B) 25%.C) 16%.D) 8%.AnswerABCD4 points Question 16Use the following to answer questions 15-17:The following information regarding Winn, Inc. is available:Sales.$1,600,000Cost of goods sold.700,000Operating expenses.500,000Operating income.400,000Average invested capital.2,500,00016. Refer to the information above. What is the return on sales for Winn, Inc.?A) 16%.B) 25%.C) 48%.D) 60%.AnswerABCD4 points Question 17Use the following to answer questions 15-17:The following information regarding Winn, Inc. is available:Sales.$1,600,000Cost of goods sold.700,000Operating expenses.500,000Operating income.400,000Average invested capital.2,500,00017. Refer to the information above. What is the capital turnover for Winn, Inc.?A) 32%.B) 48%.C) 64%.D) 84%.AnswerABCD4 points Question 1818. Calculate the residual income assuming the following information:Operating earnings.$300,000Minimum acceptable return.15%Invested capital.1,500,000A) $225,000.B) $100,000.C) $75,000.D) $45,000.AnswerABCD4 points Question 1919. 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.AnswerABCD4 points Question 2020. 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.AnswerABCD4 points Question 2121. 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%AnswerABCD4 points Question 2222. 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) $56,184B) $50,720C) $12,184D) ($7,712)AnswerABCD4 points Question 2323. An unfavorable overhead volume variance results from:AnswerA) An unfavorable overhead spending varianceB) Poor decisions made by the production manager.C) Producing at levels of output which exceed normal output levelsD) Producing at levels of output which fall short of normal output levels4 points Question 2424. Standard costs:AnswerA) Are the same for all companies in a given industryB) 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 systemsD) Should be revised upward when actual costs are higher then expected because of waste and inefficiency.4 points Question 2525. If the actual amount of direct materials used in production was less than the standard amount allowed for units produced, there was:AnswerA) A favorable materials price varianceB) A unfavorable total materials varianceC) An unfavorable materials quantity varianceD) A favorable materials quantity variance4 points Question 2626. 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>AnswerTrueFalse2 points Question 2727. In determining whether to scrap or to rebuild defective units of product, the cost already incurred in producing the defective units is not relevant.AnswerTrueFalse2 points Question 2828. Products resulting from a shared manufacturing process are referred to as complimentary products.AnswerTrueFalse2 points Question 2929. Incremental analysis rarely requires the decision maker to exercise judgment.AnswerTrueFalse2 points Question 3030. Opportunity costs refer to benefits actually obtained by deciding to pursue alternative courses of action.AnswerTrueFalse2 points Question 3131. Profit centers generate revenues and expenses.AnswerTrueFalse2 points Question 3232. Responsibility margin is useful in evaluating the consequences of short-run marketing strategies, while contribution margin is more useful in evaluating long - term profitability.AnswerTrueFalse2 points Question 3333. The responsibility margin is the contribution margin less common fixed costs.AnswerTrueFalse2 points Question 3434. In an income statement segmented by sales departments, salaries to departmental salespeople would be an example of "common" fixed cost.AnswerTrueFalse2 points Question 3535. Return on assets and residual income are two commonly used measures of an investment cost center's performance.AnswerTrueFalse2 points Question 3636. The typical starting point of a master budget would be to prepare a budgeted balance sheet.AnswerTrueFalse2 points Question 3737. A debt service budget summarizes cash payments required for interest, and includes those required to pay down the principal.AnswerTrueFalse2 points Question 3838. Flexible budgeting may be viewed as combining the concepts of budgeting with cost-volume-profit analysis.AnswerTrueFalse2 points Question 3939. A favorable variance occurs when actual costs are less than standard costs.AnswerTrueFalse2 points Question 4040. A standard cost is the per unit cost actually incurred under normal operating conditions.AnswerTrueFalse2 points Question 4141. Return on investment (ROI) tells us how much earnings can be expected for the average invested dollar.AnswerTrueFalse2 points Question 4242. The balance scorecard approach attempts to measure whether an organization is meeting its strategic goals.AnswerTrueFalse2 points Question 4343. Operating earnings rather than net income is used to compute return on sales.AnswerTrueFalse2 points Question 4444. The value chain starts with the supplier and ends with the consumer.AnswerTrueFalse2 points Question 4545. Capital investment refers to large expenditures to purchase plant assets. develop new products, or sell more company stock.AnswerTrueFalse2 points Question 4646. The present value of a future cash flow is the amount you would pay today for the right to receive the future amount.AnswerTrueFalse2 points Question 4747. In selecting among alternative investment opportunities, the investment with the shortest payback period is the most desirable alternative?AnswerTrueFalse2 points Question 4848. 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.AnswerTrueFalse2 points Question 4949. 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.AnswerTrueFalse2 points Question 5050. To determine the average investment over the life of an asset, divide the total depreciation of the investment by two.AnswerTrueFalse

 

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