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Kaplan GB519 final exam

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Question;Unit;6: Unit 6: Management Level Control - Final Exam;Top of Form;Time Remaining;Question;1.1.Target costing determines the desired cost for a product;upon the basis of a given competitive price such that the product will;(Points: 2);Earn at least a small profit. Earn a desired profit. Earn the maximum profit. Break even.;Question;2.2.The five steps of strategic decision making include all;of the following except: (Points: 2);Based on strategy and analysis;choose and implement the desired alternative. Identify the alternative actions. Determine the strategic issues;surrounding the problem. Select the proper cost management;technique. Provide an ongoing evaluation of;the effectiveness of the decision.;Question;3.3.The five steps of strategic decision making include all;of the following except: (Points: 2);Identify the alternative actions. Gather, summarize, and report;accounting information. Determine the strategic issues;surrounding the problem. Choose and implement the desired;alternative.;Question;4.4.Strategic analysis uses which of the following to help a;firm improve its competitive position through an analysis of product and;production complexity? (Points: 2);Differential cost drivers. Discretionary cost drivers. Structural cost drivers. Marginal cost drivers.;Question;5.5.The strategy map is a tool that is used: (Points: 2);as one of the key aspects of the;contemporary management environment to enhance the sustainability of;the organization to link the perspectives of the;balanced scorecard to organize the critical success;factors of a company;Question;6.6.Factory overhead costs for a given period were 2 times;as much as the direct material costs. Prime costs totaled $8,000.;Conversion costs totaled $11,350. What are the direct labor costs for the;period? (Points: 2);$4,650. $3,560. $4,200. $3,860.;Question;7.7.Factory overhead costs for a given period were 3 times;as much as the direct material costs. Prime costs totaled $2,000.;Conversion costs totaled $3,280. What are the direct labor costs for the;period? (Points: 2);$1,220. $1,360. $1,410. $1,540.;Question;8.8.ABC Company listed the following data for the current;year;Budgeted Factory Overhead = $ 1,044,000;Budgeted Direct labor Hours;= 69,600;Budgeted Machine Hours;=;24,000;Actual Factory Overhead;=;1,037,400;Actual Labor Hours;=;72,400;Actual Machine Hours;=;23,600;Assuming ABC Company applied overhead based on direct labor hours, the;company's predetermined overhead rate for the year is: (Points: 2);$43.95 per direct labor hour. $15.50 per direct labor hour. $15.00 per direct labor hour. $14.28 per direct labor hour. $14.00 per direct labor hour.;Question;9.9.When completed units are transferred to the warehouse;(Points: 2);Cost of Goods Sold account is;debited. Cost of Goods Manufactured account;is debited. Finished Goods Inventory account is;debited. Work-in-Process Inventory account;is debited. Finished Goods Inventory account is;credited.;Question;10.10.Effective implementation of activity-based costing;(ABC) requires: (Points: 2);Normally the assistance of a;consultant. A sophisticated and expensive;computer system. Support of top management and key;employees. Capturing properly the complexity;of the data. ABC has no significant;implementation issues.;Question;11.11.Standard costs are: (Points: 2);Planned costs the firm should;attain. Associated with direct materials;and factory overhead only. Associated with direct labor and;factory overhead only. Targeted low costs the firm should;strive for. None of the above.;Question;12.12.Process cost systems are used in all of the following;industries except: (Points: 2);Chemicals. Ship building. Oil refining. Textiles. Steel.;Question;13.13.Wings Co. budgeted $555,600 manufacturing direct;wages, 2,315 direct labor hours, and had the following manufacturing;overhead:Overhead Cost Pool - Budgeted O/H $ - Budgeted;Level for Cost Driver - O/H Cost Driver;Materials Handling;$160,000;3,200;lbs.;Material Weight;Machine;Setup;13,200;390;S/U?s;# of S/Us;Machine;Repair;1,380;30,000 Mach.;Hrs;Machine Hrs.;Inspections;10,560;160;Inspections;# of InspectionsRequirements for Job #971 which included 4 Units of Production;D/L Hours = 20;Hours;D/Mat?ls;= 130 lbs.;Machine S/U = 30 Set-ups;Machine Hrs. = 15,000 Machine Hours;Inspections = 15;Inspections.;Using ABC, the materials handling overhead cost assigned to Job #971 is;(Points: 2);$2,300. $990. $6,500. $690. $1,020.;Question;14.14.Randall Company manufactures products to customer;specifications. A job costing system is used to accumulate production;costs. Factory overhead cost was applied at 125% of direct labor cost.;Selected data concerning the past year's operation of the company are;presented below.;Direct Materials January 1;= $77,000;Direct Materials December 31;=;40,000;WIP January 1;=;66,000;WIP December 31;=;42,000;Finished Goods January 1;=;115,000;Finished Goods December 31;=;100,000;Other Information;Direct Materials Purchased;=;$324,000;Cost of Goods Available for Sale;= 950,000;Actual Factory Overhead;=;206,000;The cost of goods manufactured during the year is: (Points: 2);$850,000. $348,000. $672,000. $835,000. $811,000.;Question;15.15.The point in a joint production process at which;individual products can be identified for the first time is called the;(Points: 2);Separable point. By-pass point. Split-off point. Joint identification point.;Question;16.16.Cost-volume-profit (CVP) relationships that are;curvilinear may be analyzed linearly by considering only: (Points: 2);Fixed and semi-variable costs. Relevant fixed costs. Relevant variable costs. A relevant range of volume. The multi-product/multi-service;context.;Question;17.17.Which of the following provides the most accurate cost;estimation? (Points: 2);Regression analysis with R-squared;of 0.12. Regression analysis with F value of;1.2 High-low method. Regression analysis with R squared;of 0.89.;Question;18.18.Net Realizable Value (NRV) of a product is: (Points;2);Split-off cost - profit margin -;additional processing and selling cost. Profit at split-off + additional;processing and selling cost. Ultimate sales value - additional;processing and selling cost. Ultimate sales value + additional;processing and selling cost. Cost allocation plus separable;cost.;Question;19.19.Which of the following is an example of a physical;measure used in the physical measure method? (Points: 2);Pounds. Minutes. Seconds. Dollars. Volume.;Question;20.20.Variable costs will generally be relevant for decision;making because they: (Points: 2);Differ between options. Are volume-based. Have not been committed and differ;between options. Differ between options and have;been committed. Measure opportunity cost.;Question;21.21.Done on a regular basis, relevant cost pricing in;special order decisions can erode normal pricing policies and lead to;(Points: 2);Overconfidence in decision-making. A decrease in the firm's long-term;profitability. Goal congruence between management;and sales personnel. A cost leadership strategy.;Question;22.22.Which of the following is not true regarding the;appropriate discount rate to be used in conjunction with discounted cash;flow (DCF) decision models? (Points: 2);For projects of "above;average" risk, the appropriate discount rate is the weighted-average;cost of capital (WACC) It includes an estimate of the;after-tax cost of debt. It can differ across investment projects;according to perceived risk. It is also sometimes referred to as;the "hurdle rate" for capital budgeting purposes.;Question;23.23.Joint (common) costs in a joint production process are;relevant for determining: (Points: 2);Whether to produce at all. Which products should be produced;up to the split-off point in the production process. Which products should be produced;internally and which products should be outsourced. The set of products that should be;subjected to additional processing.;Question;24.24.Which of the following statements regarding a joint;production process is NOT true? (Points: 2);The essential decision facing;management is whether to sell products at the split-off point or to sell;these products after further processing. The allocation of joint (common);production costs to individual products helps management determine which;products should be processed beyond the split-off point. Costs incurred up to the split-off;point are referred to as joint production costs. The decision as to whether;individual products should be sold "as is" or processed further;is made on the basis of comparing incremental revenues and incremental;costs.;Question;25.25.In situations when management must decide on accepting;or rejecting one-time-only special orders, where there is sufficient idle;capacity, which one of the following is not relevant to the decision?;(Points: 2);Absorption costs. Differential costs. Direct costs. Variable costs. Incremental costs.;Question;26.26.One of the key management functions is to perform a;regular review of product profitability. Which question(s) below would;not be asked when performing the analysis? (Points: 2);Are the products priced properly? Which products are the most;profitable? Which products should be advertised;more aggressively? Should any product manager be;rewarded? What was the product manager paid;last year?;Question;27.27.Pique Corporation wants to purchase a new machine for;$300,000. Management predicts that the machine can produce sales of;$200,000 each year for the next 5 years. Expenses are expected to include;direct materials, direct labor, and factory overhead (excluding;depreciation) totaling $80,000 per year. The firm uses straight-line;depreciation with no residual value for all depreciable assets. Pique's;combined income tax rate is 40%. Management requires a minimum after-tax;rate of return of 10% on all investments.;What is the approximate internal rate of return (IRR) of the investment?;(NOTE: To answer this question, students must have access to Table 2 from;Appendix C, Chapter 12.) (Points: 2);Less than 12%. Somewhere between 12% and 14%. Somewhere between 15% and 20%. Somewhere between 20% and 25%. Over 25%.;Question;28.28.____________________ is an important first step in;value engineering because it identifies critical consumer preferences;that will define the product's desired functionality: (Points: 2);Consumer analysis. Sales force analysis. Design analysis. R&D analysis. Market place analysis.;Question;29.29.The theory of constraints (TOC) emphasizes which of;the following? (Points: 2);Developing competitive constraints. Finding and eliminating design;constraints. Removing bottlenecks from the;production process. Improving overall production;efficiency.;Question;30.30.An organization's overall management accounting and;control system: (Points: 2);Includes the planning function. Is also referred as the;organization's core performance-measurement system. Is separate from its operational;control system. Includes nonfinancial, but not;financial, performance measures. Focuses on strategic, not;operational, control;Question;31.31.The sequence of phases in the product or service's;life in the market - from the introduction of the product or service to;the growth in sales and finally maturity, decline, and withdrawal from;the market is the: (Points: 2);Sales life cycle. Target life cycle. Market life cycle. Critical life cycle. Cost life cycle.;Question;32.32.Traditional financial control systems have recently;been criticized because: (Points: 2);They use flexible, not static;budgets. They generally lead to;goal-congruent behavior on the part of managers. They focus more in improving basic;business processes than short-term financial results. They fail to incorporate;nonfinancial performance indicators into the evaluation process.;Question;33.33.Generally, firms will price a product more;competitively at which stages of the product's sales life cycle? (Points;2);Product introduction and Growth. Maturity and Decline. Throughout the cycle. At the end of the life cycle.;Question;34.34.Information concerning Johnston Co.'s direct materials;costs is as follows;Standard $ per;Lb.;$ 6.45;Actual Lbs.;Purchased;2,850;Actual Lbs. Used in production 2,750;Units of Material;Produced;700;Materials Purchase Price Variance $ 855(F);Budget Data for the Period;Units to;Manufacture 1,000;Units of;DM;4,000 Lbs.;The actual purchase price per pound of direct materials is: (Points: 2);$6.12. $6.15. $6.50. $6.75. $7.13.;Question;35.35.In September, Larson Inc. sold 40,000 units of its;only product for $240,000 and incurred a total cost of $225,000, of which;$25,000 is fixed costs. The flexible budget for September showed total;sales of $300,000. Among variances of the period were: total variable;cost flexible-budget variance, $8,000U, total flexible-budget variance;$63,000U, and, sales volume variance, in terms of contribution margin;$27,000U;The actual amount of operating income earned in September was: (Points;2);$15,000. $40,000. $63,000. $78,000. $105,000.;Question;36.36.Of the three basic forms of management compensation;(salary, bonus, benefits), the fastest growing part of total compensation;is: (Points: 2);Salary. Bonus. Benefits. Salary and bonus.;Question;37.37.Any system of compensation: (Points: 2);May encourage unethical behavior. Must be approved by the appropriate;regulatory authority. Should be designed by top;management. Must be approved by the auditor.;Question;38.38.Under variable costing, fixed manufacturing overhead;costs would be classified as: (Points: 2);Period costs. Product costs. Selling costs. Inventory costs.;Question;39.39.SBU is the acronym for: (Points: 2);Small Business Unit. Sustainable Business Unit. Standard Business Unit. Strategic Business Unit.;Question;40.40.Other things being equal, income computed by the;variable costing method will exceed that computed by the full costing;method if: (Points: 2);Units produced exceed units sold. Units sold exceed units produced. Fixed manufacturing costs;increase. Variable manufacturing costs;increase.;Question;41.41."Outsourcing" a cost center is often done;to: (Points: 2);Reduce cost and obtain strategic;focus. Increase control over a strategic;resource. Reduce the firm's contractual;relationships. Shift costs within remaining cost;centers.;Question;42.42.A current bonus can consist of: (Points: 2);Cash only. Stock only. Cash and/or stock. Membership in a fitness club.;Question;43.43.When strategic performance measures or critical;success factors are used to determine bonus compensation, the bonus will;usually depend either on the amount of improvement in the measure or on;(Points: 2);Maintaining the current level. Achieving a predetermined goal. Quality of work completed. Intensity of effort expended.;Question;44.44.In management compensation, the use of the balanced;scorecard achieves: (Points: 2);Fairness. Alignment of manager's incentives;and the organization's strategy. The desired ethical environment. Revenue generation and cost;control.;Question;45.45.The objectives of management compensation, when;compared to the objectives used to develop performance measurement;systems, are: (Points: 2);More numerous. Less specific. Consistent in their objectives. Significantly broader in scope. More specific.;Question;46.46.Which one of the following refers to the firm's;ability to pay its current operating expenses and maturing debt? (Points;2);Discounted cash flow. Liquidity. Earnings base. Profitability. Purchasing power.;Question;47.47.Jackson Supply Company has a 2 to 1 current ratio.;This ratio would increase to more than 2 to 1 if the company: (Points;2);Purchased a marketable security for;cash. Wrote off an uncollectible receivable. Sold merchandise on account that;earned a normal gross margin. Purchased inventory on account.;Question;48.48.The King Mattress Company had the following operating;results for 2012-2013. In addition, the company paid dividends in both;2012 and 2013 of $60,000 per year and made capital expenditures in both;years of $30,000 per year. The company's stock price in 2012 was $8 and;$7 in 2013. The industry average earnings multiple for the mattress;industry was 9 in 2013 and the free cash flow and sales multiples were 18;and 1.5, respectively. The company is publicly owned and has 1,200,000;shares of outstanding stock at the end of 2013.Balance Sheet, December 312013 2012;Cash;$;340,000;$ 100,000;Accounts;Receivable;350,000;400,000;Inventory;250,000 300,000;Total Current;Assets;$;940,000;$ 800,000;Long Lived;Assets 1,080,000 1,100,000;Total Assets;$;2,020,000 $;1,900,000;Current;Liabilities;$ 200,000;$ 300,000;Long-Term;Liabilities;600,000;500,000;Stockholder?s;Equity 1,220,000 1,100,000;Total Liabilities;Equity;$ 2,020,000 $;1,900,000Income Statement for the Year Ended December 31;Sales;$;4,750,000;$ 4,500,000;Cost of;Sales 4,100,000 4,000,000;Gross;Margin;$ 650,000;$ 500,000;Operating;Expenses 350,000 400,000;Operating;Income;$;300,000;$ 100,000;Taxes 120,000 40,000;Net;Income;$;180,000;$ 60,000 Cash Flow from Operations;Net;Income;$;180,000;$ 60,000;Plus Depreciation;Expense;50,000;50,000;+Decrease (-Inc) in A/T and Inventory;100,000;- 0 -;+Increase (-Dec) in Current Liabilities;(100,000) -;0 ?;Cash Flow from;Operations;$;230,000;$ 110,000;The current ratio for 2013 is: (Points: 2);1.8 2.0 3.9 4.7;Question;49.49.The King Mattress Company had the following operating;results for 2012-2013. In addition, the company paid dividends in both;2012 and 2013 of $60,000 per year and made capital expenditures in both;years of $30,000 per year. The company's stock price in 2012 was $8 and;$7 in 2013. The industry average earnings multiple for the mattress;industry was 9 in 2013 and the free cash flow and sales multiples were 18;and 1.5, respectively. The company is publicly owned and has 1,200,000;shares of outstanding stock at the end of 2013.Balance Sheet, December 312013 2012;Cash;$;340,000;$ 100,000;Accounts;Receivable;350,000;400,000;Inventory 250,000 300,000;Total Current;Assets;$;940,000;$ 800,000;Long Lived;Assets 1,080,000 1,100,000;Total;Assets;$ 2,020,000 $;1,900,000;Current;Liabilities;$ 200,000;$ 300,000;Long-Term;Liabilities;600,000;500,000;Stockholder?s;Equity 1,220,000 1,100,000;Total Liabilities;Equity;$ 2,020,000 $;1,900,000Income Statement for the Year Ended December 31;Sales;$;4,750,000;$ 4,500,000;Cost of Sales;4,100,000 4,000,000;Gross;Margin;$ 650,000;$ 500,000;Operating;Expenses 350,000 400,000;Operating;Income;$;300,000;$ 100,000;Taxes 120,000 40,000;Net;Income;$ 180,000;$;60,000 Cash Flow from Operations;Net;Income;$;180,000;$ 60,000;Plus Depreciation;Expense;50,000;50,000;+Decrease (-Inc) in A/T and Inventory;100,000;- 0 -;+Increase (-Dec) in Current Liabilities;(100,000) -;0 ?;Cash Flow from;Operations;$;230,000;$ 110,000;The inventory turnover ratio for 2013 is (rounded): (Points: 2);11.2 12.7 13.7 14.9;Question;50.50.During October, Rover Industries produced 35,000 units;of product with costs as follows;DM;= $ 84,000;DL;= 43,000;Variable O/H = 13,000;Fixed O/H = 147,000;Total =$ 287,000;What is Rover's unit cost for October, calculated on the variable costing;basis? (Points: 2);$3.25. $3.75. $4.00. $4.50. $5.00.;Time Remaining;Bottom of Form

 

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