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Final exam Acct 434




for Account_tutor;Question 1. 1. (TCO 1) If products are alike, then for costing purposes (Points: 5) a simple costing system will yield accurate cost numbers.;an activity-based costing system should be used.;multiple indirect-cost rates should be used.;varying demands will be placed on resources.;Question 2. 2. (TCO 1) Ireland Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 80,000. What is the budgeted indirect cost allocation rate for this activity? (Points: 5) $0.50;$1.00;$1.50;$2.25;Question 3. 3. (TCO 2) Overhead costs have been increasing due to all of the following except (Points: 5) product proliferation.;tracing more costs as direct costs with the help of technology.;more complexity in distribution processes.;increased automation.;Question 4. 4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table;February March April;Cash Sales $160,000 $150,000 $120,000;Credit Sales 300,000 400,000 280,000;Total Sales $460,000 $550,000 $400,000;Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 75% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 80% of the next month's projected total sales. All purchases of inventory are on account, 50% are paid in the month of purchase, and the remainder is paid in the month following the purchase.;Brenton's budgeted total cash receipts in April are (Points: 5) $448, 000.;$414, 500.;$431, 600.;$328, 000.;Question 5. 5. (TCO 2) Budgeting provides all of the following except (Points: 5) a means to communicate the organization's short-term goals to its members.;support for the management functions of planning and coordination.;a means to anticipate problems.;an ethical framework for decision making.;Question 6. 6. (TCO 3) The cost function y = 1,000 + 5X (Points: 5) represents a fixed cost.;is not a straight line.;has an intercept of 1,000.;has a slope coefficient of 1,000.;Question 7. 7. (TCO 3) Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms? (Points: 5) Quantitative analysis method;Account analysis method;Conference method;Industrial engineering method;Question 8. 8. (TCO 4) Sunk costs (Points: 5) have future implications.;are ignored when evaluating alternatives.;are differential.;are relevant.;Question 9. 9. (TCO 5) The theory of constraints is used for cost analysis when (Points: 5) a manufacturing company produces multiple products and uses multiple manufacturing facilities and/or machines.;using a long-term time horizon.;operating costs are assumed fixed.;All of the above;Question 10. 10. (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines. One way the company can overcome the bottleneck is (Points: 5) eliminating idle time at the bottleneck operation. Extra staffing at the bottleneck would be a possibility, particularly if numerous manual type tasks were involved.;concentrate on processing those parts or products that increase throughput contribution, not parts or products that remain in finished goods or spare parts inventories.;solicit the opinions of the factory workers for ideas as to how the design of the manufacturing process can be simplified.;All of the above;Question 11. 11. (TCO 6) What type of cost is the result of an event that results in more than one product or service simultaneously? (Points: 5) Byproduct cost;Joint cost;Main costs;Separable cost;Question 12. 12. (TCO 6) Which of the following is a disadvantage of the physical-measure method of allocating joint costs? (Points: 5) The measurement basis for each product may be different.;There is a need for a common denominator.;The physical measure may not reflect the product's ability to generate revenues.;All of the above;Question 13. 13. (TCO 7) An understanding of life-cycle costs can lead to (Points: 5) additional costs during the manufacturing cycle.;less need for evaluation of the competition.;cost-effective product designs that are easier to service.;mutually beneficial relationships between buyers and sellers.;Question 14. 14. (TCO 7) Each month, Haddon Company has $300,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (75% fixed). Haddon's monthly sales are $500,000.;The markup percentage on variable costs to arrive at the existing (target) selling price is (Points: 5) 84 %.;40 %.;80 %.;66 2/3%.;Question 15. 15. (TCO 8) Transfer prices should be judged by whether they promote (Points: 5) goal congruence.;the balanced scorecard method.;a high level of subunit autonomy in decision making.;Both 1 and 3 are correct;Question 16. 16. (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $25 per unit. Outlay cost is $10. What is the opportunity cost, assuming the seller sells internally? (Points: 5) $ 10;$ 16;$ 15;$ 24;Question 17. 17. (TCO 8) When companies do not want to use market prices or find it too costly, they typically use ________ prices, even though suboptimal decisions may occur. (Points: 5) short-run average cost;long-run cost;average -cost;full- cost;Question 18. 18. (TCO 9) To guide cost allocation decisions, the cause-and-effect criterion (Points: 5) may allocate corporate salaries to divisions based on profits.;is used less frequently than the other criteria.;is the primary criterion used in activity-based costing.;is a difficult criterion on which to obtain agreement.;Question 19. 19. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer d ivision used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. Which corporate costs should be allocated to divisions? (Points: 5) Variable costs;Fixed costs;Neither fixed nor variable costs;Both fixed and variable costs;Question 20. 20. (TCO 10) A "what-if" technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes is called (Points: 5) adjusted rate-of-return analysis.;internal rate-of-return analysis.;sensitivity analysis.;net-present-value analysis.;Question 21. 21. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $400,000 in annual cash flows for a period of four years. The required rate of return is 12%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period.;What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered. (Points: 5) $119,550, Y es;$314,800, Yes;$1,019,550, Yes;$69,550, No;Question 22. 22. (TCO 11) The four cost categories in a cost of quality program are (Points: 5) product design, process design, internal success, and external success.;prevention, appraisal, internal failure, and external failure.;design, conformance, control, and process.;design, process specification, on-time delivery, and customer satisfaction.;Question 23. 23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 200,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories.;How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? (Points: 5) $500,000 decrease;$750,000 decrease;$33,750 decrease;$45,000 decrease;Question 24. 24. (TCO 12) Obsolescence is an example of which cost category? (Points: 5) Ordering costs;Carrying costs;Labor costs;Quality costs;Question 25. 25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $100. There are no flag displays on hand but Liberty had scheduled 70 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.;The estimated total setup cost for the flag displays for the coming year is (Points: 5) $2, 000.;$3, 000.;$7, 000.;$12, 500.;1. (TCO 2) Rossi Company has the following projected account balances for June 30, 20X9


Paper#74218 | Written in 18-Jul-2015

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