| Question 1.1. (TCO 1) Which of the following is a sign that an ABC system may be useful? (Points : 5) |
Operations staff agrees with accountants about the costs of manufacturing and marketing products and services.
There are small amounts of indirect costs.
Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity.
Products a company is less suited to produce and sell show small profits. |
Question 2.2. (TCO 1) Merriamn Company provides the following ABC costing information:
| Activities |
Total Costs |
Activity-cost drivers |
| Account inquiry hours |
$400,000 |
10,000 hours |
| Account billing lines |
$280,000 |
4,000,000 lines |
| Account verification accounts |
$150,000 |
40,000 accounts |
| Correspondence letters |
$ 50,000 |
4,000 letters |
| Total costs |
$880,000 |
|
The above activities are used by Department A and B as follows:
|
Department A |
Department B |
| Account inquiry hours |
2,000 hours |
4,000 hours |
| Account billing lines |
400,000 lines |
200,000 lines |
| Account verification accounts |
10,000 accounts |
8,000 accounts |
| Correspondence letters |
1,000 letters |
1,600 letters |
How much of the inquiry cost will be assigned to Department A?
(Points : 5) |
$80,000
$400,000
$160,000
None of the above |
| Question 3.3. (TCO 2) A master budget (Points : 5) |
includes only financial aspects of a plan and excludes nonfinancial aspects.
includes broad expectations and visionary results.
is an aid to coordinating what needs to be done to implement a plan.
should not be altered after it has been agreed upon. |
| Question 4.4. (TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units. The flexible-budget variance is (Points : 5) |
$2,000 favorable.
$14,000 unfavorable.
$16,400 unfavorable.
$2,400 favorable. |
| Question 5.5. (TCO 3) The conference method estimates cost functions (Points : 5) |
by mathematically analyzing the relationship between inputs and outputs in physical terms.
using quantitative methods that can be very time consuming and costly.
based on analysis and opinions gathered from various departments.
using time-and-motion studies. |
| Question 6.6. (TCO 4) Relevant costs of a make-or-buy decision include all of the following EXCEPT (Points : 5) |
fixed salaries that will not be incurred if the part is outsourced.
current direct material costs of the part.
special machinery for the part that has no resale value.
material-handling costs that can be eliminated. |
| Question 7.7. (TCO 5) Producing more non bottle neck output (Points : 5) |
creates more inventory and increases throughput contribution.
creates less pressure for the bottleneck workstations.
allows for the maximization of overall contribution.
creates more inventory, but does not increase throughput contribution |
| Question 8.8. (TCO 5) Konrade’s Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:
Direct materials $40,000
Direct labor 10,000
Variable overhead costs 30,000
Fixed overhead costs 20,000
Total costs $100,000
It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Konrade’s Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
If Konrade’s Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total
(Points : 5) |
$82,000
$98,000
$50,000
$100,000 |
| Question 9.9. (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs? (Points : 5) |
y = 1.80 + 400X
y = 2.20 + 1,000X
y = 400 + 1.80X
y = 1.00 + 400X |
| Question 10.10. (TCO 4) Opportunity costs (Points : 5) |
result in a cash outlay.
only are considered when selecting among alternatives.
are recorded in the accounting records.
should be maximized for the best decision. |
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