2023 1 Managers are often required to make decisions about the future based on all the following | Assignments Online

1. Managers are often required to make decisions about the future based on all the following except: 

 estimated information.

 financial information.

 cost information.

 perfect information.

 

2. Just-in-time (JIT) methods of production are designed to:  

 increase sales.

 reduce operating expenses.

 reduce inventories.

 increase product quality.

 

3.  The Coyote Cafe had sales revenues and food costs in 2007 of $800,000 and $600,000, respectively. In 2008, Coyote will be introducing a new menu item that will generate $100,000 in sales revenues and $45,000 in food costs. Assuming no changes are expected for the other food items, the differential operating profit for 2008 is: 

 $55,000.    

 $100,000.

 $155,000.

 $200,000. 

 

4.  The terms direct cost and indirect cost are commonly used in accounting. A particular cost might be considered a direct cost of a manufacturing department, but an indirect cost of the product produced in the manufacturing department. Classifying a cost as either direct or indirect depends upon: 

 

 whether an expenditure is unavoidable because it cannot be changed, regardless of any action taken.

 whether the cost is expensed in the period in which it is incurred.

 the behavior of the cost in response to volume changes.

 the cost object to which the cost is being related. 

 

 

5.  Which of the following is NOT a product cost under full absorption costing?  

 Salaries of CEOs

 Raw materials used in production

 Supplies used in the factory

 Direct labor 

 

6. Calculate the conversion costs from the following information: 

Fixed manufacturing overhead$2,000

Variable manufacturing overhead1,500

Direct materials3,500

Direct labor2,500

 

 $2,500

 $3,500

 $6,000  

 $8,500 

 

7. The excess of sales over variable costs is termed:  

 the net income.

 the contribution margin.

 the operating profit.

 the gross margin. 

 

8. Western Sales has the following information concerning its one and only product: 

 

Selling price per unit: $40

Variable cost per unit: $15

Total fixed costs: $250,000

 

Compute the break-even point in sales dollars. 

 $250,000

 $1,000,000

 $400,000    

 $666,680

 

9. The profit equation may be expressed as:  

 

 total revenues – total costs = operating profit.

 total fixed costs – total variable costs = operating profit.

 price x units of output = operating profit.

 revenue – contribution margin = operating profit. 

 

10. Western Sales has the following information concerning its one and only product: 

Selling price per unit: $40

Variable cost per unit: $15

Total fixed costs: $250,000

 

Compute the break-even point in units.

 6,250 units

 16,667 units

 9,000 units

 10,000 units   

 

 

1.  The management method for dealing with bottlenecks in the production process is called: 

 differential management.

 make-buy decision.

 differential strategy.

 theory of constraints. 

 

 

2. Costs incurred in the past that cannot be changed by a present or future decision are termed: 

 opportunity costs.

 sunk costs.

 differential costs.

 avoidable costs. 

 

3. Differential analysis may be used for all the following except:

 a make-buy decision.

 adding or dropping a product.

 accepting a special order.

 costing our product using full absorption costing.

 

4. Which of the following is NOT a statistical method of cost estimation? 

 

 Regression analysis method

 Scattergraph method

 Account analysis method

 High-low method 

 

5. We use cost estimation to determine: 

 the cost formula.

 total costs.

 the fixed and variable components of the total cost.

 engineering estimates.

 

6. A basic assumption of regression analysis is: 

 

 it will use a spreadsheet application.

 management is honest.

 the process for which costs are being estimated remains constant over time.

 business will constantly change for the better.

 

7. The basic cost flow model is: 

 BB + TO – TI = EB.

 BB + EB – TO = TI.

 BB – TI – TO = EB.

 BB + TI – TO = EB.

 

8. In a labor intensive company in which more overhead is used by the more highly skilled and paid employees, which activity base would be most appropriate for applying overhead to production?  

 

 Direct labor cost

 Direct material cost

 Direct labor hours

 Machine hours

 

9. What is the beginning balance for Case A? 

Case A

Beginning balance????

Ending balance$67,000

Transferred in149,600

Transferred out164,600

 

 $52,000

 $82,000   

 $67,000

 $97,600 

 

10. For which of the following businesses would the job order cost system be appropriate? 

 

 Law office

 Crude oil refinery

 Baby formula manufacturer

 Soft drink producer

 

1. T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics: 

 

Sales price per unit: $125 

Variable cost per unit: $75

Annual fixed costs: $180,000

 

(a)  How many units must T-Tunes sell to break even?

(b)  How many units must T-Tunes sell to make an operating profit of $120,000 for the year?

(c)  What will the operating profit be, assuming that the projected sales for the year are 7,500 units?

 

Consider requirements (b) and (c) independent of each other.  

 

 

2. Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:

Total factory overhead costs$180,000

Direct labor hours50,000 hours

Direct labor costs$250,000

Machine hours60,000 hours

 

Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours. 

 

 

3. The Boyceville Machining Company provided you with the following information for the fiscal year ending on December 31:

Work-in-process inventory, 12/31$28,950

Finished goods inventory, 1/1153,700

Direct labor costs incurred502,150

Manufacturing overhead costs1,364,700

Direct materials inventory, 1/1125,400

Finished goods inventory, 12/31255,500

Direct materials purchased875,100

Work-in-process inventory, 1/150,500

Direct materials inventory, 12/3184,700

 

(a) Compute the total manufacturing costs incurred during the year.

(b) Compute the total work-in-process during the year.

(c) Compute the cost of goods manufactured during the year.

(d) Compute the cost of goods sold during the year. 

 

 

4. (TCO 5) The following information relates to a product produced by Bayfield Company:

Direct materials$50

Direct labor35

Variable overhead30

Fixed overhead40

Unit cost$155

 

Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $180 each. A customer has offered to buy 60,000 units for $150 each. Compute the effect on the net income if Bayfield accepts the special order.