2024 – 1 15 Multiple Choice Each multiple choice has only one correct answer 1 Which of the following aspects of a
A+ Answers – 2024
2024 – 1 15 Multiple Choice Each multiple choice has only one correct answer 1 Which of the following aspects of a.
1-15. Multiple Choice Each multiple choice has only one correct answer.
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Critical success factor
1. Which of the following aspects of a company could be considered a critical success factor, given the appropriate business environment?
A) cutting edge research and development.
Award-winning product quality
B) award-winning product quality.
C) excellent customer service.
D) continually beating competitors to the market with new, innovative products
E) all of the above characteristics could be seen as critical success factors, depending on the situation
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2. A firm that has traditionally succeeded on the basis of its high quality products and excellent customer service has started to decrease many of its internal budgets, as well as placed greater emphasis on reducing waste and providing its clientele with the lowest priced product.
Cost leadership
A) Cost leadership to differentiation. B) Focus to cost leadership.
C) Differentiation to focus. D) Cost leadership to focus.
E) Differentiation to cost leadership.
F) Focus to differentiation.
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3. The competitive strategy in which the firm succeeds by developing and maintaining a unique value for the product, as perceived by the customers is termed:
A) differentiation.
B) specialization advantage.
Design strategy
C) design strategy.
D) design focus.
E) product specialization.
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Chain analysis
4. Which of the following statements concerning value chain analysis is false?
A) The goal of value chain analysis is to find area where a company can either add value or reduce cost.
B) The value chain focuses on the entire production process, as well as the sale of the product and service after the sale.
C) If a company discovers that it can’t compete in a specific area of the value, it might want to consider the option of outsourcing that portion of the value chain to someone who can perform it better.
Successful firms
D) Throughout business, the most successful firms are the ones that operate within the entire value chain, thereby doing every aspect of the process.
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5. When a firm is determining its opportunities and threats, which of the following would not be mentioned?
A) An intense rivalry with a local competitor was beginning to start a price war.
B) The incredible success of the firm’s latest marketing campaign.
Firm
C) The firm just received a patent on its product, thereby ensuring that no new competitors would be able to surprise the company.
D) In spite of its patent, there are several substitute products consumers could use.
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6. Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term?
A) variable costs.
B) fixed costs.
C) mixed costs.
D) semivariable costs.
E) discretionary costs.
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Production level rises
7. How will unit (or average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?
A) It will remain constant.
B) It will increase in direct proportion to the production increase.
C) It will increase, but inversely with the production increase.
D) It will decrease, but not in direct proportion to the production increase.
E) It will decrease inversely and in direct proportion to the production increases.
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8. Operating leverage increases with
A) high variable cost.
B) high fixed cost.
C) high total cost.
D) high contribution margin.
E) high sales.
9. The linear equation Y = a + bX is often used to express cost formulas. In this equation:
A) the a term represents variable cost in total.
B) the b term represents variable cost per unit of activity.
C) the X term represents total cost.
D) the Y term represents total fixed cost.
10. The master budget process usually begins with the:
A) production budget.
B) selling and administrative expense budget.
C) sales budget.
D) cash budget.
11. In an organization that makes furniture, which of the following is a value-added activity?
A) purchasing direct materials.
B) inspecting production.
C) storing finished goods inventory.
D) moving work-in-process inventory around the factory.
E) waiting for incoming materials.
12-15 use the following:
Advanced Company is installing an ABC system and needs to know the level of a few activities. Advanced has already determined which costs are directly traceable to product and customers. Only those costs left to be allocated/assigned are of concern here.
Advanced Company produces two products—high-tech global positioning systems (GPS) and low-tech compasses—using portions of the same assembly line. One design department handles the design of both products. The GPSs are made in batches of 50, while the compasses are made in batches of 5,000. GPSs require a one-hour inspection, while compasses require a one-minute inspection.
Using these answers choices, indicate whether the following four activities are:
A. Unit level B. Batch level C. Product level
D. Customer level E. Facility sustaining F. Organization sustaining
12. Setup machines Batch level
13. Enter customer orders Customer leve;
14. Prepare annual financial statements Organization Sustaining
15. Design products Product level
16-32. Multiple Choice and Short Answer
Each multiple choice or short answer question has only one correct answer.
16. TwoShaft Inc. manufactures a wide variety of parts for recreational boating, including boat engines. The component is purchased by OEM (original equipment manufacturers) such as Mercury and Honda, for use in the larger and more powerful outboards. The units sell for $660, and sales volume averages 32,000 units per year.
Recently, TwoShaft’s major competitor lowered the price of the equivalent part to $596. The market was very competitive, and TwoShaft realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year.
The target cost for maintaining current market share and profitability is calculated to be:
A) $466.61.
B) $417.12.
C) $396.61.
D) $390.61.
E) $402.61.
17. Clang Co. produces and sells three products (X, Y, and Z). The following data relate to the three products.
Labor is the constraint.
According to the theory of constraints, which product should be produced first?
A) Product X
B) Product Y
C) Product Z
D) more than one of the products have equal profitability.
E) there isn’t enough information to answer the question.
18 and 19 use the following information:
Grant’s Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant’s carries numerous styles of western hats, each hat has approximately the same price and invoice purchase cost, as shown below. Sales personnel receive large commissions to encourage them to be more aggressive in their sales efforts.
Currently the economy of Atlanta is really humming, and sales growth at Grant’s has been great. However, the business is very competitive, and Grant has relied on is knowledgeable and courteous staff to attract and retain customers, who otherwise might go to other western wear stores. Also, because of the rapid growth in sales, Grant is finding it more difficult to manage certain aspects of the business, such as restocking of inventory and hiring and training new salespeople.
18. The annual breakeven point in unit sales is calculated to be: 15,000 Units
19. If 24,000 hats were sold, Grant’s operating income would be: $108,000
20. Holdren Company expects the following credit sales for the first four months of the year: January, $12,500; February, $18,000; March, $16,000; April, $15,000. Experience has shown that payment for the credit sales is received as follows: 10% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 10% is uncollectible.
Expected March cash collections: $__________ $14,900
21. Quirch Inc. manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor who would provide 2,400 units of product PQ107 for Valters for a price of $150,000.
Costs per unit
Direct materials $31
Direct labor 19
Variable overhead 8
Fixed overhead 10 (Allocated and unavoidable, except for $10,800 below)
In addition to the above costs, if Valters produces part PQ107, he would also have a retooling and design cost of $10,800. The relevant costs of producing 2,400 units of product PQ107 are calculated to be
A) $149,000.
B) $129,800.
C) $150,000.
D) $164,200.
E) $144,000.
22. The Sand Cruiser is a takeout food store at a popular beachside resort. Teresa Texton, owner of the Sand Cruiser, was deciding which of four different beverages to add to the refrigerator:
Assuming demand is not a limiting factor, which beverage will produce the most profit:
A) Limeaid.
B) Lemonaid.
C) Ginger Ale.
D) Grape Juice.
E) Two or more are equally profitable.
23. Vadis Inc. was a job-order manufacturer. The company used a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For 2001, estimated direct labor hours were 114,000, and estimated factory overhead was $695,400. The following information was for September 2001.
Job X was completed during September, while Job Y was started but not finished.
The total “inventory” cost of Job X is calculated to be:
A) $128,220.
B) $129,672.
C) $140,855.
D) $151,900.
E) $153,628.
24. ABC Company listed the following data for 2006:
Assuming no proration is done, the journal entry to dispose of overapplied/underapplied overhead, if overhead is applied based on direct labor hours, would include a credit to:
A) Work-in-Process Inventory.
B) Cost of Goods Sold.
C) Finished Goods Inventory.
D) Factory Overhead Applied.
E) Materials Inventory.
25. Bilbo owned two adjoining restaurants, the PorkPalace and the Chicken Hut. Each restaurant was treated as a profit SBU for performance evaluation purposes. Although the restaurants had separate kitchens, they shared a central baking facility. The principal costs of the baking area included depreciation and maintenance on the equipment, materials, supplies, and labor.
Bilbo allocated the monthly costs of the baking facility to the two restaurants based on the number of tables served in each restaurant during the month. In April, the costs were $32,000, of which $16,000 were fixed. The PorkPalace served 4,400 tables, while the Chicken Hut served 3,600 tables.
The amount of the joint cost that should have been allocated to the PorkPalace in April is calculated to be:
A) $6,400.
B) $7,200.
C) $8,000.
D) $8,800.
E) $9,600.
26. A company has two divisions, X and Y, each operated as a profit center. X charges Y $55 per unit for each unit transferred to Y. Other data are:
X” variable cost per unit $ 40
X’s fixed cost $100,000
X’s annual sales to Y 5,000 units
X’s sales to outsiders 10,000 units
X is planning to raise its transfer price to $65 per unit. Division Y can purchase units at $50 each from outsiders, but doing so would idle X’s facilities now committed to producing units for Y. Division X cannot increase its sales to outsiders.
A) Outside vendors.
B) Division X, but only at the variable cost per unit.
C) Division X, but only until fixed costs are covered, then should purchase from outside vendors.
D) Division X, regardless of the transfer price.
27. Division A, which is operating at capacity, produces a component, all of which sells in a perfectly competitive market for $25 per unit. At the current level of production, the fixed cost of producing this component is $8 per unit and the variable cost is $10 per unit. Division B would like to purchase this component from Division A.
A) $10 per unit.
B) $18 per unit.
C) $20 per unit.
D) $25 per unit.
E) $8 per unit
28. A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped.
A) decrease by $20,000 per year.
B) increase by $20,000 per year.
C) decrease by $10,000 per year.
D) increase by $30,000 per year.
29. Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $29,000 cannot be eliminated. The effect on the profit of Manor Company of discontinuing this department would be:
A) a decrease of $4,000.
B) an increase of $4,000.
C) a decrease of $25,000.
D) an increase of $25,000.
30. Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split-off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit.
A) sold at the split-off point, since further processing would result in a loss of $0.50 per unit.
B) processed further, since this will increase profits by $2,500 each period.
C) sold at the split-off point, since further processing will result in a loss of $2,500 each period.
D) processed further, since this will increase profits by $12,500 each period.
B) processed further, since this will increase profits by $2,500 each period. ADDITIONAL
31. Using actual costing, the total product cost for the job, rounded to the nearest dollar, would be:
32. Using normal costing, the total product cost for the job, rounded to the nearest dollar, would be:
Pblem 1. Journal Entries
Record the following journal entries for TEB Company in good form and without abbreviations.
Do not provide explanations beneath your journal entries.
a. Raw materials used in production total $35,000: $30,000 direct and $5,000 indirect
b. Salaries and wages costs incurred/accrued, but not yet paid, $115,000:
Direct manufacturing labor cost, $60,000
Indirect manufacturing labor cost, $40,000
Sales salaries, $15,000
c. Depreciation on factory equipment, $38,000
d. Manufacturing overhead is applied at a predetermined rate of 200% of direct labor cost
e. Cost of goods manufactured for the month, $160,000
f. Goods costing $150,000 to produce were sold on credit for $225,000. Only record the goods leaving the company. Assume someone else will record the credit sale.
Pblem 2. Cost of Goods Sold section of income statement
Prepare for Buttross Company, in good form and without abbreviations, the Cost of Goods Sold section of the income statement (Only the cost of goods sold section. )
In order to present cost of goods sold, you will need to compute the cost of goods manufactured. Do NOT present a Statement of Cost of Goods Manufactured in your solution and do NOT show the computation of cost of goods manufactured .
The following costs relate to one month’s operations:
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Indirect labor 400
Rent on factory building 350
Maintenance of factory equipment 100
Direct material used 1,200
Utilities in factory 200
Direct labor 1,500
Selling expense 900
Administrative expense 700
Work in process, beginning 800
Work in process, end 600
Finished goods, beginning 500
Finished goods, end 250
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Pblem 3. Activity-Based Costing
Prepare for World Company, in good form and without abbreviations, a computation of the estimated product cost per unit for the current period using the activity-based costing approach.
World Company manufactures two products, Product X and Product Z. The company estimates it will incur $100,000 of manufacturing overhead for the current period. Overhead currently is assigned to the products using direct labor hours.
Product X Product Z
Estimated volume in units 400 1,500
Direct labor hours per unit 0.70 1.20
Direct materials cost per unit $10.50 $16.75
Direct labor cost per unit $11.25 $20.00
Manufacturing overhead cost per unit* $33.66 $57.70
In order to compute estimated cost under activity-based costing, the company has identified two activity cost pools, broken down the estimated overhead, and estimated activity levels as follows:
Estimated Estimated Activity
Activity Cost Pool Overhead Product X Product Z Total
Setup machines $ 20,000 200 300 500
Prepare purchase orders 80,000 900 500 1,400
Total $100,000
Pblem 4. Cash Budget
Prepare for StartUp Company, in good form and without abbreviations, a cash budget for the month of January, 2015.
StartUp Company has asked you to prepare a cash budget for the month of January 2015, using the following information:
Projected cash balance at December 31, 2014, $2,000
Minimum cash balance desired January 31, 2015, $4,000.
Minimum cash balance desired, December 31, 2015, $8,000
Projected transactions in January are:
Cash collections from sales $ 25,000
Cash from tax refund 14,000
Purchases of merchandise inventory 10,000
Selling and administrative expenses (excluding depreciation) 25,000
Depreciation of building and equipment 15,000
Purchases of store equipment (one-half to be paid in February) 40,000
Declaration of a dividend (100% to be paid in February) 12,000
Amortization of patents 11,000
Where a projected transaction involves a cash outlay, unless otherwise noted the cash will be paid in January.
The company has a line of credit at the bank, which allows borrowing up to $100,000. Since March 2014, the company has had loans of $30,000 outstanding at 12% interest. Interest is payable quarterly on March 31, June 30, September 30, and December 31.
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