Question 1

Which of the following could be considered a segment?

Accepted Answer

A) division 
B) product-line 
C) sales territory 
D) all of the above 
A) division 
B) product-line 
C) sales territory 
D) all of the above

Question 2

Absorption costing is used to calculate two measures of profit: gross profit and operating income.

Accepted Answer

A) True 
 B)False

Question 3

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. $\begin{array}{lr}&\text { Division } X\
\text { Sales } & \$ 100,000 \
\text { Variable manufacturing costs } & 60,000 \
\text { Gross profit } & \$ 40,000 \
\text { Fixed expenses (direct and allocated) } & 50,000 \
\text { Operating income (loss) } & \$(10,000)
\end{array}$
What would be the effect on the firm's operating income if Division X were discontinued?

Accepted Answer

A) increase $10,000 
B) decrease $40,000 
C) decrease $100,000 
D) decrease $10,000 
A) increase $10,000 
B) decrease $40,000 
C) decrease $100,000 
D) decrease $10,000

Question 4

Which of the following statements is TRUE?

Accepted Answer

A) Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B) Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C) Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D) Absorption costing net income exceeds variable costing net income when units produced are greater than units sold. 
A) Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B) Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C) Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D) Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.

Question 5

The Crested Butte Company recorded the following data for a product line: $$\begin{array} { l r } 
\text { Sales } & \$ 250,000 \
\text { Variable manufacturing expenses } & 50,000 \
\text { Direct fixed manufacturing expenses } & 37,500 \
\text { Variable selling and administrative expenses } & 25,000 \
\text { Direct fixed selling and admin. expenses } & 30,000
\end{array}$$
What is the contribution margin of the product line?

Accepted Answer

A) $175,000 
B) $162,500 
C) $142,500 
D) $170,000 
A) $175,000 
B) $162,500 
C) $142,500 
D) $170,000

Question 6

What are some of the pricing practices regulated by law?

Accepted Answer

Laws have been passed regulating the lev

Question 7

Which of the following markets is characterized by the following: many buyers and sellers, a homogeneous product, easy entry into and exit from the industry, and all firms are price takers?

Accepted Answer

A) perfectly competitive market 
B) monopolistic competition 
C) monopoly 
D) oligopoly 
A) perfectly competitive market 
B) monopolistic competition 
C) monopoly 
D) oligopoly

Question 8

The two factors that influence the ability of companies to adjust price are price elasticity and __________ structure.

Accepted Answer

The answer of The two factors that influence the ability...

Question 9

Lilah Fabulous operates a catering company. Lilah provides food and servers for parties. She also rents tables, chairs, dinnerware, glassware, and linens. Jeff and Jessica Mantooth contacted Lilah about catering for their daughter's wedding. They have requested an open bar, hors d'oeuvres (enough for 300 people), a large wedding cake, and forty tables with linens, dinnerware, and glassware. Lilah put together the following bid: $$\begin{array} { l r } 
\text { Food } ( 300 \times \$ 7.50 ) & \$ 2,250 \
\text { Wedding cake } ( \$ 150 ) & 150 \
\text { Beverages } ( 300 \times \$ 5 ) & 1,500 \
\text { Servers } ( 12 \times 4 \text { hours } \times \$ 10 ) & 480 \
\text { Bartender } ( 1 \times 3 \text { hours } \times \$ 12 ) & 36 \
\text { Rental of: } & \
\text { Linens } & 80 \
\text { Tables } & 200 \
\text { Dinnerware } & 80 \
\text { Glassware } & 80 \
\text { Total } & \$ 4,856
\end{array}$$ 
Required:
Suppose that the Mantooths blanch when they see the bid. Mr. Mantooth suggests that they had hoped to spend no more than $3,750 or so on the party. How could Lilah work with the Holmses to achieve a target cost of that amount?

Accepted Answer

Lilah will need to sit down with the Man

Question 10

Burlywood Company has two divisions with the following segment margins for the current year: Rosewood, $170,000; Sandalwood, $230,000. Common expenses of the company are $36,000. Calculate Burlywood Company's net income.

Accepted Answer

A) $452,000 
B) $400,000 
C) $364,000 
D) $500,000 
A) $452,000 
B) $400,000 
C) $364,000 
D) $500,000

Question 11

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

Accepted Answer

The answer of Using variable costing procedures, net income will...

Question 12

Octagonal Company has the following information for 2018: $\begin{array}{lr}
\text { Selling price } & \$ 150 \text { per unit } \
\text { Variable production costs } & \$ 40 \text { per unit produced } \
\text { Variable selling and admin. expenses } & \$ 16 \text { per unit sold } \
\text { Fixed production costs } & \$ 200,000 \
\text { Fixed selling and admin. expenses } & \$ 140,000 \
\text { Units produced } & 10,000 \text { units } \
\text { Units sold } & 8,000 \text { units }
\end{array}$ There were no beginning inventories.
What is the net income for Octagonal using the absorption costing method?

Accepted Answer

A) $600,000 
B) $480,000 
C) $1,200,000 
D) $452,000 
A) $600,000 
B) $480,000 
C) $1,200,000 
D) $452,000

Question 13

Lorillard Corporation has the following information for April, May, and June 2018: $\begin{array} { l r r r } & \text { April } & \text { May } & \text { June } \ \text { Units produced } & 12,500 & 12,500 & 12,500 \ \text { Units sold } & 8,750 & 10,625 & 13,125 \end{array}$
Production costs per unit (based on 12,500 units) are as follows:
$\begin{array}{lr}
\text { Direct materials } & \$ 15 \
\text { Direct labor } & 10 \
\text { Variable factory overhead } & 7.50 \
\text { Fixed factory overhead } & 5 \
\text { Variable selling and admin. expenses } & 12.50 \
\text { Fixed selling and admin. expenses } & 5
\end{array}$ There were no beginning inventories for April 2018, and all units were sold for $50. Costs are stable over the three months.
What is the April ending inventory for Lorillard Corporation using the variable costing method?

Accepted Answer

A) $312,500 
B) $187,500 
C) $121,875 
D) $140,000 
A) $312,500 
B) $187,500 
C) $121,875 
D) $140,000

Question 14

The income measurement required for external financial reporting is called __________ costing.

Accepted Answer

The answer of The income measurement required for external financial...

Question 15

Octagonal Company has the following information for 2018: $\begin{array}{lr}
\text { Selling price } & \$ 150 \text { per unit } \
\text { Variable production costs } & \$ 40 \text { per unit produced } \
\text { Variable selling and admin. expenses } & \$ 16 \text { per unit sold } \
\text { Fixed production costs } & \$ 200,000 \
\text { Fixed selling and admin. expenses } & \$ 140,000 \
\text { Units produced } & 10,000 \text { units } \
\text { Units sold } & 8,000 \text { units }
\end{array}$ There were no beginning inventories. What is the cost of ending inventory for Octagonal using the variable costing method?

Accepted Answer

A) $80,000 
B) $180,000 
C) $120,000 
D) $300,000 
A) $80,000 
B) $180,000 
C) $120,000 
D) $300,000

Question 16

Target costing sets costs based on the price that customers are willing to pay.

Accepted Answer

A) True 
 B)False

Question 17

According to Hansen and Mowen, which of the following product life cycle stages comes first?

Accepted Answer

A) Introduction 
B) Growth 
C) Development 
D) Decline 
A) Introduction 
B) Growth 
C) Development 
D) Decline

Question 18

Theta, Inc., sells three different products. The following information is provided by Theta: $\begin{array}{lrrrr}
&&&\text { Sales Quantity }&\text { Sales Quantity }\
\text { Product } & \text { Old Price } & \text { New Price } &\text { (at old price) }&\text { (at NEW price) }\
\text { Alpha } & \$ 20.00 & \$ 25.00 & 5,000 & 5,100 \
\text { Beta } & 10.00 & 5.00 & 8,000 & 14,000 \
\text { Gamma } & 40.00 & 39.00 & 900 & 850
\end{array}$ Which of the following is the price elasticity of demand for the product Beta? (Give the answer to one decimal place.)

Accepted Answer

A) ?1.5 
B) 1.2 
C) ?2.2 
D) 2.5 
A) ?1.5 
B) 1.2 
C) ?2.2 
D) 2.5

Question 19

The stage where revenues always decrease is the __________ stage.

Accepted Answer

The answer of The stage where revenues always decrease is...

Question 20

What is the primary difference between variable and absorption costing?

Accepted Answer

A) inclusion of fixed selling expenses in product costs 
B) inclusion of variable factory overhead in period costs 
C) inclusion of fixed selling expenses in period costs 
D) inclusion of fixed factory overhead in product costs 
A) inclusion of fixed selling expenses in product costs 
B) inclusion of variable factory overhead in period costs 
C) inclusion of fixed selling expenses in period costs 
D) inclusion of fixed factory overhead in product costs

Which of the following could be considered a segment?

Absorption costing is used to calculate two measures of profit: gross profit and operating income.

Which of the following statements is TRUE?

What are some of the pricing practices regulated by law?

Which of the following markets is characterized by the following: many buyers and sellers, a homogeneous product, easy entry into and exit from the industry, and all firms are price takers?

The two factors that influence the ability of companies to adjust price are price elasticity and __________ structure.

Burlywood Company has two divisions with the following segment margins for the current year: Rosewood, $170,000; Sandalwood, $230,000. Common expenses of the company are $36,000. Calculate Burlywood Company's net income.

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

The income measurement required for external financial reporting is called __________ costing.

Target costing sets costs based on the price that customers are willing to pay.

According to Hansen and Mowen, which of the following product life cycle stages comes first?

The stage where revenues always decrease is the __________ stage.

What is the primary difference between variable and absorption costing?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Which of the following could be considered a segment?

Absorption costing is used to calculate two measures of profit: gross profit and operating income.

Which of the following statements is TRUE?

What are some of the pricing practices regulated by law?

Which of the following markets is characterized by the following: many buyers and sellers, a homogeneous product, easy entry into and exit from the industry, and all firms are price takers?

The two factors that influence the ability of companies to adjust price are price elasticity and __________ structure.

Burlywood Company has two divisions with the following segment margins for the current year: Rosewood, $170,000; Sandalwood, $230,000. Common expenses of the company are $36,000. Calculate Burlywood Company's net income.

Using variable costing procedures, net income will be less than __________ when production is less than sales volume.

The income measurement required for external financial reporting is called __________ costing.

Target costing sets costs based on the price that customers are willing to pay.

According to Hansen and Mowen, which of the following product life cycle stages comes first?

The stage where revenues always decrease is the __________ stage.

What is the primary difference between variable and absorption costing?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters