Question 1

What costs are treated as product costs under variable costing?

Accepted Answer

A)  Only variable costs. 
B)  Only variable production costs. 
C)  All variable costs. 
D)  All variable and fixed manufacturing costs. 
A)  Only variable costs. 
B)  Only variable production costs. 
C)  All variable costs. 
D)  All variable and fixed manufacturing costs.

Question 2

Todweed Academy allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools:$\begin{array}{ccccc} 
& \text { Lower } & \text { Middle } & \text { Upper } \
{\text { School }} & \text { School } & \text { School } & \text { School } & \text { Total } \
\text { Tuition revenue } & \$ 1,000,000 & \$ 800,000 & \$ 1,200,000 & \$ 3,000,000\\text { Marketing and }\
\text { administrative }&&&&\$1,200,000
\end{array}$Using revenue as an allocation base, the amount of costs allocated to the Middle School is calculated to be:

Accepted Answer

A)  $240,000. 
B)  $320,000. 
C)  $400,000. 
D)  $480,000. 
E)  $600,000. 
A)  $240,000. 
B)  $320,000. 
C)  $400,000. 
D)  $480,000. 
E)  $600,000.

Question 3

A significant problem in comparing profitability measures among companies is the:

Accepted Answer

A)  Lack of general agreement over which profitability measure is best. 
B)  Lack of agreement on how to measure the size of the companies. 
C)  Differences in the accounting methods used by the companies. 
D)  Differences in the dividend policies of the companies. 
E)  Effect of interest rates on net income. 
A)  Lack of general agreement over which profitability measure is best. 
B)  Lack of agreement on how to measure the size of the companies. 
C)  Differences in the accounting methods used by the companies. 
D)  Differences in the dividend policies of the companies. 
E)  Effect of interest rates on net income.

Question 4

The "risk-averse" manager will be improperly biased to:

Accepted Answer

A)  Seek out decisions with uncertain outcomes. 
B)  Make risky decisions. 
C)  Avoid decisions with uncertain outcomes. 
D)  Maximize his or her own risk and minimize the company's risk. 
E)  Use resources beyond his/her control. 
A)  Seek out decisions with uncertain outcomes. 
B)  Make risky decisions. 
C)  Avoid decisions with uncertain outcomes. 
D)  Maximize his or her own risk and minimize the company's risk. 
E)  Use resources beyond his/her control.

Question 5

A company's operating income recently increased by 30% while its inventory increased in a given year. Which of the following accounting methods would produce the most favorable income results?

Accepted Answer

A)  Full costing. 
B)  Direct costing. 
C)  Variable costing. 
D)  Standard direct costing. 
A)  Full costing. 
B)  Direct costing. 
C)  Variable costing. 
D)  Standard direct costing.

Question 6

A company had income of $50,000 using variable costing for a given period. Beginning and ending inventories for that period were 80,000 units and 90,000 units, respectively. If the fixed overhead application rate were $10.00 per unit, what would operating income have been using full costing?

Accepted Answer

A)  ($50,000). 
B)  $170,000. 
C)  $150,000. 
D)  $0. 
E)  Cannot be determined from the information given. 
A)  ($50,000). 
B)  $170,000. 
C)  $150,000. 
D)  $0. 
E)  Cannot be determined from the information given.

Question 7

Home Products Inc has failed to reach its planned activity level during its first two years of operation. The following table shows the relationship between units produced, sales, and normal activity for these years and the projected relationship for Year 3. All prices and costs have remained the same for the last two years and are expected to do so in Year 3. Income has been positive in both Year 1 and Year 2.$\begin{array}{llll}&\text { Units } & & \text { Planned } \
&\text { Produced } & \text { Sales } & \text { Production }\
\text { Year 1 } & 90,000 & 90,000 & 100,000 \
\text { Year 2 } & 95,000 & 95,000 & 100,000 \
\text { Year 3 } & 95,000 & 90,000 & 100,000
\end{array}$Because Home Products uses a full costing system, one would predict operating income for Year 3 to be:

Accepted Answer

A)  Greater than operating income under variable costing. 
B)  Less than year 2. 
C)  The same as operating income under variable costing. 
D)  Less than the operating income under variable costing. 
A)  Greater than operating income under variable costing. 
B)  Less than year 2. 
C)  The same as operating income under variable costing. 
D)  Less than the operating income under variable costing.

Question 8

Expenditures made in revenue centers usually include:

Accepted Answer

A)  Order-purchasing costs. 
B)  Order-getting costs. 
C)  Order-producing costs. 
D)  Order-scheduling costs. 
E)  Order-delivering costs. 
A)  Order-purchasing costs. 
B)  Order-getting costs. 
C)  Order-producing costs. 
D)  Order-scheduling costs. 
E)  Order-delivering costs.

Question 9

Which of the following is not a principle of employment contracts?

Accepted Answer

A)  Risk sharing between the manager and the company can improve motivation. 
B)  Exclude known uncontrollable factors from the contract. 
C)  Interests of manager may not align with those of top management. 
D)  Uncertainty affects future wages. 
A)  Risk sharing between the manager and the company can improve motivation. 
B)  Exclude known uncontrollable factors from the contract. 
C)  Interests of manager may not align with those of top management. 
D)  Uncertainty affects future wages.

Question 10

Cost allocation of service department costs to production departments makes the evaluation and control processes in the production departments:

Accepted Answer

A)  Simpler. 
B)  More complex. 
C)  Forthright and fair. 
D)  Less efficient. 
E)  Counter-productive. 
A)  Simpler. 
B)  More complex. 
C)  Forthright and fair. 
D)  Less efficient. 
E)  Counter-productive.

Question 11

Which of the following is not an objective when choosing a cost allocation method?

Accepted Answer

A)  Provide an incentive for managers to make decisions consistent with top management's goals. 
B)  Provide an opportunity for managers to make decisions consistent with the manager's goals. 
C)  Provide a basis for a fair evaluation of manager's performance. 
D)  Motivate managers to exert a high level of effort. 
A)  Provide an incentive for managers to make decisions consistent with top management's goals. 
B)  Provide an opportunity for managers to make decisions consistent with the manager's goals. 
C)  Provide a basis for a fair evaluation of manager's performance. 
D)  Motivate managers to exert a high level of effort.

Question 12

Which of the following can be inferred as an argument against the use of variable costing?

Accepted Answer

A)  Full costing overstates the balance sheet value of inventories. 
B)  Variable factory overhead is a period cost. 
C)  Fixed factory overhead is difficult to allocate properly. 
D)  Fixed factory overhead is necessary for the production of a product. 
A)  Full costing overstates the balance sheet value of inventories. 
B)  Variable factory overhead is a period cost. 
C)  Fixed factory overhead is difficult to allocate properly. 
D)  Fixed factory overhead is necessary for the production of a product.

Question 13

Bradbo owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each restaurant was treated as a profit center for performance evaluation purposes. Although the restaurants had separate kitchens, they shared a central baking facility. The principal costs of the baking area included materials, supplies, labor, and depreciation and maintenance on the equipment.
Bradbo 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 using dual allocation and equal sharing of fixed costs. In April, the costs were $30,000, of which $16,000 were fixed. The Pork Palace 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 Chicken Hut in April is calculated to be:

Accepted Answer

A)  $8,000. 
B)  $14,300. 
C)  $15,700. 
D)  $18,000. 
E)  $22,000. 
A)  $8,000. 
B)  $14,300. 
C)  $15,700. 
D)  $18,000. 
E)  $22,000.

Question 14

Which of the following is not a criterion for choosing the cost allocation method?

Accepted Answer

A)  Motivate managers. 
B)  Provide an incentive for managers. 
C)  Profitability focus. 
D)  Basis for fair evaluation. 
A)  Motivate managers. 
B)  Provide an incentive for managers. 
C)  Profitability focus. 
D)  Basis for fair evaluation.

Question 15

SBU is the acronym for:

Accepted Answer

A)  Small Business Unit. 
B)  Sustainable Business Unit. 
C)  Standard Business Unit. 
D)  Strategic Business Unit. 
A)  Small Business Unit. 
B)  Sustainable Business Unit. 
C)  Standard Business Unit. 
D)  Strategic Business Unit.

Question 16

The common factor among control systems in hiring practices, promotion policies, and strategic performance measurement is:

Accepted Answer

A)  Management sets expectations for desired employee performance. 
B)  Employee-determined expectations for desired employee performance. 
C)  Coordination of activities. 
D)  Communication of results. 
A)  Management sets expectations for desired employee performance. 
B)  Employee-determined expectations for desired employee performance. 
C)  Coordination of activities. 
D)  Communication of results.

Question 17

The balanced scorecard is particularly important in difficult economic times because:

Accepted Answer

A)  Financial measures are even more important. 
B)  Nonfinancial measures are even more important. 
C)  Financial measures may be distorted. 
D)  Nonfinancial measures may be distorted. 
A)  Financial measures are even more important. 
B)  Nonfinancial measures are even more important. 
C)  Financial measures may be distorted. 
D)  Nonfinancial measures may be distorted.

Question 18

From a strategic standpoint, profit centers tend to:

Accepted Answer

A)  Free the center manager from concerns about markets. 
B)  Place more cost emphasis on rush orders. 
C)  Provide incentive for coordination among managers of different functional units. 
D)  Focus managers on cost control rather than revenue generation. 
E)  All of these answer choices are correct. 
A)  Free the center manager from concerns about markets. 
B)  Place more cost emphasis on rush orders. 
C)  Provide incentive for coordination among managers of different functional units. 
D)  Focus managers on cost control rather than revenue generation. 
E)  All of these answer choices are correct.

Question 19

Risk plays a critical role in the decision making process. However, numerous studies have shown that it is common for executives, managers and individuals to be considered:

Accepted Answer

A)  Risk neutral. 
B)  Risk prone. 
C)  Risk averse. 
D)  Risk seekers. 
A)  Risk neutral. 
B)  Risk prone. 
C)  Risk averse. 
D)  Risk seekers.

Question 20

Managers who are risk-seeking:

Accepted Answer

A)  Seek risky projects that promise some chance of a benefit. 
B)  Seek risky projects that promise some chance of a high benefit, although the projects may have a risk of low benefit. 
C)  Seek risky projects. 
D)  Seek high risk projects that promise some chance of a high benefit, although the projects may have a very significant risk of no benefit. 
A)  Seek risky projects that promise some chance of a benefit. 
B)  Seek risky projects that promise some chance of a high benefit, although the projects may have a risk of low benefit. 
C)  Seek risky projects. 
D)  Seek high risk projects that promise some chance of a high benefit, although the projects may have a very significant risk of no benefit.

What costs are treated as product costs under variable costing?

A significant problem in comparing profitability measures among companies is the:

The "risk-averse" manager will be improperly biased to:

A company's operating income recently increased by 30% while its inventory increased in a given year. Which of the following accounting methods would produce the most favorable income results?

A company had income of $50,000 using variable costing for a given period. Beginning and ending inventories for that period were 80,000 units and 90,000 units, respectively. If the fixed overhead application rate were $10.00 per unit, what would operating income have been using full costing?

Expenditures made in revenue centers usually include:

Which of the following is not a principle of employment contracts?

Cost allocation of service department costs to production departments makes the evaluation and control processes in the production departments:

Which of the following is not an objective when choosing a cost allocation method?

Which of the following can be inferred as an argument against the use of variable costing?

Which of the following is not a criterion for choosing the cost allocation method?

SBU is the acronym for:

The common factor among control systems in hiring practices, promotion policies, and strategic performance measurement is:

The balanced scorecard is particularly important in difficult economic times because:

From a strategic standpoint, profit centers tend to:

Risk plays a critical role in the decision making process. However, numerous studies have shown that it is common for executives, managers and individuals to be considered:

Managers who are risk-seeking:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

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Exam 18: Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

What costs are treated as product costs under variable costing?

A significant problem in comparing profitability measures among companies is the:

The "risk-averse" manager will be improperly biased to:

A company's operating income recently increased by 30% while its inventory increased in a given year. Which of the following accounting methods would produce the most favorable income results?

A company had income of $50,000 using variable costing for a given period. Beginning and ending inventories for that period were 80,000 units and 90,000 units, respectively. If the fixed overhead application rate were $10.00 per unit, what would operating income have been using full costing?

Expenditures made in revenue centers usually include:

Which of the following is not a principle of employment contracts?

Cost allocation of service department costs to production departments makes the evaluation and control processes in the production departments:

Which of the following is not an objective when choosing a cost allocation method?

Which of the following can be inferred as an argument against the use of variable costing?

Which of the following is not a criterion for choosing the cost allocation method?

SBU is the acronym for:

The common factor among control systems in hiring practices, promotion policies, and strategic performance measurement is:

The balanced scorecard is particularly important in difficult economic times because:

From a strategic standpoint, profit centers tend to:

Risk plays a critical role in the decision making process. However, numerous studies have shown that it is common for executives, managers and individuals to be considered:

Managers who are risk-seeking:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters