Question 1

Harstin Corporation has provided the following data:
 
-What was the return on investment for the past year?

Accepted Answer

A)  8%. 
B)  20%. 
C)  28%. 
D)  36%. 
A)  8%. 
B)  20%. 
C)  28%. 
D)  36%.

Question 2

(Appendix 11B)Which of the following is NOT an example of an order-getting marketing activity?

Accepted Answer

A)  Advertising. 
B)  Sales travel. 
C)  Training of sales staff. 
D)  Delivery of customers' orders. 
A)  Advertising. 
B)  Sales travel. 
C)  Training of sales staff. 
D)  Delivery of customers' orders.

Question 3

(Appendix 11A)Iraj Company retails two grades of Persian carpets: Grade X and Grade Y.The carpets are sold by rolls.The following is a summary of the company's activities for last year:

$\begin{array}{l}
\begin{array}{lll}
\
\text {Sales in rolls:}\
\text {Budget}\
\text {Actual}\
\text {Contribution margin per roll:}\
\text {Budget}\
\text {Actual}\
\text {Market volume in rolls:}\
\text {Forecast}\
\text {Actual}\
\text {Required:}\
\end{array}
\begin{array}{ccc}
Grade X&Grade Y &Total\
\
1,600 & 400 & 2,000 \
1,980 & 220 & 2,200 \
\
\$ 800 & \$ 2,000 & \
\$ 700 & \$ 2,500 &\
\
&&10,000\
&&13,750
\end{array}
\end{array}$

Required:

a) Assume the two grades of carpet are close substitutes. Calculate the sales volume variance for each grade of carpet and analyze each into a sales mix variance and a sales quantity variance.
b) Analyze the sum of the sales quantity variance into its two components: market volume variance and market share variance.
c) Comment on the appropriateness of the assumption of close substitution between the two grades of carpet. Comment also on the effect, if any, on the analysis in part a) above if this assumption is considered inappropriate.

Accepted Answer

For the following,F = favourable and U =

Question 4

Galant Company's quality cost report is to be based on the following data:

$\begin{array}{ll}
\text { Downtime caused by quality problems } & \$ 11,000 \
\text { Rework labour and overhead } & \$ 32,000 \
\text { Quality circles } & \$ 44,000 \
\text { Returns arising from quality problems } & \$ 97,000 \
\text { Supervision of testing and inspection activities } & \$ 18,000 \
\text { Test and inspection of in-process goods } & \$ 90,000 \
\text { Systems development } & \$ 28,000 \
\text { Amortization of test equipment } & \$ 25,000 \
\text { Warranty repairs and replacements } & \$ 59,000
\end{array}$

Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Accepted Answer

None

Question 5

Sales and average operating assets for Company P and Company Q are given below:

$\begin{array}{lccc}
& \underline { \text { Sales Average } } & \text { Operating Assets } \
\text { Company P } & \$ 20,000 & \$ 8,000 \
\text { Company Q } & \$ 50,000 & \$ 10,000
\end{array}$

What is the margin that each company (Company P and Company Q,respectively)will have to earn in order to generate a return on investment of 20%?

Accepted Answer

A)  2.5% and 5%. 
B)  8% and 4%. 
C)  12% and 16%. 
D)  50% and 100%. 
A)  2.5% and 5%. 
B)  8% and 4%. 
C)  12% and 16%. 
D)  50% and 100%.

Question 6

Internal failure costs result when a defective product is used within the company.

Accepted Answer

A) True 
 B)False

Question 7

Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below:
 $\begin{array}{lr}
\text { Selling Price to Outside Customers } & \$ 50 \
\text { Variable Cost per Unit } & \$ 30 \
\text { Total Fixed Costs } & \$ 400,000 \
\text { Capacity in Units } & 25,000
\end{array}$ 
Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $49 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into outside sales.According to the transfer pricing formula,what is the lower limit on the transfer price?

Accepted Answer

A)  $30. 
B)  $46. 
C)  $49. 
D)  $50. 
A)  $30. 
B)  $46. 
C)  $49. 
D)  $50.

Question 8

The Post Division of the M.T. Woodhead Company produces basic posts that can be sold to outside customers or sold to the Lamp Division of the M.T. Woodhead Company. Last year, the Lamp Division bought all of its 25,000 posts from the Post Division at $1.50 each. The following data are available for last year's activities of the Post Division:
 
The total fixed costs would be the same for all the alternatives considered below.
-Suppose there is ample capacity so that transfers of the posts to the Lamp Division do not cut into sales to outside customers.What is the lowest transfer price that would not reduce the operating income of the Post Division?

Accepted Answer

A)  $0.90. 
B)  $1.35. 
C)  $1.41. 
D)  $1.75. 
A)  $0.90. 
B)  $1.35. 
C)  $1.41. 
D)  $1.75.

Question 9

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about quality costs is correct?

Accepted Answer

A)  They relate only to the manufacturing process. 
B)  They should be focused on appraisal activities. 
C)  They are minimized by having a team of well-trained quality control inspectors. 
D)  They cut across departmental lines and often are not accumulated and reported to management. 
A)  They relate only to the manufacturing process. 
B)  They should be focused on appraisal activities. 
C)  They are minimized by having a team of well-trained quality control inspectors. 
D)  They cut across departmental lines and often are not accumulated and reported to management.

Question 11

Eagan Company's quality cost report is to be based on the following data:
 
-What will be the total internal failure cost appearing on the quality cost report?

Accepted Answer

A)  $64,000. 
B)  $113,000. 
C)  $121,000. 
D)  $124,000. 
A)  $64,000. 
B)  $113,000. 
C)  $121,000. 
D)  $124,000.

Question 12

Ieso Company has two stores: J and K. During November, Ieso Company reported operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses were $60,000 in Store J, and $40,000 in Store K.
-What were the total variable expenses in Store K?

Accepted Answer

A)  $70,000. 
B)  $110,000. 
C)  $130,000. 
D)  $200,000. 
A)  $70,000. 
B)  $110,000. 
C)  $130,000. 
D)  $200,000.

Question 13

(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year:
 
-(Appendix 11A)What was the market volume variance for last year?

Accepted Answer

A)  $18,375.00 favourable. 
B)  $19,687.50 favourable. 
C)  $21,875.00 favourable. 
D)  $21,875.00 unfavourable. 
A)  $18,375.00 favourable. 
B)  $19,687.50 favourable. 
C)  $21,875.00 favourable. 
D)  $21,875.00 unfavourable.

Question 14

Estes Company has assembled the following data for its divisions for the past year:
 
-What were Division B's average operating assets rounded to the nearest dollars?

Accepted Answer

A)  $81,200. 
B)  $130,128. 
C)  $1,333,333. 
D)  $2,080,000. 
A)  $81,200. 
B)  $130,128. 
C)  $1,333,333. 
D)  $2,080,000.

Question 15

The following selected data pertain to Beck Co.'s Beam Division for last year:
 
-What was the residual income?

Accepted Answer

A)  $10,000. 
B)  $40,000. 
C)  $50,000. 
D)  $80,000. 
A)  $10,000. 
B)  $40,000. 
C)  $50,000. 
D)  $80,000.

Question 16

Eacker Company's quality cost report is to be based on the following data:
 
-What will be the total prevention cost appearing on the quality cost report?

Accepted Answer

A)  $103,000. 
B)  $145,000. 
C)  $151,000. 
D)  $155,000. 
A)  $103,000. 
B)  $145,000. 
C)  $151,000. 
D)  $155,000.

Question 17

Faust Company's quality cost report is to be based on the following data:
 
-What will be the total appraisal cost appearing on the quality cost report?

Accepted Answer

A)  $74,000. 
B)  $78,000. 
C)  $81,000. 
D)  $181,000. 
A)  $74,000. 
B)  $78,000. 
C)  $81,000. 
D)  $181,000.

Question 18

(Appendix 11A)A favourable sales volume variance for a single-product firm necessarily implies a favourable market share variance.

Accepted Answer

A) True 
 B)False

Question 19

Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.

Accepted Answer

A) True 
 B)False

Question 20

How is manufacturing cycle efficiency (MCE)computed?

Accepted Answer

A)  By dividing throughput time by delivery cycle time. 
B)  By dividing process time by delivery cycle time. 
C)  By dividing value-added time by throughput time. 
D)  By dividing value-added time by delivery-cycle time. 
A)  By dividing throughput time by delivery cycle time. 
B)  By dividing process time by delivery cycle time. 
C)  By dividing value-added time by throughput time. 
D)  By dividing value-added time by delivery-cycle time.

Harstin Corporation has provided the following data: -What was the return on investment for the past year?

(Appendix 11B)Which of the following is NOT an example of an order-getting marketing activity?

Sales and average operating assets for Company P and Company Q are given below: Operating Assets Company P \ 20,000 \ 8,000 Company Q \ 50,000 \ 10,000 What is the margin that each company (Company P and Company Q,respectively)will have to earn in order to generate a return on investment of 20%?

Internal failure costs result when a defective product is used within the company.

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Which of the following statements about quality costs is correct?

Eagan Company's quality cost report is to be based on the following data: -What will be the total internal failure cost appearing on the quality cost report?

(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year: -(Appendix 11A)What was the market volume variance for last year?

Estes Company has assembled the following data for its divisions for the past year: -What were Division B's average operating assets rounded to the nearest dollars?

The following selected data pertain to Beck Co.'s Beam Division for last year: -What was the residual income?

Eacker Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Faust Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

(Appendix 11A)A favourable sales volume variance for a single-product firm necessarily implies a favourable market share variance.

Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.

How is manufacturing cycle efficiency (MCE)computed?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Filters

Exam 11: Reporting for Control

Harstin Corporation has provided the following data: -What was the return on investment for the past year?

(Appendix 11B)Which of the following is NOT an example of an order-getting marketing activity?

Sales and average operating assets for Company P and Company Q are given below: Operating Assets Company P \ 20,000 \ 8,000 Company Q \ 50,000 \ 10,000 What is the margin that each company (Company P and Company Q,respectively)will have to earn in order to generate a return on investment of 20%?

Internal failure costs result when a defective product is used within the company.

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Which of the following statements about quality costs is correct?

Eagan Company's quality cost report is to be based on the following data: -What will be the total internal failure cost appearing on the quality cost report?

(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year: -(Appendix 11A)What was the market volume variance for last year?

Estes Company has assembled the following data for its divisions for the past year: -What were Division B's average operating assets rounded to the nearest dollars?

The following selected data pertain to Beck Co.'s Beam Division for last year: -What was the residual income?

Eacker Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Faust Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

(Appendix 11A)A favourable sales volume variance for a single-product firm necessarily implies a favourable market share variance.

Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.

How is manufacturing cycle efficiency (MCE)computed?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Filters