Question 1

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Accepted Answer

A)  Managers at the local/divisional level will act in the best interest of the organization. 
B)  Top managers at corporate headquarters will act in the best interest of the organization. 
C)  Top managers at corporate headquarters have access to better information for operational decisions.. 
D)  Managers at the local/divisional level have access to better information for operational decisions. 
A)  Managers at the local/divisional level will act in the best interest of the organization. 
B)  Top managers at corporate headquarters will act in the best interest of the organization. 
C)  Top managers at corporate headquarters have access to better information for operational decisions.. 
D)  Managers at the local/divisional level have access to better information for operational decisions.

Question 2

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Accepted Answer

A)  This method does not make allowance for difference in the size of compared divisions. 
B)  Opportunities may be undertaken that will decrease the overall return on investment. 
C)  The minimum required rate of return may eliminate desirable opportunities from consideration. 
D)  Residual income does not measure how effectively the division manager controls costs. 
A)  This method does not make allowance for difference in the size of compared divisions. 
B)  Opportunities may be undertaken that will decrease the overall return on investment. 
C)  The minimum required rate of return may eliminate desirable opportunities from consideration. 
D)  Residual income does not measure how effectively the division manager controls costs.

Question 3

Thais 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)  $84,000. 
B)  $92,000. 
C)  $98,000. 
D)  $113,000. 
A)  $84,000. 
B)  $92,000. 
C)  $98,000. 
D)  $113,000.

Question 4

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Accepted Answer

A) True 
 B)False

Question 5

Ricric Corporation has provided the following data for one of its products:
 
-The manufacturing cycle efficiency for this operation is closest to which of the following?

Accepted Answer

A)  0.18. 
B)  0.33. 
C)  0.375. 
D)  0.45. 
A)  0.18. 
B)  0.33. 
C)  0.375. 
D)  0.45.

Question 6

Which of the following best describes a segment of a business responsible for both revenues and expenses?

Accepted Answer

A)  A cost centre. 
B)  An investment centre. 
C)  A profit centre. 
D)  A residual income centre. 
A)  A cost centre. 
B)  An investment centre. 
C)  A profit centre. 
D)  A residual income centre.

Question 7

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Accepted Answer

A) True 
 B)False

Question 8

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

$\begin{array}{ll}
\text { Amortization of test equipment } & \$ 94,000 \
\text { Quality cireles } & \$ 54,000 \
\text { Product recalls } & \$ 20,000 \
\text { Test and inspection of incoming materials } & \$ 82,000 \
\text { Debugging software errors } & \$ 11,000 \
\text { Rework labour and overhead } & \$ 48,000 \
\text { Technical support provided to suppliers } & \$ 12,000 \
\text { Net cost of scrap } & \$ 29,000 \
\text { Lost sales due to poor quality } & \$ 74,000
\end{array}$

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 9

Which of the following would be classified as an appraisal cost on a quality cost report?

Accepted Answer

A)  Supervision of testing and inspection activities. 
B)  Systems development. 
C)  Quality engineering. 
D)  Quality training. 
A)  Supervision of testing and inspection activities. 
B)  Systems development. 
C)  Quality engineering. 
D)  Quality training.

Question 10

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Accepted Answer

A) True 
 B)False

Question 11

Eacker 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)  $128,000. 
B)  $165,000. 
C)  $185,000. 
D)  $196,000. 
A)  $128,000. 
B)  $165,000. 
C)  $185,000. 
D)  $196,000.

Question 12

Which of the following would be classified as a prevention cost on a quality cost report?

Accepted Answer

A)  Cost of field servicing and handling complaints. 
B)  Warranty repairs and replacements. 
C)  Systems development. 
D)  Rework labour and overhead. 
A)  Cost of field servicing and handling complaints. 
B)  Warranty repairs and replacements. 
C)  Systems development. 
D)  Rework labour and overhead.

Question 13

The Millard Division's operating data for the past two years are provided below:
 
Millard Division's margin in Year 2 was 150% of the margin in Year 1.
-What were the sales for Year 2?

Accepted Answer

A)  $1,200,000. 
B)  $3,000,000. 
C)  $3,200,000. 
D)  $3,333,333. 
A)  $1,200,000. 
B)  $3,000,000. 
C)  $3,200,000. 
D)  $3,333,333.

Question 14

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P)yearly from an outside supplier at a price of $90 per wheel set.Division Q would like to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set.What would be the change in annual operating income for the company as a whole,compared to what it is currently?

Accepted Answer

A)  $135,000. 
B)  $225,000. 
C)  $600,000. 
D)  $750,000. 
A)  $135,000. 
B)  $225,000. 
C)  $600,000. 
D)  $750,000.

Question 15

The Northern Division of the Gordon Company reported the following data for last year:
 
-What was the return on investment last year for the Northern Division?

Accepted Answer

A)  18.000%. 
B)  28.125%. 
C)  40.000%. 
D)  62.500%. 
A)  18.000%. 
B)  28.125%. 
C)  40.000%. 
D)  62.500%.

Question 16

The Holmes Division recorded operating data as follows for the past year:
 
-For the past year,what was the turnover?

Accepted Answer

A)  2. 
B)  4. 
C)  10. 
D)  25.200,000/100,000 
A)  2. 
B)  4. 
C)  10. 
D)  25.200,000/100,000

Question 17

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Accepted Answer

A) True 
 B)False

Question 18

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

Accepted Answer

A) True 
 B)False

Question 19

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Accepted Answer

A) True 
 B)False

Question 20

Eade 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)  $54,000. 
B)  $75,000. 
C)  $80,000. 
D)  $121,000. 
A)  $54,000. 
B)  $75,000. 
C)  $80,000. 
D)  $121,000.

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Thais 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?

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Ricric Corporation has provided the following data for one of its products: -The manufacturing cycle efficiency for this operation is closest to which of the following?

Which of the following best describes a segment of a business responsible for both revenues and expenses?

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Which of the following would be classified as an appraisal cost on a quality cost report?

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Eacker 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?

Which of the following would be classified as a prevention cost on a quality cost report?

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1. -What were the sales for Year 2?

The Northern Division of the Gordon Company reported the following data for last year: -What was the return on investment last year for the Northern Division?

The Holmes Division recorded operating data as follows for the past year: -For the past year,what was the turnover?

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Eade 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?

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

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Exam 11: Reporting for Control

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Thais 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?

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Ricric Corporation has provided the following data for one of its products: -The manufacturing cycle efficiency for this operation is closest to which of the following?

Which of the following best describes a segment of a business responsible for both revenues and expenses?

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Which of the following would be classified as an appraisal cost on a quality cost report?

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Eacker 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?

Which of the following would be classified as a prevention cost on a quality cost report?

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1. -What were the sales for Year 2?

The Northern Division of the Gordon Company reported the following data for last year: -What was the return on investment last year for the Northern Division?

The Holmes Division recorded operating data as follows for the past year: -For the past year,what was the turnover?

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Eade 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?

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