Académique Documents
Professionnel Documents
Culture Documents
d. $7.20.
10-1. A standard is:
10-8. The actual direct labour rate per hour was:
a. unrelated to budgeting since standards are used for control purposes
only. a. $6.00.
b. normally set at the ideal rather than the practical level of cost, efficiency, b. $6.50.
or quantity. c. $8.00.
c. normally not applied to the variable portion of overhead. d. $8.60.
d. the budgeted cost for one unit of product.
10-9. The labour rate variance was:
10-2. The materials price variance should be computed:
a. $2,280 favourable.
a. when materials are purchased. b. $2,280 unfavourable.
b. when materials are used in production. c. $920 favourable.
c. based upon the amount of materials used in production when only a d. $920 unfavourable.
portion of materials purchased is actually used.
d. based upon the difference between the actual quantity of inputs and the 10-10. Webber, Inc. gathers the following information about it operations:
standard quantity allowed for output times the standard price. Throughput time, 4 hours; Delivery cycle time, 8 hours; Process time, 1
hour; Queue time, 2 hours. Webber's manufacturing cycle efficiency (MCE)
10-3. Which of the following represents value-added time in the is:
manufacturing cycle?
a. 50%.
a. Inspection Time. b. 75%.
b. Queue Time. c. 25%.
c. Move Time. d. 12%.
d. Process Time.
Segment Reporting, Profitability Analysis, and Decentralization
10-4. The throughput time, or velocity of production, consists of:
12-1. Which of the following costs is not deducted from sales to arrive at the
a. Process Time. divisional segment margin?
b. Inspection Time and Move Time.
c. Process Time, Inspection Time, and Move Time. a. Traceable fixed expenses.
d. Process Time, Inspection Time, Move Time, and Queue Time. b. Common fixed expenses.
c. Direct materials.
10-5. Questions 5 - 9 refer to the following: d. Direct labour.
Dark Company uses standard costing for the single product the company
makes and sells. The following data are for the month of April: 12-2. The performance of the manager of East Division is measured by
residual income. Which of the following would increase the manager's
1. Actual cost of direct material purchased and used: $62,400. performance measure?
a. 1 lb.
Segment margin $5,000 $12,500
b. 4 lbs.
c. 6 lbs.
If total net income for the Kartoom was $9,000 for 2000, then the total fixed
d. 2 lbs.
costs (traceable and common) for the year were:
10-7. The actual material cost per pound was:
a. $17,500.
b. $8,500.
a. $6.50.
c. $15,500.
b. $6.00.
d. $24,000.
12-5. Segmented income statements are most meaningful to managers c. promote those products having the highest contribution margin per
when they are prepared: unit of a constrained resource.
d. promote those products having the highest contribution margins and
a. on an absorption cost basis. contribution margin ratios.
b. on a cost behaviour (contribution) basis.
c. on a cash basis. 13-4. Two or more products produced from a common input are termed:
d. in a single-step format.
a. common costs.
12-6. The Northern Division of the Kimball Company reported the following b. joint products.
data for last year: Sales, $800,000; Shareholders' Equity, $250,000; c. joint costs.
Operating Expenses, $600,000; Average Operating Assets, $400,000; d. by-products.
Interest Expense, $40,000; Minimum Required Rate of Return, 14%; Taxes
Expense, $50,000; The return on investment last year for the Northern 13-5. In a decision to sell or process further beyond the split-off point, a
Division was: manager should base the decision on:
a. 6% North South
b. 30%
c. 18% Sales $450,000 $400,000
d. 26%
Variable costs 225,000 150,000
12-10. The turnover for the past year was:
Direct fixed costs 130,000 105,000
a. 1.4
b. 3.3
c. 10.0 Allocated corporate costs 120,000 95,000
d. 3.0
Net income (loss) (25,000) 50,000
13-2. The decision to drop a product line should be based on: 13-8. Jack's Personal Devices makes and sells hand-held computers. Each
computer regularly sells for $200. The following cost data per computer are
a. the fact that the product line shows a net loss over several periods. based on a full capacity of 12,000 computers produced each period: Direct
b. the ability of the firm to eliminate some fixed costs as a result of dropping materials. $75; Direct labour, $55; Factory Overhead (75% variable, 25%
the product. unavoidable fixed), $48. A special order has been received by Jack's for a
c. whether the fixed costs that can be avoided by dropping the product line sale of 2,500 computers to an overseas customer. The only selling costs that
are less than the contribution margin that will be lost. would be incurred on this order would be $10 per computer for shipping.
d. whether the fixed costs that can be avoided by dropping the product Jack's is now selling 7,200 computers through regular distributors each
line are greater than the contribution margin lost. period. What should be the minimum selling price per computer in
negotiating a price for this special order?
13-3. To maximize total contribution margin, a firm should:
a. $200.
a. promote those products having the highest unit contribution margins. b. $166.
b. promote those products having the highest contribution margin ratios. c. $178.
d. $176.
13-9. Questions 9 - 10 refer to the following: Welter, Inc. is considering the c. will produce essentially the same results as those obtained through the
addition of a new line of product to its current product lines. The expected use of discounted cash flow techniques.
cost and revenue data for the new product are as follows: Annual sales, d. requires the use of a sophisticated calculator or computer software.
2,500 units. Selling price per unit, $304. Variable costs per unit: Production,
$125 and Selling, $49. Avoidable traceable fixed costs per year: Production, 14-5. In which of the following situations would a project be acceptable
$50,000 and Selling, $75,000. Unavoidable allocated corporate costs per under the internal rate of return method? 1. The internal rate of return is
year, $55,000. If the new product is added to the existing product line, the equal to the cost of capital. 2. The internal rate of return is greater than the
contribution margin of the other existing product lines is expected to drop cost of capital. 3. The internal rate of return is less than or equal to the cost
$65,000 per year. If the new product line is added next year, the increase in of capital.
net income resulting from this decision would be:
a. Only 1.
a. $325,000. b. Only 3.
b. $200,000. c. Both 1 and 3.
c. $145,000. d. Both 1 and 2.
d. $135,000.
14-6. Anthony operates a part time auto repair service. He estimates that a
13-10. What is the lowest selling price per unit that could be charged for the new diagnostic computer system will result in increased cash inflows of
new product line and still make it economically desirable to add the new $1,500 in Year 1, $2,100 in Year 2, and $3,200 in Year 3. If Anthony's cost of
product line? capital is 10%, then the most he would be willing to pay for the new
computer system would be:
a. $246.
b. $224. a. $4,599.
c. $232. b. $5,502.
d. $282. c. $5,638.
d. $5,107.
14-2. Working capital required for an investment project would be a. 0.27 years.
considered as: b. 3.75 years.
c. 10.00 years.
a. a cash outflow at the inception of the project with no discounting required. d. 2.13 years.
b. a cash inflow at the end of the term of the investment project when
working capital is released, discounted back to the inception of the project at 14-9. The simple rate of return on the investment would be:
the appropriate rate.
c. both a cash outflow at the inception of the project and a cash inflow at the a. 26.67%.
end of the term of an investment project resulting in an offsetting of two b. 16.67%.
equal amounts that has no effect on the net present value analysis. c. 36.67%.
d. described in both item a and item b above. d. 10.00%.
14-3. The net present value method: 14-10. Which of the following statements is accurate regarding the ranking
of projects using the net present value method?
a. makes no allowance for recovery of the original investment.
b. requires the deduction of amortization in order to provide for the recovery a. Projects can never be ranked using the net present value method.
of the original investment. b. The net present value of one project cannot be compared directly to
c. provides for recovery of the original investment since each inflow is the net present value of another project unless the investments in the
allocated between a return of principal and interest. projects are of equal size.
d. only makes allowance for return on the investment. c. The net present value of one project can be compared directly to the net
present value of another project even when the investments in the projects
14-4. The evaluation of an investment having uneven cash flows using the are not of equal size.
payback method: d. All projects, regardless of size, can be ranked using the net present value
method.
a. cannot be done.
b. can be done only by matching cash inflows and investment outflows
on a year-by-year basis.