Cost management has moved from a traditional role of product costing and operational control
to a broader strategic focus, which places an emphasis on: Strategic thinking.
In the current business environment, companies cannot survive without a long-term strategy.
What exactly should an effective strategy include?
A clear, concise mission statement, naming every product and outlining the company's
long-term goals of success.
Which of the following most accurately describes what is included in cost management
information?
A combination of financial cost information and relevant non-financial information.
The competitive strategy in which the firm succeeds by developing and maintaining a unique
value for
the product, as perceived by the customer, is termed
Differentiation.
A firm succeeds on its ability to deliver products to customers more quickly than rival
companies in its industry. This skill is an example of the firm's:
Core competency.
The balanced scorecard: Fails to reflect environmental and social effects of the firm's
operations.
Which of the following does not represent a possible opportunity for a manufacturing firm as
a part of SWOT analysis?
Changes in regulation of the industry.
In order to remain competitive in the contemporary business environment, several firms have
started training their employees to stop viewing problems as strictly functional -- a marketing
problem, or an accounting problem, for example. What does this trend illustrate about
strategic management?
There has been a renewed emphasis on integrative thinking and solving problems cross-
functionally.
In SWOT analysis, strengths and weaknesses are most easily identified by looking:
Inside the firm at its specific resources
The cause and effect relationships among critical success factors are best captured in:
The strategy map
The Euro is: A currency used in many European countries.
Which one of the following critical success customer factors is best measured by warranty
expense? Quality.
The additional cost incurred as the cost driver increases by one unit is: Variable cost
,Stephenson Company's computer system recently crashed, erasing much of the Company's
financial data. The following accounting information was discovered soon afterwards on the
CFO's backup computer disk Direct labor cost incurred during the period amounted to 1.5
times the factory overhead. The CFO of Stephenson Company has asked you to recalculate the
following accounts and report to him by week's end. What should be the amount of direct
materials purchased? $10,000.
The following information was taken from the accounting records of Elliott Manufacturing
Corp.
Unfortunately, some of the data were destroyed by a computer malfunction.
Cost of goods sold is calculated to be: $27,000.
All indirect manufacturing costs are commonly combined into a single cost pool called:
Overhead.
Bracken Co. incurred the following costs during 2010:
What was the amount of direct materials used and direct labor for the year? B
Any product, service, or organizational unit to which costs are assigned for some management
purpose is a(n): Cost object
Structural cost drivers are to executional cost drivers as: Long-term is to short-term.
Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The
following accounting information remained in the office files:
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The
CFO of Tierney Construction, Inc.has asked you to recalculate the following accounts and to
report to him by the end of tomorrow.
What should be the amount of total manufacturing cost? $108,000.
Which one of the following is not a unit-level cost driver? Production orders.
Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:
Sheen Co. has an order for 1,000 laser printers that has the following production requirements:
Using activity-based costing, applied miscellaneous factory overhead for the 1000 laser
printer order based on direct labor hours is: $10,500.
Customer lifetime value is a type of analysis used to:
Assess the long term profit potential of all the firm's customers.
Activity-based costing (ABC) differs from other costing approaches in its:
Use of cost objects.
A measure of the quantity of resources consumed by an activity is:
Consumption cost driver.
Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated.
The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below
is cost driver information used in the product-costing system:
A current product order has the following requirements:
What is the total manufacturing overhead for the current product order if the firm assigns
overhead costs based on machine hours? $43,741.
Purchase order, setup, and inspection costs are examples of: Batch-level costs.
The use of activity-based costing is most appropriate for:
Firms that manufacture multiple product lines.
,A significant advantage of using either an activity-based budgeting (ABB) or a time-driven
activitybased
budgeting (TDABB) system is: Reduction in the cost of developing budget amounts.
Brownsville Novelty Store prepared the following budget information for the month of May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is
made monthly at three percent of sales.
• Inventory was $84,000 on April 30 and an increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus fifty percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Budgeted Cost of Goods Purchased in May is: $180,000.
The Johann's Professional Service Company expects 70% of sales for cash and 30% on credit.
The company collects 80% of its credit sales in the month following sale, 15% in the second
month following sale, and 5% are not collected. Expected sales for June, July, and August are
$54,000, $48,000, and $44,000, respectively. What are the company's expected total cash
receipts in August? $45,920.
Capital One produces a single product, which it sells for $8.00 per unit. Variable costs per unit
equal $3.20. The company expected total short-term fixed costs to be $7,200 for the coming
month, at the projected sales level of 20,000 units. Management is considering several
alternative actions designed to improve operating results. In conjunction with this, they have
created a profit-planning model, which can be used to evaluate different scenarios.
Management believes that a 10% reduction in the selling price will increase sales volume by
10%. If this plan is implemented, then: Profit should decrease by approximately $16,000 per
month. The process of planning business actions in the near future and expressing them as
formal plans is called: Budgeting.
LeMinton Company expects the following credit sales for the first five months of the year:
January, $25,000; February, $40,000; March, $30,000; April, $36,000, May $40,000.
Experience has shown that payment for the credit sales is received as follows: 60% in the
month of sale, 25% in the first month after sale, 12% in the second month after sale, and the
remainder is uncollectible. How much cash can LeMinton Company expect to collect in
March as a result of credit sales? $18,000.
Graham Corporation's budget calls for the following production:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company's policy is to begin
each quarter with 30% of that quarter's direct materials requirements.
What would be the budgeted direct materials purchases in the second quarter? 57,000 pounds.
Graham Corporation's budget calls for the following production:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company's policy is to begin
each quarter with 30% of that quarter's direct materials requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter
1.
, What would be the budgeted direct materials purchases in the first quarter? 37,750 pounds.
Folsom Fashions sells a line of women's dresses. The company uses flexible budgets to
analyze its performances. The firm's performance report for November is presented below:
What additional information would be needed for Folsom to calculate the dollar impact of
changes in market share on November's operating income? Folsom's budgeted market share
and the actual total market size.
Winston Co. had two products code named X and Y. The firm had the following budget for
August: On September 1, the following operating results for August were reported:
Industry volume was estimated to be 120,000 units at the time of the budget. Actual industry
volume for the period was 125,000 units. The weighted-average budgeted contribution margin
per unit is: $77.50.
Darwin, Inc. provided the following information (round calculations to two significant digits):
What is the actual partial productivity ratio? 0.97 unit per gallon.
Which one of the following uses the number of units of an input factor in its assessment of
productivity? Total productivity.
Jackson, Inc manufactures two products that it sells to the same market. Excerpted below are
its budgeted and actual operating results for the year just completed: Industry volume was
estimated to be 1,875,000 units at the time the budget was prepared. Actual industry volume
for the period was 2,440,000 units. Jackson measures variances using contribution margin.
The weighted-average budgeted contribution margin per unit is: $11.36.
Broha Company manufactured 1,500 units of its only product during 2011. The inputs for this
production are as follows:
450 pounds of Material A at a cost of $1.50 per pound
300 pounds of Material H at a cost of $2.75 per pound
300 direct labor hours at $20 per hour
The firm manufactured 1,800 units of the same product in 2010 with the following inputs:
500 pounds of Material A at a cost of $1.20 per pound
360 pounds of Material H at a cost of $2.50 per pound
400 direct labor hours at $18 per hour
The total productivity ratio in 2010 is: 0.70.
Folsom Fashions sells a line of women's dresses. The company uses flexible budgets to
analyze its performances. The firm's performance report for November is presented below:
The effect of the sales volume variance on November's contribution margin is: $30,000
unfavorable. Broha Company manufactured 1,500 units of its only product during 2011. The
inputs for this production are as follows:
450 pounds of Material A at a cost of $1.50 per pound
300 pounds of Material H at a cost of $2.75 per pound
300 direct labor hours at $20 per hour
The firm manufactured 1,800 units of the same product in 2010 with the following inputs:
500 pounds of Material A at a cost of $1.20 per pound
360 pounds of Material H at a cost of $2.50 per pound
400 direct labor hours at $18 per hour
In 2010, the partial financial productivity of Material A is: (round all calculations to two
significant digits) 3.33.
The story of Gideon defeating the Midianites (Judges 6 and 7), proves that management
techniques cannot turn impossible circumstances into possible ones. False
Since there is nothing new under the sun (Ecclesiastes 1:9), management should never attempt
to implement new ideas. False
to a broader strategic focus, which places an emphasis on: Strategic thinking.
In the current business environment, companies cannot survive without a long-term strategy.
What exactly should an effective strategy include?
A clear, concise mission statement, naming every product and outlining the company's
long-term goals of success.
Which of the following most accurately describes what is included in cost management
information?
A combination of financial cost information and relevant non-financial information.
The competitive strategy in which the firm succeeds by developing and maintaining a unique
value for
the product, as perceived by the customer, is termed
Differentiation.
A firm succeeds on its ability to deliver products to customers more quickly than rival
companies in its industry. This skill is an example of the firm's:
Core competency.
The balanced scorecard: Fails to reflect environmental and social effects of the firm's
operations.
Which of the following does not represent a possible opportunity for a manufacturing firm as
a part of SWOT analysis?
Changes in regulation of the industry.
In order to remain competitive in the contemporary business environment, several firms have
started training their employees to stop viewing problems as strictly functional -- a marketing
problem, or an accounting problem, for example. What does this trend illustrate about
strategic management?
There has been a renewed emphasis on integrative thinking and solving problems cross-
functionally.
In SWOT analysis, strengths and weaknesses are most easily identified by looking:
Inside the firm at its specific resources
The cause and effect relationships among critical success factors are best captured in:
The strategy map
The Euro is: A currency used in many European countries.
Which one of the following critical success customer factors is best measured by warranty
expense? Quality.
The additional cost incurred as the cost driver increases by one unit is: Variable cost
,Stephenson Company's computer system recently crashed, erasing much of the Company's
financial data. The following accounting information was discovered soon afterwards on the
CFO's backup computer disk Direct labor cost incurred during the period amounted to 1.5
times the factory overhead. The CFO of Stephenson Company has asked you to recalculate the
following accounts and report to him by week's end. What should be the amount of direct
materials purchased? $10,000.
The following information was taken from the accounting records of Elliott Manufacturing
Corp.
Unfortunately, some of the data were destroyed by a computer malfunction.
Cost of goods sold is calculated to be: $27,000.
All indirect manufacturing costs are commonly combined into a single cost pool called:
Overhead.
Bracken Co. incurred the following costs during 2010:
What was the amount of direct materials used and direct labor for the year? B
Any product, service, or organizational unit to which costs are assigned for some management
purpose is a(n): Cost object
Structural cost drivers are to executional cost drivers as: Long-term is to short-term.
Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The
following accounting information remained in the office files:
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The
CFO of Tierney Construction, Inc.has asked you to recalculate the following accounts and to
report to him by the end of tomorrow.
What should be the amount of total manufacturing cost? $108,000.
Which one of the following is not a unit-level cost driver? Production orders.
Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:
Sheen Co. has an order for 1,000 laser printers that has the following production requirements:
Using activity-based costing, applied miscellaneous factory overhead for the 1000 laser
printer order based on direct labor hours is: $10,500.
Customer lifetime value is a type of analysis used to:
Assess the long term profit potential of all the firm's customers.
Activity-based costing (ABC) differs from other costing approaches in its:
Use of cost objects.
A measure of the quantity of resources consumed by an activity is:
Consumption cost driver.
Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated.
The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below
is cost driver information used in the product-costing system:
A current product order has the following requirements:
What is the total manufacturing overhead for the current product order if the firm assigns
overhead costs based on machine hours? $43,741.
Purchase order, setup, and inspection costs are examples of: Batch-level costs.
The use of activity-based costing is most appropriate for:
Firms that manufacture multiple product lines.
,A significant advantage of using either an activity-based budgeting (ABB) or a time-driven
activitybased
budgeting (TDABB) system is: Reduction in the cost of developing budget amounts.
Brownsville Novelty Store prepared the following budget information for the month of May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is
made monthly at three percent of sales.
• Inventory was $84,000 on April 30 and an increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus fifty percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Budgeted Cost of Goods Purchased in May is: $180,000.
The Johann's Professional Service Company expects 70% of sales for cash and 30% on credit.
The company collects 80% of its credit sales in the month following sale, 15% in the second
month following sale, and 5% are not collected. Expected sales for June, July, and August are
$54,000, $48,000, and $44,000, respectively. What are the company's expected total cash
receipts in August? $45,920.
Capital One produces a single product, which it sells for $8.00 per unit. Variable costs per unit
equal $3.20. The company expected total short-term fixed costs to be $7,200 for the coming
month, at the projected sales level of 20,000 units. Management is considering several
alternative actions designed to improve operating results. In conjunction with this, they have
created a profit-planning model, which can be used to evaluate different scenarios.
Management believes that a 10% reduction in the selling price will increase sales volume by
10%. If this plan is implemented, then: Profit should decrease by approximately $16,000 per
month. The process of planning business actions in the near future and expressing them as
formal plans is called: Budgeting.
LeMinton Company expects the following credit sales for the first five months of the year:
January, $25,000; February, $40,000; March, $30,000; April, $36,000, May $40,000.
Experience has shown that payment for the credit sales is received as follows: 60% in the
month of sale, 25% in the first month after sale, 12% in the second month after sale, and the
remainder is uncollectible. How much cash can LeMinton Company expect to collect in
March as a result of credit sales? $18,000.
Graham Corporation's budget calls for the following production:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company's policy is to begin
each quarter with 30% of that quarter's direct materials requirements.
What would be the budgeted direct materials purchases in the second quarter? 57,000 pounds.
Graham Corporation's budget calls for the following production:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company's policy is to begin
each quarter with 30% of that quarter's direct materials requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter
1.
, What would be the budgeted direct materials purchases in the first quarter? 37,750 pounds.
Folsom Fashions sells a line of women's dresses. The company uses flexible budgets to
analyze its performances. The firm's performance report for November is presented below:
What additional information would be needed for Folsom to calculate the dollar impact of
changes in market share on November's operating income? Folsom's budgeted market share
and the actual total market size.
Winston Co. had two products code named X and Y. The firm had the following budget for
August: On September 1, the following operating results for August were reported:
Industry volume was estimated to be 120,000 units at the time of the budget. Actual industry
volume for the period was 125,000 units. The weighted-average budgeted contribution margin
per unit is: $77.50.
Darwin, Inc. provided the following information (round calculations to two significant digits):
What is the actual partial productivity ratio? 0.97 unit per gallon.
Which one of the following uses the number of units of an input factor in its assessment of
productivity? Total productivity.
Jackson, Inc manufactures two products that it sells to the same market. Excerpted below are
its budgeted and actual operating results for the year just completed: Industry volume was
estimated to be 1,875,000 units at the time the budget was prepared. Actual industry volume
for the period was 2,440,000 units. Jackson measures variances using contribution margin.
The weighted-average budgeted contribution margin per unit is: $11.36.
Broha Company manufactured 1,500 units of its only product during 2011. The inputs for this
production are as follows:
450 pounds of Material A at a cost of $1.50 per pound
300 pounds of Material H at a cost of $2.75 per pound
300 direct labor hours at $20 per hour
The firm manufactured 1,800 units of the same product in 2010 with the following inputs:
500 pounds of Material A at a cost of $1.20 per pound
360 pounds of Material H at a cost of $2.50 per pound
400 direct labor hours at $18 per hour
The total productivity ratio in 2010 is: 0.70.
Folsom Fashions sells a line of women's dresses. The company uses flexible budgets to
analyze its performances. The firm's performance report for November is presented below:
The effect of the sales volume variance on November's contribution margin is: $30,000
unfavorable. Broha Company manufactured 1,500 units of its only product during 2011. The
inputs for this production are as follows:
450 pounds of Material A at a cost of $1.50 per pound
300 pounds of Material H at a cost of $2.75 per pound
300 direct labor hours at $20 per hour
The firm manufactured 1,800 units of the same product in 2010 with the following inputs:
500 pounds of Material A at a cost of $1.20 per pound
360 pounds of Material H at a cost of $2.50 per pound
400 direct labor hours at $18 per hour
In 2010, the partial financial productivity of Material A is: (round all calculations to two
significant digits) 3.33.
The story of Gideon defeating the Midianites (Judges 6 and 7), proves that management
techniques cannot turn impossible circumstances into possible ones. False
Since there is nothing new under the sun (Ecclesiastes 1:9), management should never attempt
to implement new ideas. False
