AC 6352 TEST BANK FOR MIDTERM.

AC 6352 TEST BANK FOR MIDTERM. 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 crossfunctionally. 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, I 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 Critical success factors may have a financial, customer oriented, internal business processes, or a learning and growth perspective. True Cost management is something that managers should leave to the accountant, as it does not affect the manager’s bottom line. False Value-added activities provide us with an opportunity to honor God with the resources that we as managers have been given. True Budgeting can be applied to one’s time, not just to finances. True Covers textbook readings and other materials from Modules/Weeks 1 - 3 Open-book/open-notes 50 multiple-choice and true/false questions 2 1/2 hour time limit Do not hit the BACK button on your browser. The timer will continue if and when you leave this exam before completing it. This exam must be completed by 11:59 p.m. (ET) on Sunday. Question 1 Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on: Selected Answer: Strategic thinking. Question 2 In the current business environment, companies cannot survive without a long-term strategy. What exactly should an effective strategy include? Selected Answer: A clear, concise mission statement, naming every product and outlining the company's long-term goals of success. Question 3 Which of the following most accurately describes what is included in cost management information? Selected Answer: A combination of financial cost information and relevant non-financial information. Question 4 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: Selected Answer: Differentiation. Question 5 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: Selected Answer: Core competency. Question 6 The balanced scorecard: Selected Answer: Fails to reflect environmental and social effects of the firm's operations. Question 7 Which of the following does not represent a possible opportunity for a manufacturing firm as a part of SWOT analysis? Selected Answer: Changes in regulation of the industry. Question 8 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? Selected Answer: There has been a renewed emphasis on integrative thinking and solving problems cross-functionally. Question 9 In SWOT analysis, strengths and weaknesses are most easily identified by looking: Selected Answer: Inside the firm at its specific resources. Question 10 The cause and effect relationships among critical success factors are best captured in: Selected Answer: The strategy map Question 11 The Euro is: Selected Answer: A currency used in many European countries. Question 12 Which one of the following critical success customer factors is best measured by warranty expense? Selected Answer: Quality. Question 13 The additional cost incurred as the cost driver increases by one unit is: Selected Answer: Variable cost. Question 14 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? Selected Answer: $10,000. Question 15 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: Selected Answer: $27,000. Question 16 All indirect manufacturing costs are commonly combined into a single cost pool called: Selected Answer: Overhead. Question 17 Bracken Co. incurred the following costs during 2010: What was the amount of direct materials used and direct labor for the year? Selected Answer: B Question 18 Any product, service, or organizational unit to which costs are assigned for some management purpose is a(n): Selected Answer: Cost object. Question 19 Structural cost drivers are to executional cost drivers as: Selected Answer: Long-term is to short-term. Question 20 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, I 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? Selected Answer: $108,000. Question 21 Which one of the following is not a unit-level cost driver? Selected Answer: Production orders. Question 22 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: Selected Answer: $10,500. Question 23 Customer lifetime value is a type of analysis used to: Selected Answer: Assess the long term profit potential of all the firm's customers. Question 24 Activity-based costing (ABC) differs from other costing approaches in its: Selected Answer: Use of cost objects. Question 25 A measure of the quantity of resources consumed by an activity is: Selected Answer: Consumption cost driver. Question 26 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? Selected Answer: $43,741. Question 27 Purchase order, setup, and inspection costs are examples of: Selected Answer: Batch-level costs. Question 28 The use of activity-based costing is most appropriate for: Selected Answer: Firms that manufacture multiple product lines. Question 29 A significant advantage of using either an activity-based budgeting (ABB) or a time-driven activitybased budgeting (TDABB) system is: Selected Answer: Reduction in the cost of developing budget amounts. Question 30 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: Selected Answer: $180,000. Question 31 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? Selected Answer: $45,920. Question 32 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: Selected Answer: Profit should decrease by approximately $16,000 per month. Question 33 The process of planning business actions in the near future and expressing them as formal plans is called: Selected Answer: Budgeting. Question 34 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? Selected Answer: $18,000. Question 35 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? Selected Answer: 57,000 pounds. Question 36 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? Selected Answer: 37,750 pounds. Question 37 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? Selected Answer: Folsom's budgeted market share and the actual total market size. Question 38 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: Selected Answer: $77.50. Question 39 Darwin, Inc. provided the following information (round calculations to two significant digits): What is the actual partial productivity ratio? Selected Answer: 0.97 unit per gallon. Question 40 Which one of the following uses the number of units of an input factor in its assessment of productivity? Selected Answer: Total productivity. Question 41 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: Selected Answer: $11.36. Question 42 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: Selected Answer: 0.70. Question 43 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: Selected Answer: $30,000 unfavorable. Question 44 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) Selected Answer: 3.33. Question 45 The story of Gideon defeating the Midianites (Judges 6 and 7), proves that management techniques cannot turn impossible circumstances into possible ones. Selected Answer: False Question 46 Since there is nothing new under the sun (Ecclesiastes 1:9), management should never attempt to implement new ideas. Selected Answer: False Question 47 Critical success factors may have a financial, customer oriented, internal business processes, or a learning and growth perspective. Selected Answer: True Question 48 Cost management is something that managers should leave to the accountant, as it does not affect the manager’s bottom line. Selected Answer: False Question 49 Value-added activities provide us with an opportunity to honor God with the resources that we as managers have been given. Selected Answer: True Question 50 Budgeting can be applied to one’s time, not just to finances. Selected Answer: True 1. Which of the following does not represent a main focus of cost management information? A. Strategic management. B. Performance measurement. C. Planning and decision making. D. Preparation of financial statements. E. Internal auditing and control. Difficulty: Easy Learning Objective: 1-1 2. Strategic management can be defined as the development of a sustainable: A. Chain of command. B. Competitive position. C. Cash flow. D. Business entity. E. Company image. Difficulty: Easy Emerging Issues: Strategy Learning Objective: 1-1 3. Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on: A. Competitive pricing. B. Domestic marketing. C. Short-term thinking. D. Strategic thinking. E. Independent judgment.