ACC 561 Final Exams 3 Complete A++ Work Part 2 - 17217

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26) Managers should apply two principles to obtain accurate and useful cost functions. These principles are ____.
A. plausibility and reliability
B. reliability and validity
C. plausibility and believability
D. believability and validity

27) In relation to a cost function, the term reliability means_____.
A. whether the cost function conforms to a given mathematical model
B. how well the cost function predicts future costs
C. whether the costs and activities can be easily observed
D. how well the cost function explains past cost behavior

28) _____ is a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.
A. Cost driver accounting
B. Activity based costing
C. Transaction costing
D. Transaction based accounting

29) _____ need cost accounting systems.
A. Service organizations and nonprofit organizations
B. Manufacturing firms and service organizations
C. Manufacturing firms, service organizations, and nonprofit organizations
D. Manufacturing firms and nonprofit organizations

30) _____ is an example of the external financial reporting purpose of the cost management systems.
A. The product mix to optimize profitability
B. The cost of a manufacturing process
C. Budget reporting
D. The amount of inventory that should appear on the balance sheet

31) A sales forecast is _____.
A. the result of decisions to create conditions
B. a prediction of sales under a given set of conditions
C. all of these answers are correct
D. the same as a sales budget that will generate a desired level of sales

32) _____ budgeting is when budgets are formulated with the active participation of all affected employees
A. Team
B. Financial
C. Shared
D. Participative

33) A _____ gives the expected sales under a given set of conditions.
A. sales budget
B. sales prediction
C. sales forecast
D. budget forecast

34) Unit sales of Product A are currently 10,000, while unit sales of Product B are double those of Product A. The com¬pany's sales forecast will be _____, assuming sales of Product A increase by 10% and those of Product B increase by 4,000 units.
A. 11,000 and 22,000 units, respectively
B. none of these answers is correct
C. 11,000 and 24,000 units, respectively
D. 10,000 and 20,000 units, respectively

35) The master budget includes forecasts for all of the following except _____.
A. number of employees
B. cash disbursements
C. balance sheets
D. sales

36) A sales forecast is _____.
A. the result of decisions to create conditions
B. all of these answers are correct
C. the same as a sales budget that will generate a desired level of sales
D. a prediction of sales under a given set of conditions

37) _____ are components of a master budget.
A. An operating budget and a financial budget
B. A cash budget and an activity budget
C. A continuous budget and a static budget
D. A strategic plan and an operating budget

38) Which of the following statements is false?
A. Flexible budgets are not based on the same revenue and cost behavior assumptions as the static budget.
B. Flexible budgets are automatically matched to changes in activity levels
C. Flexible budgets are prepared for a range of activity.
D. Flexible budgets help provide a basis for management by exception.

39) The master budget quantifies targets for all of the following except _____.
A. production
B. cost driver activity
C. markets
D. sales

40) Cost allocation base refers to the _____.
A. total costs to be allocated
B. total allocated costs
C. cost objectives
D. cost driver

41) The preferred guidelines for allocating service department costs include _____.
A. evaluating performance using allocated costs for each service department
B. establishing part or all of the details regarding cost allocation in advance of rendering the service
C. allocating variable- and fixed-cost pools simultaneously
D. identifying the direct and indirect costs

42) _____ is not a type of cost allocation.
A. Reallocation of costs from service departments to production departments
B. Allocation of costs of a particular organizational unit to products or services
C. Reallocation of costs from production departments to service departments
D. Allocation of costs to the appropriate organizational unit

43) Kevin Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is _____.
A. $72,000
B. $31,500
C. $105,000
D. $42,000

44) Murphy Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Mixing is _____.
A. $58,500
B. $63,000
C. $78,000
D. $31,500

45) Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.
A. $31,500
B. $57,000
C. $47,250
D. $42,750

46) When the variable costing method is used, fixed factory overhead appears on the income statement as a_____.
A. fixed expense
B. production-volume variance
C. component of cost of goods sold and as a production-volume variance
D. component of cost of goods sold

47) _____ is (are) used for external reporting.
A. Absorption costing
B. Variable costing
C. Absorption costing and variable costing
D. Direct costing

48) In absorption costing, costs are separated into the major categories of_____.
A. manufacturing and nonmanufacturing
B. manufacturing and fixed
C. variable and nonmanufacturing
D. fixed and variable

49) _____ is the first step in designing a management control system.
A. Evaluating management's performance
B. Establishing organizational goals
C. Distinguishing between profit centers and cost centers
D. Preparing financial statements

50) _____ is (are) the most basic component of a management control system.
A.The organization's long-range budget
B.The organization's goals
C.Top management's preferences
D.The stockholder's preferences

51) Identify which of the following is not a characteristic of a management control system.
A.A management control system aids and coordinates the process of making decisions.
B.A management control system encourages short term profitability.
C.A management control system coordinates forecasting sales and cost driver activities, budgeting, and measuring and evaluating performance.
D.A management control system motivates individuals throughout the organization to act in concert.

52) Jewel Company's revenues are $300 and invested capital is $240. Expenses are currently 60% of sales. Jewel Company's current return on investment is _____.
A. 50%
B. 100%
C. none of these answers are correct
D. 80%

53) The following information is available for the Peter Company:
Sales     $500,000
Invested Capital     312,500
ROI     10%
The return on sales is _____.
A. 10.000%
B. none of these answers is correct
C. 6.250%
D. 1.000%

54) The following information is available for the Peter Company:
Sales     $150,000
Invested Capital     156,250
ROI     10%
The return on sales is _____.
A. 10.00%
B. none of these answers is correct
C. 10.42%
D. 62.50%

 

 

 

 

Solution Description

26) Managers should apply two principles to obtain accurate and useful cost functions. These principles are ____.
A. plausibility and reliability
B. reliability and validity
C. plausibility and believability
D. believability and validity

27) In relation to a cost function, the term reliability means_____.
A. whether the cost function conforms to a given mathematical model
B. how well the cost function predicts future costs
C. whether the costs and activities can be easily observed
D. how well the cost function explains past cost behavior

28) _____ is a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.
A. Cost driver accounting
B. Activity based costing
C. Transaction costing
D. Transaction based accounting

29) _____ need cost accounting systems.
A. Service organizations and nonprofit organizations
B. Manufacturing firms and service organizations
C. Manufacturing firms, service organizations, and nonprofit organizations
D. Manufacturing firms and nonprofit organizations

30) _____ is an example of the external financial reporting purpose of the cost management systems.
A. The product mix to optimize profitability
B. The cost of a manufacturing process
C. Budget reporting
D. The amount of inventory that should appear on the balance sheet

31) A sales forecast is _____.
A. the result of decisions to create conditions
B. a prediction of sales under a given set of conditions
C. all of these answers are correct
D. the same as a sales budget that will generate a desired level of sales

32) _____ budgeting is when budgets are formulated with the active participation of all affected employees
A. Team
B. Financial
C. Shared