1. (TCO 6) Installing a custom logo on a motorcycle is a(n)
a. Unit-level
b. Product-level
c. Facility-level
d. Batch-level
2. (TCO 4) When the
... [Show More] activity level is expected to decrease within the relevant range, what effects would be anticipated with respect to each of the following?
a. Fixed costs per unit decrease and variable costs in total decrease
b. Fixed costs per unit increase and variable costs in total increase
c. Fixed costs per unit increase and variable costs per unit decrease
d. Fixed costs per unit increase and variable costs per unit do not change
3. (TCO 2) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?
a. Potato chip manufacturer
b. Computer consulting firm
c. Oil refinery
d. A factory that processes sugar and other ingredients into candy
4. (TCO 1) Which of the following is a fixed inventoriable product cost?
a. Commissions paid to sales representatives
b. Direct labor
c. Advertising costs
d. Factory rent
5. (TCO 1) Which of the following IMA Statement of Ethical Professional Practice standards is violated if the plant controller intentionally hides negative news?
a. Confidentiality
b. Competence
c. Integrity
d. Credibility
6. (TCO 1) How does managerial accounting assist managers with fulfilling their primary responsibilities of planning, directing, and controlling? Please define planning, directing, and controlling and state at least one managerial accounting report that can assist with planning, one managerial accounting report that can assist with directing, and one managerial accounting report that can assist with controlling.
a. Managerial accounting assists managers by ensuring that they can run the business efficiently and effectively.
b. Planning involves setting goals and objectives for the company and determining how to best achieve them, budgets are a type of report that can be used to help with planning.
c. Directing means overseeing the company’s day-to-day operations and business. Managers use product cost reports and product sales information to help direct the business in the correct way.
d. Controlling means evaluating the results of business operations against the plan and making the adjustments to keep the company pressing forward towards its goals. Managers would use performance reports to ensure that this responsibility is being conducted properly.
7. (TCO 10) (a) What is participative budgeting (5 points)? (b) Please state at least two advantages of participative budgeting (10 points). (c) Please state at least two disadvantages of participative budgeting (10 points).
a. Participative budgeting involves the participation of many levels of management.
b. (1) Lower-level managers are closer to the action, and should have a more detailed knowledge for creating realistic budgets. (2) Managers are more likely to accept, and be motivated by, budgets they helped to create.
c. (1) The budget process can become much more complex and time consuming as more people participate in the process. (2) Managers may intentionally build slack into the budget for their areas of operation by overbudgeting expenses or underbudgeting revenue.
8. (TCO 2) James Inc. estimates that its employees will utilize 400,000 machine hours during the coming year. Total overhead costs are estimated to be $8,800,000 and direct labor hours are estimated to be 200,000. Actual machine hours are 420,000. Actual labor hours are 225,000.
If James Inc. allocates overhead based on machine hours, what is the predetermined manufacturing overhead rate?
a. Overhead costs / Estimated machine hours = Predetermined MOH
8,800,000 / 400,000 = 22
9. (TCO 4) Johnson Company produces and sells a single product whose selling price is $80.00 per unit and whose variable expense is $50.00 per unit. The company's fixed expense is $270,000 per month.
a. What is the CM ratio (express your answer as a percentage to two decimal places)? (5 points)
i. (Sales – Variable Expenses) / Sales = CM Ratio
= ($80 - $50) / $80
= $30 / $50
= 60%
b. How many units must be sold to break-even for the month? (10 points)
i. Fixed Cost / CM Per Unit
= $270,000 / $30
= 9,000 units
c. How many units do we need to sell to earn a profit of $240,000 for the month? (10 points)
i. (Fixed Costs + Target Profit) / (CM Per Unit)
= ($270,000 + $240,000) / $30
= $510,000 / $30
= 17,000 units [Show Less]