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3- (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best
fit which category of management decisions under activity-based management?
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6- (TCO 1) Different products consume different proportions of manufacturing overhead costs because of differences in all of
the following EXCEPT
7- (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived
from an ABC analysis
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9to
(TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help
10- (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is
$180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this
activity?
1- (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of
2- (TCO 7) The first step in implementing target pricing and target costing is
3- (TCO 7) The markup percentage is usually higher if the cost base used is
4- (TCO 7) An understanding of life-cycle costs can lead to
5- (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000,
allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How
much should the selling price be per unit for 300,000 units?
6- (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as
7- (TCO 8) Transfer prices should be judged by whether they promote
8- (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is
temporary, it is called
9- (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10- (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What
is the opportunity cost, assuming the seller sells internally?
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(TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that
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5- (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond
issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest
costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?
6- (TCO 10) All of the following are methods that aid management in analyzing the expected results of capital budgeting
decisions EXCEPT the
7- (TCO 10) Assume your goal in life is to retire with $1.5 million. How much would you need to save at the end of each year
if interest rates average 5% and you have a 25-year work life?
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9- (TCO 10) A what-if technique that examines how a result will change if the original predicted data are not achieved or if
an underlying assumption changes is called
10- (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to
generate annual cash inflows of $300,000. The required rate of return is 12% and the current machine is expected to last for four
years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also
four years? Income taxes are not considered.
(TCO 11) The four cost categories in a cost of quality program are
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(TCO 11) ________ is a formal means of distinguishing between random and nonrandom variation in an operating process
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(TCO 11) Which of the following is NOT one of the steps in managing bottlenecks under the theory of constraints?
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5- (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its
prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000
in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The
budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention
procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal
failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third.
Internal failure units are destroyed. External failure costs average $54 per failed unit. The companys average external failures
average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no
ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by
40% in the appraisal phase?
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(TCO 12) Which of the following is NOT a major feature of a just-in-time production system?
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(TCO 12) Which of the following statements about the economic-order-quantity decision model is FALSE?
9- (TCO 12) When using a vendor-managed inventory system to enhance the features of supply-chain management, a
challenging issue is
10(TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is
estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run
is $40. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming
year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur
uniformly throughout the year and that production is instantaneous.
If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year
is