ACC 213

3E-Q
30 items

1. A management information system should do which of the following?

Collect data Organize data for managers Analyze data for management
a. yes no yes
b. yes yes no
c. no no yes
d. yes yes yes

2. Cost-volume-profit analysis is based on certain general assumptions. Which of the following

is not one of these assumptions?
a. Product prices will remain constant as volume varies within the relevant range.
b. Costs can be categorized as fixed, variable, or semivariable.
c. The efficiency and productivity of the production process and workers will change
to reflect manufacturing advances.

3.Which of the following statements best describes the relationship between the sales-
forecasting process and the master-budgeting process?
a. The sales forecast is typically completed after completion of the master budget.
b. The sales forecast is typically completed before the master budget and has no
impact on the master budget.
c. The sales forecast is typically completed before the master budget and has little
impact on the master budget.
d. The sales forecast is typically completed before the master budget and has
significant impact on the master budget.

4. Statement I: When using a market-based transfer price, a decision must be made which market price
to use. Statement II: When using a negotiated transfer price, a determination must be made if
comparable substitutes are available externally.

a. Only statement 1 is true.

b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.

5.Cost classifications are based on the relationship of costs to all of the following except:
a. ledger accounts
b. accounting periods
c. products
d. volume of production

6 Which of the following is a force that shapes an organization's profit potential?

a. Investors
b. Potential entrants into the market.
c. Creditors
d. Research and development

7. The first step to successful balanced scorecard implementation is clarifying the:

a. organization's vision and strategy
b. elements that pertain to value-added aspects of the business
c. owner's expectations about return on investment
d. objectives of all four balanced scorecard measurement perspectives

Stephen Corporation plans to grow by offering a sound system, the SD235, that is superior and
unique from the competition. Stephen believes that putting additional resources into R&D and
staying ahead of the competition with technological innovations is critical to implementing its
strategy.

8. Stephen's strategy is:

a. product differentiation
b. downsizing
c. reengineering
d. cost leadership

9. The internal business processes perspective of the balanced scorecard comprises three
subprocesses that address all of the following EXCEPT:
a. innovative processes used to create new products, services, and processes
b. motivating current employees
c. providing service and support to the customer after the sale
d. delivering existing products and services to best meet the needs of customers

10. The first step in activity-based costing is to

a. assign manufacturing overhead costs for each activity cost pool to products.
b. compute the activity-based overhead rate per cost driver.
c. identify and classify the major activities involved in the manufacture of specific
products.
d. identify the cost driver that has a strong correlation to the activity cost pool.

11.Compared to an ABC system, a traditional costing system reports:

a. a lower unit cost for high-volume products and a higher unit cost for low-
volume products
b. a higher unit cost for high-volume products and a lower unit cost for low-
volume products
c. the same unit costs for high- and low-volume products as does an ABC system
d, . either higher or lower unit cost for high-volume products than an ABC system
depending upon the level of fixed costs

12. The four categories of quality costs are

a. Product liability, warranty, appraisal, and training costs.
b. Internal failure, external failure, carrying, and ordering costs.
 c. Prevention, appraisal, internal failure, and external failure costs.
d. Training, testing, failure, and conformance costs.

13. A company wants to be known as a world-class manufacturer of quality products, hence,

it is willing to spend on quality costs. To achieve this, the company should spend the
majority of its funds on
a. External failure costs c. appraisal costs
b. Internal failure costs d. prevention costs

14. Spoilage is an example of:

a. prevention costs
b. appraisal costs
c. internal failure costs
d. external failure costs

15. A liability claim is an example of:

a. prevention costs
b. appraisal costs
c. internal failure costs
d. external failure costs

16. A company, subject to a 40% tax rate, desires to earn $500,000 of after-tax income. How
much should the firm add to fixed costs when figuring the sales revenues necessary to
produce this income level? _________

Arlyne sells a single product for P50. Variable costs are 60% of the selling price, and the
company has fixed costs that amount to P400,000. Current sales total 16,000 units.

17. Arlyne:
a. will break-even by selling 8,000 units.
b. will break-even by selling 13,333 units.
c. will break-even by selling 20,000 units.
d. cannot break-even because it loses money on every unit sold.

18-19. Daniella Inc. has projected sales to be P100,000 in June, P90,000 in July, and P70,000 in
August. Danniella collects 50% of a month's sales in the month of sale, 30% in the month
following the sale, and 16% in the second month following the sale. Cash collections in
August would be

Red Apple Corporation has two divisions, Distribution and Production. The company's primary
product is fertilizer. Each division's costs are provided below:

Production: Variable costs per pound P0.10

Fixed costs per pound P0.50
Distribution: Variable costs per pound P0.06
Fixed costs per pound P0.04

The Distribution Division has been operating at a capacity of 4,000,000 pounds a week and
usually purchases 2,000,000 pounds from the Production Division and 2,000,000 pounds from
other suppliers at $0.90 per pound.

20. What is the transfer price per barrel from the Production Division to the Distribution
Division, assuming the method used to place a value on each pound of fertilizer is 120% of full
costs? ________

Sean Company makes a household appliance with model number JL912. The goal for 2020 is to
reduce direct materials usage per unit. No defective units are currently produced.
Manufacturing conversion costs depend on production capacity defined in terms of JL912 units
that can be produced. The industry market size for appliances increased 10% from 2019 to 2020.
The following additional data are available for 2019 and 2020:

2019 2020
Units of JL912 produced and sold 10,000 11,000
Selling price P100 P95
Direct materials (square feet) 30,000 29,000
Direct material costs per square foot P10 P11
Manufacturing capacity for X200 (units) 12,500 11,000
Total manufacturing conversion costs $250,000 $220,000
Manufacturing conversion costs per unit of capacity $20 $20

21) What is the revenue effect of the price-recovery component? _______

22) What is the cost effect of the price-recovery component? ________

23) What is the net effect on operating income as a result of the price-recovery component?
A) decreased operating income due to decreased selling price and inability to recover increased
costs
B) decreased operating income due to the inability to recover increased costs
C) increased operating income due to the increased number of units produced and sold
D) increased operating income due to the revenue effect of the price-recovery component

24) Overall, was Sean's strategy successful for 2020?

A) No, because the selling price per unit decreased.
B) Yes, because operating income increased.
C) Yes, because less direct materials were used.
D) No, because more units were produced and sold.

Menna Company provides the following ABC costing information:

Activities Total Costs Activity-cost drivers

Account inquiry hours P200,000 10,000
hours
Account billing lines P140,000 4,000,000
lines
Account verification accounts P75,000 40,000
 accounts
Correspondence letters P25,000 4,000
letters
Total costs P440,000

The above activities are used by Departments A and B as follows:

Department A Department B
Account inquiry hours 2,000
hours 4,000 hours
Account billing lines 400,000
lines 200,000 lines
Account verification accounts 10,000
accounts 8,000 accounts
Correspondence letters 1,000
letters 1,600 letters

25 How much of the account inquiry cost will be assigned to Department A? ______

26 How much of the account billing cost will be assigned to Department B? _______

At the beginning of 2019, Lush Forest Company initiated a program to improve its
environmental performance. Efforts were made to reduce the production and emission of
contaminating gaseous, solid and liquid residues. By the end of the year, in an executive
meeting, the environmental manager indicated that the company has made significant
improvement in its environmental performance, reducing the emission of contaminating
residues of all types. The president of the company was pleased with the reported success but
wanted an assessment of the financial consequences of the environmental improvements. To
satisfy this request, the following financial data were collected for 2018 and 2019 (all changes in
costs are a product of environmental improvements).

2018 2019
Sales P65,000,000 P65,000,000
Evaluating and selecting suppliers 0 P 2,000,000
Treating and disposing of toxic materials 3,800,000 2,500,000
Inspecting processes ( environmental 700,000 900,000
objective)
Land restoration (annual fund contribution) 5,000,000 4,000,000
Maintaining pollution equipment 1,500,000 1,000,000
Testing for contaminants 500,000 400,000

27. How much is the total prevention cost? _______

28. How much is the total detection cost? _______
29. How much is the total internal failure cost? _______
30. How much is the total external failure cost? _______