Part II: Multiple Choice 1.The process of selecting strategies to achieve goals is often referred to as:

Part II: Multiple Choice

1.The process of selecting strategies to achieve goals is often referred to as:

A) Controlling

B) Organizing

C) Motivating

D) Planning

2. This is an organizational cost driver for a discount department store chain:

A) The decision to price lower than a key competitor

B) The decision to rearrange merchandise within a store

C) The decision to issue a purchase order for raw materials

D) The decision to sale product globally versus only domestically

3. Mary French uses gas to heat her home. She has accumulated the following information regarding her monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month.

Month

Heating Degree-Days

Gas Bill

February

1,900

$195

April

600

$78

What will be the increase in Mary’s monthly gas bill per heating degree-day using the high-low method?

A) $ 0.09

B) $ 0.39

C) $ 46.00

D) $117.00

4. The following procedure performed by a dairy is the best example of a unit level activity within a manufacturing cost hierarchy:

A) Delivering dairy products to a grocery store

B) Filling milk into half-gallon cartons

C) Homogenizing milk in specially designed tanks

D) Receiving milk from farms

5. Rozella’s income statement is as follows:

Sales (10,000 units)

$120,000

Less variable costs

– 48,000

Contribution margin

$72,000

Less fixed costs

– 24,000

Net income

$ 48,000

What is the unit contribution margin?

A) $12.00

B) $ 7.20

C) $ 4.80

D) $ 2.40

6. George Company sells one product at a price of $20 per unit. Variable expenses are 40 percent of sales, and fixed expenses are $20,000. The sales dollars level required to break even are:

A) $ 2,500

B) $12,000

C) $33,333

D) $50,000

7. Which of the following statements is true when making a decision between two alternatives?

A) Fixed costs are never relevant.

B) Taxes are never relevant.

C) Variable costs may not be relevant when the decision alternatives have the same activity levels.

D) Variable costs are not relevant when the decision alternatives have different activity levels.

8. The point in the production process where joint products become separately identifiable is called:

A) The conversion point

B) The point of sale

C) The split-off point

D) The throughput point

9. The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as:

A) Prime costing

B) FIFO

C) The weighted average cost method

D) Absorption costing

10. Which of the following accounts increases when raw materials are used?

A) Finished Goods Inventory

B) Raw Materials Expense

C) Raw Materials Inventory

D) Work-in-Process Inventory

11. In an activity-based costing model, total costs assigned to cost objectives may include:

A) Only direct costs

B) Both direct costs and resource costs

C) Both activity costs and resource costs

D) Both direct costs and activity costs

12. Assume that total costs assigned to the setup activity cost pool in March are $80,000 and 100 setups were completed in March. Further, assume that during March machines were setup 20 times to make product X5. The total setup cost that would be assigned to product X5 would be:

A) $ 1,600

B) $ 16,000

C) $160,000

D) Cannot be determined

13. Check Company has two service departments whose direct department costs are $30,000 and $50,000, respectively, and two producing departments whose direct department costs are $320,000 and $300,000, respectively. The combined total department costs for the producing departments after allocating the service departments are:

A) $700,000

B) $830,000

C) $780,000

D) $130,000

14. Cycle time is comprised of each of the following components except:

A) Planning time

B) Set-up time

C) Waiting time

D) Inspection time

15. Which of the following is not a drawback to cost-based pricing?

A) Cost-based pricing requires accurate cost assignments.

B) The greater the portion of unassigned costs, the greater the likelihood of overpricing and underpricing individual products.

C) Cost-based pricing assumes goods or services are relatively scarce, and customers who want a product or service are, generally, willing to pay the price.

D) In a competitive environment, cost-based approaches increase the time and cost of bringing new products to market

16. Deb Burg is considering the production of a new line of jeans. Based on preliminary market research, management has decided that each pair of jeans should be priced at $160. Furthermore, management believes that the profit margin should be 30 percent of sales revenue. What is the target cost?

A) $ 32

B) $ 80

C) $112

D) $128

17.Which budgeting approach is widely used in government and non-profit organizations?

A) The continuous budgeting approach

B) The input/output approach

C) The incremental approach

D) Participation budgeting

18.All of the following are true of the sales budget except:

A) It contains a forecast of unit sales volume

B) It contains a forecast of sales dollars

C) It may contain a forecast of sales collections

D) It may contain a forecast of Kaizen activities

19. Which of the following departments would most likely be classified as a cost center in a large department store?

A) The men’s clothing department

B) The hardware department

C) The women’s shoe department

D) The accounting department

20. A flexible budget variance for a manufacturing cost is computed as the difference between:

A) Flexible budget costs and static budget costs

B) Actual costs and flexible budget costs

C) Departmental costs and cost center costs

D) Flexible budget costs and original budget costs