A standard cost:
A. is the "true" cost of a unit of production.
B. is a budget for the production of one unit of a product or service.
C. can be useful in calculating equivalent units.
D. is normally the average cost within an industry.
E. is almost alway
B. is a budget for the production of one unit of a product or service.
Which of the following is a predetermined estimated cost that can be used in the calculation of a variance?
A. Product cost.
B. Actual cost.
C. Standard cost.
D. Differential cost.
E. Marginal cost.
C. Standard cost.
Variances are computed by taking the difference between which of the following?
A. Product cost and period cost.
B. Actual cost and differential cost.
C. Price factors and rate factors.
D. Actual cost and standard cost.
E. Product cost and standard cost.
D. Actual cost and standard cost.
The term "management by exception" is best defined as:
A. choosing exceptional managers.
B. controlling actions of subordinates through acceptance of management techniques.
C. investigating unfavorable variances.
D. devoting management time to investigate
D. devoting management time to investigate significant variances.
Which of the following are methods for setting standards?
A. Analysis of historical data.
B. Task analysis.
C. Task analysis and the analysis of historical data.
D. Matrix application forms.
E. Goal congruence.
C. Task analysis and the analysis of historical data.
Which of the following individuals is least likely to become involved in the setting of either direct material standards or direct labor standards?
A. The purchasing manager.
B. A production supervisor.
C. An engineer.
D. A machine operator.
E. A company'
E. A company's president.
A perfection standard:
A. tends to motivate employees over a long period of time.
B. is attainable in an ideal operating environment.
C. would make allowances for normal amounts of scrap and waste.
D. is generally preferred by behavioral scientists.
E. wi
B. is attainable in an ideal operating environment.
Consider the following statements:
Behavioral scientists find that perfection standards often discourage employees and result in low worker morale.
Practical standards are also known as attainable standards.
Practical standards incorporate a certain amoun
Which of the above statements is (are) true?
A. I only.
B. II only.
C. III only.
D. II and III.
E. I, II, and III.
Which of the following would be considered if a company desires to establish a series of practical manufacturing standards?
A. The productivity loss associated with a short-term worker slowdown.
B. Normal defect rates in an assembly process.
C. Highly unu
E. Both "B" and "D
Which of the following would not be considered if a company desires to establish a series of practical manufacturing standards?
A. Production time lost during unusual machinery breakdowns.
B. Normal worker fatigue.
C. Freight charges on incoming raw mater
A. Production time lost during unusual machinery breakdowns.
Consider the following statements:
The standard cost per unit of materials is used to calculate a materials price variance.
The standard cost per unit of materials is used to calculate a materials quantity variance.
The standard cost per unit of materials
D. I and II.
Most companies base the calculation of the materials price variance on the:
A. number of units purchased.
B. number of units spoiled.
C. number of units that should have been used.
D. number of units actually used.
E. number of units to be purchased durin
A. number of units purchased.
Which of the following correctly lists all the information needed to calculate a labor rate variance?
A. Standard labor rate and actual hours worked.
B. Actual hours worked and actual units produced.
C. Standard labor rate, actual labor rate, and actual u
E. Actual labor rate, standard labor rate, and actual hours worked.
Which of the following variances are most similar with respect to the manner in which they are calculated?
A. Labor rate variance and labor efficiency variance.
B. Materials price variance and materials quantity variance.
C. Materials price variance, mate
E. Materials quantity variance and labor efficiency variance.
Which of the following variances cannot occur together during the same accounting period?
A. Unfavorable labor rate variance and favorable labor efficiency variance.
B. Unfavorable labor efficiency variance and favorable materials quantity variance.
C. Fa
E. None of the above, as all of these variance combinations are possible.
If a company has an unfavorable direct-material quantity variance, then:
A. the direct-material price variance is favorable.
B. the total direct-material variance is unfavorable.
C. the total direct-material variance is favorable.
D. the direct-labor effi
E. any of the above variances can occur.
A favorable labor efficiency variance is created when:
A. actual labor hours worked exceed standard hours allowed.
B. actual hours worked are less than the standard hours allowed.
C. actual wages paid are less than amounts that should have been paid.
D. a
B. actual hours worked are less than the standard hours allowed.
Victoria, Inc., recently completed 52,000 units of a product that was expected to consume five pounds of direct material per finished unit. The standard price of the direct material was $9 per pound. If the firm purchased and consumed 268,000 pounds in ma
B. $72,000U.
Solo Corporation recently purchased 25,000 gallons of direct material at $5.60 per gallon. Usage by the end of the period amounted to 23,000 gallons. If the standard cost is $6.00 per gallon and the company believes in computing variances at the earliest
D. $10,000F.
The following data relate to product no. 89 of Des Moines Corporation:
Direct material standard: 3 square feet at $2.50 per square foot
Direct material purchases: 30,000 square feet at $2.60 per square foot
Direct material consumed: 29,200 square feet
Man
B. $1,000U. , E. $3,000U.
Consider the following information:
Direct material purchased and used, 80,000 gallons
Standard quantity of direct material allowed for May production, 76,000 gallons
Actual cost of direct materials purchased and used, $176,000
Unfavorable direct-material
C. $12,000F.
Courtney purchased and consumed 50,000 gallons of direct material that was used in the production of 11,000 finished units of product. According to engineering specifications, each finished unit had a manufacturing standard of five gallons. If a review of
C. $0.70.
According to manufacturing specifications, each unit is anticipated to take 2.5 hours to complete. The company's actual payroll cost amounted to $370,000. If the standard labor cost per hour is $18, Holland's labor rate variance is:
A. $10,000F.
B. $10,00
B. $10,000U.
Denver Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual payroll cost amounted to $158,200. If the standar
B. $11,000F.
The following data relate to product no. 33 of La Quinta Corporation:
Direct labor standard: 5 hours at $14 per hour
Direct labor used in production: 45,000 hours at a cost of $639,000
Manufacturing activity, product no. 33: 8,900 units completed
29. The
D,B
Simms Corporation had a favorable direct-labor efficiency variance of $6,000 for the period just ended. The actual wage rate was $0.50 more than the standard rate of $12.00. If the company's standard hours allowed for actual production totaled 9,500, how
A. 9,000.
When considering whether to investigate a variance, managers should consider all of the following except the variance's:
A. size.
B. pattern of recurrence.
C. trends over time.
D. nature, namely, whether it is favorable or unfavorable.
E. controllability.
D. nature, namely, whether it is favorable or unfavorable.
Which of the following combinations of direct-material variances might prompt management to undertake a detailed variance investigation?
A. Price, unfavorable; quantity, unfavorable.
B. Price, unfavorable; quantity, favorable.
C. Price, favorable; quantit
E. All of the above.
Consider the following statements about variance investigation:
Variance investigation involves a look at only unfavorable variances.
Variance investigation is typically based on a cost-benefit analysis.
Variance investigation is often performed by establ
D. II and III.
A statistical control chart is best used for determining:
A. direct-material price variances.
B. direct-labor variances.
C. whether a variance is favorable or unfavorable.
D. who should be held accountable for specific variances.
E. whether a particular v
E. whether a particular variance should be investigated.
The individual generally responsible for the direct-material price variance is the:
A. sales manager.
B. production supervisor.
C. purchasing manager.
D. finance manager.
E. head of the human resources department.
C. purchasing manager.
A production supervisor generally has little influence over the:
A. direct-material quantity variance.
B. direct-labor rate variance.
C. direct-labor efficiency variance.
D. direct-material price variance.
E. number of units produced.
D. direct-material price variance.
In which department would an investigation normally begin regarding an unfavorable materials quantity variance?
A. Quality control.
B. Purchasing.
C. Engineering.
D. Production.
E. Receiving.
D. Production.
Cohen Corporation has a favorable materials quantity variance. Which department would likely be asked to explain the cause of this variance?
A. Engineering.
B. Purchasing.
C. Production.
D. Marketing.
E. None, because the variance is favorable.
C. Production.
Rogers, Inc., had an unfavorable labor efficiency variance and an unfavorable materials quantity variance. Which department might be held accountable for these variances?
A. Purchasing, because bad materials can harm labor efficiency.
B. Production, becau
C. Purchasing and/or production.
A direct-material quantity variance can be caused by all of the following except:
A. improper employee training.
B. changes in sales volume.
C. acquisition of materials at a very attractive price.
D. adjustment problems with machines.
E. disgruntled worke
B. changes in sales volume.
direct-labor efficiency variance cannot be caused by:
A. inexperienced employees.
B. poor quality raw materials.
C. employee inefficiency.
D. an out-of-date labor time standard.
E. producing fewer finished units than originally planned.
E. producing fewer finished units than originally planned.
Justin Company recently purchased materials from a new supplier at a very attractive price. The materials were found to be of poor quality, and the company's laborers struggled significantly as they shaped the materials into finished product. In a despera
E. All of the above.
Listed below are five variances (and possible causes) that are under review by management of Knox Company. Which of the following is least likely to cause the variance indicated?
A.The need to ship goods acquired from a distant supplier via FedEx rather t
D. The need to close a plant for two days because of blizzard conditions; material quantity variance, part no. 542.
Lucky Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $9,500F. The alloy produced more waste than normal, as evidenced by a direct-material quantity varia
A. $4,100F.
Standard costs:
A. allow a manager to assess the efficiency of operations.
B. allow a company to practice management by exception.
C. provide management with a basis for performance evaluations.
D. if set correctly, can provide a motivational tool for emp
E. will provide all of the above benefits for a company.
Which of the following is a criticism of standard costing, as applied to today's manufacturing environment?
A. Automated manufacturing processes are very consistent in meeting production specifications, making variances very small and relatively unimporta
E. All of the above are valid criticisms.
Which of the following is not a valid way to adapt standard cost systems to today's manufacturing environment?
A. Emphasize material and overhead costs.
B. Use more non-traditional cost drivers such as number of setups or number of engineering change orde
E. Devote more resources to the tracking of direct labor cost.
To assess how customers perceive a company's products, management may study:
A. the number of customer complaints.
B. the number of warranty claims.
C. the number of products returned.
D. the cost of repairing returned products.
E. all of the above measur
E. all of the above measures.
To improve its manufacturing efficiency, companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time. The blank is:
A. processing time.
B. lead time.
C. waiting time.
D. move ti
A. processing time.
In the calculation of manufacturing cycle efficiency, which of the following activities results in value-added time?
A. Moving.
B. Processing.
C. Inspection.
D. Waiting.
E. All of the above.
B. Processing.
The manufacturing cycle efficiency for PQR Company when the processing time is six hours and inspection, waiting, and move time are one hour each is:
A. 0.67.
B. 0.75.
C. 0.78.
D. 0.88.
E. an amount other than those shown above.
A. 0.67.
Which of the following would not be a concern of a company that desires to compete in a global manufacturing arena?
A. Number of new products introduced.
B. Manufacturing cycle efficiency.
C. Number of customer complaints.
D. Number of on-time deliveries.
E. All of the above would be concerns.
An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as:
A. the integrated performance measurement tool (IPMT).
B. the balanced scor
B. the balanced scorecard.
The typical balanced scorecard is best described as containing:
A. financial performance measures.
B. nonfinancial performance measures.
C. neither financial nor nonfinancial performance measures.
D. both financial and nonfinancial performance measures.
E
E. both financial and nonfinancial performance measures, the latter often covering a broad range of perspectives such as customers, internal operations, and learning and growth.
Swedish Cruise Lines (SCL), which operates in a very competitive marketplace, is considering four categories of performance measures: (1) profitability measures, (2) customer-satisfaction measures, (3) efficiency and quality measures, and (4) learning and
E. 1, 2, 3, 4.
Lead indicators guide management to:
A. take actions now that will have positive effects on organizational performance now.
B. take actions now that will have positive effects on organizational performance in the future.
C. take actions in the future that
B. take actions now that will have positive effects on organizational performance in the future.
When using a balanced scorecard, a company's market share is typically classified as an element of the firm's:
A. financial performance measures.
B. customer performance measures.
C. learning and growth performance measures.
D. internal-operations perform
B. customer performance measures.
When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?
A. Cash flow.
B. Number of customer complaints.
C. Employee training hours.
D. Number of employee suggestions.
E. Number of supp
E. Number of suppliers used.
Which of the following perspectives is influenced by a company's vision and strategy?
A. Financial.
B. Customer.
C. Internal operations.
D. Learning and growth.
E. All of the above.
E. All of the above.
At the end of the accounting period, most companies close variance accounts to:
A. Raw-Material Inventory.
B. Work-in-Process Inventory.
C. Finished-Goods Inventory.
D. Cost of Goods Sold.
E. Income Summary.
D. Cost of Goods Sold.
Generally speaking, budgets are not used to:
A. identify a company's most profitable products.
B. evaluate performance.
C. create a plan of action.
D. assist in the control of profit and operations.
E. facilitate communication and coordinate activities.
A. identify a company's most profitable products.
A formal budget program will almost always result in:
A. higher sales.
B. more cash inflows than cash outflows.
C. decreased expenses.
D. improved profits.
E. a detailed plan against which actual results can be compared.
E. a detailed plan against which actual results can be compared.
A budget serves as a benchmark against which:
A. actual results can be compared.
B. allocated results can be compared.
C. actual results become inconsequential.
D. allocated results become inconsequential.
E. cash balances can be compared to expense total
A. actual results can be compared.
The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as:
A. an integrated budget.
B. a pro-forma budget.
C. a master budget.
D. a financial budget.
E. a rolling budget.
C. a master budget.
A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:
A. pro-forma budget.
B. master budget.
C. financial budget.
D. profit plan.
E. capital budget.
E. capital budget.
Wilson Corporation is budgeting its equipment needs on an on-going basis, with a new quarter being added to the budget as the current quarter is completed. This type of budget is most commonly known as a:
A. capital budget.
B. rolling budget.
C. revised b
B. rolling budget.
An organization's budgets will often be prepared to cover:
A. one month.
B. one quarter.
C. one year.
D. periods longer than one year.
E. all of the above.
E. all of the above.
A manufacturing firm would begin preparation of its master budget by constructing a:
A. sales budget.
B. production budget.
C. cash budget.
D. capital budget.
E. set of pro-forma financial statements.
A. sales budget.
Which of the following budgets is based on many other master-budget components?
A. Direct labor budget.
B. Overhead budget.
C. Sales budget.
D. Cash budget.
E. Selling and administrative expense budget.
D. Cash budget.
The budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows comprise:
A. the final portion of the master budget.
B. the depiction of an organization's overall actual financial results.
C. the first step of the master budget
A. the final portion of the master budget.
Which of the following budgets is prepared at the end of the budget-construction cycle?
A. Sales budget.
B. Production budget.
C. Budgeted financial statements.
D. Cash budget.
E. Overhead budget.
E. Overhead budget.
Which of the following would depict the logical order for preparing (1) a production budget, (2) a cash budget, (3) a sales budget, and (4) a direct-labor budget?
A. 1-3-4-2.
B. 2-3-1-4.
C. 2-1-3-4.
D. 3-1-4-2.
E. 3-1-2-4.
E. 3-1-2-4.
A company's sales forecast would likely consider all of the following factors except:
A. political and legal events.
B. advertising and pricing policies.
C. general economic and industry trends.
D. top management's attitude toward decentralized operating
D. top management's attitude toward decentralized operating structures.
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 typicall
E. The sales forecast is typically completed before the master budget and has significant impact
Which of the following organizations is not likely to use budgets?
A. Manufacturing firms.
B. Merchandising firms.
C. Firms in service industries.
D. Nonprofit organizations.
E. None of the above, as all are likely to use budgets.
E. None of the above, as all are likely to use budgets.
Activity-based budgeting:
A. begins with a forecast of products and services to be produced, and customers served.
B. ends with a forecast of products and services to be produced, and customers served.
C. parallels the flow of analysis that is associated
E. is best described by choices "A" and "D" above.
A company that uses activity-based budgeting performs the following:
1�Plans activities for the budget period.
2�Forecasts the demand for products and services as well as the customers to be served.
3�Budgets the resources necessary to carry out activitie
B. 2-1-3.
Santa Fe Corporation has a highly automated production facility. Which of the following correctly shows the two factors that would likely have the most direct influence on the company's manufacturing overhead budget?
A. Sales volume and labor hours.
B. Co
C. Production volume and management judgment.
May Production Company, which uses activity-based budgeting, is in the process of preparing a manufacturing overhead budget. Which of the following would likely appear on that budget?
A. Batch-level costs: Production setup.
B. Unit-level costs: Depreciati
A. Batch-level costs: Production setup.
FastTec, which sells electronics in retail outlets and on the Internet, uses activity-based budgeting in the preparation of its selling, general, and administrative expense budget. Which of the following costs would the company likely classify as a unit-l
B. Retail outlet sales commissions.
Which of the following would have no effect, either direct or indirect, on an organization's cash budget?
A. Sales revenues.
B. Outlays for professional labor.
C. Advertising expenditures.
D. Raw material purchases.
E. None of the above, as all of these i
E. None of the above, as all of these items would have some influence.
End-of-period figures for accounts receivable and payables to suppliers would be found on the:
A. cash budget.
B. budgeted schedule of cost of goods manufactured.
C. budgeted income statement.
D. budgeted balance sheet.
E. budgeted statement of cash flows
D. budgeted balance sheet.
Which of the following statements about financial planning models (FPMs) is (are) false?
A. FPMs express a company's financial and operating relationships in mathematical terms.
B. FPMs allow a user to explore the impact of changes in variables.
C. FPMs a
D. FPMs have become less popular in recent years because of computers and spreadsheets.
Which of the following statements concerning the budget director is false?
A. The budget director is often the organization's controller.
B. The budget director has the responsibility of specifying the process by which budget data will be gathered.
C. The
E. The budget director usually has the authority to give final approval to the master budget.
E-budgeting:
A. often uses specialized software to streamline the budgeting process.
B. is an Internet-based budgeting procedure.
C. requires significant network security provisions.
D. is becoming more commonplace as businesses expand their operations th
E. possesses all of the above attributes.
The budgeting technique that focuses on different phases of a product such as planning and concept design, testing, manufacturing, and distribution and customer service is known as:
A. cash-flow budgeting.
B. zero-base budgeting.
C. base budgeting.
D. com
E. life-cycle budgeting.
The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:
A. passing the buck.
B. budgetary slack.
C. false budgeting.
D. participative budgeting.
E. resource allocation proce
B. budgetary slack.
When an organization involves its many employees in the budgeting process in a meaningful way, the organization is said to be using:
A. budgetary slack.
B. participative budgeting.
C. budget padding.
D. imposed budgeting.
E. employee-based budgeting.
B. participative budgeting.
Which of the following outcomes is (are) sometimes associated with participative budgeting?
A. Employees make little effort to achieve budgetary goals.
B. Budget preparation time can be somewhat lengthy.
C. The problem of budget padding may arise.
D. Fina
E. Budget preparation time can be somewhat lengthy and budget padding may arise.
Company A uses a heavily participative budgeting approach whereas at Company B, top management develops all budgets and imposes them on lower-level personnel. Which of the following statements is false?
A. A's employees will likely be more motivated to ac
C. Budget padding will likely be a greater problem at Company B.
When managers of subunits throughout an organization strive to achieve the goals set by top management, the result is:
A. goal congruence.
B. planning and control.
C. responsibility accounting.
D. delegation of decision making.
E. strategic control.
A. goal congruence.
Which of the following is not an example of a responsibility center?
A. Cost center.
B. Revenue center.
C. Profit center.
D. Investment center.
E. Contribution center.
E. Contribution center.
A manufacturer's raw-material purchasing department would likely be classified as a:
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
A. cost center.
Hitchcock Corporation is in the process of overhauling the performance evaluation system for its Los Angeles manufacturing division, which produces and sells parts that are popular in the aerospace industry. Which of the following is least likely to be ch
A. Cost center.
A cost center manager:
A. does not have the ability to produce revenue.
B. may be involved with the sale of new marketing programs to clients.
C. would normally be held accountable for producing an adequate return on invested capital.
D. often oversees di
A. does not have the ability to produce revenue.
The Telemarketing Department of a residential remodeling company would most likely be evaluated as a:
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
B. revenue center.
If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a(n):
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
C. profit center.
Which of the following would have a low likelihood of being organized as a profit center?
A. A movie theater of a company that operates a chain of theaters.
B. A maintenance department that charges users for its services.
C. The billing department of an I
E. Both "C" and "D" above.
Decentralized firms can delegate authority by structuring an organization into responsibility centers. Which of the following organizational segments is most like a totally independent, standalone business where managers are expected to "make it on their
D. Investment center.
A responsibility center in which the manager is held accountable for the profitable use of assets and capital is commonly known as a(n):
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
D. investment center.
The Asian Division of a multinational manufacturing organization would likely be classified as a:
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
D. investment center.
Performance reports help managers:
A. use management by exception and effectively control operations.
B. decide whether a cost, profit, or investment center framework is appropriate.
C. design their organizational hierarchy.
D. pinpoint trouble spots.
E.
E. by assisting with functions "A" and "D.
Leisure Time owns six hotels in Hawaii, collectively known as the Hawaiian Division. The various hotels, including the Surf & Sun, have operating departments (such as Maintenance, Housekeeping, and Food and Beverage) that are evaluated as either cost cent
C
A cost pool is:
A. a collection of homogeneous costs to be assigned.
B. the combined result of decisions made by different responsibility center managers.
C. the primary function of a responsibility accounting system.
D. the amount of cost that has been a
A. a collection of homogeneous costs to be assigned.
A cost object is:
A. a collection of costs to be assigned.
B. a responsibility center, product, or service to which cost is to be assigned.
C. the tool used to charge cost dollars to user departments.
D. the primary function of a responsibility accounting
B. a responsibility center, product, or service to which cost is to be assigned.
Kelly Corporation, with operations throughout the country, will soon allocate corporate overhead to the firm's various responsibility centers. Which of the following is definitely not a cost object in this situation?
A. The maintenance department.
B. Prod
C. Kelly Corporation.
An allocation base for a cost pool should ideally be:
A. machine hours.
B. a cost object.
C. a common cost.
D. a cost driver.
E. direct labor, either cost or hours.
D. a cost driver.
Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?
A. Number of employees in the responsibility centers.
B. Budgeted sales dollars of the responsibility centers.
C. Square feet occupied
C. Square feet occupied by the responsibility centers.
Cost pools should be charged to responsibility centers by using:
A. budgeted amounts of allocation bases because the cost allocation to one responsibility center should influence the allocations to others.
B. budgeted amounts of allocation bases because t
B. budgeted amounts of allocation bases because the cost allocation to one responsibility center should not influence the allocations to others.
Responsibility accounting systems strive to:
A. place blame on guilty individuals.
B. provide information to managers.
C. hold managers accountable for both controllable and noncontrollable costs.
D. identify unfavorable variances.
E. provide information
B. provide information to managers.
Controllable costs, as used in a responsibility accounting system, consist of:
A. only fixed costs.
B. only direct materials and direct labor.
C. those costs that a manager can influence in the time period under review.
D. those costs about which a manage
C. those costs that a manager can influence in the time period under review.
For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?
A. Direct materials used.
B. Departmental supplies.
C. Assembly-line labor.
D. Repairs and ma
E. Assembly-line facilities depreciation.
Common costs:
A. are not easily related to a segment's activities.
B. are easily related to a segment's activities.
C. are charged to the operating segments of a company.
D. are not charged to the operating segments of a company.
E. are best described by
E. are best described by characteristics "A" and "D" above.
Harris Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing). Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives
E. The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.
West Coast Electronics (WCE) operates 87 stores and has three divisions: California, Oregon, and Washington. Which of the following costs would not appear on Oregon's portion of WCE's segmented income statement?
A. Costs related to statewide advertising c
D
The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:
A. variable operating expenses.
B. allocated common expenses.
C. fixed expenses controllable by the segment manager.
D. fixed expenses t
D. fixed expenses traceable to the segment but controllable by others.
The profit margin controllable by the segment manager would not include:
A. variable operating expenses.
B. fixed expenses controllable by the segment manager.
C. a share of the company's common fixed expenses.
D. income tax expense.
E. items "C" and "D
E. items "C" and "D" above.
A segment contribution margin would reflect the impact of:
A. variable operating expenses.
B. fixed expenses controllable by the segment manager.
C. fixed expenses traceable to the segment but controllable by others.
D. common fixed expenses.
E. items "A,
A. variable operating expenses.
Gathersburg Retail has three stores in Maryland. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?
A. Hourly labor costs incurred by personnel at store no. 3.
B. Property taxes at
E. Items "B," "C," and "D" above.
Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?
A. Segment sales revenue.
B. Segment contribution margin.
C. Profit margin controllable by the segment manager.
C. Profit margin controllable by the segment manager.
Quality of conformance refers to:
A. the extent to which a product meets the specifications of its design.
B. the extent to which a product adds value to a firm's product line.
C. the extent to which a product is designed for its intended use.
D. the exte
A. the extent to which a product meets the specifications of its design.
Which of the following is not a cost of quality?
A. External failure cost.
B. Internal failure cost.
C. Production inefficiency cost.
D. Prevention cost.
E. Appraisal cost.
C. Production inefficiency cost.
Which of the following costs is often considered the hardest to measure?
A. Prevention costs.
B. Appraisal costs.
C. Internal failure costs.
D. External failure costs.
E. The cost of lost sales.
E. The cost of lost sales.
Which of the following costs would be classified as a prevention cost on a quality report?
A. Reliability engineering.
B. Materials inspection.
C. Rework.
D. Warranty repairs.
E. Out-of-court liability settlements.
A. Reliability engineering.
Which of the following costs would be classified as an appraisal cost on a quality report?
A. Reliability engineering.
B. Materials inspection.
C. Rework.
D. Warranty repairs.
E. Out-of-court liability settlements.
B. Materials inspection.
If goods are inspected and found to be defective, any rework costs related to these units before the units are transferred to the finished-goods warehouse would be classified as a(n):
A. external failure cost.
B. internal failure cost.
C. production ineff
B. internal failure cost.
Which of the following costs would be classified as an internal failure cost on a quality report?
A. Reliability engineering.
B. Materials inspection.
C. Rework.
D. Warranty repairs.
E. Out-of-court liability settlements.
C. Rework.
The cost of servicing a unit under a warranty agreement is known as a(n):
A. external failure cost.
B. internal failure cost.
C. production inefficiency cost.
D. prevention cost.
E. appraisal cost.
A. external failure cost.
Which of the following costs would be classified as an external failure cost on a quality report?
A. Reliability engineering.
B. Materials inspection.
C. Rework.
D. Warranty repairs.
E. Pilot studies/focus-group sessions.
D. Warranty repairs.
Under the contemporary view of product quality, companies should strive to:
A. balance failure costs with the sum of prevention and appraisal costs.
B. increase total quality costs.
C. achieve zero defects in manufacturing.
D. inspect after-the-fact rathe
C. achieve zero defects in manufacturing.
Which of the following is a helpful tool in identifying the frequency of quality-control problems?
A. Decision trees.
B. Scatter diagrams.
C. Pareto diagrams.
D. Flowcharts.
E. Decision tables.
C. Pareto diagrams.