A relatively low margin of safety ratio for a product is usually an indication that the product:
A. Is losing money.
B. Has a high contribution margin.
C. Is riskier than higher margin of safety products.
D. Is less risky than higher margin of safety prod
C
CVP analysis for revenue and cost planning has the primary objective of:
A. Maximizing revenue.
B. Minimizing costs.
C. Both revenue maximization and cost minimization.
D. Achieving the desired level of sales and profits.
E. Consistently producing sales a
D
High operating leverage is a measure of the risk of change in profit a firm assumes when it has relatively:
A. High variable cost.
B. High fixed cost.
C. High sales.
D. High turnover.
E. High sales expectations.
B
CVP analysis with multiple products assumes that sales will continue at the same mix of products, expressed
in either sales units or sales dollars. This assumption is essential, because a change in the product mix will
probably change:
A. The average sale
C
CVP analysis using activity-based costs will tend to shift cost from fixed to variable classifications,
resulting in:
A. Lower breakeven sales.
B. Higher breakeven sales.
C. Breakeven sales can be higher or lower, depending on batch size.
D. A higher cont
C
Which one of the following is correct for determining relevant costs?
A. Differential.
B. Integrative.
C. Long-term focus.
D. Subjective.
E. Opportunistic.
A
To make a special order decision, managers need critical information about all the following except:
A. Relevant costs.
B. Prior period operating costs.
C. Any opportunity costs.
D. The strategic, competitive environment of the firm.
B
In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevant to the
short-run decision is:
A. Direct labor.
B. Variable overhead.
C. Fixed overhead that will be avoided if the part is bought from an outside vendor.
D
A decision bias is an inherent tendency of most decision makers that leads to incorrect decisions. An
example of decision bias is:
A. Failure to consider all relevant costs.
B. Failure to properly identify sunk costs as irrelevant.
C. Failure to consider
B
The process of planning business actions in the near future and expressing them as formal plans is called:
A. Budgeting.
B. Cost accounting.
C. Managerial accounting.
D. Auditing.
E. Financial Accounting.
A
A master budget is typically prepared for:
A. A period of one year.
B. Top management only.
C. Headquarters only.
D. Strategic business units only.
E. Product lines only.
A
Sales forecasts are the first step in the budgeting process of a merchandising firm because:
A. The revenue data is easiest to generate.
B. Sales information is precise in amount.
C. Sales personnel have the quickest access to data.
D. Sales forecasts are
E
The primary purpose of calculating standard cost variances each period is:
A. To achieve financial control regarding operating activities.
B. To facilitate the recording of manufacturing costs during a period.
C. To adjust reported income to flexible-budg
A
A flexible-budget variance measures the impact on short-term operating profit of:
A. Changes in sales volume.
B. Changes in output during the period.
C. Differences in sales mix�budgeted versus actual.
D. Selling price and cost differences�actual versus b
D
The difference between the actual sales volume for a period and the flexible-budget sales volume is:
A. The total sales-volume variance for the period.
B. The total production-volume variance for the period.
C. The sales price variance for the period.
D.
E
The fixed factory overhead production-volume variance represents:
A. Money lost or gained because of achieved production levels.
B. An artifact of unitizing fixed overhead costs for product-costing purposes.
C. Information regarding the effectiveness of t
B
The difference between total variable overhead cost incurred and the standard variable overhead cost based
on the actual quantity of the cost driver used to apply variable overhead is the:
A. Total variable overhead variance.
B. Variable overhead spending
B
In process costing, unit product cost is calculated by dividing process cost in each department by the
equivalent units produced:
A. Less beginning inventory.
B. Plus beginning inventory.
C. In the prior period.
D. In the following period.
E. During the p
E
The journal entry to record the application of factory overhead would include a credit to:
A. Work-in-Process Inventory.
B. Accrued Payroll.
C. Factory Overhead.
D. Materials Inventory.
E. Finished Goods Inventory.
C
When using the first-in, first-out method of process costing, equivalent units for work done during this
period is equal to the number of units:
A. In work-in-process at the beginning of the period times the percent of work necessary to complete the items
A
In the computation of manufacturing cost per equivalent unit, the weighted-average method of process
costing considers:
A. Current costs only.
B. Current costs less cost of ending work-in-process inventory.
C. Current costs plus cost of beginning work-in-
C
Place the following Process costing steps in the correct order:
1 - Calculate equivalent units
2 - Determine the total costs to account for
3 - Analyze flow of physical units
4 - Assign total manufacturing costs
5 - Compute unit costs
A. 3,5,2,1,4.
B. 2,1
D
Which of the following statements regarding "opportunity costs" is TRUE?
A. These costs are recorded routinely by cost accounting systems.
B. These costs relate to the benefit lost or foregone when a chose option (course of action) precludes the benefits
B
Which of the following budgets must be completed before preparing a cash budget?
A. Cash receipts budget.
B. Rolling budget.
C. Cash financing budget.
D. Pro forma balance sheet.
E. Pro forma income statement.
A
Another name for the total operating income variance for a period is:
A. Flexible-budget variance.
B. Master (Static) budget variance.
C. Sales volume variance.
D. Total income variance.
E. Sales mix variance.
B
A flexible-budget variance measures the impact on short-term operating profit of:
A. Changes in sales volume.
B. Changes in output during the period.
C. Differences in sales mix--budgeted versus actual.
D. Selling price and cost differences--actual versus
D
The fixed factory overhead production-volume variance represents:
A. Money lost or gained because of achieved production levels.
B. An artifact of unitizing fixed overhead costs for product-costing purposes.
C. Information regarding the effectiveness of t
B