Which of the following denotes minimum transfer price?
Select one:
a. Minimum transfer price = Incremental cost per unit incurred up to the point of transfer + Opportunity cost per unit to the selling subunit
b. Minimum transfer price = Total cost per uni
a. Minimum transfer price = Incremental cost per unit incurred up to the point of transfer + Opportunity cost per unit to the selling subunit
When there is unused capacity, ________.
Select one:
a. the transfer-price range lies between the its variable cost per unit and the higher of its contribution or price at which the product is available from external suppliers
b. the transfer-price range
c. the transfer-price range lies between the minimum price at which the selling division is willing to sell and the maximum price the buying division is willing to pay
A transfer price based on the full cost plus a markup may lead to suboptimal decisions because ________.
Select one:
a. it leads the buying division to regard the fixed costs and the markup of the selling division as a variable cost
b. it leads the buying
a. it leads the buying division to regard the fixed costs and the markup of the selling division as a variable cost
Market-based transfer prices are helpful when ________.
Select one:
a. the product is specialized
b. the internal product is different from the products available externally in terms of its quality
c. the interdependencies of subunits are minimal
d. the m
c. the interdependencies of subunits are minimal
Negotiated transfer prices are often employed when ________.
Select one:
a. market prices are stable
b. market prices are volatile
c. market prices change by a regular percentage each year
d. goal congruence is not a major objective
b. market prices are volatile
Which of the following best describes a transfer price?
Select one:
a. It is the price charged by an organization when it transfer goods to another organization in lieu of services provided by it.
b. It is the price that is to be used while calculating re
d. It is the price one subunit charges for a product or service supplied to another subunit of the same organization.
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoe and sells it to retailers. The
c. $42
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoe and sells it to retailers. The
c. $43.20
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoe and sells it to retailers. The
d. $35.00
A primary consideration in assigning a cost to a responsibility center is ________.
Select one:
a. whether the cost is fixed or variable
b. whether the cost is direct or indirect
c. who can best control the change in that cost
d. where in the organization
c. who can best control the change in that cost
A company using responsibility accounting system decides to exclude all uncontrollable costs from a manager's performance report. Jenson is the machine supervisor. Which of the following costs will impact Jenson's performance report?
Select one:
a. rent a
c. machine maintenance cost
Responsibility accounting ________.
Select one:
a. emphasizes controllability
b. focuses on who should be asked about the information
c. attempts to assign blame for problems to a specific manager
d. attempts to create a decentralized organization
b. focuses on who should be asked about the information
A manager of a revenue center is responsible ________.
Select one:
a. for only the profits of his center
b. for investments, revenues, and costs
c. for only the revenues of his center
d. for both, the revenues and costs of his center
c. for only the revenues of his center
A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time.
Select one:
a. controlled
b. influenced
c. segregated
d. excluded
b. influenced
Which one of the following is a benefit of activity-based budgeting?
Select one:
a. It uses a single cost driver for batch-level activities or higher.
b. It is the most convenient method of budgeting as it requires minimal effort.
c. It provides detailed
c. It provides detailed information that improves decision making.
Which of the following statements is true about activity-based budgeting?
Select one:
a. activity-based budgeting estimates total costs more accurately than cost-based budgeting
b. activity-based budgeting provides more detailed information than cost-base
b. activity-based budgeting provides more detailed information than cost-based budgeting
Shamokin Manufacturing produces a Tourbillon watch movement called OM362. Shamokin expects to sell 10,000 units of OM362 and to have an ending finished inventory of 2,000 units. Currently, it has a beginning finished inventory of 800 units. Each unit of O
b. 11,200 hours of assembling; 22,400 hours of polishing
Solution:
10,000 + 2,000 - 800 = 11,200 * 1 (hour labor assembling) = 11,200
10,000 + 2,000 - 800 = 11,200 * 2 (hours labor polishing) = 22,400
The expected cost of direct labor for OM362 is ________.
Select one:
a. $350,000
b. $378,000
c. $392,000
d. $420,000
c. $392,000
Solution:
11,200 * $10 = 112,000
22,400 * $12.50 = 280,000
112,000 + 280,000 = 392,000
Within the relevant range, if there is a change in the level of the cost driver, then ________.
Select one:
a. total fixed costs and total variable costs will change
b. total fixed costs and total variable costs will remain the same
c. total fixed costs w
c. total fixed costs will remain the same and total variable costs will change
Which of the following differentiates job costing from process costing?
Select one:
a. Job costing is used when each unit of output is identical, and process costing deals with unique products.
b. Job costing is used when each unit of output is identical
c. Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches
The weighted-average process-costing method calculates the equivalent units by ________.
Select one:
a. considering only the work done during the current period
b. the units started during the current period minus the units in ending inventory
c. the unit
d. the equivalent units completed during the current period plus the equivalent units in ending inventory
Which of the following companies is most likely to use process costing?
Select one:
a. Crimpson Color, a company selling customized garments for niche customers
b. Effel & Associates, a consulting firm providing various audit and related services
c. Red P
c. Red Paste Inc., a company manufacturing and selling toothpaste on a large scale
Hint: needs to produce a uniform product
The costs of unused capacity are highlighted when ________.
Select one:
a. actual usage based allocations are used
b. budgeted usage allocations are used
c. practical capacity-based allocations are used
d. the dual-rate cost-allocation method allocates fi
c. practical capacity-based allocations are used
A cost function is a ________.
Select one:
a. process of calculating present value of projected cash flows
b. process of allocating costs to cost centers or cost objects
c. mathematical description of how a cost changes with changes in the level of an act
c. mathematical description of how a cost changes with changes in the level of an activity relating to that cost
In joint costing, which of the following is a market-based approach to allocating costs?
Select one:
a. sales units
b. units of production
c. physical measures
d. net realizable value
d. net realizable value
Which of the following statements best define split-off point in joint costing?
Select one:
a. It is the point at which managers decide to discontinue one or more of the products.
b. It is the point at which the managers decide to outsource some of its pr
c. It is the juncture in a joint production process when two or more products become separately identifiable.
Which of the following is a reason for a favorable material price variance?
Select one:
a. the purchasing manager bargaining effectively with suppliers
b. the purchasing manager giving orders for small quantity to reduce storage cost
c. the purchasing man
a. the purchasing manager bargaining effectively with suppliers
For each of the following statements regarding the satisfaction of transfer pricing criteria, identify whether you would expect the transfer pricing method to meet the criteria. Provide a yes, no, or sometimes for each situation.
1. Negotiated transfer pr
1. Yes
2. No
3. Yes
4. Sometimes
5. Yes
6. Yes
7. Yes
8. Yes
9. Yes
10. Yes