A cost incurred in the past that cannot be changed by any future action is a
sunk cost
Which of the following is a true statement about cost behaviors in incremental analysis
Fixed costs will generally not change between alternatives
Which of the following scenarios would make a manager indifferent about selling a product at the split-off point or processing it further?
When incremental revenues = incremental costs
All of the following are approaches for determining a transfer price except the
A) cost-based approach.
B) market-based approach.
C) negotiated approach.
d time-and-material approach.
In the minimum transfer price formula, variable cost is defined as the variable cost of
units sold internally
Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable?
Department managers' performances should not be evaluated based on actual results to budgeted results.
A common starting point in the budgeting process is
past performance
If budgets are to be effective, there must be
an organizational structure with clearly defined lines of authority and responsibility.
An appropriate activity index for a college or university for budgeting faculty positions would be the
credit hours taught by a department
A purchases budget is used instead of a production budget by
merchandising companies.
What is the goal of residual income
To maximize the total amount of residual income
A static budget is appropriate for
fixed overhead costs.
A responsibility report should
show only those costs that a manager can control
The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the
total labor variance
Standard costs
A) may show past cost experience.
B) help establish expected future costs.
C) are the budgeted cost per unit in the present.
d) all of these.
Which one of the following describes the total overhead variance?
The difference between what was actually incurred and overhead applied
The investigation of materials price variance usually begins in the
purchasing department.
Net annual cash flow can be estimated by
adding depreciation expense to net income.
The payback period is often compared to an asset's
estimated useful life.
Which of the following ignores the time value of money
A) Internal rate of return
B) Profitability index
C) Net present value
d) Cash payback
In evaluating high-tech projects
both tangible and intangible benefits should be considered.
When using the cash payback technique, the payback period is expressed in terms of
years
if a company is concerned with the potential negative effects of establishing standards they should
offer wage incentives to those meeting standards
the investigation of a materials quantity variance usually begins in the
production department
standard cost is
a predetermined cost/ may show past cost experience / help establish expected future costs / are budgeted cost per unit in the present,
debit balances in variance accounts represent
unfavorable variances
if the labor quantity variance is unfavorable and the cause is inefficient labor , the responsibility rest with the
production department
an overhead volume variance is calculated as the difference between normal capacity hours and standard hours allowed
times the predetermined fixed overhead rate
the higher the risk element in a project, the
higher the net present value
a thorough evaluation of how well a project's actual performance matches the projections made when the project was proposed is called a
post audit
all of the following are involved in the capital budgeting evaluation process except a company's
stockholders
to avoid rejecting project that actually should be accepted
conservative estimates of the intangible benefits' value should incorporated into the NPV calculation/ calculate net present value ignoring intangible benefis are amount of the negative NPV
intangible benefits in capital budgeting would include all of the increased
salvage value
the first step in the capital budgeting evaluation process is to
request proposals for projects
operating budgets must be completed before the financial budgets can be prepared
true
with which management function is budgeting most closely related
planing
the last step in the budgeting process is developing a sales forecast
false
what should be the reaction of upper level managers when a difference between budget and actual sales exist
it depends on whether the difference is material or not
which statement is true concerning management by exception
it requires investigation of all material differences whether favorable or not
which one of the following is a measure of the performance of the manager of a profit center
amount of controllable margin generated
which one of the following is a performance indicator for an investment center, but not for a profit center
asset utilization effectiveness
what is the purpose of determining return on investment
to assess performance of an investment center
when is a cost considered to be controllabe
only when the manager has the power to incure the cost within a given time period
which on of the folloing measures is frequently used to evaluate the performance of the manager of an investment center, but not profit center
the rater of return on funds invested in the center
what is another name for interest fixed cost
common