ACCT 434 (Advanced Cost Management) Devry
Week 1
ACCT 434 Week 1 DQ 1 (ABC Journey)
ACCT 434 Week 1 DQ 2 (Workout Room)
Week 1 Quiz 1
1- (TCO 1) The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
2- (TCO 1) The allocation of indirect costs in an activity-based costing system
3- (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management?
4- (TCO 1) A company produces three products; if one product is overcosted then
5- (TCO 1) To set realistic selling prices
6- (TCO 1) Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT
7- (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis
8- (TCO 1) Companies use ABC system information to
9- (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help to
10- (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity?
Week 2
ACCT 434 Week 2 DQ 1 (Flexible vs Static)
ACCT 434 Week 2 DQ 2 (Workout Room)
Week 2 Quiz 1
1- (TCO 2) Operating budgets and financial budgets
2- (TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget.
3- (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?
4- (TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to be worked on during the period can be computed at the start of that period. This feature of standard costing makes it possible to
5- (TCO 2) An unfavorable variance indicates that
6- (TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing?
7- (TCO 2) Overhead costs have been increasing due to all of the following except
8- (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted sales for 20X9?
9- (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009.
10- (TCO 2) Information pertaining to Brenton Corporation’s sales revenue is presented in the following table:
Week 2 Quiz 2
1- (TCO 2) Benchmarking is
2- (TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget.
3- (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?
4- (TCO 2) A flexible budget
5- (TCO 2) An unfavorable variance indicates that
6- (TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing?
7- (TCO 2) Overhead costs have been increasing due to all of the following except
8- (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted cost of goods sold for 20X9?
9- (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009.
10- (TCO 2) Information pertaining to Brenton Corporation’s sales revenue is presented in the following table:
Week 3
ACCT 434 Week 3 DQ 1 (Relevant Costs)
ACCT 434 Week 3 DQ 2 (Workout Room)
Week 3 Quiz
1- (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified?
2- (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs?
3- (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?
4- (TCO 3) Penny’s TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 20X8 operations: Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager’s salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated total costs if Penny’s expects to sell 3,000 units next year?
5- (TCO 4) The formal process of choosing among alternatives is known as a(n)
6- (TCO 4) When using the five-step decision process, which one of the following steps should be done last?
7- (TCO 4) Sunk costs
8- (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods’ policy to add a 50% markup to full costs. A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order?
9- (TCO 5) Throughput contribution equals revenues minus
10- (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines. One way the company can overcome the bottleneck is
Week 4
ACCT 434 Week 4 DQ 1 (Accounting for Primary Products)
ACCT 434 Week 4 DQ 2 (Workout Room)
Midterm Exam
Week 5
ACCT 434 Week 5 DQ 1 (Pricing Decision)
ACCT 434 Week 5 DQ 2 (Workout Room)
Week 5 Quiz 1
1- (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of
2- (TCO 7) The first step in implementing target pricing and target costing is
3- (TCO 7) The markup percentage is usually higher if the cost base used is
4- (TCO 7) An understanding of life-cycle costs can lead to
5- (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6- (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as
7- (TCO 8) Transfer prices should be judged by whether they promote
8- (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called
9- (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10- (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally?
Week 5 Quiz 2
1- (TCO 7) When companies do not want to use market prices or find it too costly, they typically use __________ prices, even though suboptimal decisions may occur.
2- (TCO 7) The first step in implementing target pricing and target costing is
3- (TCO 7) The amount of markup percentage is usually higher if
4- (TCO 7) An understanding of life-cycle costs can lead to
5- (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6- (TCO 8) A benefit of using a market-based transfer price is
7- (TCO 8) A transfer-pricing method leads to goal congruence when managers
8- (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called
9- (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10- (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs additional costs of $2.50 per pound. Which of the following formulas correctly reflects the company’s operating income per pound?
Week 6
ACCT 434 Week 6 DQ 1 (Evaluating Managers)
ACCT 434 Week 6 DQ 2 (Workout Room)
Week 6 Quiz:
1- (TCO 9) To guide cost allocation decisions, the benefits-received criterion
2- (TCO 9) A challenge to using cost-benefit criteria for allocating costs is that
3- (TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that
4- (TCO 9) Identifying homogeneous cost pools
5- (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?
6- (TCO 10) All of the following are methods that aid management in analyzing the expected results of capital budgeting decisions EXCEPT the
7- (TCO 10) Assume your goal in life is to retire with $1.5 million. How much would you need to save at the end of each year if interest rates average 5% and you have a 25-year work life?
8- (TCO 10) The definition of an annuity is
9- (TCO 10) A “what-if” technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes is called
10- (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $300,000. The required rate of return is 12% and the current machine is expected to last for four years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also four years? Income taxes are not considered.
Week 7
ACCT 434 Week 7 DQ 1 (Quality and Performance)
ACCT 434 Week 7 DQ 2 (Workout Room)
Week 7 Quiz:
1- (TCO 11) The four cost categories in a cost of quality program are
2- (TCO 11) ________ is a formal means of distinguishing between random and nonrandom variation in an operating process
3- (TCO 11) Which of the following is NOT one of the steps in managing bottlenecks under the theory of constraints?
4- TCO 11) Scrap is an example of
5- (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company’s average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?
6- (TCO 12) Which of the following is NOT a major feature of a just-in-time production system?
7- (TCO 12) Quality costs include
8- (TCO 12) Which of the following statements about the economic-order-quantity decision model is FALSE?
9- (TCO 12) When using a vendor-managed inventory system to enhance the features of supply-chain management, a challenging issue is
10- (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $40. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.
If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is
Week 7 Quiz 2
1- (TCO 11) The four cost categories in a cost of quality program are
2- (TCO 11) ________ is a formal means of distinguishing between random and nonrandom variation in an operating process.
3- (TCO 11) Delays in customer-response time occur because of
4- (TCO 11) Scrap is an example of
5- (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company’s average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures?
6- (TCO 12) Which of the following categories of costs are important when managing inventories of goods for sale, according to the authors of the text?
7- (TCO 12) Quality costs include
8- (TCO 12) Which of the following is an assumption of the economic-order-quantity decision model?
9- (TCO 12) Increases in the carrying cost and decreases in the ordering cost per purchase order result in
10- (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $50. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.
Final Exam