Kaplan GB519 Unit 6 Final A+ Answers: Click HERE
1. The strategy map is a tool
that is used: (Points : 2)
as one of the key aspects of the contemporary management environment
to enhance the sustainability of the organization
to link the perspectives of the balanced scorecard
to organize the critical success factors of a company
2. Value activities can best be defined as: (Points : 2)
Activities that firms in the industry must perform to improve a product.
Activities that firms in the industry must perform in the process of converting raw material to final product, including customer service.
Activities that firms in the industry must perform in the process of closing down a product line, including customer service.
Activities that firms in the industry must perform to consider ways of marketing a product.
3. In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique? (Points : 2)
Benchmarking.
Activity-Based Costing.
Theory of Constraints.
Continuous Improvement.
Total Quality Management.
4. A firm succeeds on its ability to deliver products to customers more quickly than rival companies in its industry. This skill is an example of the firm's: (Points : 2)
Core competency.
Research effectiveness.
Production efficiency.
Cost control effectiveness.
5. Using value-chain analysis, a firm can develop a competitive advantage by specifically looking for ways to: (Points : 2)
Add value and reduce cost.
Improve manufacturing productivity.
Improve customer service.
Improve product quality.
6. Assume the following information pertaining to a Company:
Prime costs = $195,000
Conversion Costs = $221,000
Direct Materials used = $85,000
Beginning Work-in-Process = $98,000
Ending Work-in-Process = $81,000
Cost of goods manufactured is calculated to be: (Points : 2)
$289,000.
$348,000.
$314,000.
$297,000.
$323,000.
7. Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
COGS = $80,000
WIP Inventory – January 1. = $18,500
WIP Inventory – December 31 = $14,500
Selling & Administrative Expenses = $16,000
Net Income = $30,000
Factory O/H = $20,000
Direct Materials Inventory, January 1= $26,000
Direct Materials Inventory, December 31= $14,000
COGM = $98,000
Finished Goods Inventory, January 1 = 31,000
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount of direct materials used? (Points : 2)
$15,000.
$29,000.
$20,000.
$24,000.
8. Process cost systems are used in all of the following industries except: (Points : 2)
Chemicals.
Ship building.
Oil refining.
Textiles.
Steel.
9. Multistage ABC is used when: (Points : 2)
There are many departments in the organization.
Management wants a higher level of accuracy from the ABC calculations.
There are complex relationships among the activities.
To simplify the ABC calculations.
10. The primary focus of job costing in service industries is on: (Points : 2)
Direct materials.
Direct labor.
Indirect materials.
Supplies.
Factory overhead.
11. Abnormal spoilage: (Points : 2)
Is considered part of good production.
Arises under efficient operating conditions.
Is controllable in the short run.
Is unacceptable spoilage that should not occur under efficient operating conditions.
Is part of inventory product cost.
12. Job costing in service industries uses recording procedures and accounts similar to those illustrated in the chapter except for: (Points : 2)
Direct labor.
Overhead costs.
Direct materials.
Cost drivers.
13. Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.
Direct Materials January 1 = $77,000
Direct Materials December 31 = 40,000
WIP January 1 = 66,000
WIP December 31 = 42,000
Finished Goods January 1 = 115,000
Finished Goods December 31 = 100,000
Other Information:
Direct Materials Purchased = $324,000
Cost of Goods Available for Sale = 950,000
Actual Factory Overhead = 206,000
The cost of goods manufactured during the year is: (Points : 2)
$850,000.
$348,000.
$672,000.
$835,000.
$811,000.
as one of the key aspects of the contemporary management environment
to enhance the sustainability of the organization
to link the perspectives of the balanced scorecard
to organize the critical success factors of a company
2. Value activities can best be defined as: (Points : 2)
Activities that firms in the industry must perform to improve a product.
Activities that firms in the industry must perform in the process of converting raw material to final product, including customer service.
Activities that firms in the industry must perform in the process of closing down a product line, including customer service.
Activities that firms in the industry must perform to consider ways of marketing a product.
3. In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique? (Points : 2)
Benchmarking.
Activity-Based Costing.
Theory of Constraints.
Continuous Improvement.
Total Quality Management.
4. A firm succeeds on its ability to deliver products to customers more quickly than rival companies in its industry. This skill is an example of the firm's: (Points : 2)
Core competency.
Research effectiveness.
Production efficiency.
Cost control effectiveness.
5. Using value-chain analysis, a firm can develop a competitive advantage by specifically looking for ways to: (Points : 2)
Add value and reduce cost.
Improve manufacturing productivity.
Improve customer service.
Improve product quality.
6. Assume the following information pertaining to a Company:
Prime costs = $195,000
Conversion Costs = $221,000
Direct Materials used = $85,000
Beginning Work-in-Process = $98,000
Ending Work-in-Process = $81,000
Cost of goods manufactured is calculated to be: (Points : 2)
$289,000.
$348,000.
$314,000.
$297,000.
$323,000.
7. Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
COGS = $80,000
WIP Inventory – January 1. = $18,500
WIP Inventory – December 31 = $14,500
Selling & Administrative Expenses = $16,000
Net Income = $30,000
Factory O/H = $20,000
Direct Materials Inventory, January 1= $26,000
Direct Materials Inventory, December 31= $14,000
COGM = $98,000
Finished Goods Inventory, January 1 = 31,000
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount of direct materials used? (Points : 2)
$15,000.
$29,000.
$20,000.
$24,000.
8. Process cost systems are used in all of the following industries except: (Points : 2)
Chemicals.
Ship building.
Oil refining.
Textiles.
Steel.
9. Multistage ABC is used when: (Points : 2)
There are many departments in the organization.
Management wants a higher level of accuracy from the ABC calculations.
There are complex relationships among the activities.
To simplify the ABC calculations.
10. The primary focus of job costing in service industries is on: (Points : 2)
Direct materials.
Direct labor.
Indirect materials.
Supplies.
Factory overhead.
11. Abnormal spoilage: (Points : 2)
Is considered part of good production.
Arises under efficient operating conditions.
Is controllable in the short run.
Is unacceptable spoilage that should not occur under efficient operating conditions.
Is part of inventory product cost.
12. Job costing in service industries uses recording procedures and accounts similar to those illustrated in the chapter except for: (Points : 2)
Direct labor.
Overhead costs.
Direct materials.
Cost drivers.
13. Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below.
Direct Materials January 1 = $77,000
Direct Materials December 31 = 40,000
WIP January 1 = 66,000
WIP December 31 = 42,000
Finished Goods January 1 = 115,000
Finished Goods December 31 = 100,000
Other Information:
Direct Materials Purchased = $324,000
Cost of Goods Available for Sale = 950,000
Actual Factory Overhead = 206,000
The cost of goods manufactured during the year is: (Points : 2)
$850,000.
$348,000.
$672,000.
$835,000.
$811,000.
14. ABC Company uses a
Materials Inventory account to record both direct and indirect materials. ABC
charges direct materials to WIP, while indirect materials are charged to the
Factory Overhead account. During the month of April, the company has the
following cost information:
Total Materials (Direct and Indirect) Purchased = $ 90,000
Indirect Materials Issued to Production = 30,000
Total Materials Issued to Production = 110,000
Beginning Materials Inventory = 50,000
The ending materials inventory cost is: (Points : 2)
$110,000.
$30,000.
$90,000.
$80,000.
15. Which of the following is an example of a physical measure used in the physical measure method? (Points : 2)
Pounds.
Minutes.
Seconds.
Dollars.
Volume.
16. Joint products are products that: (Points : 2)
Have minor total sales value.
Have substantial sales value.
Come from different production processes.
Are marketed in a joint marketing program.
17. Data collected on the cost objects and cost drivers for cost estimation must be: (Points : 2)
Brief and limited.
Exhaustive.
Concrete.
Consistent and accurate.
Varied.
18. The p-value measures: (Points : 2)
The probability that the regression equation is reliable.
The statistical significance of the dependent variable.
The risk that a particular independent variable has only a chance relationship to the dependent variable.
The confidence range around the regression prediction.
19. Firm X has a production process that has a total joint cost of $15,000. At the split-off point, there are 2,000 pounds of Product 1 and 3,000 pounds of Product 2. What is the cost per pound of Product 1 using the physical measure method? (Points : 2)
$2.50.
$3.00.
$3.50.
$4.00.
20. Cleaning Care Inc. expects to sell 10,000 mops. Fixed costs (for the year) are expected to be $10,000, unit sales price is expected to be $12, and unit variable costs are budgeted at $7.
Cleaning Care's margin of safety (MOS) in units is: (Points : 2)
1,000.
2,000.
4,000.
8,000.
9,000.
21. Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below.
Sales Price $75.00
Per Unit Variable Costs:
Invoice Cost 41.70
Sales Commission 18.30
Total Per Unit Variable Cost $60.00
Fixed Costs:
Advertising $ 56,000
Rent 78,000
Salaries 226,000
Total Annual Fixed Costs $360,000
If 40,000 office chairs were sold, Stylish Sitting's operating income would be: (Points : 2)
$240,000.
$280,000.
$210,000.
$340,000.
$120,000.
Total Materials (Direct and Indirect) Purchased = $ 90,000
Indirect Materials Issued to Production = 30,000
Total Materials Issued to Production = 110,000
Beginning Materials Inventory = 50,000
The ending materials inventory cost is: (Points : 2)
$110,000.
$30,000.
$90,000.
$80,000.
15. Which of the following is an example of a physical measure used in the physical measure method? (Points : 2)
Pounds.
Minutes.
Seconds.
Dollars.
Volume.
16. Joint products are products that: (Points : 2)
Have minor total sales value.
Have substantial sales value.
Come from different production processes.
Are marketed in a joint marketing program.
17. Data collected on the cost objects and cost drivers for cost estimation must be: (Points : 2)
Brief and limited.
Exhaustive.
Concrete.
Consistent and accurate.
Varied.
18. The p-value measures: (Points : 2)
The probability that the regression equation is reliable.
The statistical significance of the dependent variable.
The risk that a particular independent variable has only a chance relationship to the dependent variable.
The confidence range around the regression prediction.
19. Firm X has a production process that has a total joint cost of $15,000. At the split-off point, there are 2,000 pounds of Product 1 and 3,000 pounds of Product 2. What is the cost per pound of Product 1 using the physical measure method? (Points : 2)
$2.50.
$3.00.
$3.50.
$4.00.
20. Cleaning Care Inc. expects to sell 10,000 mops. Fixed costs (for the year) are expected to be $10,000, unit sales price is expected to be $12, and unit variable costs are budgeted at $7.
Cleaning Care's margin of safety (MOS) in units is: (Points : 2)
1,000.
2,000.
4,000.
8,000.
9,000.
21. Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below.
Sales Price $75.00
Per Unit Variable Costs:
Invoice Cost 41.70
Sales Commission 18.30
Total Per Unit Variable Cost $60.00
Fixed Costs:
Advertising $ 56,000
Rent 78,000
Salaries 226,000
Total Annual Fixed Costs $360,000
If 40,000 office chairs were sold, Stylish Sitting's operating income would be: (Points : 2)
$240,000.
$280,000.
$210,000.
$340,000.
$120,000.
22. In deciding between
alternative choices for a given situation, managers usually employ a five-step
process. Which of the following is not a step in the decision-making process?
(Points : 2)
Evaluate performance.
Specify the criteria and identify the alternative actions.
Select and implement the best course of action.
Perform relevant and strategic cost analysis.
Review the audit report.
23. Which of the following is NOT one of the more common strategic benefits provided by capital investment projects? (Points : 2)
Being able to deliver a product that competitors cannot (i.e., product differentiation).
Improving product quality.
Reducing manufacturing cycle time.
Reducing the number of short-term (i.e., operational) decisions that management must make.
Providing significant cost reductions, in terms of production and/or marketing costs.
24. To make a decision whether to accept or reject a special sales order, managers need critical information about all the following except: (Points : 2)
Relevant costs.
Prior period operating costs.
Any opportunity costs.
The strategic, competitive environment of the firm.
25. One of the key management functions is to perform a regular review of product profitability. Which (s) below would not be asked when performing the analysis? (Points : 2)
Are the products priced properly?
Which products are the most profitable?
Which products should be advertised more aggressively?
Should any product manager be rewarded?
What was the product manager paid last year?
26. 26. For a typical capital investment project, the bulk of the investment-related cash outflow occurs: (Points : 2)
During the initiation stage of the project (i.e., at time period 0).
During the operation stage of the project.
Either during the initiation stage or the operation stage.
During neither the initiation stage nor the operation stage.
Evenly during all three stages: initiation, operation, and final disposal.
27. Pique Corporation wants to purchase a new machine for $300,000. Management predicts that the machine can produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique's combined income tax rate is 40%. Management requires a minimum after-tax rate of return of 10% on all investments.
What is the net present value (NPV) of the investment? (The PV annuity factor for 5 years, 10% is 3.791.) Assume that the cash inflows occur at year-end. (Points : 2)
($270,480).
$63,936.
$109,428.
$154,920.
28. Carmino Company is considering an investment in equipment that will generate an after-tax income of $6,000 for each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The net book value (NBV) of the investment at the beginning of each year will be as follows:
Year 1 = $30,000
Year 2 = 15,000
Year 3 = 7,500
Year 4 = 3,750
The amount of after-tax cash inflow from the asset in Year 3 is: (Points : 2)
$6,600.
$7,500.
$8,100.
$9,000.
$9,750.
29. Traditional financial control systems have recently been criticized because: (Points : 2)
They use flexible, not static, budgets.
They generally lead to goal-congruent behavior on the part of managers.
They focus more in improving basic business processes than short-term financial results.
They fail to incorporate nonfinancial performance indicators into the evaluation process.
30. Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.
Assuming sales and marketing are not correct in their estimation and the volume of sales is not changed and ECC meets the competitive price, what is the target cost if ECC wants to maintain its same income level? (Points : 2)
$210.
$200.
$190.
$180.
Evaluate performance.
Specify the criteria and identify the alternative actions.
Select and implement the best course of action.
Perform relevant and strategic cost analysis.
Review the audit report.
23. Which of the following is NOT one of the more common strategic benefits provided by capital investment projects? (Points : 2)
Being able to deliver a product that competitors cannot (i.e., product differentiation).
Improving product quality.
Reducing manufacturing cycle time.
Reducing the number of short-term (i.e., operational) decisions that management must make.
Providing significant cost reductions, in terms of production and/or marketing costs.
24. To make a decision whether to accept or reject a special sales order, managers need critical information about all the following except: (Points : 2)
Relevant costs.
Prior period operating costs.
Any opportunity costs.
The strategic, competitive environment of the firm.
25. One of the key management functions is to perform a regular review of product profitability. Which (s) below would not be asked when performing the analysis? (Points : 2)
Are the products priced properly?
Which products are the most profitable?
Which products should be advertised more aggressively?
Should any product manager be rewarded?
What was the product manager paid last year?
26. 26. For a typical capital investment project, the bulk of the investment-related cash outflow occurs: (Points : 2)
During the initiation stage of the project (i.e., at time period 0).
During the operation stage of the project.
Either during the initiation stage or the operation stage.
During neither the initiation stage nor the operation stage.
Evenly during all three stages: initiation, operation, and final disposal.
27. Pique Corporation wants to purchase a new machine for $300,000. Management predicts that the machine can produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique's combined income tax rate is 40%. Management requires a minimum after-tax rate of return of 10% on all investments.
What is the net present value (NPV) of the investment? (The PV annuity factor for 5 years, 10% is 3.791.) Assume that the cash inflows occur at year-end. (Points : 2)
($270,480).
$63,936.
$109,428.
$154,920.
28. Carmino Company is considering an investment in equipment that will generate an after-tax income of $6,000 for each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The net book value (NBV) of the investment at the beginning of each year will be as follows:
Year 1 = $30,000
Year 2 = 15,000
Year 3 = 7,500
Year 4 = 3,750
The amount of after-tax cash inflow from the asset in Year 3 is: (Points : 2)
$6,600.
$7,500.
$8,100.
$9,000.
$9,750.
29. Traditional financial control systems have recently been criticized because: (Points : 2)
They use flexible, not static, budgets.
They generally lead to goal-congruent behavior on the part of managers.
They focus more in improving basic business processes than short-term financial results.
They fail to incorporate nonfinancial performance indicators into the evaluation process.
30. Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.
Assuming sales and marketing are not correct in their estimation and the volume of sales is not changed and ECC meets the competitive price, what is the target cost if ECC wants to maintain its same income level? (Points : 2)
$210.
$200.
$190.
$180.
31. The difference between the
flexible-budget operating income and the actual operating income in a period is
the: (Points : 2)
Sales mix variance.
Sales volume variance.
Sales price variance.
Operating income flexible-budget variance.
32. Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle? (Points : 2)
R&D.
Product planning and scheduling.
Product design.
Manufacturing.
33. The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the: (Points : 2)
Fixed overhead efficiency variance.
Fixed overhead production-volume variance.
Fixed overhead spending variance.
Fixed overhead rate variance.
Fixed overhead sales-volume variance.
34. Operational control has a management-by-exception approach in contrast to management control, which is more consistent with: (Points : 2)
The management-by-incentives approach.
The management-by-objectives approach.
The "hands off" approach.
A non-quantitative set of measures.
A non-qualitative set of measures.
35. Information concerning Johnston Co.'s direct materials costs is as follows:
Standard $ per Lb. $ 6.45
Actual Lbs. Purchased 2,850
Actual Lbs. Used in production 2,750
Units of Material Produced 700
Materials Purchase Price Variance $ 855(F)
Budget Data for the Period:
Units to Manufacture 1,000
Units of DM 4,000 Lbs.
The actual purchase price per pound of direct materials is: (Points : 2)
$6.12.
$6.15.
$6.50.
$6.75.
$7.13.
36. The need for coordination between the production and the selling function will impact the choice of: (Points : 2)
Profit, cost or revenue center.
Manager for the firm.
Formal or informal control systems.
Profitability goal for the firm.
Control measures to prevent fraud.
37. Controllable margin is determined by subtracting short-term controllable fixed costs from the: (Points : 2)
Long-term controllable fixed cost.
Contribution margin.
Variable costs.
Fixed costs.
Variable costs and fixed costs.
38. Of most relevance in deciding how or which costs should be assigned to an SBU is the degree of: (Points : 2)
Avoidability.
Causality.
Controllability.
Reliability.
39. Of the three basic forms of management compensation (salary, bonus, benefits), the fastest growing part of total compensation is: (Points : 2)
Salary.
Bonus.
Benefits.
Salary and bonus.
40. SBU is the acronym for: (Points : 2)
Small Business Unit.
Sustainable Business Unit.
Standard Business Unit.
Strategic Business Unit.
Sales mix variance.
Sales volume variance.
Sales price variance.
Operating income flexible-budget variance.
32. Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle? (Points : 2)
R&D.
Product planning and scheduling.
Product design.
Manufacturing.
33. The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the: (Points : 2)
Fixed overhead efficiency variance.
Fixed overhead production-volume variance.
Fixed overhead spending variance.
Fixed overhead rate variance.
Fixed overhead sales-volume variance.
34. Operational control has a management-by-exception approach in contrast to management control, which is more consistent with: (Points : 2)
The management-by-incentives approach.
The management-by-objectives approach.
The "hands off" approach.
A non-quantitative set of measures.
A non-qualitative set of measures.
35. Information concerning Johnston Co.'s direct materials costs is as follows:
Standard $ per Lb. $ 6.45
Actual Lbs. Purchased 2,850
Actual Lbs. Used in production 2,750
Units of Material Produced 700
Materials Purchase Price Variance $ 855(F)
Budget Data for the Period:
Units to Manufacture 1,000
Units of DM 4,000 Lbs.
The actual purchase price per pound of direct materials is: (Points : 2)
$6.12.
$6.15.
$6.50.
$6.75.
$7.13.
36. The need for coordination between the production and the selling function will impact the choice of: (Points : 2)
Profit, cost or revenue center.
Manager for the firm.
Formal or informal control systems.
Profitability goal for the firm.
Control measures to prevent fraud.
37. Controllable margin is determined by subtracting short-term controllable fixed costs from the: (Points : 2)
Long-term controllable fixed cost.
Contribution margin.
Variable costs.
Fixed costs.
Variable costs and fixed costs.
38. Of most relevance in deciding how or which costs should be assigned to an SBU is the degree of: (Points : 2)
Avoidability.
Causality.
Controllability.
Reliability.
39. Of the three basic forms of management compensation (salary, bonus, benefits), the fastest growing part of total compensation is: (Points : 2)
Salary.
Bonus.
Benefits.
Salary and bonus.
40. SBU is the acronym for: (Points : 2)
Small Business Unit.
Sustainable Business Unit.
Standard Business Unit.
Strategic Business Unit.
41. The most important
objective of a strategic performance measurement system is: (Points : 2)
Budgeting.
Motivation.
Authority.
Variances.
Pricing.
42. The objectives of management compensation, when compared to the objectives used to develop performance measurement systems, are: (Points : 2)
More numerous.
Less specific.
Consistent in their objectives.
Significantly broader in scope.
More specific.
43. Jackson Supply Company has a 2 to 1 current ratio. This ratio would increase to more than 2 to 1 if the company: (Points : 2)
Purchased a marketable security for cash.
Wrote off an uncollectible receivable.
Sold merchandise on account that earned a normal gross margin.
Purchased inventory on account.
44. 44. A company had income of $50,000 using variable costing for a given period. Beginning and ending inventories for that period were 80,000 units and 90,000 units, respectively. If the fixed overhead application rate were $10.00 per unit, what would operating income have been using full costing? (Points : 2)
$(50,000).
$170,000.
$150,000.
$0.
Cannot be determined from the information given.
45. A method for determining a bonus based upon the performance of the unit is a(n): (Points : 2)
Segment-based pool.
Unit-based pool.
Firm-based pool.
Activity-based pool.
Function-based pool.
46. Which one of the following has been the most common payment option for bonus compensation in recent years? (Points : 2)
Vacation time.
Stock options.
Increased benefits.
Salary increase.
47. EVA is calculated as: (Points : 2)
EVA Net Income - (Cost of Capital x EVA Invested Capital).
Total Net Income - (Cost of Capital x Invested Capital).
Gross Income - Cost of Capital.
Total Net Income - EVA Net Income.
Accounting earnings adjusted for EVA.
48. The King Mattress Company had the following operating results for 2012-2013. In addition, the company paid dividends in both 2012 and 2013 of $60,000 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2012 was $8 and $7 in 2013. The industry average earnings multiple for the mattress industry was 9 in 2013 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2013.
Balance Sheet, December 31
2013 2012
Cash $ 340,000 $ 100,000
Accounts Receivable 350,000 400,000
Inventory 250,000 300,000
Total Current Assets $ 940,000 $ 800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $ 1,900,000
Current Liabilities $ 200,000 $ 300,000
Long-Term Liabilities 600,000 500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $ 1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $ 4,500,000
Cost of Sales 4,100,000 4,000,000
Gross Margin $ 650,000 $ 500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $ 100,000
Taxes 120,000 40,000
Net Income $ 180,000 $ 60,000
Cash Flow from Operations
Net Income $ 180,000 $ 60,000
Plus Depreciation Expense 50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000 - 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0 –
Cash Flow from Operations $ 230,000 $ 110,000
The inventory turnover rat
The inventory turnover ratio for 2013 is (rounded): (Points : 2)
11.2
12.7
13.7
14.9
Budgeting.
Motivation.
Authority.
Variances.
Pricing.
42. The objectives of management compensation, when compared to the objectives used to develop performance measurement systems, are: (Points : 2)
More numerous.
Less specific.
Consistent in their objectives.
Significantly broader in scope.
More specific.
43. Jackson Supply Company has a 2 to 1 current ratio. This ratio would increase to more than 2 to 1 if the company: (Points : 2)
Purchased a marketable security for cash.
Wrote off an uncollectible receivable.
Sold merchandise on account that earned a normal gross margin.
Purchased inventory on account.
44. 44. A company had income of $50,000 using variable costing for a given period. Beginning and ending inventories for that period were 80,000 units and 90,000 units, respectively. If the fixed overhead application rate were $10.00 per unit, what would operating income have been using full costing? (Points : 2)
$(50,000).
$170,000.
$150,000.
$0.
Cannot be determined from the information given.
45. A method for determining a bonus based upon the performance of the unit is a(n): (Points : 2)
Segment-based pool.
Unit-based pool.
Firm-based pool.
Activity-based pool.
Function-based pool.
46. Which one of the following has been the most common payment option for bonus compensation in recent years? (Points : 2)
Vacation time.
Stock options.
Increased benefits.
Salary increase.
47. EVA is calculated as: (Points : 2)
EVA Net Income - (Cost of Capital x EVA Invested Capital).
Total Net Income - (Cost of Capital x Invested Capital).
Gross Income - Cost of Capital.
Total Net Income - EVA Net Income.
Accounting earnings adjusted for EVA.
48. The King Mattress Company had the following operating results for 2012-2013. In addition, the company paid dividends in both 2012 and 2013 of $60,000 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2012 was $8 and $7 in 2013. The industry average earnings multiple for the mattress industry was 9 in 2013 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2013.
Balance Sheet, December 31
2013 2012
Cash $ 340,000 $ 100,000
Accounts Receivable 350,000 400,000
Inventory 250,000 300,000
Total Current Assets $ 940,000 $ 800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $ 1,900,000
Current Liabilities $ 200,000 $ 300,000
Long-Term Liabilities 600,000 500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $ 1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $ 4,500,000
Cost of Sales 4,100,000 4,000,000
Gross Margin $ 650,000 $ 500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $ 100,000
Taxes 120,000 40,000
Net Income $ 180,000 $ 60,000
Cash Flow from Operations
Net Income $ 180,000 $ 60,000
Plus Depreciation Expense 50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000 - 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0 –
Cash Flow from Operations $ 230,000 $ 110,000
The inventory turnover rat
The inventory turnover ratio for 2013 is (rounded): (Points : 2)
11.2
12.7
13.7
14.9
49. The King Mattress Company
had the following operating results for 2012-2013. In addition, the company
paid dividends in both 2012 and 2013 of $60,000 per year and made capital
expenditures in both years of $30,000 per year. The company's stock price in
2012 was $8 and $7 in 2013. The industry average earnings multiple for the
mattress industry was 9 in 2013 and the free cash flow and sales multiples were
18 and 1.5, respectively. The company is publicly owned and has 1,200,000
shares of outstanding stock at the end of 2013.
Balance Sheet, December 31
2013 2012
Cash $ 340,000 $ 100,000
Accounts Receivable 350,000 400,000
Inventory 250,000 300,000
Total Current Assets $ 940,000 $ 800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $ 1,900,000
Current Liabilities $ 200,000 $ 300,000
Long-Term Liabilities 600,000 500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $ 1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $ 4,500,000
Cost of Sales 4,100,000 4,000,000
Gross Margin $ 650,000 $ 500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $ 100,000
Taxes 120,000 40,000
Net Income $ 180,000 $ 60,000
Cash Flow from Operations
Net Income $ 180,000 $ 60,000
Plus Depreciation Expense 50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000 - 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0 –
Cash Flow from Operations $ 230,000 $ 110,000
The current ratio for 2013 is: (Points : 2)
1.8
2.0
3.9
4.7
50. During October, Rover Industries produced 35,000 units of product with costs as follows:
DM = $ 84,000
DL = 43,000
Variable O/H = 13,000
Fixed O/H = 147,000
Total =$ 287,000
What is Rover's unit cost for October, calculated on the variable costing basis? (Points : 2)
$3.25.
$3.75.
$4.00.
$4.50.
$5.00.
Balance Sheet, December 31
2013 2012
Cash $ 340,000 $ 100,000
Accounts Receivable 350,000 400,000
Inventory 250,000 300,000
Total Current Assets $ 940,000 $ 800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $ 1,900,000
Current Liabilities $ 200,000 $ 300,000
Long-Term Liabilities 600,000 500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $ 1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $ 4,500,000
Cost of Sales 4,100,000 4,000,000
Gross Margin $ 650,000 $ 500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $ 100,000
Taxes 120,000 40,000
Net Income $ 180,000 $ 60,000
Cash Flow from Operations
Net Income $ 180,000 $ 60,000
Plus Depreciation Expense 50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000 - 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0 –
Cash Flow from Operations $ 230,000 $ 110,000
The current ratio for 2013 is: (Points : 2)
1.8
2.0
3.9
4.7
50. During October, Rover Industries produced 35,000 units of product with costs as follows:
DM = $ 84,000
DL = 43,000
Variable O/H = 13,000
Fixed O/H = 147,000
Total =$ 287,000
What is Rover's unit cost for October, calculated on the variable costing basis? (Points : 2)
$3.25.
$3.75.
$4.00.
$4.50.
$5.00.
