1. Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current...

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1. Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?

		Unit Variable costs remain constant, unit fixed costs remain constant
		Unit Variable costs increase, unit fixed costs decrease
		Unit Variable costs decrease, unit fixed costs remain constant
g		Unit Variable costs remain constant, unit fixed costs decrease

5 points

Question 2

1. When calculating a labor variance if the standard rate exceeds the actual rate this would be a ________ variance.

		favorable
		unfavorable
		standard
		actual labor

5 points

Question 3

1. According to the Institute of Management Accountants Statement of Ethical Professional Practice, which of the following is NOT included:

		Competence
		Integrity
		Credibility
		Compliance

5 points

Question 4

1. An employee is dissatisfied with the resolution of an ethical conflict at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:

		Report the incident to the State Board of Accountancy
		Contact the Institute of Management Accountants
		Make the president of the company aware of the ethical conflict
		Contact the next level of management who is not involved in the ethical conflict

5 points

Question 5

1. Ecology Company sells a biodegradable product called Run-All and has the following sales on account for the first four months of the current year:

Jan Feb March April

Sales in units: 2,000 2,000 3,000 4,000

The company is preparing a cash budget for April only. Based on past history accounts are collected 50% in the current month, 20% from the prior month, and 20% from 2 months back. Ten percent is considered uncollectible. How much cash will be collected in April?

		8,700
		4,000
		3,000
		2,000

5 points

Question 6

1. Ace Company wants to give their managers the greatest amount of responsibility over their department’s accounting. Which of the following responsibility centers would accomplish that goal?

		Cost center
		Profit center
		Investment center
		Company center

5 points

Question 7

1. The two basic types of cost accounting systems are:

		Job order and process costing
		Job order and customized product costing
		Process costing and perpetual costing
		Perpetual costing and periodic costing

5 points

Question 8

1. Kent Computers manufactures computer parts for 3 different models of computers: laptops, desktops, and mainframes in 3 different departments. They are looking for a way to allocate the cost of electricity used by the manufacturing plant. Which of the following would be the most appropriate activity base?

		Number of computers manufactured by each division
		Dollar value of the sales for each division
		Square footage occupied by each division
		The number of employees in each division

5 points

Question 9

1. A company is considering purchasing a machine for $21,200. The machine will generate an after-tax net income of $4,100 per year. What is the payback period for the new machine?

		9.2 years
		11.8 years
		0.19 years
		5.2 years

5 points

Question 10

1. The following information describes a company’s usage of direct labor in a recent period. The direct labor efficiency variance is:

Actual hours used: 41,000

Actual rate per hour $14

Standard rate per hour $13

Standard hours for units produced 43,000

		$26,000 Favorable
		$41,000 Unfavorable
		$41,000 Favorable
		$26,000 Unfavorable

5 points

Question 11

1. A retail store has three departments, 1, 2, and 3, and does general advertising that benefits all departments. Advertising expense totaled $41,000 for the year, and departmental sales were as follows. Which department would be allocated the highest amount of the advertising expense if the activity base is sales?

Sales: Department 1 $101,000

Department 2 $212,750

Department 3 $157,750

		Department 1
		Department 2
		Department 3
		Each department would have and equal amount since advertising benefits all departments

5 points

Question 12

1. At Flint Company, the unit sales price is $84; the unit variable cost is $62 and fixed costs total $202,400. What is the break-even in units?

		8,400
		9,000
		9,200
		9,400

5 points

Question 13

1. When making a decision to accept additional production work a manager needs to look closely at which of the following:

		The additional revenue should be at least 25% above the current revenue without the additional production work
		The incremental or differential costs of the additional work should not exceed incremental or differential revenue
		The additional production should exceed the current capacity by no more than 15%
		The combined incremental or differential costs of production should exceed the incremental or differential revenue of the total production run by 15%

5 points

Question 14

1. When using just-in-time (JIT) inventory, which of the following accounts may be eliminated?

		Raw materials inventory
		Work in process
		Cost of goods sold
		Sales

5 points

Question 15

1. The purpose of just-in-time (JIT) manufacturing is to eliminate?

		Payroll
		Excess assembly time
		Inventory
		Employees

5 points

Question 16

1. When preparing a budget, the first budget to be prepared is the _______ budget.

		Administrative
		Cash
		Purchases
		Sales

5 points

Question 17

1. When using activity based costing method overhead allocation is typically based on:

		One rate
		Two or more rates
		At least 2 rates but usually many more
		Volume based measures such as machine hours

5 points

Question 18

1. In business decision-making, managers typically examine the two fundamental factors of:

		Risk and capital investment
		Risk and rate of return
		Capital investment and rate of return
		Risk and payback

5 points

Question 19

1. A company is considering a new project that will cost $19,000. This project would result in additional annual revenues of $6,000 for the next 5 years and the company has already paid for $2,000 for permit fees. The $2,000 cost is an example of a(n):