Accounting Exam

The cost that will NOT continue if an onging operation is changed or deleted is known as:

Select one:

[removed]a. Avoidable cost

[removed]b. Common cost

[removed]c. Sunk cost

[removed]d. Differential cost

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__________is an activity for which a seperate measurement is desired.

Select one:

[removed]a. cost objective

[removed]b. cost accumulation system

[removed]c. period cost

[removed]d. product cost

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Rental cost at the Sawgrass Mall, which includes a flat rate per month plus 2% of gross sales, would be considered which pattern of cost behavior

Select one:

[removed]a. variable cost

[removed]b. step cost

[removed]c. mixed cost

[removed]d. fixed cost

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Variable costs

Select one:

[removed]a. decrease in total as the cost-driver activity level increases.

[removed]b. are fixed per unit and vary in total.

[removed]c. are fixed in total

[removed]d. vary per unit.

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If the sales price per unit is $125, the total fixed costs are $175,000, and the break-even volume in dollar sales is $450,000, then the variable cost per unit is

Select one:

[removed]a. $72.43

[removed]b. $68.22

[removed]c. $48.61

[removed]d. $76.39

Which of the following would not be a consideration in a make or buy decision?

Select one:

[removed]a. Excess capacity

[removed]b. Unavoidable fixed costs

[removed]c. Variable factory overhead

[removed]d. Rental income from unused facilities

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The pricing strategy in markets that first determine the price at which a product will be sold and then a product is designed that can be produced at a low enough cost to provide an adequate profit margin is referred to as

Select one:

[removed]a. discriminartory pricing

[removed]b. target costing

[removed]c. predatory pricing

[removed]d. full costing

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Wiley Company manufactures a part for its production cycle.  The costs per unit for 10,000 units of this part are as follows:

Direct Materials                                  $12

Direct Labor                                        $20

Variable factory overhead                 $16

Fixed factory overhead                      $  8

Total Costs                                         $56

The fixed factory overhead costs are not avoidable.

Assume that Wiley Company can buy 10,000 units of the part from another producer for $60 each. The facilities currently used to make the part could be rented out to another manufacturer for $80,000 per year. Wiley Company should

Select one:

[removed]a. Buy the part as that would save $12 per unit.

[removed]b. Buy the part as that would save $2 per unit.

[removed]c. Make the part as that owuld save $12 per unit.

[removed]d. Make the part as that would save $4 per unit.

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If you know the Intercept Value (a) in the equation Y=a + bX equals $14,250, you then know what information?

Select one:

[removed]a. Total variable costs

[removed]b. Total contribution margin

[removed]c. Total cost function

[removed]d. Total fixed costs

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In the mixed-cost function, Y=$42,530+$5.42X, the X stands for?

Select one:

[removed]a. variable cost per unit of cost driver

[removed]b. total cost

[removed]c. total fixed cost

[removed]d. number of units of the cost driver

The current ratio provides a decision maker with insight into a firm’s:

Select one:

[removed]a. Current net income to assets

[removed]b. Liquidity position

[removed]c. Debt position relative to assets

[removed]d. Cash flow from operating activities

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An example of a Discretionary Fixed cost would be which of the following?

Select one:

[removed]a. property rent payments

[removed]b. salaries of senior managers

[removed]c. planned new computers for the office

[removed]d. equipment depreciation

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BOOM, Inc., manufacturers seels dynamite. A projected income statement for the expected sales volume of 3,000,000 cases is as follows: Sales $6,000,000 Variable expenses $3,000,000 Contribution margin $3,000,000 Fixed expenses 2,000,000 Before-tax profit $1,000,000 What dollar sales volume would be required to achieve $3,000,000 of before-tax profit?

Select one:

[removed]a. $7,500,000

[removed]b. $6,000,000

[removed]c. $12,000,000

[removed]d. $10,000,000

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___________is how the activities of an organization affect its costs.

Select one:

[removed]a. Cost Behavior

[removed]b. Cost driver

[removed]c. Volume-related cost drivers

[removed]d. None of the selections

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If Tootsie wants to increase ROA, which of the following would accomplish this:

Select one:

[removed]a. Increase ROS                      Increase Turnover
Yes                                            No

[removed]b. Increase ROS                           Increase Turnover
No                                                  Yes

[removed]c. Increase ROS                          Increase Turnover
No                                             No

[removed]d. Increase ROS                           Increase Turnover
Yes                                            Yes

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Which of the following is a correct cost relationship?

Select one:

[removed]a. Depreciation is a discretionary variable cost

[removed]b. Mfg Supervisor salaries is a fixed period cost

[removed]c. Selling and Administrative costs are discretionary product costs

[removed]d. Direct Material is a variable cost

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   In problem 1-33, the analysis showed that advertising expense had a $2,500 unfavorable variance for the most recent accounting period. If management determined that this variance should be investigated more thoroughly because of its significance, such action would be an example of?

Select one:

[removed]a. accounting/budgeting difference perusal

[removed]b. management oversight

[removed]c. management by exception

[removed]d. management of expenses

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Return on sales (ROS) provides managerial insight into:

Select one:

[removed]a. How much of each $1 of sales finds its way to net income

[removed]b. How much markup is achieve on each sale over the cost of purchasing the item sold

[removed]c. The contribution margin on each $1 of sales

[removed]d. Is the same thing as return on equity

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As the level of activity decreases within the relevent range,

Select one:

[removed]a. total fixed cost increase.

[removed]b. total variable cost increase.

[removed]c. fixed costs per unit decrease.

[removed]d. variable costs per unit remain unchanged

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Policy for an Intensive Care unit of the Plantation Hospital requires one nurse for every four beds. Policy also states Nursing Supervisors have no more than 6 direct reports at any time. Current capacity of the ICU is sixteen beds, with one supervisor. Plantation Hospital plans a new addition which will increase the capacity to thirty two beds. How many nurses and /or supervisiors must be employed under the proposed expansion?

Select one:

[removed]a. 8 nurses, 4 supervisors

[removed]b. 4 nurses, 1 supervisors

[removed]c. 8 nurses, 2 supervisors

[removed]d. 8 nurses, 3 supervisors

_________is one of the accountant's primary roles in the decision-making process.

Select one:

[removed]a. Makeing the decision

[removed]b. Providing emotional support

[removed]c. Collecting relevant information

[removed]d. Reporting irrelevant information

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As the cost driver activity level increases within the relevant range,

Select one:

[removed]a. Variable costs per unit increase

[removed]b. Fixed costs per unit increase

[removed]c. Total variable costs decrease

[removed]d. Total fixed costs remain unchanged

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Management is considering purchasing a Model B300 machine to use in addition to the company’s present Model B100 machine. This will increase the company’s production and sales. The increase in volume will be large enough to require increases in variable manufacturing overhead, fixed and selling expenses and in general administrative overhead, but not in the fixed manufacturing overhead. Which of the following items would be considered relevant to the decision?

Select one:

[removed]a. Variable manufacturing overhead

[removed]b. Depreciation - Model B100 machine

[removed]c. Both of the above

[removed]d. None of the above

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A firm uses the DuPont approach to analyze its performance and plan for the future. If this firm seeksto increase ROE, it should do all of the following except?

Select one:

[removed]a. Increase return on sales

[removed]b. Lower financial leverage

[removed]c. Increase total asset turnover

[removed]d. All of the above will increase ROE

[removed]e. None of the above will increase ROE

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__________is the field of accounting that develops information for external decision makers such as stockholders, suppliers, banks, and government regulatory agencies.

Select one:

[removed]a. Tax accounting

[removed]b. Auditing

[removed]c. Financial accounting

[removed]d. Management accounting

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The cafeteria department at Mercy Hospital has experienced the following costs and number of meals served from January through September of 200x:

Month                     Cafeteria Costs                    Meals Served

January                    $35,800                              9,800                                       

February                  34,400                                9,000

March                      36,920                                9,800       

April                         38,280                               10,200

May                          44,805                               13,500

June                          34,700                               9,200

July                          36,344                                9,695

August                      43,882                               12,211

September                41,128                                11,523

Using the High-Low method, develop the cost funtion equation to predict Cafeteria Costs. It is:

Select one:

[removed]a. $10,733+$2.66X
 

[removed]b. $630+$3.542X

[removed]c. $5290+$6.371X

[removed]d. $13,590+$2.31X

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A clerk prepares a monthly report comparing the actual phone bill with the expected (budgeted) phone costs and calculates a variance. This activity would be classified as

Select one:

[removed]a. Planning

[removed]b. Attention Directing

[removed]c. Problem Solving

[removed]d. Scorekeeping

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Suppose a Super 8 motel has annual fixed costs applicable to its rooms of $3.5 million for its 400-room motel, average daily room rents $55, and average variable costs of $12 for each room rented. It operates 365 days per year. How much net income on rooms will be generated if the motel is half full throughout the entire year?

Select one:

[removed]a. $156,250

[removed]b. $(361,000)

[removed]c. $315,150

[removed]d. $(175,425)

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The additional cost resulting from producing and selling one more unit of product is:

Select one:

[removed]a. Perfect competition cost

[removed]b. Unit cost

[removed]c. Marginal cost

[removed]d. Product cost

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A dry cleaning company charges $1 to launder a man's shirt and $1.75 to launder a women's shirt. The owner acknowledges the cost to launder is not different and that women are 80% of his customers. This pricing policy is an example of

Select one:

[removed]a. best business practices

[removed]b. discriminartory pricing

[removed]c. predatory pricing

[removed]d. cost plus pricing