Acct 281 Extra Credit Problems

Chapter 22 - Responsibility Accounting and Transfer Pricing

CHAPTER 22

NAME

10-MINUTE QUIZ A

#

SECTION

Indicate the best answer for each question in the space provided.
1 Which of the following costs is traceable to an individual sales department in a
department store such as Sears?
a Salary of the store manager.
b Depreciation on the store building.
c Salaries of store security guards.
d The corporate plane.
2 The Sports Arena location of Burgerheaven reports monthly sales of $140,000,
variable costs of $63,000, and traceable fixed costs of $54,000. The contribution
margin ratio of this business unit is:
a 70%.
b 45%.
c 55%.
d 30%.
3 In deciding which responsibility centers can benefit most from short-term
marketing efforts, such as advertising specific products, management should give
greatest consideration to the relationship between a center’s sales and:
a Traceable fixed costs.
b Income from operations.
c Contribution margin.
d Responsibility margin.
4 From a long-term perspective, when evaluating the contribution of a particular
profit center to the overall profitability of the company, management should be
most interested in the center’s:
a Traceable fixed costs.
b Income from operations.
c Contribution margin.
d Responsibility margin.
5 The Molding Department of Acadia Corporation is a cost center. The transfer price
used to transfer goods from the Molding Department to the Assembly Department
would most likely be based upon:
a The cost of the units transferred.
b The market value of the units transferred.
c A negotiated amount set by the department managers.
d The average fixed cost per unit transferred.

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Chapter 23 - Operational Budgeting

CHAPTER 23

NAME

10-MINUTE QUIZ C

#

SECTION

The cost accountant for Sherman’s Co. prepared the following monthly performance report
relating to the Production Department.
Budgeted
Production
(10,000 Units)
Direct materials used .........................................................
Direct labor .....................................................................
Variable manufacturing overhead .....................................
Fixed manufacturing overhead ..........................................
1

Actual
Production
(11,000 Units)

$240,000
$100,000
$60,000
$160,000

$260,000
$101,000
$65,000
$164,000

Refer to the above data. Compute the amounts that should be included for each of the
following in a flexible budget prepared at an 11,000-unit level of production:
a Direct materials: $____________
b Direct labor: $____________
c Fixed manufacturing overhead: $____________

2
Refer to the above data. Assume that a revised performance report is prepared for the
11,000-unit level of production using a flexible budget approach. Compute the cost variances for
each of the following. Indicate whether each variance is favorable (F) or unfavorable (U).
a Direct materials variance from flexible budget: $____________
b Direct labor variance from flexible budget: $____________
c Total manufacturing overhead variance from flexible budget: $____________

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Chapter 25 - Rewarding Business Performance

CHAPTER 25

NAME

10-MINUTE QUIZ B

#

SECTION

The following information regarding Baron Company is available:
Sales .........................................................................................................................
Cost of sales .............................................................................................................
Operating expense ....................................................................................................
Operating earnings ...................................................................................................
Average invested capital ..........................................................................................
ROI ...........................................................................................................................
Return on sales .........................................................................................................
Capital turnover ........................................................................................................
Compute the answers for items A–D.
A

B

C

D

25-10

$264,000
$99,000
A
$66,000
$660,000
B
C
D

Chapter 26 - Capital Budgeting

CHAPTER 26

NAME

10-MINUTE QUIZ C

# _________________________
SECTION

Port Pharmacy is considering the purchase of a copying machine, which it will make available to
customers at a per-copy charge. The copying machine has an initial cost of $8,500, an estimated
useful life of five years, and an estimated salvage value of $2,500. The estimated annual revenue
and expenses relating to operation of the machine are as follows:
Revenue ......................................................................................................................................
Expenses other than depreciation ..............................................................................................

$9,000
$5,500

All revenue will be received in cash; expenses other than depreciation will be paid in cash.
Depreciation will be computed by the straight-line method.
Compute for this proposal the expected:
a Annual increase in Port’s net income: $____________
b Annual net cash flow: $____________
c Payback period: ____________ years
d Return on average investment: ___________ %
e Net present value (round to the nearest dollar) of the proposed investment, discounted at an
annual rate of 15% (Tables show that the present value of $1 to be received in five periods,
discounted at 15%, is 0.497 and that the present value of a five-year annuity of $1, discounted
at 15%, is 3.352): $____________

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