Final_Exam-3110

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Final_Exam-3110

True/False

Indicate whether the statement is trueorfalse.

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Nonvalue-adding activity costs do not increase a product's cost because they do not add value to theproduct. Activity-based management is useful for both strategic planning and operational decisionmaking.

Traditional environments emphasize functional departments that tend to group similar activitiestogether. In a just-in-time environment, a manager is interested in trends in inventoryturnover.

In just-in-time manufacturing, the basic cost classifications used in product costing are materialsand overheadcosts.

In a backflush environment, costs are tracked through the various production departments as productsor services move through the productionprocess.

Costs are not affected by the changes in the volume ofproduction.

Unit variable costs vary with changes in productive output, whereas total variable costs remainconstant.

An organization’s normal capacity is the average annual level of operating capacity needed to meetits expected salesdemand.

Contribution margin is calculated by deducting total fixed costs from totalsales.

A scatter diagram helps to determine if a linear relationship exists between a cost item and its relatedactivity measure.

The engineering method of separating costs is sometimes called a regressionanalysis. An increase in the unit sales price will increase unit variableprice.

A product line's contribution margin represents its contribution to paying off variable costs and togenerating aprofit.

The point at which the total cost line intersects with the total revenue line is the breakevenpoint.

In breakeven analysis adjusted for a profit factor, increasing the unit sales price will decrease the numberof units needed to meet the targeted profit.

A sales forecast for a retail organization is based on purchases and cost of goods soldbudgets.

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           l S.   Receipt of stock dividends, depreciation, and amortization expense will not be recorded in the cashbudget prepared by anorganization.

           19.  Participative budgeting involves only personnel at top levels of theorganization.

          20.   The long-term plan or budget involves every part of the enterprise and is much more detailed thanthe short-termplan.

          21.   The standard overhead cost is the sum of the estimates of variable and fixed overhead costs in thenext accountingperiod.

          22.   Flexible budgets are also called staticbudgets.

          23.Thedirectmaterialspricevarianceisthedifferencebetweenthestandardpriceandtheactualprice,

multiplied by the actual quantity.

          24.   The direct labor efficiency variance is the difference between standard hours allowed and actualhours worked for good units produced, multiplied by the standard laborrate.

          25.   A performance report should contain cost or revenue items that the manager receiving the report cancontrol.

MultipleChoice

Identify the choice that best completes the statement or answers thequestion.

             1. Activity—based management includes all of the following exceytidentifying

a.          the level of customer satisfaction with a product orservice.

b.         the resources that are consumed by eachactivity.

c.          activitiesasvalue—adding.

d.         how resources are consumed by eachactivity.

            2.   Which of the following is a unit-levelactivity?

a.          Redesigning theprocess

b.          Setting up the productionprocess

c.          Purchase of rawmaterials

d.         Insuring thefactory

            3.Theinitialstepinachievingtheefficiencyofajust—in—timesystemisto

a.          redesign the plantlayout.

b.         replace laborers withmachines.

c.          stop ordering materials forinventory.

d.         identify products that are notprofitable.

            4.   Which of the following costs is most likely to remain fixed within a relevantrange?

a.          Indirectlabor

b.         Propertytaxes

c.          Operatingsupplies

d.         Directlabor

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