1. Which of the following aspects of a company would not be considered a critical success factor

1. Which of the following aspects of a company would not be considered a critical success factor, for a company that competes on differentiation? (Points : 2)

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Cutting edge research and development.

Excellent customer service.

Award-winning product quality.

Continually beating competitors to the market with new, innovative products.

A high level of production efficiency

Question 2. 2. Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term? (Points : 2)

Fixed costs.

Variable costs.

Mixed costs.

Semi-variable costs.

Question 3. 3. The competitive strategy in which the firm succeeds by developing and maintaining a unique value for the product, as perceived by the customer, is termed: (Points : 2)

Differentiation.

Specialization advantage.

Design strategy.

Benchmarking.

Product Specialization.

Question 4. 4. 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.

Question 5. 5. Which of the following contemporary management techniques requires a balancing of multiple goals? (Points : 2)

Target costing.

The theory of constraints.

Benchmarking.

Business process improvement.

Enterprise sustainability.

Question 6. 6. Direct materials and direct labor costs total $40,000 and factory overhead costs total $100 per machine hour. If 200 machine hours were used for Job #202, what is the total manufacturing cost for Job #202? (Points : 2)

$95,000

$75,000

$65,000

$60,000

Question 7. 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 in the finished goods inventory at December 31, 2013? (Points : 2)

$55,500.

$35,000.

$43,000.

$49,000.

Question 8. 8. The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed: (Points : 2)

Beginning direct materials inventory.

Ending direct materials inventory.

Beginning work-in-process inventory.

Ending work-in-process inventory.

Beginning finished goods inventory.

Question 9. 9. When completed units are transferred to the warehouse: (Points : 2)

Cost of Goods Sold account is debited.

Cost of Goods Manufactured account is debited.

Finished Goods Inventory account is debited.

Work-in-Process Inventory account is debited.

Finished Goods Inventory account is credited.

Question 10. 10. Effective implementation of activity-based costing (ABC) requires: (Points : 2)

Normally the assistance of a consultant.

A sophisticated and expensive computer system.

Support of top management and key employees.

Capturing properly the complexity of the data.

ABC has no significant implementation issues.

Question 11. 11. The total cost of direct materials, direct labor, and factory overhead transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account during an accounting period is: (Points : 2)

Normal cost of goods sold.

Adjusted cost of goods sold.

Total manufacturing cost.

Cost of goods manufactured.

Actual cost of goods sold.

Question 12. 12. Units accounted for includes units completed and transferred out plus: (Points : 2)

Beginning inventory.

Units to account for.

Ending inventory.

Units started.

Question 13. 13. 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.

Question 14. 14. Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Pool – Budgeted O/H $ – Budgeted Level for Cost Driver – O/H Cost Driver

Materials Handling $160,000 3,200 lbs. Material Weight

Machine Setup 13,200 390 S/U’s # of S/Us

Machine Repair 1,380 30,000 Mach. Hrs Machine Hrs.

Inspections 10,560 160 Inspections # of Inspections

Requirements for Job #971 which included 4 Units of Production:

D/L Hours = 20 Hours

D/Mat’ls = 130 lbs.

Machine S/U = 30 Set-ups

Machine Hrs. = 15,000 Machine Hours

Inspections = 15 Inspections.

Using ABC, the materials handling overhead cost assigned to Job #971 is: (Points : 2)

$2,300.

$990.

$6,500.

$690.

$1,020.

Question 15. 15. Which of the following is required for multiple regression? (Points : 2)

The use of dummy variables.

The use of more than one cost driver.

The use of more than one dependent variable.

The use of a trend variable.

The use of multiple sets of data.

Question 16. 16. Technology and complexity issues often lead management to simplify and to: (Points : 2)

Use linear estimation methods.

Use volume-based costing and nonlinear estimation methods.

Use volume-based costing methods.

Use nonlinear estimation methods.

Use activity-based costing and volume-based costing methods.

Question 17. 17. Which of the following methods considers all reciprocal flows between service departments through simultaneous equations? (Points : 2)

Dual method.

Step method.

Reciprocal method.

Direct method.

The net realizable value method.

Question 18. 18. A relatively low margin of safety ratio (MOS%) for a product is usually an indication that the product: (Points : 2)

Is losing money.

Has a high contribution margin.

Is riskier than a product with a higher margin of safety ratio.

Is less risky than a product with a higher margin of safety ratio.

Requires heavy fixed cost to produce or sell.

Question 19. 19. The use of a relationship of total factory overhead to direct labor hours is said to be valid only within the relevant range, which means: (Points : 2)

Within a reasonable dollar amount for labor costs.

Within the range of observations of the cost driver.

Within the range of reasonableness as judged by the department supervisor.

Within the budget allowance for overhead.

Question 20. 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.

Question 21. 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.

Question 22. 22. The Robinson-Patman Act, administered by the U.S. Federal Trade Commission, addresses pricing that could substantially damage the competition in an industry. This pricing is called: (Points : 2)

Competitive pricing.

Predatory pricing.

Cost-benefit pricing.

Variable pricing.

Question 23. 23. In terms of evaluating mutually exclusive projects, the internal rate of return (IRR) method mistakenly favors investment proposals with: (Points : 2)

Short useful lives.

Long useful lives.

Moderate cash flow returns.

Large residual values.

Question 24. 24. Which of the following statements regarding a joint production process is NOT true? (Points : 2)

The essential decision facing management is whether to sell products at the split-off point or to sell these products after further processing.

The allocation of joint (common) production costs to individual products helps management determine which products should be processed beyond the split-off point.

Costs incurred up to the split-off point are referred to as joint production costs.

The decision as to whether individual products should be sold “as is” or processed further is made on the basis of comparing incremental revenues and incremental costs.

Question 25. 25. Which of the following is not true regarding the appropriate discount rate to be used in conjunction with discounted cash flow (DCF) decision models? (Points : 2)

For projects of “above average” risk, the appropriate discount rate is the weighted-average cost of capital (WACC)

It includes an estimate of the after-tax cost of debt.

It can differ across investment projects, according to perceived risk.

It is also sometimes referred to as the “hurdle rate” for capital budgeting purposes.

Question 26. 26. In a sell-or-process-further decision, joint production costs: (Points : 2)

Are irrelevant to the decision.

Should be allocated to outputs on the basis of relative sales dollars.

Should be allocated to outputs on the basis of relative physical units.

Cannot be allocated to products for financial reporting purposes.

Question 27. 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 payback period for the new machine (rounded to nearest one-tenth of a year)? (Assume that the cash inflows occur evenly throughout the year.) (Points : 2)

2.5 years.

2.7 years.

3.1 years.

3.6 years.

Question 28. 28. ____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product’s desired functionality: (Points : 2)

Consumer analysis.

Sales force analysis.

Design analysis.

R&D analysis.

Market place analysis.

Question 29. 29. The “flexible budget” can best be described as a budget that adjusts: (Points : 2)

Revenues for sales-dollar changes.

Revenues and expenses for changes in output (such as sales volume).

Expenses for changes in budgeted output between two periods.

For efficiency, but not selling price and cost variances.

For selling price and cost variances, but not efficiency variances.

Question 30. 30. An organization’s overall management accounting and control system: (Points : 2)

Includes the planning function.

Is also referred as the organization’s core performance-measurement system.

Is separate from its operational control system.

Includes nonfinancial, but not financial, performance measures.

Focuses on strategic, not operational, control

Question 31. 31. The total operating income variance for a period reveals whether a company has achieved: (Points : 2)

The sales level budgeted for the period.

An adequate return on investment (assets) during the period.

Control of basic business processes.

Control of total expenses for the period.

The master budgeted operating income for the period.

Question 32. 32. Which of the following benefits is not typically associated with a move to a just-in-time (JIT) manufacturing system? (Points : 2)

Raw materials are delivered as close as possible to time of production.

Existence of long-term contracts with selected suppliers.

Reduction in employee training and education costs.

Decreases in manufacturing lead time.

Improved customer-response time (CRT).

Question 33. 33. The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the: (Points : 2)

Total flexible-budget variance.

Sales volume variance.

Selling price variance.

Operating income flexible-budget variance.

Question 34. 34. The process by which managers at all levels in the firm gain information about the performance of tasks within the firm and judge that performance against pre-established criteria is: (Points : 2)

Performance measurement.

Employee inspection.

Goal congruence.

Managerial evaluation.

Management control.

Question 35. 35. Matinna Co. maintains no inventories and has the following data pertaining to one of its direct materials in July:

Standard Quantity of DM for the Units Manufactured = 30,000

DM Purchased – Actual Cost = $63,000

Standard Price per Unit of DM (SP) = $2.00

Direct Material Efficiency Variance = $4,500 (F)

All materials purchased during the month were issued to production.

What was the company’s direct materials flexible-budget (FB) variance for July? (Points : 2)

$1,500 favorable.

$3,000 unfavorable.

$3,000 favorable.

$7,500 unfavorable.

$7,500 favorable.

Question 36. 36. The manager acting independently in such a way as to simultaneously achieve top management’s objectives is: (Points : 2)

Performance evaluation.

Operational control.

Goal congruence.

Principal-agent model.

Management control.

Question 37. 37. The “risk-averse” manager will be improperly biased to: (Points : 2)

Seek out decisions with uncertain outcomes.

Make risky decisions.

Avoid decisions with uncertain outcomes.

Maximize his or her own risk and minimize the company’s risk.

Use resources beyond his/her control.

Question 38. 38. Other things being equal, income computed by the variable costing method will exceed that computed by the full costing method if: (Points : 2)

Units produced exceed units sold.

Units sold exceed units produced.

Fixed manufacturing costs, increase.

Variable manufacturing costs increase.

Question 39. 39. The common factor among control systems in hiring practices, promotion policies, and strategic performance measurement is: (Points : 2)

Management sets expectations for desired employee performance.

Employee-determined expectations for desired employee performance.

Coordination of activities.

Communication of results.

Question 40. 40. The contribution by profit center (CPU) expands the contribution margin income statement by distinguishing: (Points : 2)

Variable and fixed costs.

Short-term and long-term fixed costs.

Controllable and non-controllable fixed costs.

Noncontrollable and untraceable fixed costs.

Net income and contribution margin.

Question 41. 41. 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.

Question 42. 42. Economic value added is calculated from: (Points : 2)

Average total assets, current liabilities, net income, and the cost of capital.

EVA net income and EVA invested capital.

Net income, cost of capital, and net assets.

Net income and the cost of capital.

EVA net income, the cost of capital, and EVA invested capital.

Question 43. 43. Which one of the following develops the value of the firm as the present value of the firm’s net free cash flows? (Points : 2)

Discounted cash flow method.

Cash flow liquidity method.

Multiples-based method.

Profitability method.

Purchasing power method.

Question 44. 44. When strategic performance measures or critical success factors are used to determine bonus compensation, the bonus will usually depend either on the amount of improvement in the measure or on: (Points : 2)

Maintaining the current level.

Achieving a predetermined goal.

Quality of work completed.

Intensity of effort expended.

Question 45. 45. Which of the following is one of the most comprehensive bases of compensation? (Points : 2)

Balanced scorecard.

Unit-based compensation pool.

Firm-wide compensation pool.

Salary.

Question 46. 46. The receivables turnover ratio is a measure of: (Points : 2)

Asset value.

Leverage.

Sales performance.

Profitability.

Liquidity.

Question 47. 47. The stock option form of bonus payments to managers usually: (Points : 2)

Motivates well even in extended market downturns.

Can lose some motivation because of the delay in reward.

Focuses on the short-term.

Is not consistent with shareholder interests.

Has less risk than other types of bonus payment plans.

Question 48. 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 ratio for 2013 is (rounded): (Points : 2)

11.2

12.7

13.7

14.9

Question 49. 49. 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.

Question 50. 50. 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

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