GB519 Final Exam

1.When managers produce value for
the customer, their orientation consists of all the following except:
(Points : 2)

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2. 2.Important changes in the contemporary business environments
include all of the following except: (Points : 2)

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

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4. 4.Over the past several years it has become increasingly
important for firms to improve achievement towards their social and
environmental responsibilities. What is the best way the management
accountant can help the firm improve on sustainability? (Points : 2)

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5. 5.The five steps of strategic decision making include all of the
following except: (Points : 2)

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6. 6.Factory overhead costs for a given period were 3 times as much
as the direct material costs. Prime costs totaled $2,000. Conversion costs
totaled $3,280. What are the direct labor costs for the period? (Points :
2)

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7. 7.Assume the following information pertaining to a Company:

Prime costs = $195,000
Conversion Costs = $221,000
Direct Materials used = $85,000
Beginning Work-in-Process = $98,000
Ending Work-in-Process = $81,000

Factory overhead is calculated to be: (Points : 2)

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8. 8.At the end of a fiscal year, overapplied factory overhead
should be: (Points : 2)

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9. 9.The general sales manager’s salary is an example of a: (Points
: 2)

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10. 10.Standard costs are: (Points : 2)

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11. 11.The number of the same or similar units that could have been
produced given the amount of work actually performed on both complete and
partially complete units is referred to as: (Points : 2)

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12. 12.In calculating unit cost in a process costing system,
“conversion cost” is defined as the sum of: (Points : 2)

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13. 13.East Bay Fisheries Inc. processes king salmon for various
distributors. Two departments are involved — processing and packaging. Data
relating to tons of king salmon processed in the processing department
during June 2013 are provided below:

Tons
of
Percent Completed
King Salmon Materials
Conversion
Work-in-Process Inventory – June
1
1,500
90
80
Work-in-Process Inventory – June
1
2,800
60
40
Started processing during
June
7,800

Total equivalent units for materials under the weighted-average method are
calculated to be: (Points : 2)

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14. 14.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 debit to Work-in-Process Inventory account for materials is: (Points :
2)

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15. 15.The contribution income statement would require a firm to:
(Points : 2)

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16. 16.Joint products are products that: (Points : 2)

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17. 17.Thompson Refrigerators Inc. needs to prepare pro forma
financial statements for the next fiscal year. To do so, the company must
forecast its total overhead cost. The actual machine hours and total
overhead cost are presented below for the past six months.

MONTH
TOTAL
O/H
MACHINE HOURS
Jan
$
8,258
2,134
Feb
8,006
2,045
Mar
8,387
2,276
Apr
8,832
2,743
May
8,921
2,834
June
7,841
2,034

Using the high-low method, unit variable overhead cost is calculated to be:
(Points : 2)

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18. 18.Which one of the following methods of allocating joint costs
allocates joint costs to joint products on the basis of estimated sales
values at the split-off point? (Points : 2)

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19. 19.Regression analysis is better than the high-low method of
cost estimation because regression analysis: (Points : 2)

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20. 20.Jackson, Inc. is preparing a budget for the coming year and
requires a breakdown of the cost of electrical power used in its factory
into the fixed and variable elements. The following data on the cost of
power used and direct labor hours worked are available for the last six
months of this year:

Month
$ for Power
DL Hours
July
$
15,850
3,000
Aug
13,400
2,050
Sept
16,370
2,900
Oct
19,800
3,650
Nov
17,600
2,670
Dec
18,500
2,650
Total
$101,520
16,920

Assuming that Jackson uses the high-low method of analysis, the estimated
variable cost of steam per direct labor hour is: (Points : 2)

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21. 21.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)

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

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23. 23.To make a decision whether to accept or reject a special
sales order, managers need critical information about all the following
except: (Points : 2)

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24. 24.In deciding between alternative choices for a given
situation, managers usually employ a five-step process. Which of the
following is not a step in the decision-making process? (Points : 2)

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25. 25.Research has shown that in framing capital investment
decisions, sunk costs tend to: (Points : 2)

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26. 26.Which of the following statements regarding
“opportunity costs” is TRUE? (Points : 2)

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

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28. 28.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 present value payback period, rounded to one-tenth of a year?
(Points : 2)

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29. 29.The goals of coordinating manufacturing processes, reducing
the amount of inventory, and improving overall productivity is particularly
important in a: (Points : 2)

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30. 30.A flexible-budget variance measures the impact on short-term
operating profit of: (Points : 2)

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31. 31.The theory of constraints (TOC) emphasizes which of the
following? (Points : 2)

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

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33. 33.The difference between total variable overhead cost incurred
and the standard variable overhead cost based on the actual quantity of the
cost driver used to apply variable overhead is the: (Points : 2)

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34. 34.In September, Larson Inc. sold 40,000 units of its only
product for $240,000 and incurred a total cost of $225,000, of which
$25,000 is fixed costs. The flexible budget for September showed total
sales of $300,000. Among variances of the period were: total variable cost
flexible-budget variance, $8,000U; total flexible-budget variance,
$63,000U; and, sales volume variance, in terms of contribution margin,
$27,000U

The actual amount of operating income earned in September was: (Points : 2)

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35. 35.Bonehead Co. has the following factory overhead costs:

Standard Overhead Applied to this Period’s
Production
= $72,500
Flexible Budget for Overhead Based on Output (Units Produced)
= 65,000
Total Budgeted Overhead in the Master (Static)
Budget
= 86,000
Actual Total Overhead Cost Incurred During the
Period
= 76,000

The total underapplied or overapplied factory overhead for Bonehead Co. for
the period is: (Points : 2)

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36. 36.SBU is the acronym for: (Points : 2)

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37. 37.Of the three basic forms of management compensation (salary,
bonus, benefits), the fastest growing part of total compensation is: (Points
: 2)

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38. 38.The evaluation by upper-level managers of the performance of
mid-level managers is: (Points : 2)

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39. 39.The most important objective of a strategic performance
measurement system is: (Points : 2)

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40. 40.A unit of an organization is referred to as a profit center
if it has: (Points : 2)

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41. 41.The need for coordination between the production and the
selling function will impact the choice of: (Points : 2)

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42. 42.Salary is: (Points : 2)

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43. 43.A method for determining a bonus based upon the performance
of the unit is a(n): (Points : 2)

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44. 44.Which one of the following has been the most common payment
option for bonus compensation in recent years? (Points : 2)

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45. 45.EVA is calculated as: (Points : 2)

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

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47. 47.The objectives of management compensation, when compared to
the objectives used to develop performance measurement systems, are:
(Points : 2)

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48. 48.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)

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49. 49.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)

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 inventory turnover ratio for 2013 is (rounded): (Points : 2)