accounts prob-Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process.



During June, Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes
a. Scrap, but not spoilage
b. Normal spoilage, but neither scrap nor abnormal spoilage
c. Scrap and normal spoilage, but not abnormal spoilage
d. Scrap, normal spoilage, and abnormal spoilage

Cuff Caterers quotes a price of $60 per person for a dinner party. This price includes the 6% sales tax andthe 15% service charge. Sales tax is computed on the food plus the service charge. The service charge is computed on the food only. At what amount does Cuff price the food?
a. $56.40
b. $51.00
c. $49.22
d. $47.40

Bartlett Company is considering a new product, Pear. Bartlett’s fixed costs are $200,000. Pear’s contribution margin is $200 per unit. Bartlett has a marginal tax rate of 25%. How many units of Pear would Bartlett have to sell to have after-tax net income of $1,000,000?
a. 2,250 units
b. 4,750 units
c. 5,000 units
d. 7,667 units

During May, Kern Co. produced and sold 10,000 units of a product. Manufacturing and selling costs incurred during May were as follows:
Direct materials and direct labor $200,000
Variable manufacturing overhead $45,000
Fixed manufacturing overhead $10,000
Variable selling costs $5,000
The product’s unit cost under direct (variable) costing was
a. $24.50
b. $25.00
c. $25.50
d. $26.00

Nonfinancial measures provide information about
A. the economic effect of operations and decisions
B. aspects of operations that cannot be measured in dollars
C. the dollar value of a particular cost containment strategy
D. the operating margin

Why is the evaluation of subunits and subunit managers important?
A. It helps determine whether or not to expand or contract operations.
B. It encourages manager motivation to take actions that maximize the value of the firm.
C. Both a and b.
D. They should not be evaluated separately.

Which of the following is a problem with the ROI calculation?
A. Increased profits cause ROI to decrease.
B. Investment in assets is measured using current value costs.
C. An undue emphasis on ROI may lead managers to delay the purchase of modern equipment needed to stay competitive.
D. It does not hold managers responsible for assets.

Beam Company currently has 100,000 shares of common stock outstanding and a price-earnings ratio of seven. Net income for the recently ended year is $375,000. Beam’s board of directors declared a 15-for-2 stock split. Sunshine owned 100 shares of Beam before the split. What is the approximate value of Sunshine’s investment in Beam immediately after the split?
a. $ 26
b. $ 350
c. $2,625
d. $5,250

What of the following is the primary concern of a treasurer managing cash and short-term investments?
a. Liquidity
b. Maximizing return on working capital
c. Minimizing taxes
d. Minimizing transaction fees

What costs are included in ordering costs in the economic order quantity model?
a. Handling
b. Insurance
c. Interest on invested capital
d. Quantity discounts lost

The difference between tariffs and quotas is
a. That a tariff is a tax and a quota is a subsidy.
b. That the tariff is expressed as a percentage of price and the quota is expressed as an amount per unit.
c. That a tariff is a duty, whereas a quota is a limitation on quantities.
d. That a tariff limits price and a quota limits quantities.


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