general business data bank

$7.00

Description

Q10. The following data applies to Kaiser company(millions of dollars):

Cash & marketable securities

$ 100

Fixed assets

$283.5

Sales

$1,000

Net income

$50

Quick ratio

2.0x

Current ratio

3.0x

DSO (average collection period)*

40 days

ROE

12%

*Calculation is based on a 360 day year.

Kaiser has no preferred stock – only common equity, current liabilities,
and long-term debt.

Find Kaiser’s (1) accounts
receivable (A/R), (2) current
liabilities, (3) current assets,

(4) total assets, (5) ROA, ( 6 ) common equity, and (7) long-term debt.

Q11. Ace industries have current assets equal to Rs. 3 Million. The
company’s current ratio is 1.5, and its quick ratio is 1.0.

a) What is the firm’s level of current
liabilities?

b) What is the firm’s level of inventories?

Q12.Complete the balance sheet and sales information in the table that
follows for Hoffmeister Industries using the following financial data:

Debt ratio: 50%

Quick ratio: 0.80x

Total assets turnover: 1.5x

Days sales outstanding / average collection period: 36 days*

Gross profit margin on sales: (sales – cost of goods sold)/sales = 25%

Inventory turnover ratio: 5x

*Calculation is based on a 360 day year.

Balance Sheet

Assets

$

Liabilities & Equity

$

Cash

Accounts payable

Accounts receivable

Long-term debt

60,000

Inventory

Common stock

Fixed assets

Retained earnings

97,500

Total Assets

300,000

Total Liabilities & Equity

Sales

Cost of Goods Sold

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$7.00

Description

Q4.

.png”>

Q5.

Allied Company expects sales of Rs 2.4 million next year and the
same amount the following year. Sales are spread evenly throughout the year. On
the basis of the following information, prepare a forecast income statement and
balance sheet for year end:

1.
Cash:
Minimum of 4
percent of annual sales.

2.
Accounts
receivable:
60-day average
collection period based on annual sales.

3.
Inventories:
Turnover of
eight times a year.

4.
Net
fixed assets:
Rs 500,000 now.
Capital expenditures equal to depreciation.

5.
Accounts
payable:
One month’s
purchases.

6.
Accrued
expenses:
3 percent of
sales.

7.
Bank
borrowings:
Rs 27,000 now.

8.
Can
borrow up to Rs 250,000.

9.
Long-term
debt:
Rs 300,000 now,
payable Rs 75,000 at year end.

10.
Common
stock:
Rs 100,000. No
additions planned.

11.
Retained
earnings:
Rs 500,000 now.

12.
Net
profit margin:
8 percent of
sales.

13.
Dividends:
None.

14.
Cost
of goods sold:
60 percent of
sales.

15.
Purchases:
50 percent of
cost of goods sold.

16.
Income
taxes:
50 percent of before-tax
profits.

Q6. Using the data below produce common size and indexed balance sheet.

.png”>

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$4.00

Description

Question 1

Which one of the following terms is
defined as a conflict of interest between the corporate shareholders and the
corporate managers? ________

A.

articles of incorporation

B.

corporate breakdown

C.

agency problem

D.

bylaws

E.

legal liability

Question 2

Which one of the following is a capital
budgeting decision?

A.

determining how many shares of stock
to issue

B.

deciding whether or not to purchase a
new machine for the production line

C.

deciding how to refinance a debt issue
that is maturing

D.

determining how much inventory to keep
on hand

E.

determining how much money should be
kept in the checking account

Question 3

Decisions made by financial managers
should primarily focus on increasing which one of the following?

A.

size of the firm

B.

growth rate of the firm

C.

gross profit per unit produced

D.

market value per share of outstanding
stock

E.

total sales

Question 4

The book value of a firm is:

A.

equivalent to the firm’s market value
provided that the firm has some fixed assets.

B.

based on historical cost.

C.

generally greater than the market
value when fixed assets are included.

D.

more of a financial than an accounting
valuation.

E.

adjusted to the market value whenever
the market value exceeds the stated book value.

Question 5

A firm has $520 in inventory, $1,860 in
fixed assets, $190 in accounts receivables, $210 in accounts payable, and $70
in cash. What is the amount of the current assets?

A.

$710

B.

$780

C.

$990

D.

$2,430

E.

$2,640

Question 6

List and briefly describe the three
general areas of responsibility for a financial manager.

The three areas of responsibility for a financial manager
are capital budgeting, capital structure and working capital.

Question 7

Crandall Oil has total sales of
$1,349,800 and costs of $903,500. Depreciation is $42,700 and the tax rate is
34 percent. The firm does not have any interest expense. What is the operating
cash flow?

A.

$129,152

B.

$171,852

C.

$179,924

D .

$281,417

E.

$309,076

Question 8

Relationships determined from a firm’s
financial information and used for comparison purposes are known as:

A.

financial ratios.

B.

identities.

C.

dimensional analysis.

D.

scenario analysis.

E.

solvency analysis.

Question 9

According to the Statement of Cash
Flows, a decrease in accounts receivable will _____ the cash flow from _____
activities.

A.

decrease; operating

B.

decrease; financing

E.

increase; investment

Question 10

The Corner Hardware has succeeded in
increasing the amount of goods it sells while holding the amount of inventory
on hand at a constant level. Assume that both the cost per unit and the selling
price per unit also remained constant. This accomplishment will be reflected in
the firm’s financial ratios in which one of the following ways?

A.

decrease in the inventory turnover
rate

B.

decrease in the net working capital
turnover rate

C.

no change in the fixed asset turnover
rate

D.

decrease in the day’s sales in
inventory

E.

no change in the total asset turnover
rate

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$2.00

Description

1. By convention, short-term financial control
is accomplished by all the following except:

A.
Comparing actual to budgeted financial
results.

B.
Calculating a series of
cost and revenue variances at the end of the period.

C.
The use of flexible
budgets and standard costs.

D.
Explaining the total
operating-income variance for a given period.

E.
The use of productivity
analysis.

2. Operational control systems can be
distinguished from financial control systems:

A.
In the time horizon: financial-control
systems have a long-term perspective.

B.
Because they focus on
the control of basic business processes.

C.
Because such systems
rely on the use of flexible, not static, budgets.

D.
Because they focus on
explaining the total operating income variance for a period.

E.
They do not include
nonfinancial performance indicators.

3. Traditional financial control systems have
recently been criticized because:

A.
They use flexible, not static, budgets.

B.
They generally lead to
goal-congruent behavior on the part of managers.

C.
They focus more in
improving basic business processes than short-term financial results.

D.
They fail to incorporate
nonfinancial performance indicators into the evaluation process.

E.
They use static, not
flexible, budgets.

4.
One important short-term
goal for a company is to earn the projected operating income for the period.
Attainment of this goal is measured by comparing the actual operating income to
the:

A.
Flexible-budget operating income.

B.
Prior period’s operating
income.

C.
The income reflected in
the company’s balanced scorecard.

D.
Master budget operating
income.

E.
Industry average
operating income.

5. The total operating-income variance for a
period reveals whether a company has achieved:

A.
The sales level budgeted for the period.

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

C.
Control of basic
business processes.

D.
Control of total
expenses for the period.

E.
The master budgeted
operating income for the period.

6. Another name for the total operating-income
variance for a period is:

A.
Flexible-budget variance.

B.
Master (static) budget
variance.

C.
Sales-volume variance.

D.
Production-volume
variance.

E.
Sales-mix variance.

7. Authoritative standards (within the context
of a standard cost system) are determined primarily by:

A.
Distributors.

B.
Employees.

C.
Customers.

D.
Suppliers.

E.
Managers.

8. The arrival of new manufacturing techniques
such as automation, flexible manufacturing systems, and cluster or cell
manufacturing has:

A.
Emphasized the importance of direct
labor variances.

B.
Not had an effect on the
importance of direct labor variances.

C.
De-emphasized the
importance of direct labor variances.

D.
Made direct labor
variances obsolete.

E.
Eliminated the need to
calculate and report direct materials variances.

9. An organization’s overall management
accounting and control system:

A.
Includes the planning function.

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

C.
Is separate from its
operational control system.

D.
Includes nonfinancial,
but not financial, performance measures.

E.
Focuses on strategic,
not operational, control.

10.
The “flexible budget” can best be described as a budget that adjusts:

A.
Revenues for sales-dollar changes.

B.
Revenues and expenses
for changes in output.

.
Expenses for changes in budgeted output
between two periods.

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

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

11.
Which of the following is different in a flexible budget compared to the master
budget for a period?

A.
Selling price per unit.

B.
Variable cost per unit.

C.
Budgeted fixed cost.

D.
Sales volume.

12. A
flexible-budget variance measures the impact on short-term operating profit of:

A.
Changes in sales volume.

B.
Changes in output during
the period.

C.
Differences in sales
mix—budgeted versus actual.

D.
Selling price and cost
differences—actual versus budgeted.

E.
Selling price, but not
cost differences—actual versus budgeted.

13. A
“standard cost” is a predetermined amount (e.g., cost) that:

A.
Should be incurred under relatively
efficient operating conditions.

B.
Will be incurred for an
operation or a specific objective.

C.
Must occur for an
operation or a specific objective.

D.
Cannot be changed once
it is established by management.

E.
Is useful for planning
and control but not inventory valuation purposes.

14.
Differences in expectation levels lead to two basic types of standards in a
standard cost system:

A.
Ideal and real.

B.
Ideal and currently
attainable.

C.
Normal and conceptual.

D.
Attainable and real.

E.
Current and future.

15.
An organization planned
to use $82 of material per unit of output, but it actually used $80 per unit.
During this period, the company planned to make 1,200 units, but actually
produced only 1,000 units. The flexible budget amount for materials is:

A.
$80,000.

B.
$82,000.

C.
$96,000.

D.
$98,400.

16. A
“currently attainable standard” emphasizes:

A.
Ideal or theoretical performance.

B.
Past performance of the
organization.

C.
Future performance of
the organization’s primary competitors.

D.
Maximum performance.

E.
Relatively efficient
operating performance.

17.
An organization subject to intense competitive pressures would most likely use:

A.
Ideal standards for its operations.

B.
Real standards for its
operations.

C.
Caution in even using
standards.

D.
A mix of types of
standards.

E.
Standards that are not
modified over time.

18. A
materials efficiency variance can be caused by all of the following except:

A.
Actual output volume of the period
(i.e., units produced).

B.
Performance of the
workers in using the materials.

C.
Quality of the
materials.

D.
Skill level of the
workers using the materials.

E.
Inadequate employee
supervision.

19. A
standard cost system:

A.
Cannot be used in conjunction with a
job-cost system.

B.
Is not permissible for
financial-reporting purposes.

C.
Is most easily
introduced in conjunction with a process-cost system.

D.
Is useful for planning
but not control purposes.

E.
Is useful for cost
control but not planning purposes.

20. A
______________ standard gets progressively tighter over time.

A.
Peak-efficiency.

B.
Currently attainable.

C.
Benchmarked.

D.
Flexible-budget.

E.
Continuous-improvement.

.
Using continuous-improvement standards likely has the effect(s) of all the
following except:

A.
Reductions in inefficiencies.

B.
Reduced product defects.

C.
Constantly decreasing
standard levels.

D.
Improved productivity.

E.
Increasing pressure on
employees and managers.

22. A
total variable cost variance (such as for direct materials) can be broken down
into separate variances that evaluate:

A.
Price and efficiency.

B.
Units and cost.

C.
Volume and productivity.

D.
Sales volume versus
sales mix.

E.
Efforts and results.

23. A
standard cost system should be designed to generate and report variances:

A.
Coincidental with regular reporting
intervals.

B.
As soon as possible.

C.
Only when significant in
amount.

D.
Only when negative in
impact.

E.
Only when requested by
decision-makers.

24.
Which of the following benefits is not typically associated with a move
to a just-in-time (JIT) manufacturing system?

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

B.
Existence of long-term
contracts with selected suppliers.

C.
Reduction in employee
training and education costs.

D.
Decreases in
manufacturing lead time.

E.
Improved
customer-response time (CRT).

25.
The way managers and employees who are affected by a standard cost system
perceive the system will:

A.
Be of little consequence on the success
of the system if correctly implemented.

B.
Generally be minimal in
impact on the implementation of the system.

C.
Affect its success or
failure in implementing the system.

D.
Be difficult to assess.

E.
Not matter in the long
run.

26.
For control purposes, it is usually preferable to calculate the materials price
variance:

A.
At point of purchase.

B.
At point of production.

C.
At the end of the
period.

D.
Only if the materials
quantity variance is significant in amount.

E.
Only if it is
controllable by operating managers.

27.
The difference between the actual operating income of the period and master
budgeted operating income for the period is the:

A.
Total flexible-budget variance.

B.
Sales-volume variance.

C.
Sales price variance.

D.
Operating income
flexible-budget variance.

E.
Total operating income
variance.

28.
The difference between the actual sales volume for a period and the
flexible-budget sales volume is:

A.
The total sales-volume variance for the
period.

B.
The total
production-volume variance for the period.

C.
The sales price variance
for the period.

D.
The operating-income
sales volume variance for the period.

E.
A flexible-budget
variance.

29.
The difference between the flexible-budget operating income and the actual
operating income in a period is the:

A.
Sales-mix variance.

B.
Sales-volume variance.

C.
Sales price variance.

D.
Operating income
flexible-budget variance.

E.
Total operating income
variance.

30.
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:

A.
Total flexible-budget variance.

B.
Sales volume variance.

C.
Selling price variance.

D.
Operating income flexible-budget
variance.

E.
Operating income
variance.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$2.00

Description

31. A
standard that assumes perfect implementation and maximum efficiency is called
a(n):

.
Currently attainable standard.

B.
Practical standard.

C.
Efficiency standard.

D.
Normal standard.

E.
Ideal standard.

32. A
standard that sets the performance criterion at a level that workers with
proper training and experience can attain most of the time without
extraordinary effort is a(n):

A.
Currently attainable standard. B. Practical standard.

C.
Efficiency standard. D. Ideal standard.

33.
The total variable cost flexible-budget variance for any given period:

A.
Is the difference between actual total variable cost incurred and master
budgeted total variable cost. B. Is decomposable into sales-volume and
sales-mix components.

C.
Is decomposable into production-volume and production-mix components.

D. Can be broken down into
flexible-budget variances for major costs such as materials, labor, variable
overhead, and variable selling expenses.

34.
The flexible-budget variable cost variance includes all of the following except:

A.
Direct materials variances.

B.
Sales price variance.

C.
Variable selling and administrative expenses variances.

D.
Direct labor variances.

E.
Variable overhead variances.

35.
Which one of the
following is the difference in direct material costs between the actual amount
incurred and the total standard cost in the flexible budget for the units
manufactured during the period?

A.
Direct materials price variance.

B.
Direct materials mix
variance.

C.
Direct materials usage
variance.

D.
Direct materials
flexible-budget variance.

E.
Direct materials
efficiency variance.

36. For
a direct material, which one of the following is the difference between the
actual and standard unit price of the direct material multiplied by the actual
quantity of the material purchased?

A.
Direct materials price variance.

B.
Direct materials volume
variance.

C.
Direct materials usage
variance.

D.
Direct materials
flexible-budget variance.

E.
Direct materials mix
variance.

37. Which
one of the following, for each direct material used in production, is the
difference between the actual units of material used and the total standard
units of the direct material that should have been used for the units of the
product manufactured during the period, multiplied by the standard unit price
of the direct materials?

A.
Direct materials sales-volume variance.

B.
Direct materials rate
variance.

C.
Direct materials usage
variance.

D.
Direct materials
flexible-budget variance.

E.
Direct materials mix
variance.

38.
Which one of the
following is the difference between the actual and standard hourly wage rate
multiplied by the actual direct labor hours worked during a period?

A.
Total direct labor standard cost
variance.

B.
Direct labor efficiency
variance.

C.
Direct labor usage
variance.

D.
Direct labor
flexible-budget variance.

E.
Direct labor rate
variance.

39.
Which one of the
following is the difference between the actual and standard direct labor hours
for the units manufactured, multiplied by the standard hourly wage rate per
hour?

A.
Direct labor price variance.

B.
Direct labor efficiency
variance.

C.
Total direct labor
standard cost variance.

D.
Direct labor
flexible-budget variance.

E.
Direct labor
operating-income variance.

40.
The primary purpose of calculating standard cost variances each period
is:

A.
To achieve financial control regarding
operating activities.

B.
To facilitate the
recording of manufacturing costs during a period.

C.
To adjust reported
income to flexible-budget income.

D.
To diagnose the problems
of operating problems as well as what should be done to correct such problems.

. A
firm uses a JIT inventory system and has an unfavorable selling price variance
for the period just ended. If the proportion of the total variable
manufacturing costs to total sales in both the flexible budget and the actual
operating results is 70%:

A.
The firm has an unfavorable total
variable manufacturing cost variance.

B.
The firm has a favorable
total variable manufacturing cost variance.

C.
The firm has an
unfavorable total flexible-budget variance.

D.
The firm has a favorable
contribution margin variance.

E.
The firm has a favorable
total flexible-budget variance.

42.
The effect on sales, expenses, or operating income of changes in units sold is
measured by the:

A.
Flexible-budget variance.

B.
Sales-volume variance.

C.
Sales price variance.

D.
Operating income
flexible-budget variance.

E.
Production-volume
variance.

43. The
difference between actual and standard cost caused by the difference between
the actual number of resource-units used and the standard number of
resource-units that should have been used for the output of the period is
called the:

A.
Controllable variance. B. Master budget variance. C. Flexible-budget variance.

D.
Quantity (or efficiency) variance. E. Price variance.

44.
Which of the following is not a plausible cause of a direct labor
efficiency variance?

A.
Poor scheduling of work.

B.
Inadequate supervision of workers.

C.
Materials used are different from those specified.

D.
Failure to update the standard cost to conform to wage provisions in the union
contract. E. Batch sizes during the period were different from standard.

45.
The direct materials usage ratio for a given period is:

A.
Defined as the ratio of quantity purchased to quantity used.

B.
Defined as the inverse of the materials quantity variance for the period. C.
Entered into its own variance account at the end of the period.

D.
A useful indicator of performance by the manufacturing department. E. A useful
indicator of performance of the purchasing department.

46. A
favorable cost variance of significant magnitude:

A. Is
the result of exceptional planning.

B.
May lead to future improvements in production methods if the variance is
investigated to determine its underlying cause(s). C. Is strong evidence of
excellent operating performance.

D.
Is strong evidence of tight financial control.

E.
Does not need to be investigated as to its underlying cause. 47. A flexible
budget contains:

A.
Cost targets based on actual output for the period. B. Cost targets based on
planned output for the period.

C.
Actual costs incurred for the actual output of the period.

D.
Costs and revenues for the difference between planned and actual output.

E.
Costs based on actual output of the period, and revenue based on master
budgeted output. 48. A favorable price variance for direct materials indicates
that:

A.
Lower-quality materials were purchased. B. The materials standard is likely out
of date.

C.
A lower price than expected was paid for the materials.

D.
Less material was used in production this period than should have been used.

E.
There will most likely be an unfavorable materials efficiency (quantity)
variance.

49. A
manufacturer planned to use $82 of materials per unit produced, but in the most
recent period it actually used $80 of material per unit produced. During this
same period, the company planned to produce 1,200 units, but actually produced
only 1,000 units. The flexible-budget variance for materials is:

A.
$2,000 favorable.

B.
Impossible to determine
without additional information.

C.
$14,000 unfavorable.

D.
$16,400 unfavorable.

E.
$2,400 unfavorable.

50.
All of the following are limitations of short-term financial performance
indicators except:

A.
Employees and managers can take actions
that improve short-term financial performance at the expense of long-term
performance.

B.
Focusing on individual
cost variances can result in optimum local but not global (i.e., firm-wide)
performance.

C.
Operating personnel may
not readily understand or be able to interpret financial-performance
indicators.

D.
Senior managers
typically find non-financial performance indicators more useful than summary
financial-performance indicators.

.
Flexible budgets and standard costs are useful for assessing:

A.
Strategic performance during the most recent period. B. Operating performance
during the period.

C.
Short-term financial performance. D. Management control.

52.
For operational control, a management accounting system should include:

A.
Performance measures associated with basic business processes. B. Only
financial-control measures, such as standard cost variances.

C.
High-level financial metrics such as return on investment (ROI) or return on
sales (ROS). D. A combination of short-term and strategic financial-performance
metrics.

53.
Which of the following is not considered a basic business process?

A.
Operating processes.

B.
Customer-management processes. C. Innovation processes.

D.
Social/regulatory processes. E. Just-in-time (JIT) processes.

54.
Which of the following is not an anticipated benefit of switching to a
JIT production system?

A.
Reduction in inventory holding costs.

B.
Reduction of monitoring costs associated with the production system. C.
Reduction in customer-response time.

D.
Increased sales due to increases in quality and customer satisfaction.

E.
Reduction in internal failure costs, such as the cost of reworking defective
outputs. 55. Customer-response time (CRT) is defined as:

A.
The time between when a customer places an order and the time when the order is
received by the customer. B. The elapsed time between initial customer contact
and the time a customer places an order.

C.
The time between when a customer places an order and when that order is
manufactured.

D.
The time between when an order is started into production and when that order
is completed. 56. The term “processing cycle efficiency” (PCE):

A.
Like manufacturing cycle time, is a measure of operational efficiency. B. Is
defined as the ratio of manufacturing lead time to delivery time.

C.
Is defined as manufacturing lead time minus delivery time.

D.
Is defined as the ratio of customer-response time to order-delivery time. E. Is
at an optimum level when PCE = 0.

57.
Which of the following
is not indicated as an advantage of using nonfinancial performance
measures, relative to financial performance measures, as part of an operational
control system?

A.
Nonfinancial performance indicators are readily understandable by operating
personnel.

B.
Nonfinancial performance indicators can be viewed as drivers of future
financial performance. C. Nonfinancial performance indicators direct attention
to precise problem areas that need attention. D. Nonfinancial performance
measures are more reliable than financial performance measures.

58.
Which of the following statements about processing cycle efficiency (PCE) is not
true:

A.
It is defined as the ratio of processing time to non-processing time. B. It is
a measure of operating process efficiency.

C.
It is based on the relationship between actual processing time and total
production time.

D. It incorporates notions of
“value-added” and “non-value-added,” as discussed in the
development of activity-based cost (ABC) systems. E. The optimum value of PCE
is 1.

59. A
flexible-budget variance for any fixed cost:

A.
Is defined as the difference between flexible-budget fixed cost and the level
of fixed costs reflected in the master (static) budget. B. Is undefined, except
when actual output equals budgeted output.

C.
Is typically zero, because the volume assumed in the flexible budget and the
master budget for fixed costs is identical. D. Is the difference between
budgeted fixed cost and actual fixed cost.

60.
The total operating-income variance for any period:

A.
Is unaffected by variances between
actual and budgeted sales volume.

B.
Can be decomposed into a
total flexible-budget variance and a sales-volume variance.

C.
Can be decomposed into a
total flexible-budget variance and a sales price variance.

D.
Is equal to the sum of
selling and administrative expense variances plus the total sales-volume
variance for the period.

E.
Equals the sum of the
total flexible-budget variance plus the sales-mix variance for the period.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

101. Xero
Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH),
calculated at 90% capacity = 900 standard DLHs. In December, the company
operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at
80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the
actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300
was for fixed factory overhead. Under a three-way breakdown (decomposition) of
the total overhead variance, what is the total factory overhead spending
variance for December?

A.
N/A—this variance doesn’t exist under a
three-way breakdown of the total overhead variance.

B.
$225 favorable.

C.
$425 unfavorable.

D.
$560 unfavorable.

E.
$600 unfavorable.

102. Xero
Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH),
calculated at 90% capacity = 900 standard DLHs. In December, the company
operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at
80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the
actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300
was for fixed factory overhead. Under a four-way breakdown (decomposition) of
the total overhead variance, what is the variable factory overhead spending
variance for December?

A.
$50 favorable.

B.
$225 favorable.

C.
$425 unfavorable.

D.
$610 unfavorable.

E.
$650 unfavorable.

103. Xero
Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH),
calculated at 90% capacity = 900 standard DLHs. In December, the company
operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at
80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the
actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300
was for fixed factory overhead. Assuming the use of a four-way breakdown
(decomposition) of the total overhead variance, what is the variable factory
overhead efficiency variance for December?

A.
$90 unfavorable.

B.
$150 unfavorable.

C.
$225 favorable.

D.
$425 unfavorable.

E.
$650 unfavorable.

104. Xero
Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH),
calculated at 90% capacity = 900 standard DLHs. In December, the company
operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at
80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the
actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300
was for fixed factory overhead. What was the fixed factory overhead spending
variance for December?

A.
$50 favorable.

B.
$225 favorable.

C.
$425 unfavorable.

D.
$560 unfavorable.

E.
$610 unfavorable.

105. Xero
Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH),
calculated at 90% capacity = 900 standard DLHs. In December, the company
operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at
80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the
actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300
was for fixed factory overhead. Assuming a four-variance breakdown
(decomposition) of the total overhead variance, what is the fixed factory
overhead efficiency variance for the period?

A.
N/A—this variance does not exist.

B.
$225 favorable.

C.
$425 unfavorable.

D.
$650 unfavorable.

106. Gerhan
Company’s flexible budget for the units actually manufactured in May shows
$15,640 of total factory overhead; this output level represents 70% of
available capacity. During May the company applied overhead to production at
the rate of $3.00 per direct labor hour (DLH), based on a denominator volume
level of 6,120 DLHs, which represents 90% of available capacity. The company
spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during
May, including $6,800 for fixed factory overhead. What is the factory overhead
production-volume variance for May?

A.
$180 unfavorable.

B.
$380 unfavorable.

C.
$680 unfavorable.

D.
$860 unfavorable.

E.
$1,360 unfavorable.

107.
Gerhan Company’s flexible budget for the units actually manufactured in May
shows $15,640 of total factory overhead; this output level

.
During May the company applied overhead to production at the rate of $3.00 per
direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs,
which represents 90% of available capacity. The company spent 5,000 DLHs and
incurred $16,500 of total factory overhead cost during May, including $6,800
for fixed factory overhead.

What
is the total factory overhead flexible-budget variance for May?

A.
$380 unfavorable.

B.
$680 unfavorable.

C.
$860 unfavorable.

D.
$1,160 unfavorable.

E.
$1,360 unfavorable.

108. Gerhan
Company’s flexible budget for the units actually manufactured in May shows
$15,640 of total factory overhead; this output level represents 70% of
available capacity. During May the company applied overhead to production at
the rate of $3.00 per direct labor hour (DLH), based on a denominator volume
level of 6,120 DLHs, which represents 90% of available capacity. The company
spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during
May, including $6,800 for fixed factory overhead.

What is the
factory overhead efficiency variance for May, under the assumption that the
company uses a two-variance breakdown (decomposition) of the total overhead
variance?

A.
N/A—this variance does not exist under a
two-variance breakdown of the total overead variance.

B.
$180 unfavorable.

C.
$300 favorable.

D.
$480 unfavorable.

E.
$680 unfavorable.

B.
Gerhan Company’s flexible budget for the
units actually manufactured in May shows $15,640 of total factory overhead;
this output level represents 70% of available capacity. During May the company
applied overhead to production at the rate of $3.00 per direct labor hour
(DLH), based on a denominator volume level of 6,120 DLHs, which represents 90%
of available capacity. The company spent 5,000 DLHs and incurred $16,500 of total
factory overhead cost during May, including $6,800 for fixed factory overhead.
Under a three-variance breakdown (decomposition) of the total overhead
variance, what is the total factory overhead spending variance for May?

A.
N/A—this variance does not exist in a
three-variance analysis of the total overhead variance.

B.
$300 favorable.

C.
$380 unfavorable.

D.
$480 unfavorable.

E.
$1,160 unfavorable.

110. Gerhan
Company’s flexible budget for the units actually manufactured in May shows
$15,640 of total factory overhead; this output level represents 70% of
available capacity. During May the company applied overhead to production at
the rate of $3.00 per direct labor hour (DLH), based on a denominator volume
level of 6,120 DLHs, which represents 90% of available capacity. The company
spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during
May, including $6,800 for fixed factory overhead.

What is the variable
factory overhead spending variance in May assuming the company uses a
four-variance breakdown (decomposition) of the total overhead variance?

A.
$180 unfavorable.

B.
$300 favorable.

C.
$380 unfavorable.

D.
$480 unfavorable.

E.
N/A—this variance is not
defined under the four-way breakdown of the total OVH variance.

111. Gerhan
Company’s flexible budget for the units actually manufactured in May shows
$15,640 of total factory overhead; this output level represents 70% of
available capacity. During May the company applied overhead to production at
the rate of $3.00 per direct labor hour (DLH), based on a denominator volume
level of 6,120 DLHs, which represents 90% of available capacity. The company
spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during
May, including $6,800 for fixed factory overhead.

What is the
factory overhead efficiency for May under the assumption that the company uses
a four-variance breakdown (decomposition) of the total overhead variance?

A.
$180 unfavorable.

B.
$380 favorable.

C.
$380 unfavorable.

D.
$480 unfavorable.

E.
$480 favorable.

112. Gerhan
Company’s flexible budget for the units actually manufactured in May shows
$15,640 of total factory overhead; this output level represents 70% of
available capacity. During May the company applied overhead to production at
the rate of $3.00 per direct labor hour (DLH), based on a denominator volume
level of 6,120 DLHs, which represents 90% of available capacity. The company
spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during
May, including $6,800 for fixed factory overhead. What is the fixed factory
overhead spending variance for December?

A.
$0.

B.
$180 unfavorable.

C.
$300 favorable.

D.
$480 unfavorable.

E.
$680 unfavorable.

113.Oslund
Company manufactures only one product and uses a standard cost system. During
the past month, the following variances were observed:

Oslund applies variable overhead using a
standard rate of $20 per standard DLH allowed. During the month, Oslund used
20% more DLHs than the total standard hours for the units manufactured.

What
were the total standard hours for the units manufactured?

A.
1,000.

B.
2,500.

C.
4,000.

D.
5,000.

E.
6,000

114.
Oslund Company
manufactures only one product and uses a standard cost system. During the past
month, the following variances were observed:

Oslund
applies variable overhead using a standard rate of $20 per standard DLH
allowed. During the month, Oslund used 20% more DLHs than the total standard
hours for the units manufactured. What were the total actual direct hours
worked?

A.
1,200.

B.
3,000.

C.
4,800.

D.
6,000.

E.
7,200.

115. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) = $10; overhead (2 hrs @ $2.50/hr) = $5. The flexible
budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual
data for the month show total overhead costs of $225,000, total fixed overhead
of $123,000, 85,000 hours worked, and 40,000 units produced. What is the
budgeted denominator activity level in direct labor hours?

A.
24,000.

B.
48,000.

C.
60,000.

D.
80,000.

E.
100,000.

116. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) = $10; overhead (2 hrs @ $2.50/hr) = $5. The flexible
budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual
data for the month show total overhead costs of $225,000, total fixed overhead
of $123,000, 85,000 hours worked, and 40,000 units produced. The total overhead
variance for the month is:

A.
$0.

B.
$3,000 unfavorable.

C.
$5,000 unfavorable.

D.
$20,000 unfavorable.

E.
$25,000 unfavorable.

117. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) = $10; overhead (2 hrs @ $2.50/hr) = $5. The flexible
budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual
data for the month show total overhead costs of $225,000, total fixed overhead
of $123,000, 85,000 hours worked, and 40,000 units produced. The overhead
production-volume variance is:

A.
$0.

B.
$3,000 unfavorable.

C.
$5,000 unfavorable.

D.
$20,000 unfavorable.

E.
None of the above.

118. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) = $10; overhead (2 hrs @ $2.50/hr) = $5. The flexible
budget for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual
data for the month show total overhead costs of $225,000, total fixed overhead
of $123,000, 85,000 hours worked, and 40,000 units produced. The variable
overhead spending variance is:

A.
$0.

B.
$3,000 unfavorable.

C.
$5,000 unfavorable.

D.
$17,000 unfavorable.

E.
$25,000 unfavorable.

119. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) $10. Overhead (2 hrs @ $2.50/hr) 5. The flexible budget
for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual data for
the month show total overhead costs of $225,000, total fixed overhead of
$123,000, 85,000 hours worked, and 40,000 units produced. The fixed overhead
spending variance is:

A.
$0.

B.
$3,000 unfavorable.

C.
$5,000 unfavorable.

D.
$17,000 unfavorable.

E.
$25,000 unfavorable.

. Megan,
Inc. uses the following standard costs per unit for one of its products: Direct
labor (2 hrs @ $5/hr) $10. Overhead (2 hrs @ $2.50/hr) 5. The flexible budget
for overhead is $120,000 plus $1 per direct labor hour (DLH). Actual data for
the month show total overhead costs of $225,000, total fixed overhead of
$123,000, 85,000 hours worked, and 40,000 units produced. The variable factory
overhead efficiency variance is:

A.
$0.

B.
$3,000 unfavorable.

C.
$5,000 unfavorable.

D.
$17,000 unfavorable.

E.
$25,000 unfavorable.

121.
The following information is available from the Taro Company:

What is the
total overhead spending variance for the period?

A.
$750 favorable.

B.
$750 unfavorable.

C.
$950 favorable.

D.
$1,150 unfavorable.

E.
$2,100 favorable.

122.
The following information is available from the Taro Company:

What is the
total overhead efficiency variance for the period?

A.
$750 favorable.

B.
$750 unfavorable.

C.
$950 favorable.

D.
$1,150 unfavorable.

E.
$1,150 favorable.

123.
The following information is available from the Taro Company:

What is the
overhead production volume-variance for the period?

A.
$200 unfavorable.

B.
$600 favorable.

C.
$750 favorable.

D.
$950 favorable.

E.
$2,100 favorable.

124.
The following information is available from the Taro Company:

What is the
variable overhead spending variance for the period?

A.
$200 unfavorable.

B.
$600 favorable.

C.
$750 favorable.

D.
$950 favorable.

E.
$1,700 favorable.

.
The following information is available from the Taro Company:

What is the
fixed overhead spending variance for the period?

A.
$200 unfavorable.

B.
$600 favorable.

C.
$750 favorable.

D.
$950 favorable.

E.
$2,100 favorable.

126.
The following information is available from the Taro Company:

The total under
or over applied overhead for the period is:

A.
$1,400 overapplied.

B.
$1,700 underapplied.

C.
$1,700 overapplied.

D.
$2,100 underapplied.

E.
$2,100 overapplied.

127.
The following information is available from the Taro Company:

The total
overhead flexible-budget (FB) variance for the period is:

A.
$550 favorable.

B.
$750 favorable.

C.
$1,500 favorable.

D.
$1,700 favorable.

E.
$2,100 favorable.

128.
Air Inc. uses a standard cost system. Overhead cost information for Product
CX10 for the month of October is as follows:

What is the
total overhead variance for October?

A.
$300 unfavorable.

B.
$500 favorable.

C.
$800 favorable.

D.
$4,100 unfavorable.

E.
$4,600 unfavorable.

129.
Air Inc. uses a standard cost system. Overhead cost information for Product
CX10 for the month of October is as follows:

What
is the total overhead spending variance for the month?

.
$300 unfavorable.

B.
$500 favorable.

C.
$800 favorable.

D.
$4,600 unfavorable.

E.
$4,900 unfavorable.

130.
Air Inc. uses a standard cost system. Overhead cost information for Product
CX10 for the month of October is as follows:

What is the
variable overhead efficiency variance for October?

A.
$300 unfavorable.

B.
$500 favorable.

C.
$800 favorable.

D.
$4,100 unfavorable.

E.
$4,600 unfavorable.

131.
Air Inc. uses a standard cost system. Overhead cost information for Product
CX10 for the month of October is as follows:

What is the overhead
production-volume variance for the period?

A.
$300 unfavorable.

B.
$500 favorable.

C.
$800 favorable.

D.
$4,100 unfavorable.

E.
$4,600 unfavorable.

132.
The following information is available from the Terry Company:

What is the
total overhead spending variance for the period?

A.
$800 unfavorable.

B.
$1,000 unfavorable.

C.
$1,200 unfavorable.

D.
$1,400 unfavorable.

E.
$2,000 unfavorable.

133.
The following information is available from the Terry Company:

What is the
variable overhead efficiency variance for the period?

A.
$600 favorable.

B.
$800 unfavorable.

C.
$1,200 unfavorable.

D.
$1,400 unfavorable.

E.
$2,000 unfavorable.

134.

The
following information is available from the Terry Company:

What is the
overhead production-volume variance for the period?

A.
$600 favorable.

B.
$1,000 unfavorable.

C.
$1,200 unfavorable.

D.
$1,400 favorable.

E.
$1,400 unfavorable.

135.
The following information is available from the Terry Company:

What is the
variable overhead (VOH) spending variance for the period?

A.
$600 favorable.

B.
$800 unfavorable.

C.
$1,000 unfavorable.

D.
$1,400 favorable.

E.
$1,400 unfavorable.

136.
The following information is available from the Terry Company:

The fixed overhead
spending variance for the period is:

A.
$600 favorable.

B.
$800 unfavorable.

C.
$1,000 unfavorable.

D.
$1,200 unfavorable.

E.
$1,200 favorable.

137.
The following information is available from the Terry Company:

The total under
or over applied overhead for the period is:

A.
$800 overapplied.

B.
$800 underapplied.

C.
$2,600 underapplied.

D.
$3,000 overapplied.

E.
$3,000 underapplied.

138.
The following information is available from the Terry Company:

The total
overhead flexible-budget (FB) variance for the period is:

.
$800 unfavorable.

B.
$1,400 unfavorable.

C.
$2,000 unfavorable.

D.
$2,600 unfavorable.

E.
$3,000 unfavorable.

139.
For which one of the
following reasons is the calculation of overhead variances in conjunction with
an activity-based cost (ABC) system desirable from the standpoint of
management?

A.
The resulting cost-management system is
currently required by generally accepted accounting principles (GAAP).

B.
Such a system would be
consistent with the goal of managing activities rather than cost.

C.
Such a system is likely
to be less costly to design and implement.

D.
Far fewer variances
would likely be expected under such a system.

E.
Conventional systems,
though appropriate for a manufacturing setting, are not applicable to the
service sector.

140. Which
of the following is a characteristic of calculating standard cost variances for
manufacturing overhead costs under an activity-based cost (ABC) system?

A.
Only non-volume-related cost drivers are
used in the cost-allocation process.

B.
An ABC system would
likely have a greater number of standard cost variances reported each period.

C.
Fewer variances need to
be reported, compared to the number of overhead variances calculated under a
traditional cost system.

D.
Flexible budgets are
used for planning but not cost-control purposes.

E.
The flexible budget
variance will be the same under both a traditional cost system and an ABC
system.

141. Which
one of the following characteristics is associated with standard cost variance
analysis for manufacturing overhead under a traditional versus an
activity-based cost (ABC) system?

A.
The total manufacturing overhead
variance will be the same under either system.

B.
The traditional cost
system does not meet the current International Financial Reporting Standards
for internal control and product costing.

C.
The traditional system,
but not the ABC system, is acceptable for income tax purposes.

D. Cost
variances under an ABC system must be closed to cost of goods sold (CGS), while
those calculated under a traditional system can also be prorated (allocated) to
CGS and inventory accounts.

E.
Under both cost systems
a flexible budget (FB) is used for control purposes.

142.
When there is a standard batch size for production activity:

A. A
modification of the traditional approach to constructing the flexible budget
for control purposes allows for a more detailed analysis of batch-related
overhead costs.

B.
It is not possible to
construct a flexible budget for cost-control purposes.

C.
Standard cost variances
for only the variable portion of batch-related manufacturing overhead costs can
be calculated.

D.
The variable portion of
the total flexible-budget variance for batch-related costs can be further
decomposed into a spending and a volume variance, which leads to better cost
control.

143.
Which one of the
following standard cost variances is not available when analyzing
batch-related manufacturing overhead costs using an activity-based cost (ABC)
system?

A.
Production-volume variance.

B.
Variable setup spending
variance.

C.
Fixed spending variance.

D.
Fixed flexible-budget
variance.

E.
Sales volume variance.

144. Which
of the following is not a cost system proposed as an extension to ABC
systems, with the overall goal of more accurately allocating manufacturing
overhead costs to outputs?

A.
Resource consumption accounting (RCA).

B.
Flexible standard
costing.

C.
GPK (Grenzplankostenregnung).

D.
Variable costing.

145.
A comprehensive management accounting and control system regarding
manufacturing overhead costs:

A.
Includes nonfinancial but not financial
performance indicators.

B.
Relies on direct
managerial observation rather than a formal system for cost-control purposes.

C.
Provides information for
strategic but not operational control.

D.
Provides
financial-control information to operating personnel, while both financial and
nonfinancial performance indicators to managers.

E.
Includes both financial
performance indicators as well as nonfinancial performance indicators.

146.
What are the steps in
establishing the standard application rate for variable factory overhead cost?
Does the procedure differ for product-costing versus cost control purposes?

147. What
are the steps in determining the standard fixed factory overhead application
rate? Does the procedure differ for product-costing versus cost-control
purposes?

148. “Firms
need to use the capacity of the equipment or division that is the ‘bottleneck’
of the manufacturing process as the denominator volume in setting the fixed
overhead allocation rate. In cases where there is more than one ‘bottleneck,’
the denominator should be the smallest capacity among the bottleneck production
processes.”

Required:
(a) What type of variance is related to this “denominator?” Explain.

(b) Why should a firm
choose the smallest capacity “bottleneck” as the denominator in a
manufacturing process?

149. “In
fact, a ‘favorable’ production-volume variance of a ‘non-bottleneck’ machine or
operation is not favorable to the firm as a whole; rather, it increases work
and costs for the firm.” Why?

150. Eileen
Bellows is controller at a new, rapidly growing company that produces
replacement windows for existing houses or for initial installation in new
houses. Competition is stiff in this industry, but the company for which Eileen
works is aggressive in sales development, and just showed a modest profit for
the first year since its founding four years ago. Howard Zeller is controller
at Accents Incorporated, an established drapery and blinds manufacturer. Accent
is an industry leader and has experienced sustained growth in both sales and
profits for the past five years. Eileen: Our manufacturing support costs seem
to be growing over time. For planning and control purposes we’re using
“currently attainable” standards in our standard cost system, including
the costing of manufacturing overhead. But now that we’re making profit, I’ve
been thinking of a switch to tighter standards. Howard: We’ve always used ideal
standards, although our enforcement of these goals hasn’t been strict. It seems
to work for us.

Required:
What does this conversation say about each company’s expectations regarding
their standard cost system and anticipatedvariances from each of the
two different systems?

151. Erie
Co. uses machine hours to apply standard overhead cost to production. The
following data pertain to October:

Required:
Compute the following variances using machine hours as the activity variable
used to assign standard overhead costs toproduction. Show calculations.

(a)
Variable overhead
spending variance

(b)
Variable overhead
efficiency variance

(c)
Fixed overhead spending
variance

(d)
Fixed overhead
production-volume variance

152. Bluetop
Company uses standard costs. For the month of April, the firm budgeted $160,000
for total factory overhead based on 40,000 machine hours. The standard calls
for 4 machine hours for each finished units. During April the firm used 39,000
machine hours to manufacture 9,500 units and incurred $159,000 in total factory
overhead.

Required:
(a) Determine the total amount of standard factory overhead cost charged to
production in April.

(b) Provide
the correct journal entry to record the application of standard factory
overhead costs to production. (Assume that the company uses a single overhead
account, Manufacturing Overhead.)

153. McAllister
Company’s master budget for the year just completed was based on 100% capacity
and included 40,000 machine hours and $240,000 total factory overhead. The
budgeted fixed overhead at 75% of factory capacity would be $160,000 (and
30,000 machine hours). The company actually operated at 90% capacity for the
year, and incurred $252,000 total factory overhead.

Required:
(a) Determine the factory overhead flexible-budget variance for the year. Show
calculations. (b) Calculate the factoryoverhead production-volume
variance for the year. Show calculations.

154.
Bike Pedals manufactures
bicycle seats. The company budgeted to manufacture 25,000 seats in April with
0.05 standard machine hours per seat. The total variable factory overhead was
budgeted at $30,000 for the operation. During April the company manufactured
30,000 seats using 1,600 machine hours. It incurred $34,000 of variable factory
overhead (VOH) costs.

Required:
Determine each of the following variances. Show calculations.

(a)
Variable overhead
spending variance.

(b)
Variable overhead
efficiency variance.

(c)
Variable overhead
flexible-budget variance.

155. Ben
Simon Corp. has the following information about its standards and production
activity for the month of November:

Required:
Calculate and show supporting calculations for each of the following variances:
(a) Variable overhead flexible-budgetvariance. (b) Fixed overhead
spending variance. (c) Fixed overhead production-volume variance.

156.
Dillard, Inc., has
developed the following standard cost data based on a denominator volume of
60,000 direct labor hours (DLHs), which is 75% of the firm’s capacity. Budgeted
fixed overhead is $360,000 and budgeted variable overhead is $180,000 at this
level of activity.

During the last period, the company used
48,000 DLHs to produce 128,000 units. It incurred the following manufacturing
costs:

Required:
Determine all variances for direct materials, direct labor, and factory
overhead. Use a 4-variance breakdown (decomposition)of the total
overhead variance for the period.

157. Harrison
Corporation’s direct labor rate variance for May was $200 favorable, and the
direct labor efficiency variance was $150 unfavorable. The total direct labor
payroll for the month was $10,050.

Required:
(a) Prepare the summary journal entry (May 31) to accrue payroll costs, to
charge Work in Process Inventory for the standardlabor cost of the
goods manufactured in May, and to record the direct labor variances for the
month.

(b) Assuming that
the direct labor variances are not material, prepare the journal entry that
Harrison would make to close the variance accounts.

158.

Redtop
Co. uses a standard cost system and flexible budgets. The following flexible
budget was prepared at the 80% operating level for the year:

However,
for purposes of calculating the fixed overhead application rate, the company
defined the denominator volume as the 90% capacity level. The standard calls
for four DLHs per unit manufactured. During the year, Redtop worked 33,600 DLHs
to manufacture 8,500 units. The actual factory overhead was $12,000 greater
than the flexible-budget amount for the units produced, of which $5,000 was due
to fixed factory overhead.

Required:
Calculate (and provide supporting details for) each of the following variances:

(a)
The standard variable
overhead application rate.

(b)
The variable overhead efficiency
variance.

(c)
The factory overhead
spending variance.

(d)
The factory overhead
production-volume variance.

(e)
The variable overhead
spending variance.

(f)
Provide an
interpretation for each of the above variances you calculated.

159. Carl
Jones Company’s master budget for the year just completed was based on 100%
capacity and included 50,000 machine hours and $300,000 total factory overhead.
(That is, the denominator volume, for purposes of calculating the fixed
overhead application rate, is defined as 100% capacity.) Budgeted fixed
overhead at 70% factory capacity is $200,000 (and 35,000 machine hours). The
company operated at 80% capacity for the year, and incurred $275,000 total
factory overhead.

Required:
(a) Determine the factory overhead flexible-budget variance for the year just
completed. Show calculations. (b) Calculate thefactory overhead
production-volume variance for the year just completed. Show calculations. (c)
Supply an interpretation of each of the two variances calculated above.

160. ABN
Corp. has the following information about its standards and production activity
in May:

Required:
Calculate and show calculations for each of the following variances:

(a)
Variable overhead
flexible-budget (FB) variance.

(b)
Fixed overhead spending
variance.

(c)
Fixed overhead
production-volume variance.

(d)
Provide and
interpretation of each of the above variances.

161.You are provided with
the following summary of overhead-related costs for the most recent accounting
period:

Required:
Prepare the appropriate journal entries for each of the above events. Assume
that the company uses a single account,

Manufacturing
Overhead. For entry (f), assume that any overhead variances are closed to Cost
of Goods Sold (CGS).

162.
You are provided with
the following summary of overhead-related costs for the most recent accounting
period for a company that uses a single overhead account, Factory Overhead,
into which it records both actual and standard overhead costs during the period:

Required:
Prepare the proper journal entry for each of the following events:

(a)
Incurrence of actual FOH
costs for the period.

(b)
Incurrence of actual VOH
costs for the period.

(c)
Application of standard
overhead costs to production (i.e., WIP inventory).

(d)
Recording of standard
overhead costs for units completed during the period.

(e)
Recording of the four
standard cost variances for the period.

(f) Closing
the standard cost variances under the assumption that the company closes these
variances entirely to Cost of Goods Sold (CGS).

(g) Closing
the standard cost variances under the assumption that the company prorates the
variances to the CGS and inventory accounts.

163. Management
is currently deciding whether or not to investigate a cost variance that was
identified by the accounting system. To help address this question, you have
generated the following data:

Possible States of
Nature
:

1. The underlying
operation is in control (i.e., is operating normally).

2. The underlying
operation is out of control (and therefore is in need of an intervention)

Possible
Decisions/Courses of Action
:

1. Investigate
the variance (to determine its underlying cause(s)). 2. Do not investigate the
variance

Estimated Costs and
Probabilities
:

1. Cost of investigating
the variance = I = $5,000.

2. Cost of
correcting an out-of-control process (if the process is found to be out of
control) = C = $10,000. 3. Losses from not correcting an out-of-control
process = L = $110,000.

4.
Probability, p, of the process being out of control = 60% Required:
1. Recast the above information in a payoff table.

2. What is the expected
cost of the decision to investigate the variance? Show calculations.

3. What is the expected
cost of the decision to not investigate the variance? Show calculations.

4.
What is the break-even probability of the process being out of control, p,
that would make management indifferent between investigating and not
investigating the observed variance? Demonstrate that, in fact, this is the
break-even probability by showing the expected value of each management action.
Show calculations.

164.Management
is currently deciding whether or not to investigate a cost variance that was
identified by the accounting system. To help address this question, you have
generated the following data:

Possible States of
Nature
:

1. The underlying
operation is in control (i.e., is operating normally).

2. The underlying
operation is out of control (and therefore is in need of an intervention)

Possible
Decisions/Courses of Action
:

1. Investigate
the variance (to determine its underlying cause(s)). 2. Do not investigate the
variance.

Estimated Costs and
Probabilities
:

.
Cost of investigating the variance = I
= $1,500.

2.
Cost of correcting an
out-of-control process (if the process is found to be out of control) = C
= $6,000.

3.
Losses from not
correcting an out-of-control process = L = $50,000.

4.
Probability, p,
of the process being out of control = 15%

Required:
1. Given the above information, what is the expected value of investigating the
reported variance? (Show calculation.).

2. Prepare
a payoff table that summarizes the states of nature (i.e., possible outcomes)
and the decision alternatives (i.e., management actions). Your table should
include cells for combinations of management actions and states of nature, plus
cells to represent the expected value of each management action. Which decision
is recommended on the basis of information in your payoff table?

3. Given
the above information, what is the probability level, p, for an
out-of-control process (i.e., a nonrandom variance) that would make management
indifferent between investigating and not investigating the variance? In what
sense can this probability be considered a breakeven probability? (Demonstrate
this by calculating the expected value of each management action, based on the
break-even probability, p, you calculated.) What is the correct
management action of the probability of an out-of-control process is greater
than the break-even probability, p? Show all calculations. Round final
answers to the nearest whole numbers.

165. When
implementing a standard cost system, one of the system-design choices that
management must make is choice of the denominator volume level for the purpose
of calculating the fixed overhead application rate, which is used to determine
product costs. Various alternatives exist for the denominator volume.

Required:
1. List and briefly describe the various alternatives that exist for defining
the denominator activity level for product-costingpurposes.

2. What
provisions of generally accepted accounting principles (GAAP) and current
income tax requirements affect the decision as to choice of the denominator
volume level when developing the standard fixed overhead application rate?
Provide an overview of the requirements in this regard.

166. It
can be argued that manufacturing overhead analysis under an ABC system is more
informative or useful to management because of the associated richness of the
analysis and therefore increased potential for cost control. Of particular
interest under an ABC system is the flexible-budget analysis that can be
performed when there is a standard batch size for production activity.

Required:
Explain how the conventional analysis of overhead variances through the use of
flexible budgets can be expanded whenproduction is characterized by a
standard batch size. Focus specifically on the analysis of batch-related costs,
for example, production-related set-up costs.

Discuss separately the
analysis of fixed setup-related costs and variable setup-related manufacturing
support costs.

167. The
variances discussed in Chapter 15 (for manufacturing overhead) are all
components of a short- term financial control system. These variances are
calculated using standard manufacturing costs and flexible budgets. As was
argued in the text (both in Chapter 15 and elsewhere) a financial control
system is but part of a more comprehensive management accounting and control
system.

Required:
(a) What are the primary limitations of short-run financial control measures?

(b) How can a
short-run financial control system be expanded to become a more comprehensive
management accounting and control system? Discuss, in at least some detail, how
and why you would expand the system in an attempt to provide management with
more useful information.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

81.
Under variable costing, fixed manufacturing overhead costs would be classified
as:

A.
Period costs.

B.
Product costs.

C.
Selling costs.

D.
Inventory costs.

82.
Under full costing, fixed manufacturing overhead costs would be classified as:

A.
Period costs.

B.
Product costs.

C.
Selling costs.

D.
Inventory costs.

83.
Under the
principal-agent model of contract relationships, situations such as machine
breakdowns or a decrease in market demand would be classified under:

A.
Lack of observability.

B.
Lack of responsibility.

C.
Uncertainty.

D.
Decentralization.

84. In
a formal management control system, top management sets expectations for
desired manager performance. Which of the following is not one of the
areas in which a formal individual management control system would be used?

A.
Hiring practices.

B.
Promotion policies.

C.
Operations.

D.
Sales.

E.
Organizational culture.

85. The
type of strategic business unit (SBU) where the SBU focuses on the selling
function of a specific product line or by a geographical location is referred
to as a(n):

A.
Profit center.

B.
Cost center.

C.
Revenue center.

D.
Investment center.

E.
All of the above.

86.
SBU is the acronym for:

A.
Small Business Unit.

B.
Sustainable Business
Unit.

C.
Standard Business Unit.

D.
Strategic Business Unit.

87. Quick
Technology Company is a supplier of high-end research equipment for the
pharmaceutical industry. Quick currently has a variety of different firms
producing computer chips for increased memory and improved processing speeds
which are installed in Quick’s equipment. In this case, having another firm
provide supplies for Quick’s equipment is an example of:

A.
Strategic positioning.

B.
Opportunity costing.

C.
Profitability
maximization.

D.
Outsourcing.

E.
Value chain analysis.

88.
Which of the following is not a criterion for choosing a cost allocation
method?

A.
Provide an incentive for managers to
make decisions consistent with top management’s goals.

B.
Provide an opportunity
for managers to make decisions consistent with the manager’s goals.

C.
Provide a basis for a
fair evaluation of manager’s performance.

D.
Motivate managers to
exert a high level of effort.

89.
Which one of the following is not an order-filling cost?

A.
Freight.

B.
Warehousing.

C.
Inspection.

D.
Collections.

90.
Controllable fixed costs:

A.
Are those costs that the profit center
manager can influence in approximately a year or less.

B.
Are those costs that the
profit center manager can influence in approximately a year or more.

C.
Include variable costs.

D.
Have no effect on
operating income.

91.

Using
the balanced scorecard to describe the firm’s strategy in detail through the
use of a cause-and-effect diagram which is also known as

a(n):

A.
Status Diagram.

B.
Strategy Map.

C.
Performance Flowchart.

D.
Organizational Diagram.

E.
Operational
Work-through.

92.
The cost method that is input-oriented and considers costs largely
uncontrollable at the planning stage is called the:

A.
Engineered-cost method.

B.
ABC costing.

C.
Discretionary-cost
method.

D.
Job costing.

E.
Standard costing.

93.
Costs such as depreciation, taxes and insurance and usually extending beyond
one year are considered:

A.
Controllable fixed costs.

B.
Noncontrollable fixed
costs.

C.
Noncontrollable variable
costs.

D.
Controllable variable
costs.

E.
Controllable margin
costs.

94.
Which of the following is not a revenue driver factor which affects
sales volume for a manufacturing firm?

A.
Price changes.

B.
Customer service.

C.
Delivery dates.

D.
Discounts.

E.
Productivity.

95.
Which of the following is an argument against the use of variable costing?

A.
Full costing overstates the balance
sheet value of inventories.

B.
Variable factory
overhead is a period cost.

C.
Fixed factory overhead
is difficult to allocate properly.

D.
Fixed factory overhead
is necessary for the production of a product.

96. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Sales for 2010 are
calculated to be:

A.
$1,000,000.

B.
$5,000,000.

C.
$7,500,000.

D.
$10,000,000.

E.
$12,500,000.

97. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Full costing
operating income for 2010 is calculated to be:

A.
$1,000,000.

B.
$3,200,000.

C.
$3,300,000.

D.
$4,200,000.

E.
$4,300,000.

98. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Variable costing
operating income for 2010 is calculated to be:

A.
$1,000,000.

B.
$3,200,000.

C.
$3,300,000.

D.
$4,200,000.

E.
$4,300,000.

99.
Strategic performance measurement is a(n):

A.
Accounting system used by top management
for the evaluation of SBU managers.

B.
System of shared
responsibility.

C.
Accounting system for
determining strategy.

D.
System to design and
implement the balanced scorecard.

100.
Managers who are risk averse:

A.
Seek to accept options with low risk and
would choose an option with lower expected value if it had more risk.

B.
Seek to avoid options
with low risk and would choose an option with higher expected value if it had
more risk.

.
Seek to avoid options with high risk and
would choose an option with lower expected value if it had less risk.

D.
Seek to accept options
with high risk and would choose an option with lower expected value if it had
less risk.

E.
Seek to accept options
with low risk and would choose an option with higher expected value if it had
more risk.

101.
Managers who are risk prone:

A.
Seek risky projects that promise some
chance of a low benefit.

B.
Seek risky projects that
promise some chance of a high benefit, although the projects may have a risk of
low benefit.

C.
Seek risky projects.

D.
Seek high risk projects
that promise some chance of a high benefit, although the projects may have a
very significant risk of no benefit.

102.
Risk plays a critical
role in the decision making process. However, numerous studies have shown that
most executives, managers and individuals are considered to be:

A.
Risk neutral.

B.
Risk prone.

C.
Risk averse.

D.
Risk seekers.

103.
A value stream income statement is best associated with:

A.
Value chain analysis.

B.
Activity-based costing.

C.
The theory of
constraints.

D.
Lean manufacturing.

104.
A value stream is:

A.
A set of value-adding activities.

B.
A sequence of efficient
processes.

C.
A group of related
products.

D.
A strategy map with a
focus on value-adding activities.

105. Reasons
for failure to implement the balanced scorecard effectively include all but
which of the following:

A.
Failure to link nonfinancial measures to
strategy.

B.
Failure to validate the
assumptions in the strategy map.

C.
Setting the wrong
performance targets.

D.
Failure to include
financial reporting requirements to the SEC.

E.
Measuring the results
incorrectly.

106. The
sales life cycle has three phases: early, growth, and maturity. The appropriate
performance measures for the growth phase include

A.
Profitability, market penetration.

B.
Profitability, strategy.

C.
Revenue, strategy.

D.
Profitability, asset
management.

107.
SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Determine
the amount of cost to be allocated to the Harborview Resort using revenue as an
allocation base.

A.
$1,050,000

B.
$1,950,000

C.
$1,500,000

D.
$420,000

E.
$1,680,000

108.
SeaScape Resorts owns and operates two resorts in a coastal town. Both resorts
are located on a barrier island that is connected to the

mainland
by a high bridge. One resort is located on the beach and is called the Crystal
Coast Resort. The other resort is located on the inland waterway which passes
between the town and the mainland; it is called the Harborview Resort. Some key
information about the two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

What is the
operating profit of the Crystal Coast Resort, using revenue as an allocation
base?

A.
$2,450,000

B.
$1,600,000

C.
$1,500,000

D.
$4,550,000

E.
$3,550,000

109.
SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Using
the information regarding the allocation of the $3 million to the four cost
drivers, determine the amount of cost to be allocated to the Harborview Resort.

A.
$1,050,000

B.
$1,950,000

C.
$1,500,000

D.
$715,000

E.
$1,680,000

110.SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Using the information regarding the
allocation of the $3 million to the four cost drivers, determine the operating
profit of the Crystal Coast Resort.

A.
$1,500,000

B.
$2,050,000

C.
$2,785,000

D.
$3,525,000

E.
$4,215,000

111. SeaScape
Resorts owns and operates two resorts in a coastal town. Both resorts are
located on a barrier island that is connected to the mainland by a high bridge.
One resort is located on the beach and is called the Crystal Coast Resort. The
other resort is located on the inland waterway which passes between the town
and the mainland; it is called the Harborview Resort. Some key information
about the two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

The Crystal
Coast resort is likely to be favored in terms of a lower cost allocation under:

A.
Revenue-based allocation.

B.
Cost-driver based
allocation.

C.
Cannot be determined
from the information.

D.
Would be the same for
both allocation methods.

112. Tough-Built
Corporation produces specialized truck body components, specializing in
hydraulic lifts for dump trucks. Founded 35 years ago by George Halloway, the
firm now employs 150 workers and has annual sales of over $10 million. George
operates the firm in a highly centralized way, and retains control over all
changes in operations. He is a regular visitor to the production area, which
helps him “keep his finger on the pulse of the firm.” Although George
Halloway is now 67 years old, he has no apparent management successor, and has
always hand-picked his department heads and staff personnel. He has been
generous to those who worked for him, paying substantial bonuses each year to
the employees based on his personal evaluation of each worker. Just six weeks
ago, a heart attack convinced George to consider retirement, and he decided to
sell the firm to his employees. You are assigned the task of recommending a set
of strategic performance measures for the firm, assuming that the new worker
management wants to operate as a decentralized firm. Required: What
major management problems do you foresee in the transition from sole owner to
employee ownership?

113. Harrison
Hartwell and Zenith is a successful law firm employing 26 professionals. There
is an internal controversy over allocation of the $104,000 purchase cost of a
highly sophisticated electronic law library. Each professional employee of the
firm has been assessed $4,000 as a charge against the profit distribution
account of each of the 26 members affected. In addition, it is expected to cost
about $2,600 per month to update information for the library system, resulting
in a monthly $100 assessment against each professional in the firm.

Required:
(a) As a new junior member of the professional legal group of 26, why might you
not like the proposed electronic library costallocation? (b) Propose an
alternate allocation method for both the initial purchase cost and the updating
charge that is more equitable (fair).(c) Could one argue for no allocation at
all in this case? On what basis?

114.

McShane Inc. manufactures
hair brushes that sell at wholesale for $6.00 per unit. Budgeted production in
both 2009 and 2010 was 2,000 units and fixed overhead budgeted was $25,000 in
each year. There was no beginning inventory in 2009. The following data
summarized the 2009 and 2010 operations:

Required:
Determine
income under both full costing and variable costing and explain the difference.

115. The
Daniels Tool & Die Corporation has been in existence for a little over
three years; its sales have been increasing each year as it has built a
reputation. The company manufactures dies to its customers’ specifications; as
a consequence, a job order cost system is employed. Factory overhead is applied
to the jobs based on direct labor hours. Actual variable overhead is the same
as applied variable overhead. Overapplied or underapplied overhead is treated
as an adjustment to cost of goods sold. The company’s income statements for the
last two years are presented below. Daniels used the same predetermined
overhead rate in applying overhead to production orders in both 2010 and 2011.
The rate was based on the following estimates:

In
2009 and 2010, actual direct labor hours expended were 20,000 and 23,000,
respectively. Raw materials put into production were $292,000 in 2009 and
$370,000 in 2010. Actual fixed overhead was $37,400 for 2010 and $42,300 for
2009, and the planned direct labor rate was the direct labor rate achieved. For
both years, all of the reported administrative costs were fixed, while the
variable portion of the reported selling expenses result from a commission of
five percent of sales revenue. Required: (1) For the year December 31,
2010, prepare a revised income statement for Daniels Tool & Die Corporation
utilizing the variable costing method. Be sure to include the contribution
margin on your statement. (2) Prepare a numerical reconciliation of the difference
in operating income between Daniels Tool & Die Corporation’s costing and
the revised 2010 income statement prepared on the basis of variable costing.
(3) Describe both the advantages and disadvantages of using variable costing.

116. Red
Apple Industries manufactures institutional-use furniture. Dept. A is
responsible for welding the base of the desk to the chair assembly. The desks
are then placed on an automatic conveyer to Dept. B, where the desktop is
riveted to the chair. The desks continue on the conveyer to Dept. C for further
assembly. Wanda, the manager of Dept. A, is responsible for moving 800 welded
desks per hour to Dept. B. A faulty circuit in Dept. B causes a delay in
processing in the department and prompts Rosie, the Dept. B manager, to ask
Wanda to stop the conveyer. Wanda refuses, necessitating the removal of the
welded desks from the conveyer until the riveting can resume. Rosie bills
Wanda’s department for the costs of this extra work. Wanda disputes the charge,
citing her responsibility to convey 800 desks/hour to Dept. B.

Required:
How should the managers’ dispute be resolved? How could it have been avoided?

117.Betty Jones and Penny
White are associates at the same law firm in Atlanta. They traveled to New York
City together recently to visit

their
respective clients. From the airport, they shared a cab ride to their hotel.
The cab ride for Betty alone would have cost $18.00, but for two passengers the
cost was $22.00. Had Betty not offered to share the cab ride, Penny (in
deference to her client’s frugality) would have taken the bus to Grand Central
Station, which is six blocks from the hotel, at a cost of $10.00.

Required:
How should the $22.00 cost of the cab ride be allocated to the two clients?

118. Divisional
managers of SIU Incorporated have been expressing growing dissatisfaction with
the current methods used to measure divisional performance. Divisional
operations are evaluated every quarter by comparison with the static budget
prepared during the prior year. Divisional managers claim that many factors are
completely out of their control but are included in this comparison. This
results in an unfair and misleading performance evaluation. The managers have
been particularly critical of the process used to establish standards and
budgets. The annual budget, stated by quarters, is prepared six months prior to
the beginning of the operating year. Pressure by top management to reflect
increased earnings has often caused divisional managers to overstate revenues
and/or understate expenses. In addition, once the budget had been established,
divisions were required to “live with the budget.” Frequently,
external factors such as the state of the economy, changes in consumer
preferences, and actions of competitors have not been adequately recognized in
the budget parameters that top management supplied to the divisions. The
credibility of the performance review is curtailed when the budget can not be
adjusted to incorporate these changes. Top management, recognizing the current
problems, has agreed to establish a committee to review the situation and to
make recommendations for a new performance evaluation system. The committee
consists of each division manager, the Corporate Controller, and the Executive
Vice President who serves as the chairman. At the first meeting one division
manager outlined an Achievement of Objectives System (AOS). In this performance
evaluation system, divisional managers would beevaluated
according to three criteria: ? Doing better than last year-
Various measures would be compared to the same measures of the
prior year. ? Planning realistically-
Actual performance for the current year would be compared to realistic plans
and/or goals. ?

Managing
current assets – Various measures would be used to evaluate the divisional
management’s achievements and reactions to changing business and economic
conditions. A division manager believed this system would overcome many of the
inconsistencies of the current system because divisions could be evaluated from
three different viewpoints. In addition, managers would have the opportunity to
show how they would react and account for changes in uncontrollable external
factorA second division manager was also in favor of the proposed AOS. However,
he cautioned that the success of a new performance evaluation system would be
limited unless it had the complete support of top management. Further, this
support should be visible within all divisions. He believed that the committee
should recommend some procedures which would enhance the motivational and
competitive spirit of the divisions. Required: (1) Explain whether or
not the proposed AOS would be an improvement over the measure of divisional
performance nowused by SIU Incorporated. (2) Develop specific
performance measures for each of the three criteria in the proposed AOS which
could be used to evaluate divisional managers. (3) Discuss the motivational and
behavioral aspects of the proposed performance system. Also, recommend specific
programs which could be instituted to promote morale and give incentives to
divisional management.

119. Chadd
Fisher was recently appointed vice president of operations for Cary
Corporation. He has a manufacturing background and previously served as
operations manager of Cary’s building products division. The business units of
Cary Corporation include divisions that manufacture building products, process
food, and provide financial services. In a recent conversation with Drew
Williams, Cary’s chief financial officer, Chadd suggested evaluating unit
managers on the basis of the business unit data in Cary’s annual financial
report. This report presents revenues, earnings, identifiable assets, and
depreciation for each business unit for a five-year period. He believes that
evaluating business unit managers by criteria similar to that used to evaluate
the company’s top management is appropriate. Drew has reservations about using
information from the annual financial report for this purpose and suggested
that Chadd consider other criteria to use in the evaluation.

Required:
1. Explain why the business unit information prepared for public reporting
purposes might not be appropriate for theevaluation of unit managers’
performance. 2. Describe the possible motivational impact on Cary Corporation’s
unit managers if Chadd’s proposal for their evaluation is accepted. 3. Identify
and describe several types of financial information that would be more
appropriate for Chadd Fisher to use when evaluating the performance of unit
managers.

120. Tyler
Company had the following manufacturing information for the current year.

Required:Determine
operating income under both full costing and variable costing and explain the
difference.

. Greg
Peterson was recently appointed vice president of operations for Webster
Corporation. He has a manufacturing background and previously served as
operations manager of Webster’s tractor division. The business units of Webster
Corporation include divisions that manufacture heavy equipment, process food,
and provide financial services. In a recent conversation with Carol Andrews,
Webster’s chief financial officer, Greg suggested evaluating unit managers on
the basis of the business unit data in Webster’s annual financial report. This
report presents revenues, earnings, identifiable assets, and depreciation for
each business unit for a five-year period. He believes that evaluating business
unit managers by criteria similar to that used to evaluate the company’s top
management is appropriate. Carol has reservations about using information from
the annual financial report for this purpose and suggested that Greg consider
other criteria to use in the evaluation.

Required:
1. Explain why the business unit information prepared for public reporting
purposes might not be appropriate for the evaluation of unit managers’
performance. 2. Describe the possible motivational impact on Webster Corporation’s
unit managers if Greg’s proposal for their evaluation is accepted. 3. Identify
and describe several types of information that would be appropriate for Greg
Peterson to use when evaluating the performance of unit managers.

(CMA Adapted)

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

205. Bonds that mature at a single specified
future date are called _______________ bonds, whereas bonds that mature in
installments are called ________________ bonds.

206. The terms of a bond issue are set forth in a
formal legal document called a bond ________________.

207. Unsecured bonds that are issued against the
general credit of the borrower are called ________________ bonds.

208. If bonds were issued at a premium, then the
contractual interest rate was _____________ than the market interest rate.

209. Discount on Bonds Payable is
________________ (from)(to) bonds payable on the balance sheet. Premium on
Bonds Payable is ________________ (from)(to) bonds payable on the balance
sheet.

210. If bonds are issued at face value (par), it
indicates that the ________________ interest rate must be equal to the
________________ interest rate.

211. If a $1 million, 10%, 10-year bond issue was
sold at 97, the cash proceeds from the issuance of the bonds amounted to
$________________.

Ans:
N/A,

212. When bonds are converted into common stock
and the conversion is recorded, the ________________ of the bonds is
transferred to paid-in capital accounts.

213. A lease may be classified as an
_______________ lease or as a ________________ lease.

a214. The
market price of a bond is obtained by discounting to its present value the
_______________ paid at maturity, and all _____________ payments to be made
over the term of the bond.

a215. When
there is a ________________ difference between the straight-line and
effective-interest methods of amortization, the ________________ method is
required under GAAP.

a216. A
method of amortizing bond discount or premium that allocates an equal amount
each period is the ________________ method.

a
217. The straight-line method of
amortization allocates the same amount to _______________ in each interest
period.

MATCHING

218. Match the items below by
entering the appropriate code letter in the space provided.

A. Serial bonds G. Straight-line method of amortization

B. Debenture bonds H. Bonds

C. Bond indenture I. Debt to total assets ratio

D. Premium on bonds payable J. Capital lease

E. Discount on bonds payable K. Operating lease

F. Effective-interest method of amortization L. Registered
bonds

_____ 1. A contractual arrangement which is in effect a
purchase of property.

_____ 2. A legal document that sets forth the terms of
a bond issue.

_____ 3. Bonds that mature in installments.

_____ a4. Produces
a periodic interest expense equal to a constant percentage of the carrying
value of the bonds.

_____ 5. Bonds issued in the name of the owner.

_____ 6. A form of interest-bearing notes payable used
by corporations.

_____ 7. Occurs when the contractual interest rate is
greater than the market interest rate.

_____ 8. Unsecured bonds issued against the general
credit of the borrower.

_____ 9. A contractual arrangement that gives the
lessee temporary use of property.

_____ 10. A solvency measure that indicates the
percentage of assets provided by creditors.

_____ 11. Occurs when the contractual interest rate is
less than the market interest rate.

_____ a12. Produces
a periodic interest expense that is the same amount each interest period.

SHORT-ANSWER ESSAY QUESTIONS

S-A E 219

Bonds are frequently issued at amounts greater or
less than face value. Describe how the market interest rate, relative to the
contractual interest rate, affects the selling price of bonds. Also explain the
rationale for requiring an investor to pay accrued interest when a bond is
purchased between interest payment dates.


S-A E 220

A company desires to replace its current plant
equipment with new equipment that costs $10,000,000. One possibility would be
for the company to issue $10,000,000 of bonds and use the proceeds to purchase
the equipment. Another possibility is to acquire the use of the equipment by
signing a long-term capital lease with a leasing company. Describe and compare
the financial statement effects of these two alternatives.

S-A E 221

When a bond sells at a discount, what
is probably true about the market interest rate versus the stated interest
rate? Discuss.

.

S-A E 222

Bonds may
be redeemed (retired) before maturity by the issuing corporation. Explain why a
company would decide to retire bonds before maturity and the necessary steps to
record the redemption.


S-A E 223

Kim Estes and Jeff Malone are discussing how the
market price of a bond is determined. Kim believes that the market price of a
bond is solely a function of the amount of the principal payment at the end of
the term of a bond. Is she right? Discuss.

S-A E 224

Megan Stone is discussing the advantages of the
effective-interest method of bond amortization with her accounting staff. What
do you think Megan is saying?

S-A E 225 (Ethics)

Jeff Tanner, a 26-year-old entrepreneur, started
Bells & Whistles (B&W), Inc., a firm that specializes in
top-of-the-line add-ons for computer systems. The firm has a capital structure
of approximately 60% debt. This was necessitated by the rapid growth of
B&W, and Mr. Tanner’s lack of personal funds to sustain the growth. The 60%
debt amount is quite high for firms in this field, and in fact slightly exceeds
the debt covenants negotiated with the bank. B&W recently received notice
that the bank considers the company’s debt to be excessive, and that some
accelerated repayment schedule will be adopted. The notice came at a
particularly bad time. B&W is in the midst of a major upgrade of its own
computer system. The hardware was to have been purchased outright, financed by
the seller, Mike Kerr, longtime friend of Mr. Tanner.

Mr. Kerr really needs Mr. Tanner’s business. Both
believe in the long-term strength of B&W. He therefore suggests to Mr.
Tanner that the equipment be purchased by means of a short-term lease. Mr.
Tanner could renew the lease annually.

Required:

1. Is Mr. Kerr’s suggestion
ethical? Explain.

2. If Mr. Tanner accepts the
suggestion, is he behaving ethically? Explain.

Ans:
N/A,


S-A E 226 (Communication)

Susan Kline works for Trend Press, a fairly large
book publishing firm. Her best friend and rival, Lisa, works for Silver Books,
a smaller publisher. Both companies issue $100,000 in bonds on July 1. Trend’s
bonds were issued at a discount, while Silver’s were issued at a premium. Lisa
sent Susan a fax the next day. She told Susan that it was obvious who the
better publisher was—the market had shown its preference! She reminded Susan
again of her recent increase in salary as further proof of the superiority of
Silver Books.

Required:

Draft a short
note for Susan to send to Lisa. Explain how such a result could occur.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

1. Performance evaluation in most firms is
applied at:

A.
Many different levels from top
management down to individual production and sales employees.

B.
All levels of
production, but only top levels of sales.

C.
Top and mid-management
levels only.

D.
Lower and mid-management
levels only.

E.
The mid-management level
only.

2. Risk aversion is by:

A.
Lack of a strategic emphasis in decision
making.

B.
Use of non-strategic
performance measurement systems.

C.
Presence of uncertainty
in a manager’s environment.

D.
A manager’s inability to
deal with stress.

3. 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:

A.
Performance measurement.

B.
Employee inspection.

C.
Goal congruence.

D.
Managerial evaluation.

E.
Management control.

4. Operational control has a
management-by-exception approach in contrast to management control, which is
more consistent with:

A.
The management-by-incentives approach.

B.
The
management-by-objectives approach.

C.
The “hands
off” approach.

D.
A non-quantitative set
of measures.

E.
A non-qualitative set of
measures.

5. A
strategic business unit (SBU) consists of a well-defined set of controllable
operating activities over/about which the SBU manager is:

A.
Knowledgeable.

B.
Responsible for
strategy.

C.
Responsible for strategy
and execution.

D.
Responsible for
strategy, execution, and performance.

6. The objectives of management control of the
manager include:

A.
Cost, quality, and functionality.

B.
Management by
objectives.

C.
Management by exception.

D.
Motivation, incentive
and fairness.

E.
Identification, response
and performance.

7. The principal-agent economic model applied to
employment contracts deals primarily with the two management performance
aspects of:

A.
Rights and duties.

B.
Uncertainty and lack of
observability.

C.
Performance and reward.

D.
Controllability and
responsibility.

E.
Risk and motivation.

8. The “risk-averse” manager will be
improperly biased to:

A.
Seek out decisions with uncertain
outcomes.

B.
Make risky decisions.

C.
Avoid decisions with
uncertain outcomes.

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

E.
Use resources beyond
his/her control.

9. In
properly developing formal systems at the team level that will have the desired
impact on employees’ performance, the management accountant should recognize
any existing informal systems and:

A.
Make plans to eliminate these informal
systems.

B.
Simply formalize them
into the system being developed.

C.
Try to eliminate them
prior to system development.

D.
Not let these
“culture” aspects affect system development.

E.
Try to capture valued
“culture” aspects in the formal system.

10.
The common factor among control systems in hiring practices, promotion
policies, and strategic performance measurement is:

A.
Management sets expectations for desired
employee performance.

B.
Employee-determined
expectations for desired employee performance.

.
Coordination of activities.

D.
Communication of
results.

11.
Among the benefits of centralized management in a firm is (are):

A.
Effective goal congruence.

B.
Utilization of top
management expertise.

C.
Effective participation
by all levels of management.

D.
A higher level of
motivation for divisional managers.

12.
The benefits of decentralized management in a firm include all the following except:

A.
Ability of SBU managers to use their
local knowledge effectively.

B.
Ability of SBU managers
to make more timely decisions.

C.
Motivation provided by
the freedom and responsibility of a decentralized environment.

D.
Improved coordination
among divisional managers.

13.
The need for coordination between the production and the selling function will
impact the choice of:

A.
Profit, cost or revenue center.

B.
Manager for the firm.

C.
Formal or informal
control systems.

D.
Profitability goal for
the firm.

E.
Control measures to
prevent fraud.

14.
By not distinguishing between direct and indirect costs in their performance
reporting, many companies:

A.
Generate more useful control potential
for managers.

B.
Can cause poor
decision-making.

C.
Focus on long-term
results.

D.
Focus on short-term
results.

E.
Clearly distinguish
between controllable and non-controllable costs.

15.
As a strategic issue, “budget slack” could represent a:

A.
Very minor issue in most firms.

B.
Self-correcting problem
over several operating periods.

C.
Problem only in a
decentralized management environment.

D.
Lower overall level of
expected performance than is achievable.

E.
Significant increase in
the relative risk aversion of managers.

16.
“Outsourcing” a cost center is often done to:

A.
Reduce cost and obtain strategic focus.

B.
Increase control over a
strategic resource.

C.
Reduce the firm’s
contractual relationships.

D.
Shift costs within
remaining cost centers.

17. Cost
allocation of service department costs to production departments make the
evaluation and control processes in the production departments:

A.
Simpler.

B.
More complex.

C.
Forthright and fair.

D.
Less efficient.

E.
Counter productive.

18.
From a strategic standpoint, profit centers tend to:

A.
Free the center manager from concerns
about markets.

B.
Place more cost emphasis
on rush orders.

C.
Provide incentive for
coordination among managers of different units.

D.
Focus managers on cost
control rather than revenue generation.

E.
All of the above answers
are correct.

19.
The contribution by profit center (CPU) expands the contribution margin income
statement by distinguishing:

A.
Variable and fixed costs.

B.
Short-term and long-term
fixed costs.

C.
Controllable and
non-controllable fixed costs.

D.
Noncontrollable and
untraceable fixed costs.

E.
Net income and
contribution margin.

20.
The main concept of the
balanced scorecard is that, to evaluate the SBU’s progress to strategic
success, a business must use all of the following except:

A.
Both financial and non-financial
measures.

B.
Value chain analysis.

C.
Attend to customer
satisfaction needs.

D.
Multiple measures for a
comprehensive evaluation.

21.
In a non-profit organization, you are more likely to see:

.
Cost centers.

B.
Revenue centers.

C.
Profit centers.

D.
Investment centers.

22.
The evaluation by upper-level managers of the performance of mid-level managers
is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

23.
The evaluation of operating level employees by mid-level managers is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

24.
The manager acting independently in such a way as to simultaneously achieve top
management’s objectives is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

25.
A model that has been
used to better understand the key elements that contracts must have in order to
achieve the desired objectives is the:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

26.
Order-filling costs:

A.
Include samples.

B.
Cannot often be
effectively managed as an engineered-cost center.

C.
Usually have a
relatively clear relationship to sales volume.

D.
Include commissions.

27.
Controllable margin is determined by subtracting short-term controllable fixed
costs from the:

A.
Long-term controllable fixed cost.

B.
Contribution margin.

C.
Variable costs.

D.
Fixed costs.

E.
Variable costs and fixed
costs.

28.
An employment contract
is an agreement between the manager and top management designed to provide
incentives for the manager to act:

A.
Independently to achieve top
management’s objectives.

B.
Consistently with that
of other managers.

C.
Independently to achieve
the manager’s objectives.

D.
Independently to achieve
the customer’s objectives.

29.
The least common type of SBU in a retail firm is the:

A.
Profit center.

B.
Cost center.

C.
Revenue center.

D.
Investment center.

30.
Which one of the following is a drawback of decentralization?

A.
Uses local knowledge only.

B.
May hinder coordination
among independent SBUs.

C.
Provides better
management control.

D.
Provides goal
congruence.

E.
Offers an efficient
method of performance evaluation.

31.
Production or support SBUs within the firm that have the goal of providing the
best quality product or service at the lowest cost are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

.
Investment centers.

32.
SBUs that generate revenues and incur the major portion of the cost for
producing those revenues are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

E.
Investment centers.

33.
SBUs that include the assets they employ as well as profits in the performance
evaluation are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

E.
Investment centers.

34.
The replacing of controllable costs with non-controllable costs by a department
is:

A.
Budget slack.

B.
Cost shifting.

C.
Outsourcing.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

35.
For production and support departments, a method of implementing cost centers
that is input-oriented is the:

A.
Budget slack.

B.
Cost shifting approach.

C.
Outsourcing approach.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

36.
For production and support departments, a method of implementing cost centers
that is output-oriented is the:

A.
Budget slack method.

B.
Cost shifting approach.

C.
Outsourcing approach.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

37.
Expenditures of revenue centers usually include:

A.
Order-purchasing costs.

B.
Order-getting costs.

C.
Order-producing costs.

D.
Order-scheduling costs.

E.
Order-delivering costs.

38.
The balanced scorecard measures the SBU’s performance in all of the following
areas except:

A.
Learning and growth.

B.
Managerial performance.

C.
Customer satisfaction.

D.
Internal business
processes.

E.
Accounting and tax
compliance.

39. Bilbo
owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each
restaurant was treated as a profit center for performance evaluation purposes.
Although the restaurants had separate kitchens, they shared a central baking
facility. The principal costs of the baking area included materials, supplies,
labor, and depreciation and maintenance on the equipment. Bilbo allocated the
monthly costs of the baking facility to the two restaurants based on the number
of tables served in each restaurant during the month using dual allocation and
equal sharing of fixed costs. In April, the costs were $40,000, of which
$16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut
served 3,600 tables.

The amount of joint cost
that should have been allocated to the Pork Palace in April is calculated to
be:

A.
$8,000.

B.
$10,800.

C.
$13,200.

D.
$18,800.

E.
$21,200.

40. Bilbo
owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each
restaurant was treated as a profit center for performance evaluation purposes.
Although the restaurants had separate kitchens, they shared a central baking
facility. The principal costs of the baking area included materials, supplies,
labor, and depreciation and maintenance on the equipment. Bilbo allocated the
monthly costs of the baking facility to the two restaurants based on the number
of tables served in each restaurant during the month using dual allocation and
equal sharing of fixed costs. In April, the costs were $40,000, of which
$16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut
served 3,600 tables.

The amount of the joint
cost that should have been allocated to the Chicken Hut in April is calculated
to be:

A.
$8,000.

B.
$10,800.

C.
$13,200.

.
$18,800.

E.
$21,200.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

41.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Kentucky research
facility is calculated to be:

A.
$24,000,000.

B.
$18,000,000.

C.
$9,000,000.

D.
$14,000,000.

E.
$26,000,000.

42.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Arizona research
facility is calculated to be:

A.
$25,000,000.

B.
$31,000,000.

C.
$44,000,000.

D.
$19,000,000.

E.
$36,000,000.

43.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Illinois research
facility is calculated to be:

A.
$17,000,000.

B.
$33,000,000.

C.
$14,000,000.

D.
$28,000,000.

E.
$21,000,000.

44.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Lower School is
calculated to be:

A.
$240,000.

B.
$320,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

45.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Middle School is
calculated to be:

A.
$240,000.

B.
$320,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

46.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Upper School is
calculated to be:

A.
$240,000.

B.
$360,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

47.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Full costing
operating income for 2009 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

48.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Full costing
operating income for 2010 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

49.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Variable costing
operating income for 2009 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

50.Pane
Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit.
Budgeted production in both 2009 and 2010 was 3,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable
costing operating income for 2010 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

51.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Full costing
operating income for 2009 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

52.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Full costing
operating income for 2010 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

53.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable costing
operating income for 2009 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

54.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable costing
operating income for 2010 is calculated to be:

A.
$149.

.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

55.
The value stream income statement can be compared to:

A.
Value chain analysis.

B.
The contribution income
statement.

C.
A streamlined production
process.

D.
A streamlined accounting
system.

56.
The six steps Ittner and
Larcker propose for maximizing the value of nonfinancial measures when using a
balanced scorecard include all the following except:

A.
Continually refine the model.

B.
Assess outcomes.

C.
Gather data.

D.
Base actions on the
data.

E.
Base actions on the
findings.

57.
The balanced scorecard is particularly important in difficult economic times
because:

A.
Financial measures are even more
important.

B.
Nonfinancial measures
are even more important.

C.
Financial measures may
be distorted.

D.
Nonfinancial measures
may be distorted.

58.
The value stream income statement provides the following information not usually
contained in the contribution income statement:

A.
Contribution by CPC.

B.
Contribution by profit
center.

C.
A separate accounting
for the effect of inventory change on profit.

D.
A separate accounting
for the effect of productivity change on profit.

59. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Sales for 2010 are calculated
to be:

A.
$9,750,000.

B.
$12,675,000.

C.
$13,000,000.

D.
$13,900,000.

E.
$20,000,000.

60. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Full costing operating income
for 2010 is calculated to be:

A.
$1,525,000.

B.
$1,850,000.

C.
$1,935,000.

D.
$2,260,000.

E.
$2,750,000.

61. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Variable costing operating
income for 2010 is calculated to be:

A.
$1,525,000.

B.
$1,850,000.

C.
$1,935,000.

D.
$2,260,000.

E.
$2,750,000.

62.
Profit center income statements are most meaningful to managers when they are
prepared:

A.
On a full cost basis.

B.
On a cost behavior
basis.

C.
On a cash basis.

D.
In a single-step format.

E.
In a multiple-step
format.

63. A
unit of an organization is referred to as a profit center if it has:

A.
Authority to make decisions affecting
the major determinants of profit, including the power to choose its markets and
sources of supply.

B.
Authority to make
decisions affecting the major determinants of profit, including the power to
choose its markets and sources of supply and significant control over the
amount of invested capital.

C.
Authority to make
decisions over the most significant costs of operations, including the power to
choose the sources of supply.

D.
Authority to provide
specialized support to other units within the organization.

E.
Responsibility for
combining material, labor, and other factors of production into a final output.

.
A unit of an organization is referred to as an investment center if it has:

A.
Authority to make decisions affecting
the major determinants of profit, including the power to choose its markets and
sources of supply.

B. Authority
to make decisions affecting the major determinants of profit, including the
power to choose its markets and sources of supply and significant control over
the amount of invested capital.

C.
Authority to make
decisions over the most significant costs of operations, including the power to
choose the sources of supply.

D.
Authority to provide
specialized support to other units within the organization.

E.
Responsibility for
developing markets for and selling the output of the organization.

65.
Of most relevance in deciding how or which costs should be assigned to an SBU
is the degree of:

A.
Avoidability.

B.
Causality.

C.
Controllability.

D.
Reliability.

66. A
significant problem in comparing profitability measures among companies is the:

A.
Lack of general agreement over which
profitability measure is best.

B.
Differences in the size
of the companies.

C.
Differences in the
accounting methods used by the companies.

D.
Differences in the
dividend policies of the companies.

E.
Effect of interest rates
on net income.

67.
The most important objective of a strategic performance measurement system is:

A.
Budgeting.

B.
Motivation.

C.
Authority.

D.
Variances.

E.
Pricing.

68.
What costs are treated as product costs under variable costing?

A.
Only variable costs.

B.
Only variable production
costs.

C.
All variable costs.

D.
All variable and fixed
manufacturing costs.

69.
Inventory under the variable costing method includes:

A.
Direct materials cost, direct labor
cost, but no factory overhead cost.

B.
Direct materials cost,
direct labor cost, and variable factory overhead cost.

C.
Prime cost but not
conversion cost.

D.
Prime cost and all
conversion cost.

70.
In an income statement prepared using the variable costing method, which of the
following terms should appear?

A.
A

B.
B

C.
C

D.
D

71.
Other things being equal, income computed by the variable costing method will
exceed that computed by the full costing method if:

A.
Units produced exceed units sold.

B.
Units sold exceed units
produced.

C.
Fixed manufacturing
costs increase.

D.
Variable manufacturing
costs increase.

72. Home
Products Inc has failed to reach its planned activity level during its first
two years of operation. The following table shows the relationship between
units produced, sales, and normal activity for these years and the projected
relationship for Year 3. All prices and costs have remained the same for the
last two years and are expected to do so in Year 3. Income has been positive in
both Year 1 and Year 2.

Because Home
Products uses a full costing system, one would predict operating income for
Year 3 to be:

A.
Greater than operating income under
variable costing.

B.
Less than year 2.

.
The same as operating income under
variable costing.

D.
Less than the operating
income under variable costing.

73.
A company’s operating
income was $70,000 using variable costing for a given period. Beginning and
ending inventories for that period were 45,000 units and 50,000 units,
respectively. Ignoring income taxes, if the fixed overhead application rate was
$8.00 per unit, what would operating income have been using full costing?

A.
$30,000.

B.
$140,000.

C.
$110,000.

D.
$100,000.

E.
Cannot be determined
from the information given.

74. A
company had income of $50,000 using variable costing for a given period.
Beginning and ending inventories for that period were 80,000 units and 90,000
units, respectively. If the fixed overhead application rate were $10.00 per
unit, what would operating income have been using full costing?

A.
$(50,000).

B.
$170,000.

C.
$150,000.

D.
$0.

E.
Cannot be determined
from the information given.

75.
The balanced scorecard
is widely used in performance evaluation and management control. In which
regions around the world is it most and least, respectively, commonly used?

A.
Europe, Asia

B.
U.S and Canada, Africa

C.
U.S. and Canada, South
and Central America

D.
South and Central
America, Europe

76.
Operating income reported under full costing will exceed operating income
reported under variable costing for a given period if:

A.
Production equals sales for that period.

B.
Production exceeds sales
for that period.

C.
Sales exceed production
for that period.

D.
The variable overhead
exceeds the fixed overhead.

77. A
company’s operating income recently increased by 30% while its inventory
increased in a given year. Which of the following accounting methods would be
most likely to produce the favorable income results?

A.
Full costing.

B.
Direct costing.

C.
Variable costing.

D.
Standard direct costing.

78.
During January, Lang, Inc. produced 10,000 units of product with costs as
follows:

What is Lang’s
unit cost for January, calculated on the variable costing basis?

A.
$6.20.

B.
$7.20.

C.
$7.50.

D.
$8.50.

E.
$9.50.

79.
In the principal-agent model, the manager is modeled as having all of the
following elements except:

A.
Risk aversion

B.
Outcomes of actions

C.
Provides effort

D.
Decision Making

80.
During October, Rover Industries produced 35,000 units of product with costs as
follows:

What is Rover’s
unit cost for October, calculated on the variable costing basis?

A.
$3.25.

B.
$3.75.

C.
$4.00.

.
$4.50.

E.
$5.00.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

BE 170

Layton Inc. is considering two alternatives to
finance its construction of a new $5 million plant.

(a) Issuance of 500,000
shares of common stock at the market price of $10 per share.

(b) Issuance of $5 million, 9%
bonds at par.

Instructions

Complete the following table.

Issue
Stock
Issue Bonds

Income before interest and taxes $2,000,000 $2,000,000

Interest expense from bonds _________ _________

Income before income taxes $ $

Income tax expense (30%) _________ _________

Net income $________ $________

Outstanding shares _________ 700,000

Earnings per share _________ _________

Outstanding shares (b) 1,200,000 700,000

Earnings per share (a)÷ (b) $1.17
$1.55

BE 171

On January 1, 2012, Morris Enterprises
issued 9%, 5-year bonds with a face amount of $800,000 at par. Interest is payable semiannually on June 30
and December 31.

Instructions

Prepare the entries to record the
issuance of the bonds and the first semiannual interest payment.


BE 172

On January 1, 2012,
Bose Company issued bonds with a face value of $800,000. The bonds carry a
stated interest of 7% payable each January 1 and July 1.

Instructions

a. Prepare
the journal entry for the issuance assuming the bonds are issued at 95.

b. Prepare
the journal entry for the issuance assuming the bonds are issued at 105.

BE 173

On July 1, 2012, Frog Corporation
issued $600,000, 8%, 10-year bonds at face value. Interest is payable
semiannually on January 1 and July 1. Frog Corporation has a calendar year end.

Instructions

Prepare all entries related to the bond issue for
2012.


BE 174

On January 1, 2012, Zappa Enterprises sold 8%, 20-year bonds with a
face amount of $1,000,000 for $950,000.
Interest is payable semiannually on July 1 and January 1.

Instructions

Calculate the carrying value of the bond at
December 31, 2012 and 2013.

BE 175

Queen Company issued bonds with a face amount of
$1,600,000 in 2007. As of January 1, 2012, the balance in Discount on Bonds
Payable is $4,800. At that time, Queen redeemed
the bonds at 102.

Instructions

Assuming that
no interest is payable, make the entry to record the redemption.

BE 176

Roxy Inc. issues a $1,300,000, 10%, 10-year mortgage
note on December 31, 2012, to obtain financing for a new building. The terms
provide for semiannual installment payments of $106,291.

Instructions

Prepare the entry to record the mortgage loan on December 31, 2012, and
the first installment payment.

………………………………………………………………………….. 106,291


BE 177

Fresh Corporation reports the
following selected financial statement information at December 31, 2012:

Total Assets $120,000

Total Liabilities 75,000

Net Income 20,000

Interest Revenue 1,600

Interest Expense 800

Income Tax Expense 400

Instructions

Calculate the
debt to total assets and times interest earned ratios.

BE 178

On January 1, 2012, Tape Enterprises issued 9%,
10-year bonds with a face amount of $900,000 at 96. Interest is payable
semiannually on June 30 and December 31.
The bonds were issued for an effective interest rate of 10%.

Instructions

Prepare the entries to record the
issuance of the bonds and the first semiannual interest payment assuming that
the company uses effective-interest amortization.

BE 179

On January 1, 2012, Hogan Enterprises
issued 8%, 20-year bonds with a face amount of $5,000,000 at 101. Interest is payable semiannually on June 30
and December 31.

Instructions

Prepare the entries to record the
issuance of the bonds and the first semiannual interest payment assuming that
the company uses straight-line amortization.

EXERCISES

Ex. 180

Sophia Company is
considering two alternatives to finance its purchase of a new $4,000,000 office
building.

(a) Issue 400,000 shares of common stock at $10
per share.

(b) Issue 8%, 10-year bonds at par ($4,000,000).

Income before
interest and taxes is expected to be $3,000,000. The company has a 30% tax rate
and has 600,000 shares of common stock outstanding prior to the new financing.

Instructions

Calculate each of the following for each alternative:

(1) Net income.

(2) Earnings per share.

Ex. 181

The board of directors of Moore Corporation is
considering two plans for financing the purchase of new plant equipment. Plan
#1 would require the issuance of $5,000,000, 6%, 20-year bonds at face value.
Plan #2 would require the issuance of 100,000 shares of $5 par value common
stock which is selling for $40 per share on the open market. Moore Corporation
currently has 100,000 shares of common stock outstanding and the income tax
rate is expected to be 35%. Assume that income before interest and income taxes
is expected to be $500,000 if the new factory equipment is purchased.

Ex. 181 (Cont.)

Instructions

Prepare a schedule which shows the
expected net income after taxes and the earnings per share on common stock
under each of the plans that the board of directors is considering.

Ex. 182

Slotkin Health is considering two alternatives
for the financing of some high technology medical equipment. These two
alternatives are:

1. Issue 50,000 shares of $10 par
value common stock at $50 per share.

2. Issue $3,000,000, 10%, 10-year
bonds at par.

It is estimated that the company will earn
$900,000 before interest and taxes as a result of acquiring the medical
equipment. The company has an estimated tax rate of 40% and has 80,000 shares
of common stock outstanding prior to the new financing.

Instructions

Determine the
effect on net income and earnings per share for these two methods of financing.

Ex. 183

Three plans for financing a $20,000,000
corporation are under consideration by its organizers. Under each of the
following plans, the securities will be issued at their par or face amount and
the income tax rate is estimated at 30%.

Plan 1 Plan 2 Plan 3

9% Bonds — — $10,000,000

6% Preferred Stock, $100 par — $10,000,000 5,000,000

Common Stock, $10 par $20,000,000
10,000,000
5,000,000

Total $20,000,000 $20,000,000 $20,000,000

It is
estimated that income before interest and taxes will be $5,000,000.

Instructions

Determine for each plan, the expected net income
and the earnings per share on common stock.

Ex. 184

Korean Corporation issued $2 million, 10-year, 6% bonds
on January 1, 2012.

Instructions

Prepare the entry to record the sale of these bonds,
assuming they were issued at

(a) 97.

(b) 104.

Ex. 185

On January 1, 2012, Lost Corporation issued $800,000,
8%, 10-year bonds at face value. Interest is payable semiannually on July 1 and
January 1. Lost Corporation has a calendar year end.

Instructions

Prepare all
entries related to the bond issue for 2012.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

Ex. 186

On January 1, Focus Corporation issued $600,000, 12%,
5-year bonds at face value. Interest is payable semiannually on July 1 and
January 1.

Instructions

Prepare journal entries to record the

(a) Issuance of the bonds.

(b) Payment of interest on July 1, assuming no
previous accrual of interest.

(c) Accrual of interest on December 31.

Ex. 187

The following section is taken from Blue Corp’s
balance sheet at December 31, 2011.

Current
liabilities

Interest
Payable…………………………………………………… $ 90,000

Long-term
liabilities

Bonds
Payable, 9%, due January 1, 2016 ……………… 2,000,000

Interest is payable semiannually on
January 1 and July 1. The bonds are callable on any interest date.


Ex. 187 (Cont.)

Instructions

(a) Journalize the payment of the
bond interest on January 1, 2012.

(b) Assume that on January 1, 2010, after
paying interest, Blue calls bonds having a face value of $800,000. The call
price is 106. Record the redemption of the bonds.

(c) Prepare the entry to record the
payment of interest on July 1, 2012, assuming no previous accrual of interest
on the remaining bonds.

Ex. 188

Niebuhr Company issued$500,000 of bonds on January 1, 2012.

Instructions

(a)
Prepare
the journal entry to record the retirement of the bonds at maturity, assuming
the bonds were issued at 100.

(b)
Prepare
the journal entry to record the retirement of the bonds before maturity at 97.
Assume the balance in Premium on Bonds Payable is $5,000.

(c)
Prepare
the journal entry to record the conversion of the bonds into 15,000 shares of
$10 par value common stock. Assume the bonds were issued at par.

20,000


Solution 188 (Cont.)

Ex. 189

Casey Company retired $500,000 face value, 9% bonds on
June 30, 2012 at 96. The carrying value of the bonds at the redemption date was
$508,000.

Instructions

Prepare the journal entry to record the redemption of the
bonds.

Ex. 190

Presented
below are three independent situations:

(a) Strike
Corporation purchased $350,000 of its bonds on June 30, 2012, at 102 and
immediately retired them. The carrying value of the bonds on the retirement
date was $339,500. The bonds pay semiannual interest and the interest payment
due on June 30, 2012, has been made and recorded.

(b) Worton,
Inc. purchased $400,000 of its bonds at 97 on June 30, 2012, and immediately
retired them. The carrying value of the bonds on the retirement date was
$393,000. The bonds pay semiannual interest and the interest payment due on
June 30, 2012, has been made and recorded.

(c) Mountain
Company has $80,000, 10%, 12-year convertible bonds outstanding. These bonds
were sold at face value and pay semiannual interest on June 30 and December 31
of each year. The bonds are convertible into 40 shares of Mountain $5 par value
common stock for each $1,000 par value bond. On December 31, 2012, after the
bond interest has been paid, $20,000 par value of bonds were converted. The
market value of Mountain’s common stock was $38 per share on December 31, 2012.

Instructions

For each of the independent situations, prepare
the journal entry to record the retirement or conversion of the bonds.


Ex. 191

Douglas Company
issued a $3,500,000, 10%, 10-year mortgage note payable to finance the
construction of a building at December 31, 2012. The terms provide for
semiannual installment payments of $200,608.

Instructions

Prepare the entry to record:

(a) the mortgage loan on December 31, 2012.

(b) the first installment payment.

Ex. 192

Adams Corporation issues a $4,500,000, 12%,
20-year mortgage note payable on December 31, 2012, to obtain needed financing
for the construction of a building addition. The terms provide for semiannual
installment payments of $309,409 on June 30 and December 31.

Ex. 192 (Cont.)

Instructions

(a) Prepare
the journal entries to record the mortgage loan on December 31, 2012, and the
first installment payment.

(b) Will
the amount of principal reduction in the second installment payment be more or
less than with the first installment payment?

Ex. 193

Lucky Company borrowed $750,000 on January
1, 2012, by issuing $800,000, 8% mortgage note payable. The terms call for
semiannual installment payments of $60,000 on June 30 and December 31.

Instructions

(a) Prepare
the journal entries to record the mortgage loan and the first two installment
payments.

(b) Indicate the amount of mortgage note payable
to be reported as a current liability and as a long-term liability at December
31, 2012.

)]

Long-term: $685,920 [($800,000 – $28,000
– $29,120) – $56,960]

Ex. 194

Presented below are three different aircraft
lease transactions that occurred for Northwest Airways in 2012. All the leases
start on January 1, 2012. In no case does Northwest receive title to the
aircraft during or at the end of the lease period; nor is there a bargain
purchase option.

Lessor

Oxford
Insurance
Goin Leasing Flagg Leasing

Type of property 747 Aircraft 727 Aircraft L-1011 Aircraft

Yearly rental $8,508,645 $6,357,660 $2,851,861

Lease term 15 years 15 years 20 years

Estimated economic life 25 years 25 years 25 years

Fair value of

leased
asset $79,200,000 $63,000,000 $32,000,000

Present value of lease

rental
payments $72,000,000 $54,000,000 $28,000,000

Instructions

(a) Which of
the above leases are operating leases and which are capital leases? Explain
your answer.

(b) How should the lease transaction with Oxford Insurance
be recorded in 2012?

(c) How should the lease transaction with Goin Leasing
be recorded in 2012?

Ex. 195

Echo Corporation
entered into the following transactions:

1. On
January 1, 2012 Grant Car Rental leased a car to Echo Corporation for one year.
Terms of the operating lease call for monthly payments of $650.

2. On
January 1, 2012, Echo Corporation entered into an agreement to lease 20
machines from Weiss Corporation. The terms of the lease agreement require an
initial payment of $500,000 and then three annual rental payments of $600,000
beginning on December 31, 2012. The present value of the three rental payments
is $1,492,108. The lease is a capital lease.

Instructions

Prepare the appropriate journal entries
to be made by Echo Corporation in January related to the lease transactions.

Ex. 196

On January 1, 2012,
Malcolm Inc. entered into an agreement to lease equipment from Finley
Corporation. The lease agreement requires five annual rental payments of
$90,000 beginning December 31, 2012. The present value of the rental payments
is $341,172. The lease transfers substantially all the benefits and risks of
ownership toMalcolm.

Instructions

Prepare the entry to record the lease agreement on the
books of Malcolm Inc. on January 1, 2012.

Ex. 197

The adjusted trial balance for Perry Corporation
at the end of 2012 contained the following accounts:

Bonds
payable, 10%…………………………………………………….. $700,000

Interest
payable…………………………………………………………… 20,000

Discount
on bonds payable…………………………………………… 40,000

Lease
liability……………………………………………………………….. 50,000

Mortgage
notes payable, 9%, due 2015………………………….. 90,000

Accounts
payable………………………………………………………… 120,000

aEx. 197 (Cont.)

Instructions

(a) Prepare the long-term liabilities section of
the balance sheet.

(b) Indicate the proper balance sheet
classification for the accounts listed above that do not belong in the
long-term liabilities section.

Ex. 198

Ranger Corporation reports the following amounts
in their 2012 financial statements:

At
December 31, 2012
For the
Year 2012

Total
assets $2,000,000

Total
liabilities 1,130,000

Total
stockholders’ equity ?

Interest
expense $20,000

Income
tax expense 130,000

Net
income 150,000

Instructions

(a) Compute the December 31, 2012, balance in
stockholders’ equity.

(b) Compute the debt to total assets ratio at
December 31, 2012.

(c) Compute
times interest earned for 2012.

aEx. 199

Boxer Corporation is issuing $600,000 of 8%, 5-year bonds when
potential bond investors want a return of 10%. Interest is payable
semiannually. The present value of 1 factors are 4%, .67556 and 5%, .61391. The
present value of an annuity factors are 4%, 8.1109 and 5%, 7.72173.

Instructions

Compute the market price (present
value) of the bonds.

aEx. 200

On January 1, 2012, Plank Corporation
issued $800,000, 9%, 5-year bonds for $769,112. The bonds were sold to yield an
effective-interest rate of 10%. Interest is paid semiannually on June 30 and
December 31. The company uses the effective-interest method of amortization.

Instructions

(a) Prepare a bond discount
amortization schedule which shows the amortization of discount for the first
two interest payment dates. (Round to the nearest dollar.)

(b) Prepare
the journal entries thatPlank Corporation would make on January 1, June 30, and December 31, 2012,
related to the bond issue.


aEx. 201

On June 30, 2012, Upton, Inc. sold $3,000,000
(face value) of bonds. The bonds are dated June 30, 2012, pay interest
semiannually on December 31 and June 30, and will mature on June 30, 2015. The
following schedule was prepared by the accountant for 2012.

Semi-Annual Interest
to Interest Unamortized Bond

Interest Period be Paid Expense Amortization
Amount
Carrying Value

$75,000 $2,925,000

1 $120,000 $131,625 $11,625 63,375 1,936,625

Instructions

On the basis of the above information, answer the
following questions. (Round your answer to the nearest dollar or percent.)

1. What
is the stated interest rate for this bond issue?

2. What
is the market interest rate for this bond issue?

3. What
was the selling price of the bonds as a percentage of the face value?

4. Prepare
the journal entry to record the sale of the bond issue on June 30, 2012.

5. Prepare
the journal entry to record the payment of interest and amortization on
December 31, 2012.

aEx. 202

On January 1, 2012, Sunrise Corporation issued
$4,000,000, 9%, 5-year bonds dated January 1, 2012, at 94. The bonds pay
semiannual interest on January 1 and July 1. The company uses the straight-line
method of amortization and has a calendar year end.

Instructions

Prepare all the journal entries that Sunrise
Corporation would make related to this bond issue through January 1, 2013. Be
sure to indicate the date on which the entries would be made.


aEx. 203

Venture Company issued $600,000, 10%, 20-year
bonds on January 1, 2012, at 103. Interest is payable semiannually on July 1
and January 1. Venture uses the straight-line method of amortization and has a
calendar year end.

Instructions

Prepare all
journal entries made in 2012 related to the bond issue.

aEx. 204

Magic Company issued $500,000, 10%, 10-year bonds
on December 31, 2012, for $460,000. Interest is payable semiannually on June 30
and December 31. Magic uses the straight-line method of amortization and has a
calendar year end.

Instructions

Prepare the
appropriate journal entries on

(a) December 31, 2012.

(b) June 30, 2013.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

a141. Presented here is a partial amortization
schedule for Roseland Company who sold $200,000, five year 10% bonds on January
1, 2012 for $208,000 and uses annual straight-line amortization.

BOND
AMORTIZATION SCHEDULE

Interest Period

Interest Paid

Interest Expense

Premium Amortization

Unamortized Premium

Bond Carrying Value

January 1, 2012

$8,000

$208,000

January 1, 2013

(i)

(ii)

(iii)

(iv)

(v)

Which of the following
amounts should be shown in cell (v)?

a. $209,600

b. $208,800

c. $206,400

d. $207,200

a142. On January 1, Health Corporation issues $3,000,000, 5-year, 12%
bonds at 96 with interest payable on July 1 and January 1. The entry on
December 31 to record accrued bond interest and the amortization of bond
discount using the straight-line method will include a

a. debit
to Interest Expense, $180,000.

b. debit
to Interest Expense, $360,000.

c. credit
to Discount on Bonds Payable, $12,000.

d. credit
to Discount on Bonds Payable, $24,000.

143. On January 1, 2012,
$2,000,000, 10-year, 10% bonds, were issued for $1,940,000. Interest is paid
annually on January 1. If the issuing corporation uses the straight-line method
to amortize discount on bonds payable, the monthly amortization amount is

a. $19,400.

b. $6,000.

c. $1,616.

d. $500.

144. A corporation issues $500,000, 10%, 5-year
bonds on January 1, 2012, for $479,000. Interest is paid annually on January 1.
If the corporation uses the straight-line method of amortization of bond
discount, the amount of bond interest expense to be recognized in December 31, 2012’s
adjusting entry is

a. $54,200.

b. $50,000.

c. $45,800.

d. $4,200.

a145. Stable Company issued
$600,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming
straight-line amortization, what is the total interest cost of the bonds?

a. $180,000

b. $192,000

c. $168,000

d. $174,000

a146. Pakota Company issued
$800,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming
straight-line amortization, what is the carrying value of the bonds after one
year?

a. $784,000

b. $785,600

c. $787,200

d. $790,400

a147. Trendy
Company issued $600,000 of 8%, 5-year bonds at 106. Assuming straight-line
amortization and annual interest payments, how much bond interest expense is
recorded on the next interest date?

a. $48,000

b. $55,200

c. $40,800

d. $7,200


a148. Dart
Company issued $600,000 of 8%, 5-year bonds at 106, with interest paid
annually. Assuming straight-line amortization, what is the carrying value of
the bonds after one year?

a. $636,000

b. $632,400

c. $628,800

d. $639,600

a149. On
January 1, 2012, $3,000,000, 5-year, 10% bonds, were issued for $2,910,000.
Interest is paid semiannually on January 1 and July 1. If the issuing
corporation uses the straight-line method to amortize discount on bonds
payable, the monthly amortization amount is

a. $17,424.

b. $18,000.

c. $1,452.

d. $1,500.

a150. A
corporation issues $500,000, 10%, 5-year bonds on January 1, 2012 for $479,000.
Interest is paid semiannually on January 1 and July 1. If the corporation uses
the straight- line method of amortization of bond discount, the amount of bond
interest expense to be recognized on July 1, 2012 is

a. $52,100.

b. $25,000.

c. $27,100.

d. $22,900.

a151. Over
the term of the bonds, the balance in the Discount on Bonds Payable account
will

a. fluctuate up and down if the market is
volatile.

b. decrease.

c. increase.

d. be unaffected until the bonds mature.

a152. Bond discount should be
amortized to comply with

a. the historical cost principle.

b. the matching principle.

c. the revenue recognition principle.

d. conservatism.

a153. If bonds have been issued at
a discount, over the life of the bonds, the

a. carrying value of the bonds will decrease.

b. carrying value of the bonds will increase.

c. interestexpense
will increase, if the discount is being
amortized on a straight-line basis.

d. unamortized discount will increase.

154. The market value
(present value) of a bond is a function of all of the following except the

a. dollar
amounts to be received.

b. length
of time until the amounts are received.

c. market
rate of interest.

d. length of time until the bond
is sold.

155. On the date of issue, Chudzick Corporation sells $5 million of5-year bonds at 97. The entry to record the sale will include the
following debits and credits:

Bonds
Payable
Discount
on Bonds Payable

a. $4,850,000 Cr. $0
Dr.

b. $5,000,000 Cr. $150,000
Dr.

c. $5,000,000 Cr. $1,250,000
Dr.

d. $5,000,000 Cr. $15,000
Dr.

156. The market rate of
interest for a bond issue which sells for more than its face value is

a. independent
of the interest rate stated on the bond.

b. higher
than the interest rate stated on the bond.

c. equal
to the interest rate stated on the bond.

d. less
than the interest rate stated on the bond.

157. When a company
retires bonds before maturity, the gain or loss on redemption is the difference
between the cash paid and the

a. carrying
value of the bonds.

b. face
value of the bonds.

c. original
selling price of the bonds.

d. maturity value of the bonds.

158. Aire Corporation
retires its bonds at 106 on January 1, following the payment of semi-annual
interest. The face value of the bonds is $600,000. The carrying value of the
bonds at the redemption date is $631,500. The entry to record the redemption
will include a

a. credit
of $31,500 to Loss on Bond Redemption.

b. debit
of $36,000 to Premium on Bonds Payable.

c. credit
of $5,250 to Gain on Bond Redemption.

d. debit
of $31,500 to Premium on Bonds Payable.

159. Each payment on a
mortgage note payable consists of

a. interest
on the original balance of the loan.

b. reduction
of loan principal only.

c. interest
on the original balance of the loan and reduction of loan principal.

d. interest on the unpaid balance
of the loan and reduction of loan principal.

160. Which of the
following is not a condition under
which the lessee must record the lease of an asset?

a. The
lease contains a bargain purchase option.

b. The
lease transfers ownership of the property to the lessee.

c. The
lease term is equal to 60% of the economic life of the lease property.

d. The
present value of the lease payments is 90% of the fair market value of the
leased property.

161. The lessee must
record a lease as an asset if the lease

a. transfers
ownership of the property to the lessor.

b. contains
a purchase option.

c. term
is 75% or more of the useful life of the leased property.

d. payments equal or exceed 90%
of the fair market value of the leased property.

162. Baker Electronics
Company issues a $1,000,000, 10%, 20-year mortgage note on January 1. The terms
provide for semiannual installment payments, exclusive of real estate taxes and
insurance, of $58,276. After the first installment payment, the principal
balance is

a. $1,000,000.

b. $983,034.

c. $991,724.

d. $779,125.

163. The
debt to total assets ratio is computed by dividing

a. long-term
liabilities by total assets.

b. total
debt by total assets.

c. total
assets by total debt.

d. total assets by long-term
liabilities.

a164. The
market price of a bond is the

a. present
value of its principal amount at maturity plus the present value of all future
interest payments.

b. principal
amount plus the present value of all future interest payments.

c. principal
amount plus all future interest payments.

d. present
value of its principal amount only.

165. Liabilities are generally presented in

a. alphabetical
order.

b. order
of liquidity.

c. maturity
date order.

d. order
of magnitude.

166. Preferred stock that is required to be
redeemed at a specific point in time in the future is reported

a. as
equity.

b. as
debt.

c. as
debt or equity depending on the circumstances.

d. in
a “mezzanine” area between debt and equity.

167. The effective-interest method for
amortization of bond discounts is required under

a. GAAP
only.

b. IFRS
only.

c. Both
GAAP and IFRS.

d. Neither
GAAP or IFRS.

169. Under IFRS, companies do not use a

a. discount
account.

b. premium
account.

c. bonds
payable account.

d. discount
or premium account.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

d. interest paid to bondholders will be a
function of the effective-interest rate on the date the bonds are issued.

a126. When
the effective-interest method of bond premium amortization is used, the

a. amount of premium amortized will get larger
with successive amortization.

b. carrying value of the bonds will increase
with successive amortization.

c. interest paid to bondholders will increase
after each interest payment date.

d. interest rate used to calculate interest
expense will be the contractual rate.

a127. Silk Company issued $500,000
of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an
effective annual rate of 8%. The effective-interest method of amortization is
to be used. Interest is paid annually.

What amount of discount
(to the nearest dollar) should be amortized for the first interest period?

a. $14,089

b. $6,815

c. $9,096

d. $4,548

a128. Silk Company issued $500,000
of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an
effective annual rate of 8%. The effective-interest method of amortization is
to be used. Interest is paid annually.

The journal entry on the
first interest payment date, to record the payment of interest and amortization
of discount will include a

a. debit to Interest Expense for $30,000.

b. credit to Cash for $34,548.

c. credit to Discount on Bonds Payable for $4,548.

d. debit to Interest Expense for $40,000.

a129. Silk Company issued $500,000
of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an
effective annual rate of 8%. The effective-interest method of amortization is
to be used.

How much bond interest
expense (to the nearest dollar) should be reported on the income statement for
the end of the first year?

a. $34,639

b. $34,548

c. $34,457

d. $30,000

a130. On January 1, Greene Inc. issued $5,000,000, 9% bonds for
$4,695,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Greene
uses the effective-interest method of amortizing bond discount. At the end of
the first year, Greene should report unamortized bond discount of

a. $274,500.

b. $285,500.

c. $258,050.

d. $255,000.

a131. On January 1, Dade Corporation issued $3,000,000, 14%, 5-year
bonds with interest payable on December 31. The bonds sold for $3,216,288. The
market rate of interest for these bonds was 12%. On the first interest date,
using the effective-interest method, the debit entry to Interest Expense is for

a. $360,000.

b. $376,473.

c. $385,955.

d. $420,000.

a132. On January 1, Jorge Inc. issued $3,000,000, 9% bonds for $2,817,000.
The market rate of interest for these bonds is 10%. Interest is payable
annually on December 31. Jorge uses the effective-interest method of amortizing
bond discount. At the end of the first year, Jorge should report unamortized
bond discount of:

a. $164,700.

b. $171,300.

c. $154,830.

d. $153,000.

a133. On January 1, Runner Corporation issued $2,000,000, 14%, 5-year
bonds with interest payable on July 1 and January 1. The bonds sold for $2,197,080.
The market rate of interest for these bonds was 12%. On the first interest
date, using the effective-interest method, the debit entry to Interest Expense
is for:

a. $120,000.

b. $153,796.

c. $131,825.

d. $263,650.

a134. Which of the following statements regarding the effective-interest
method of accounting for bonds characteristics is false?

a. GAAP
always requires use of the effective interest method.

b. The
amount of periodic interest expense decreases over the life of a discounted
bond issue when the effective-interest method is used.

c. Over
the life of the bonds, the carrying value increases for discounted bonds when
using the effective-interest method.

d. The
effective-interest method applies a constant percentage to the bond carrying
value to compute interest expense.

a135. On January 1, Gage Corporation issues $1,000,000, 5-year, 12% bonds
at 96 with interest payable on July 1 and January 1. The carrying value of the
bonds at the end of the third interest period is:

a. $972,000

b. $976,000

c. $944,000

d. $928,000

a136. If bonds are originally sold at a discount using the
straight-line amortization method:

a. Interest
expense in the earlier years of the bond’s life will be less than the interest
to be paid.

b. Interest
expense in the earlier years of the bond’s life will be the same as interest to
be paid.

c. Unamortized
discount is subtracted from the face value of the bond to determine its
carrying value.

d.
Unamortized discount is added
to the face value of the bond to determine its carrying value.


a137. Presented here is a partial amortization
schedule for Roseland Company who sold $200,000, five year 10% bonds on January
1, 2012 for $208,000 and uses annual straight-line amortization.

BOND
AMORTIZATION SCHEDULE

Interest Period

Interest Paid

Interest Expense

Premium Amortization

Unamortized Premium

Bond Carrying Value

January 1, 2012

$8,000

$208,000

January 1, 2013

(i)

(ii)

(iii)

(iv)

(v)

Which of the following
amounts should be shown in cell (i)?

a. $20,800

b. $21,600

c. $20,000

d. $4,000

a138. Presented here is a partial amortization
schedule for Roseland Company who sold $200,000, five year 10% bonds on January
1, 2012 for $208,000 and uses annual straight-line amortization.

BOND
AMORTIZATION SCHEDULE

Interest Period

Interest Paid

Interest Expense

Premium Amortization

Unamortized Premium

Bond Carrying Value

January 1, 2012

$8,000

$208,000

January 1, 2013

(i)

(ii)

(iii)

(iv)

(v)

Which of the following
amounts should be shown in cell (ii)?

a. $21,600

b. $18,400

c. $20,800

d. $19,200

a139. Presented here is a partial amortization
schedule for Roseland Company who sold $200,000, five year 10% bonds on January
1, 2012 for $212,000 and uses annual straight-line amortization.

BOND
AMORTIZATION SCHEDULE

Interest Period

Interest Paid

Interest Expense

Premium Amortization

Unamortized Premium

Bond Carrying Value

January 1, 2012

$12,000

$212,000

January 1, 2013

(i)

(ii)

(iii)

(iv)

(v)

Which of the following
amounts should be shown in cell (iii)?

a. $6,000

b. $12,000

c. $2,400

d. $1,200

a 140. Presented here is a partial amortization
schedule for Roseland Company who sold $200,000, five year 10% bonds on January
1, 2012 for $212,000 and uses annual straight-line amortization.

BOND
AMORTIZATION SCHEDULE

Interest Period

Interest Paid

Interest Expense

Premium Amortization

Unamortized Premium

Bond Carrying Value

January 1, 2012

$12,000

$212,000

January 1, 2013

(i)

(ii)

(iii)

(iv)

(v)

Which of the following
amounts should be shown in cell (iv)?

a. $10,800

b. $7,200

c. $14,400

d. $9,600

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

86. Beonce
Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1,
2011. The bonds had a face value of $200,000, pay interest semi-annually on
June 30 and December 31, and have a call price of 101. Beonce uses the
straight-line method of amortization.

Beonce Company decided to redeem the bonds on January 1, 2013. What amount of gain or loss would Beonce report
on its 2013 income statement?

a. $9,200
gain

b. $11,200
gain

c. $11,200
loss

d. $9,200
loss

87. Bargain Company has $1,600,000 of bonds
outstanding. The unamortized premium is $21,600. If the company redeemed the
bonds at 101, what would be the gain or loss on the redemption?

a. $5,600
gain

b. $5,600
loss

c. $16,000
gain

d. $16,000
loss

88. The current carrying value of Kane’s $900,000
face value bonds is $897,000. If the bonds are retired at 103, what would be
the amount Kane would pay its bondholders?

a. $897,000

b. $900,000

c. $906,000

d. $927,000

89. Lark Corporation retires its $800,000 face
value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the
redemption date is $829,960. The entry
to record the redemption will include a

a. credit
of $10,040 to Loss on Bond Redemption.

b. debit
of $10,040 to Loss on Bond Redemption.

c. credit
of $10,040 to Premium on Bonds Payable.

d. debit
of $40,000 to Premium on Bonds Payable.

90. A $600,000 bond was retired at 103 when the
carrying value of the bond was $622,000. The entry to record the retirement
would include a

a. gain on bond redemption of $18,000.

b. loss on bond redemption of $12,000.

c. loss on bond redemption of $18,000.

d. gain on bond redemption of $4,000.

91. If sixty $1,000 convertible bonds with a
carrying value of $69,000 are converted into 9,000 shares of $5 par value
common stock, the journal entry to record the conversion is

a. Bonds
Payable ……………………………………………………………. 69,000

Common
Stock ………………………………………………….. 69,000

b. Bonds
Payable ……………………………………………………………. 60,000

Premium
on Bonds Payable …………………………………………. 9,000

Common
Stock ………………………………………………….. 69,000

c. Bonds
Payable ……………………………………………………………. 60,000

Premium
on Bonds Payable …………………………………………. 9,000

Common
Stock ………………………………………………….. 45,000

Paid-in
Capital in Excess of Par ……………………………. 24,000

d. Bonds
Payable ……………………………………………………………. 69,000

Discount
on Bonds Payable …………………………………. 9,000

Common
Stock ………………………………………………….. 45,000

Paid-in
Capital in Excess of Par ……………………………. 15,000

92. A corporation
recognizes a gain or loss

a. only
when bonds are converted into common stock.

b. only
when bonds are redeemed before maturity.

c. when
bonds are redeemed at or before maturity.

d. when bonds are converted into
common stock and when they are redeemed before maturity.

93. If there is a loss on bonds redeemed early,
it is

a. debited directly to Retained Earnings.

b. reported as an “Other Expense” on
the income statement.

c. reported as an “Extraordinary Item”
on the income statement.

d. debited to Interest Expense, as a cost of
financing.

94. If bonds can be converted into common
stock,

a. they will sell at a lower price than
comparable bonds without a conversion feature.

b. they will carry a higher interest rate than
comparable bonds without the conversion feature.

c. they will be converted only if the issuer
calls them in for conversion.

d. the bondholder may benefit if the market
price of the common stock increases substantially.

95. When bonds are converted into common stock,

a. the market price of the stock on the date of
conversion is credited to the Common Stock account.

b. the market price of the bonds on the date of
conversion is credited to the Common Stock account.

c. the market price of the stock and the bonds
is ignored when recording the conversion.

d. gains or losses on the conversion are
recognized.

96. If bonds with a face value of $150,000 are
converted into common stock when the carrying value of the bonds is $135,000,
the entry to record the conversion will include a debit to

a. Bonds Payable for $150,000.

b. Bonds Payable for $135,000.

c. Discount on Bonds Payable for $15,000.

d. Bonds Payable equal to the market price of
the bonds on the date of conversion.

97. A $600,000 bond was retired at 98 when the
carrying value of the bond was $592,000. The entry to record the retirement
would include a

a. gain on bond redemption of $8,000.

b. loss on bond redemption of $8,000.

c. loss on bond redemption of $4,000.

d. gain on bond redemption of $4,000.

98. Thirty $1,000 bonds with a carrying value
of $39,600 are converted into 3,000 shares of $5 par value common stock. The
common stock had a market value of $9 per share on the date of conversion. The
entry to record the conversion is

a. Bonds
Payable ……………………………………………………………. 39,600

Common
Stock ………………………………………………….. 15,000

Paid-in
Capital in Excess of Par…………………………….. 24,600

b. Bonds
Payable ……………………………………………………………. 30,000

Premium
on Bonds Payable …………………………………………. 9,600

Common
Stock ………………………………………………….. 27,000

Paid-in
Capital in Excess of Par ……………………………. 12,600

c. Bonds
Payable ……………………………………………………………. 30,000

Premium
on Bonds Payable …………………………………………. 9,600

Common
Stock ………………………………………………….. 15,000

Paid-in
Capital in Excess of Par…………………………….. 24,600

d. Bonds
Payable ……………………………………………………………. 39,600

Common
Stock ………………………………………………….. 27,000

Paid-in
Capital in Excess of Par…………………………….. 12,600

99. Which one of the
following amounts increases each period when accounting for long-term notes
payable?

a. Cash
payment

b. Interest
expense

c. Principal
balance

d. Reduction of principal

100. In the balance sheet, mortgage notes
payable are reported as

a. a current liability only.

b. a long-term liability only.

c. both a current and a long-term liability.

d. a current liability except for the reduction
in principal amount.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$4.00

Description

39. Each
of the following is correct regarding bonds except
they are

a. a
form of interest-bearing notes payable.

b. attractive
to many investors.

c. issued
by corporations and governmental agencies.

d. sold in large denominations.

40. From the standpoint of the issuing company,
a disadvantage of using bonds as a means of long-term financing is that

a. bond interest is deductible for tax purposes.

b. interest must be paid on a periodic basis regardless
of earnings.

c. income to stockholders may increase as a
result of trading on the equity.

d. the bondholders do not have voting rights.

41. If a corporation issued $3,000,000 in bonds
which pay 10% annual interest, what is the annual net cash cost of this
borrowing if the income tax rate is 30%?

a. $3,000,000

b. $90,000

c. $300,000

d. $210,000

42. Secured bonds are bonds that

a. are in the possession of a bank.

b. are registered in the name of the owner.

c. have specific assets of the issuer pledged as
collateral.

d. have detachable interest coupons.

43. A legal document which summarizes the
rights and privileges of bondholders as well as the obligations and commitments
of the issuing company is called

a. a bond indenture.

b. a bond debenture.

c. trading on the equity.

d. a term bond.

44. Stockholders of a company may be reluctant
to finance expansion through issuing more equity because

a. leveraging with debt is always a better idea.

b. their earnings per share may decrease.

c. the price of the stock will automatically
decrease.

d. dividends must be paid on a periodic basis.

45. Which of the following is not an advantage of issuing bonds
instead of common stock?

a. Stockholder control is not affected.

b. Earnings per share on common stock may be
lower.

c. Income to common shareholders may increase.

d. Tax savings result.

46. Bonds that are secured by real estate are
termed

a. mortgage bonds.

b. serial bonds.

c. debentures.

d. bearer bonds.

47. Bonds that mature at a single specified future
date are called

a. coupon bonds.

b. term bonds.

c. serial bonds.

d. debentures.

48. Bonds that may be exchanged for common
stock at the option of the bondholders are called

a. options.

b. stock bonds.

c. convertible bonds.

d. callable bonds.

49. Bonds that are subject to retirement at a
stated dollar amount prior to maturity at the option of the issuer are called

a. callable bonds.

b. early retirement bonds.

c. options.

d. debentures.

50. Investors who receive checks in their names
for interest paid on bonds must hold

a. registered bonds.

b. coupon bonds.

c. bearer bonds.

d. direct bonds.

51. A bondholder that sends in a coupon to
receive interest payments must have a(n)

a. unsecured bond.

b. bearer bond.

c. mortgage bond.

d. serial bond.

52. Bonds that are not registered are

a. bearer bonds.

b. debentures.

c. registered bonds.

d. transportable bonds.

53. Bonds that are issued in the name of the
owner are

a. coupon bonds.

b. bearer bonds.

c. serial bonds.

d. registered bonds.

54. Corporations are granted the power to issue
bonds through

a. tax laws.

b. state laws.

c. federal security laws.

d. bond debentures.

55. The party who has the right to exercise a
call option on bonds is the

a. investment banker.

b. bondholder.

c. bearer.

d. issuer.

,

56. A major
disadvantage resulting from the use of bonds is that

a. earnings
per share may be lowered.

b. interest
must be paid on a periodic basis.

c. bondholders
have voting rights.

d. taxes may increase.

57. Bonds will always fall into all but which
one of the following categories?

a. Callable or convertible

b. Term or serial

c. Registered or bearer

d. Secured or unsecured

58. Which of the following statements
concerning bonds is not a true
statement?

a. Bonds are generally sold through an investment
company.

b. The bond indenture is prepared after the
bonds are printed.

c. The bond indenture and bond certificate are
separate documents.

d. The trustee keeps records of each bondholder.

59. A bond trustee does not

a. issue the bonds.

b. keep a record of each bondholder.

c. hold conditional title to pledged property.

d. maintain custody of unsold bonds.

60. The contractual interest rate is always
stated as a(n)

a. monthly rate.

b. daily rate.

c. semiannual rate.

d. annual rate.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

27. You hold a diversified portfolio consisting of a
$5,000 investment in each of 20 different common stocks. The portfolio beta is
equal to 1.12. You have decided to sell a lead mining stock (b = 1.00) at
$5,000 net and use the proceeds to buy a like amount of a steel company stock
(b = 2.00). What is the new beta of the portfolio?

a.
1.1139

b.
1.1725

c.
1.2311

d.
1.2927

e.
1.3573

____
28. A stock just paid a dividend of D0 = $1.75. The required
rate of return is rs = 12.0%, and the
constant growth rate is g = 4.0%. What is the current stock price?

a.
$20.56

b.
$21.09

c.
$21.63

d.
$22.18

e.
$22.75

____
29. If D0 = $2.75, g (which is constant) =
3%, and P0 = $36, what is the stock’s
expected total return for the coming year?

a.
9.82%

b.
10.07%

c.
10.33%

d.
10.60%

e.
10.87%

____
30. Gary Wells Inc. plans to issue perpetual preferred stock with an annual
dividend of $6.50 per share. If the required return on this preferred stock is
6.5%, at what price should the stock sell?

a.
$90.37

b.
$92.69

c.
$95.06

d.
$97.50

e.
$100.00

. Assume that you are a consultant to Broske
Inc., and you have been provided with the following data: D1 = $1.30; P0 = $42.50; and g =
7.00% (constant). What is the cost of equity from retained earnings based on
the DCF approach?

a.
9.08%

b.
9.56%

c.
10.06%

d.
10.56%

e.
11.09%

____
32. You are considering two mutually exclusive, equally risky, projects. Both
have IRRs that exceed the WACC that is used to evaluate them. Which of the
following statements is CORRECT? Assume that the projects have normal cash
flows, with one outflow followed by a series of inflows.

a.
If
the two projects’ NPV profiles do not cross in the upper right quadrant, then
there will be a sharp conflict as to which one should be selected.

b.
If
the cost of capital is greater than the crossover rate, then the IRR and the
NPV criteria will not result in a conflict between the projects. One project
will rank higher by both criteria.

c. If
the cost of capital is less than the crossover rate, then the IRR and the NPV
criteria will not result in a conflict between the projects. One project will
rank higher by both criteria.

d.
For
a conflict to exist between NPV and IRR, the initial investment cost of one
project must exceed the cost of the other.

e.
For
a conflict to exist between NPV and IRR, one project must have an increasing
stream of cash flows over time while the other has a decreasing stream. If both
sets of cash flows are increasing or decreasing, then it would be impossible
for a conflict to exist, even if one project is larger than the other.

____ 33. Aubey
Inc. is considering two projects that have the following cash flows:

Project 1

Project 2

Year

Cash Flow

Cash Flow

0

$2,000

$1,900

1

500

1,100

2

700

900

3

800

800

4

1,000

600

5

1,100

400

.jpg”>.jpg”>

At what cost of capital would the
two projects have the same net present value?

a.
4.73%

b.
5.85%

c.
6.70%

d.
7.50%

e.
8.20%

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

____
16. Suppose the U.S. Treasury announces plans to issue $50 billion of new
bonds. Assuming the announcement was not expected, what effect, other things
held constant, would that have on bond prices and interest rates?

a.
Prices
and interest rates would both rise.

b.
Prices
would rise and interest rates would decline.

c.
Prices
and interest rates would both decline.

d.
There
would be no changes in either prices or interest rates.

e.
Prices
would decline and interest rates would rise.

____
17. Last year Toto Corporation’s sales were $225 million. If sales grow at 6%
per year, how large (in millions) will they be 5 years later?

a.
$271.74

b.
$286.05

c.
$301.10

d.
$316.16

e.
$331.96

____ 18. You want to go to Europe
5 years from now, and you can save $3,100 per year, beginning immediately.
You plan to deposit the funds in a mutual fund which you expect to return 8.5%
per year. Under these conditions, how much will you have just after you make
the 5th deposit, 5 years from now?

a.
$17,986.82

b.
$18,933.49

c.
$19,929.99

d.
$20,926.49

e.
$21,972.82

____ 19. Below is
the common equity section (in millions) of Teweles Technology’s last two
year-end balance sheets:

2006

2005

Common
stock

$2,000

$1,000

Retained
earnings

2,000

2,340

Total
common equity

$4,000

$3,340

Teweles has never paid
a dividend to its common stockholders. Which of the following statements is
CORRECT?

a.
The
company’s net income in 2006 was higher than in 2005.

b.
Teweles
issued common stock in 2006.

c.
The
market price of Teweles’ stock doubled in 2006.

d.
Teweles
had positive net income in both 2005 and 2006, but the company’s net income in
2006 was lower than it was in 2005.

e.
The
company has more equity than debt on its balance sheet.

____ 20. Companies generate income from their
“regular” operations and from other sources like interest earned on
the securities they hold, which is called non-operating income. Lindley
Textiles recently reported $12,500 of sales, $7,250 of operating costs other than
depreciation, and $1,000 of depreciation. The company had no amortization
charges and no non-operating income. It had $8,000 of bonds outstanding that
carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%.
How much was Lindley’s operating income, or EBIT?

a.
$3,462

b.
$3,644

c.
$3,836

d.
$4,038

e.
$4,250

____
21. An investor is considering starting a new business. The company would
require $475,000 of assets, and it would be financed entirely with common
stock. The investor will go forward only if she thinks the firm can provide a
13.5% return on the invested capital, which means that the firm must have an
ROE of 13.5%. How much net income must be expected to warrant starting the
business?

a.
$52,230

b.
$54,979

c.
$57,873

d.
$60,919

e.
$64,125

____ 22. D. J. Masson Inc. recently issued
noncallable bonds that mature in 10 years. They have a par value of $1,000 and
an annual coupon of 5.5%. If the current market interest rate is 7.0%, at what
price should the bonds sell?

a.
$829.21

b.
$850.47

c.
$872.28

d.
$894.65

e.
$917.01

____
23. McCue Inc.’s bonds currently sell for $1,250. They pay a $120 annual
coupon, have a 15-year maturity, and a $1,000 par value, but they can be called
in 5 years at $1,050. Assume that no costs other than the call premium would be
incurred to call and refund the bonds, and also assume that the yield curve is
horizontal, with rates expected to remain at current levels on into the future.
What is the difference between this bond’s YTM and its YTC? (Subtract the YTC
from the YTM.)

a.
2.11%

b.
2.32%

c.
2.55%

d.
2.80%

e.
3.09%

____ 24. Moerdyk Corporation’s bonds
have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000.
The going interest rate (rd)
is 4.75%, based on semiannual compounding. What is the bond’s price?

a.
1,063.09

b.
1,090.35

.
1,118.31

d.
1,146.27

e.
1,174.93

____
25. Rick Kish has a $100,000 stock portfolio. $32,000 is invested in a stock
with a beta of 0.75 and the remainder is invested in a stock with a beta of
1.38. These are the only two investments in his portfolio. What is his
portfolio’s beta?

a.
1.18

b.
1.24

c.
1.30

d.
1.36

e.
1.43

____
26. Yonan Corporation’s stock had a required return of 11.50% last year, when
the risk-free rate was 5.50% and the market risk premium was 4.75%. Now suppose
there is a shift in investor risk aversion, and the market risk premium
increases by 2%. The risk-free rate and Yonan’s beta remain unchanged. What is
Yonan’s new required return? (Hint: First calculate the beta, then find the
required return.)

a.
14.03%

b.
14.38%

c.
14.74%

d.
15.10%

e.
15.48%

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$4.00

Description

Question 21

Your parents have made you two offers.
The first offer includes annual gifts of $10,000, $11,000, and $12,000 at the
end of each of the next three years, respectively. The other offer is the
payment of one lump sum amount today. You are trying to decide which offer to
accept given the fact that your discount rate is 8 percent. What is the minimum
amount that you will accept today if you are to select the lump sum offer?

A.

$28,216

B.

$29,407

C.

$29,367

D.

$30,439

E.

$30,691

Question 22

Grand Adventure Properties offers a 9.5
percent coupon bond with annual payments. The yield to maturity is 11.2 percent
and the maturity date is 11 years from today. What is the market price of this
bond if the face value is $1,000?

A.

$895.43

B.

$896.67

C.

$941.20

D.

$946.18

E.

$953.30

Question 23

Which one of the following types of
stock is defined by the fact that it receives no preferential treatment in
respect to either dividends or bankruptcy proceedings?

A.

dual class

B.

cumulative

C.

non-cumulative

D.

preferred

E.

common

Question 24

What are the distributions to shareholders
by a corporation called?

A.

retained earnings

B.

net income

C.

dividends

D.

capital payments

E.

diluted profits

Question 25

A project has an initial cost of $27,400
and a market value of $32,600. What is the difference between these two values
called?

A.

net present value

B.

internal return

C.

payback value

D.

profitability index

E.

discounted payback

Question 26

The length of time a firm must wait to
recoup the money it has invested in a project is called the:

A.

internal return period.

B.

payback period.

C.

profitability period.

D.

discounted cash period.

E.

valuation period.

Question 27

How does the net present value (NPV)
decision rule relate to the primary goal of financial management, which is
creating wealth for shareholder

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

161. Miller
has the following information pertaining to its usage of direct labor in a
recent period:

.jpg”>

Required:
Given the above, determine the company’s:

(A)
Direct labor efficiency
variance for the period.

(B)
Direct labor rate
variance for the period.

(C)
Summary journal entry to
record accrued labor costs and associated standard cost variances for the
period.

162.Sarheen, Inc.
maintains no inventories and has collected the following data on one of its
products for the most recent period:

.jpg”>

Required:
Determine:

(A)
The direct material
usage (quantity) variance.

(B)
The actual cost of the
direct materials purchased and used during the period. (Hint: these two amounts
are identical.)

(C)
The direct material
price variance.

(D) The
correct summary journal entry to record direct material costs for this period’s
production, including associated standard cost variances. (Note: assume that
any price variances are recorded at point of production.)

163.
McElroy Company has
prepared the following master budget for 2010. Although McElroy has the
capacity to manufacture 50,000 units, management expected the likely demand for
its product to be 40,000 units in 2010; as such, it prepared the master budget
to manufacture and sell 40,000 units. In early January 2011, the company was
pleasantly surprised to find out that it manufactured and sold 45,000 units in
2010.

.jpg”>

Required:
Prepare the flexible budget (FB) for the actual operating level achieved in
2010.

164. Balt
Company maintains a standard cost system; as such, all inventories, including
materials, are carried on the books at standard cost. Last period, Balt used
5,000 pounds of Material H to produce 800 units of Product C8. The company has
established a standard of 7 pounds of Material H per unit of C8, at a price of
$7.50 per pound of material. During the period the inventory for Material H
decreased by 2,000 pounds. The company spent $25,000 during the period to
purchase material H.

Required:
(1) Calculate the direct materials purchase-price variance for the period. (2)
Calculate the direct materials usage variance forthe period. (3)
Provide the correct summary journal entry to record the purchase, on credit, of
materials during the period.(4) Provide the correct summary journal to record
direct materials cost for materials issued to production during the period.

165. Falcon
Company uses a standard cost system; as such, all inventories are carried on
the books at standard cost. During the most recent period the company
manufactured 12,000 units. The standard cost sheet indicates that the standard
direct labor cost per unit is $1.50. The performance report for the period
includes an unfavorable direct labor rate variance of $1,000 and a favorable
direct labor efficiency variance of $275.

Required:
What was the total actual cost of direct labor incurred during the period?

166.

Balmer
Corporation’s master budget for the year is presented below:

.gif”>

During the
period, the company actually manufactured and sold 42,000 units.

Required:

(1)
Prepare a flexible
budget (FB) for the actual output level achieved during the period.

(2) What
is the definition of a FB? For what managerial purpose is a FB useful? Be
specific about the types of information (and variances) that management can
generate, at the end of an accounting period, given a flexible budget and its
master (static) budget.

167.
Patterson, Inc. wishes
to evaluate, in summary fashion, its financial performance for the most recent
period. The budget and the actual operating results for this period are
presented below.

Required: (A) What was
the actual operating income for the period?

(B) What is the firm’s
master budget operating income?

(C) What was the
flexible-budget operating income for the period?

(D) What is the total
operating-income variance of the period?

(E) What was the
sales-volume variance, in terms of operating income, for the period?

(F) What are the key
elements of the traditional financial control model?

(G) What are the primary
limitations of the traditional financial control model?

168. Contemporary
furniture manufactures office desks. The firm budgeted to sell 5,000 desks at
$200 per desk in 2010. Budgeted costs include $80 variable cost per desk, and
$200,000 fixed cost/year. In 2010 the company sold 6,000 desks at $190, and
incurred $78 variable cost per desk and $220,000 fixed cost for the year.

Required:
Prepare, in proper form, a variance analysis report identifying both flexible
budget and sales-volume variances.

.jpg”>.jpg”>

169.

Fill in the
unknowns A through S below.

170.

James has the
following information pertaining to its usage of direct labor in a recent
period:

.gif”>

Required: (A)
Calculate the labor efficiency variance for the period.

(B)
Calculate the labor rate
variance for the period.

(C)
Prepare, in proper form,
the journal entry to record wage expense for the period, including any
associated standard cost variances.

171. Appliance,
Inc. manufactured 10,000 units. The standard cost sheet indicates that the
standard direct labor cost per unit is $3.00. The performance report for the
period includes a favorable direct labor rate variance of $2,000, and a
favorable direct labor efficiency variance of $500.

Required:
What was the total actual cost of direct labor incurred during the period?

172. The
Chen Company uses a standard cost system. As such, all of its inventories are
carried on the books at standard, not actual, cost. During the most recent
accounting period, the company had the following summary transactions:

(A)
Purchased, on credit,
direct materials; the standard cost of these materials was $30,000, while the
actual cost was $32,000.

(B)
Issued to production
direct materials. The standard cost of materials that should have been used for
this period’s output was $35,000, while the standard cost of materials actually
used in production during the period was $33,000.

(C)
Actual direct labor
cost, which has been incurred but not yet paid, for the period was $75,000. The
standard direct labor cost for this period’s output was $80,000. The direct
labor efficiency variance for the period was $10,000(F).

(D)
For the units completed
during the period, the standard direct labor cost was $78,000, while the
standard direct materials cost was

$34,000.

(E) For
the units sold during the period, the standard materials cost was
$30,000, while the standard direct labor cost was $76,000 Required:
Given the above information, provide the correct journal entries for the
following:

(A)
Purchase of direct
materials

(B)
Issuance of materials to
production.

(C)
Direct labor cost for
the period.

(D)
The labor and materials
cost associated with finished production this period.

(E)
The labor and materials
cost associated with items sold during the period.

173.
Define what is meant by
the term “just in time production” (JIT). As indicated in your text,
management accountants can supply relevant information to management as it
considers a move to JIT. In this regard, describe some of the principal advantages
of using a JIT system, and then describe some of the incremental costs that
would likely be associated with a move to such a system.

174. Chapter
14 argues that a comprehensive management accounting and control system would
include nonfinancial as well as financial performance indicators. Two such
nonfinancial performance indicators were discussed in conjunction with
organizations that adopt a just-in-time (JIT) production philosophy:
customer-response time (CRT) and process cycle efficiency (PCE). Explain each
of these two performance indicators.

175. Explain
the calculation and interpretation of a sales price variance for any given period.
How does this variance relate to the total flexible-budget variance for the
period?

176.Subscript
“a” = actual; subscript “s” = standard; Q = quantity of
direct materials issued to production; P = price paid for unit of direct
materials.

Required:
Use the above notation to develop a formula for each of the following standard
cost variances: (A) Direct materials pricevariance (calculated at point
of production, not point of purchase).

(B)
Direct materials usage
variance.

(C)
Flexible-budget (FB) variance for direct
materials.

(D)
Joint price-quantity
variance for direct materials.

Chapter
14 introduces you to the concept of operational control systems. Within the
context of this discussion, certain limitations of financial control systems
were presented. Provide a summary of the primary limitations of short-term
financial performance indicators, such as the variances discussed in the main
part of the chapter

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

141.
Luanna Inc. manufactures
game consoles. Some of the company’s data was misplaced. Use the following
information to replace the lost data.

.jpg”>

The amount D
is:

A.
$26,920.

B.
$33,720.

C.
$35,620.

D.
$42,450.

142. Joe
Malay received the following report on the Division’s operation for the month
of August: Direct labor rate variance = $25,000 unfavorable. Direct labor
efficiency variance = $70,000 (?) The standard calls for 3 direct labor hours
per unit of output at $28 per labor hour. The standard direct labor hours for
the units manufactured is 20 percent more than the total direct labor hours
actually worked in August. What were the total standard hours allowed for the
units manufactured in August?

A.
10,000.

B.
12,000.

C.
12,500.

D.
15,000.

E.
15,625.

143. Joe
Malay received the following report on the Division’s operation for the month
of August:

Direct labor rate
variance = $25,000 unfavorable. Direct labor efficiency variance = $70,000 (?)
The standard calls for 3 direct labor hours per unit of output at $28 per labor
hour. The standard direct labor hours for the units manufactured is 20 percent more
than the total direct labor hours actually worked in August. What was the
average direct labor hourly rate the Division paid in August?

A.
$24.00.

B.
$26.00.

C.
$28.00.

D.
$30.00.

E.
$31.25.

.
Joe Malay received the following report
on the Division’s operation for the month of August:

Direct labor rate
variance = $25,000 unfavorable. Direct labor efficiency variance = $70,000 (?)
The standard calls for 3 direct labor hours per unit of output at $28 per labor
hour. The standard direct labor hours for the units manufactured is 20 percent more
than the total direct labor hours actually worked in August. How many units of
the product were produced in August?

A.
4,000.

B.
4,250.

C.
4,500.

D.
4,750.

E.
5,000.

145. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
Materials: (4 kilograms x $10.00 per kilogram) $40.00/unit. Labor: (4 hours x
$18.00 per hour) $72.00/unit. All materials are issued at the beginning of
processing. The operating data shown below were taken from the records for
July:

.jpg”>

The actual
direct materials purchase price per kilogram in July was:

A.
$8.80.

B.
$9.90.

C.
$10.00.

D.
$10.10.

E.
$11.80.

146. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
Materials: 4 kilograms/unit x $10.00 per kilogram = $40.00/unit; labor: 4
hours/unit x $18.00 per hour = $72.00/unit. All materials are issued at the
beginning of processing. The operating data shown below were taken from the
records for July:

.jpg”>

The actual total
cost of direct materials used in production during July was:

A.
$282,150.

B.
$287,850.

C.
$297,000.

D.
$300,000.

E.
$303,000.

147. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
materials: 4 kilograms/unit x $10.00 per kilogram = $40.00/unit; labor: 4
hours/unit x $18.00 per hour = $72.00/unit. All materials are issued at the
beginning of processing. The operating data shown below were taken from the
records for July:

.jpg”>

The direct materials
usage variance for July was:

A.
$3,000 favorable.

B.
$43,000 favorable.

C.
$12,000 unfavorable.

.
$15,000 unfavorable.

148. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
Materials: 4 kilograms/unit x $10.00 per kilogram = $40.00/unit; labor: 4
hours/unit x $18.00 per hour = $72.00/unit. All materials are issued at the
beginning of processing. The operating data shown below were taken from the
records for July:

.jpg”>

The direct labor
rate variance for July is:

A.
$6,600 favorable.

B.
$16,600 favorable.

C.
$21,000 unfavorable.

D.
$57,600 unfavorable.

E.
$58,200 unfavorable.

149. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
Materials: 4 kilograms/unit x $10.00 per kilogram = $40.00/unit; labor: (4
hours x $18.00 per hour) $72.00/unit. All materials are issued at the beginning
of processing. The operating data shown below were taken from the records for
July:

.jpg”>

The direct labor
efficiency variance for July was:

A.
$6,600 favorable.

B.
$7,200 unfavorable.

C.
$8,000 unfavorable.

D.
$14,400 favorable.

E.
$79,200 favorable.

150. Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:
Materials: 4 kilograms/unit x $10.00 per kilogram) $40.00/unit; labor: 4
hours/unit x $18.00 per hour = $72.00/unit. All materials are issued at the
beginning of processing. The operating data shown below were taken from the
records for July:

.jpg”>

The direct labor
flexible-budget variance for July was:

A.
$6,600 unfavorable.

B.
$7,200 unfavorable.

C.
$51,000 favorable.

D.
$58,200 favorable.

E.
$65,400 favorable.

151.Machine
Builders Inc. adopted a standard cost system several years ago that it uses in
conjunction with its process cost system. The per-unit standard costs for
direct materials and direct labor for its single product are as follows:

.jpg”>

All
materials are issued at the beginning of processing. The operating data shown
below were taken from the records for July:

.jpg”>

The sales volume
variance, measured in terms of direct labor cost, for July was:

A.
$6,600 favorable.

B.
$7,200 favorable.

C.
$51,000 unfavorable.

D.
$57,600 unfavorable.

E.
$72,000 unfavorable.

152. Landlubber
Company has established a standard direct material cost of 1.5 gallons @ $2 per
gallon for one unit of its product. During the past month, actual production of
this product was 6,500 units. The direct materials usage (efficiency) variance
was $700 (favorable) and the materials price variance (calculated at point of
production) was $470 (unfavorable). The entry to charge Work in Process
Inventory for the standard material costs during the month and to record the
direct material variances in the accounts would include all the following
except:

A.
A debit to Work in Process Inventory for
$19,500.

B.
A debit to Direct
Materials Inventory for $18,800.

C.
A debit to Direct
Materials Price Variance for $470.

D.
A credit to Direct
Material Usage Variance for $700.

E.
A credit to Work in
Process Inventory for $18,800.

153. What
four variances may be included as a component of the total variable cost
flexible-budget variance for a given period?

154. What
is a direct materials usage ratio? For what purpose is this ratio used?

155. What
is a direct labor efficiency variance, and what are some of the likely causes
of this variance?

156. Rachael
Hair Products shows the following budgeted and actual data for the first
quarter of the current fiscal year:

.jpg”>

Required:
(a) What type of financial control system might the company use to determine
whether the company met its short-termfinancial objectives?

(b)
For the first quarter of
the year, what was the total master (static) budget variance?

(c)
In general, into what
two component variances can the master (static) budget variance be decomposed?
What is the meaning of each of these two variances?

(d)
Comment specifically on
the financial performance of this company during the 1st
quarter.

(e)
What are the primary
limitations of traditional financial-control models?

157.Ann
Jacobson’s supervisor has asked her to list any concerns she might have about
the proposed development of standards to measure performance and to reward
superior performance in her department. Ann’s department handles customer
calls, directing customer

questions and complaints to the
appropriate persons within the firm. The company has never before used any
performance measure nor paid any performance-related bonuses. It hopes to
install a simple but effective system to achieve its twin goals of cost control
and performance measurement. Develop the list for Ann based on the information
above.

158. Within
the context of the material covered in Chapter 14, define the term
“sales-volume variance.” List some common causes of the sales-volume
variance.

159. Discuss
some major differences between static and flexible budgets.

160. Klash
Company adopted a standard cost system several years ago. The company uses
standard costs for all of its inventories. The standard costs for direct
materials and labor for its single product are as follows: Materials (12
kilograms/unit x $7.00 per kilogram) = $84.00/unit; direct labor (8 hours/unit
x $12.00 per hour) = $96.00/unit. All materials are issued at the beginning of
processing. The operating data shown below were taken from the records for
December:

.jpg”>

Note: number of
kilograms issued to production during the period = number of kilograms
purchased.

Required:
(A) Calculate the standard cost of the actual kilograms of material purchased.

(B)
Calculate the total
standard kilograms for the production of the period (that is, for
“equivalent units produced with respect to direct materials”)

(C)
Calculate the total
standard cost of materials for the production of the period.

(D)
Calculate the actual
price per kilogram of material of material purchased this period.

(E)
Calculate the direct
labor rate variance.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

True/False

Indicate
whether the statement is true or falsewith A for true and B for false.

____

1.

Interest paid by a corporation
is a tax deduction for the paying corporation, but dividends paid are not

deductible. This
treatment, other things held constant, tends to encourage the use of debt
financing by

corporations.

____

2.

According to the Capital Asset
Pricing Model, investors are primarily concerned with portfolio risk, not the

risks of individual
stocks held in isolation. Thus, the relevant risk of a stock is the stock’s
contribution to the

riskiness of a well-diversified
portfolio.

____

3.

The major advantage of a
regular partnership or a corporation as a form of business organization is
the fact

that both offer
their owners limited liability, whereas proprietorships do not.

____

4.

Midway
through the life of an amortized loan, the percentage of the payment that
represents interest is equal

to the percentage
that represents principal repayment. This is true regardless of the original
life of the loan.

____

5.

The inventory
turnover ratio and days sales outstanding (DSO) are two ratios that are used
to assess how

effectively a firm
is managing its assets.

Multiple Choice

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

____
6. You recently sold to your brother 200 shares of Disney stock, and the
transfer was made through a broker, and the trade occurred on the NYSE. This is
an example of:

a.
A
futures market transaction.

b.
A
primary market transaction.

c.
A
secondary market transaction.

d.
A
money market transaction.

e.
An
over-the-counter market transaction.

____
7. Ten years ago, Levin Inc. earned $0.50 per share. Its earnings this year
were $2.20. What was the growth rate in Levin’s earnings per share (EPS) over
the 10-year period?

a.
15.17%

b.
15.97%

c.
16.77%

d.
17.61%

e.
18.49%

____
8. Amram Company’s current ratio is 1.9. Considered alone, which of the
following actions would reduce the company’s current ratio?

a.
Borrow
using short-term notes payable and use the proceeds to reduce accruals.

b.
Borrow
using short-term notes payable and use the proceeds to reduce long-term debt.

c.
Use
cash to reduce accruals.

d.
Use
cash to reduce short-term notes payable.

e.
Use
cash to reduce accounts payable.

____
9. Northwest Lumber had a profit margin of 5.25%, a total assets turnover of
1.5, and an equity multiplier of 1.8. What was the firm’s ROE?

a. 12.79%

.

13.47%

c.

14.18%

d.

14.88%

e.

15.63%

____

10. Ripken Iron Works believes the following
probability distribution exists for its stock. What is the coefficient

of variation on the company’s
stock?

State of the

Probability of

Stock’s

Economy

State
Occurring

Expected
Return

Boom

0.25

25%

Normal

0.50

15%

Recession

0.25

5%

a.

0.4360

b.

0.4714

c.

0.5068

d.

0.5448

e.

0.5856

____

11. You have the following data on three
stocks:

Stock

Standard Deviation

Beta

A

0.15

0.79

B

0.25

0.61

C

0.20

1.29

As a risk minimizer,
you would choose Stock ____ if it is to be held in isolation and Stock ____ if
it is to be held as part of a well-diversified portfolio.

a.
A;
A.

b.
A;
B.

c.
B;
C.

d.
C;
A.

e.
C;
B.

____
12. Ewert Enterprises’ stock currently sells for $30.50 per share. The stock’s
dividend is projected to increase at a constant rate of 4.50% per year. The
required rate of return on the stock, rs, is 10.00%. What is
Ewert’s expected price 3 years from today?

a.
$31.61

b.
$32.43

c.
$33.26

d.
$34.11

e.
$34.81

____ 13. You were hired as a consultant
to Kroncke Company, whose target capital structure is 40% debt, 10% preferred,
and 50% common equity. The after-tax cost of debt is 6.00%, the cost of
preferred is 7.50%, and the cost of retained earnings is 13.25%. The firm will
not be issuing any new stock. What is its WACC?

a.
9.48%

b.
9.78%

c.
10.07%

d.
10.37%

e.
10.68%

____
14. To help finance a major expansion, Delano Development Company sold a
noncallable bond several years ago that now has 15 years to maturity. This bond
has a 10.25% annual coupon, paid semiannually, it sells at a price of $1,025,
and it has a par value of $1,000. If Delano’s tax rate is 40%, what component
cost of debt should be used in the WACC calculation?

a.
5.11%

b.
5.37%

c.
5.66%

d.
5.96%

e.
6.25%

____
15. Thompson Stores is considering a project that has the following cash flow
data. What is the project’s IRR, NPV and Payback if the WACC is 10%? Note that
a project’s projected IRR can be less than the WACC (and even negative), in
which case it will be rejected.

Year:

0

1

2

3

4

5

Cash
flows:

$1,000

$300

$295

$290

$285

$270

.jpg”>

a.
IRR
– 11.16%, NPV = 96.72, Payback = 3.4 years

b.
IRR=
13.78%, NPV = 125.232, Payback = 3.4 years

c.
IRR=
13.78%, NPV = 96.72, Payback = 3.4 years

d.
IRR
= 12.45%, NPV = 96.72, Payback 4.1 years

e.
IRR
= 12.45%, NPV = 125.232, Payback = 4.1 years

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

101.
Mandy Company has the following direct labor costs last month:

.jpg”>

What was Mandy’s
direct labor flexible-budget variance?

A.
$15,120 unfavorable.

B.
$20,800 unfavorable.

C.
$36,720 favorable.

D.
$42,480 favorable.

E.
$79,920 favorable.

102.
A company’s flexible
budget for 15,000 units of production showed sales of $48,000; variable costs
of $18,000; and fixed costs of $12,000. The operating income in the master
budget for 20,000 units is:

A.
$8,000.

B.
$13,500.

C.
$24,000.

D.
$28,000.

E.
$30,000.

. A
company’s master budget for October is to manufacture and sell 30,000 units for
a total of $270,000 with total variable costs of $180,000 and total fixed costs
of $24,000. The company actually manufactured and sold 32,000 units and generated
$45,000 of operating income in October. The flexible-budget operating income in
October is:

A.
$27,000.

B.
$70,400.

C.
$72,000.

D.
$83,520.

E.
$86,400.

104. A
company’s master budget for October is to manufacture and sell 30,000 units for
a total of $270,000 with total variable costs of $180,000 and total fixed costs
of $24,000. The company actually manufactured and sold 32,000 units and
generated $45,000 of operating income in October. The operating income
flexible-budget (FB) variance is:

A.
$3,600 unfavorable.

B.
$6,000 unfavorable.

C.
$15,400 unfavorable.

D.
$21,000 unfavorable.

E.
$27,000 unfavorable.

105. A
company’s master budget for October is to manufacture and sell 30,000 units for
a total of $270,000 with total variable costs of $180,000 and total fixed costs
of $24,000. The company actually manufactured and sold 32,000 units and
generated $45,000 of operating income in October. The sales volume variance, in
terms of operating income, for October is:

A.
$3,600 favorable.

B.
$6,000 favorable.

C.
$15,400 favorable.

D.
$21,000 favorable.

106. 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:

A.
$15,000.

B.
$40,000.

C.
$63,000.

D.
$78,000.

E.
$105,000.

107. 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 total amount of variable costs in the
flexible budget for September was:

A.
$129,000.

B.
$192,000.

C.
$200,000.

D.
$208,000.

E.
$255,000.

108. 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 amount of operating income in the
flexible budget (FB) for September was:

A.
$40,000.

B.
$48,000.

C.
$56,000.

D.
$70,000.

E.
$78,000.

109. 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 budgeted fixed cost is:

A.
$30,000.

B.
$45,000.

C.
$71,000.

D.
$78,000.

E.
$93,000.

110. 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 sales volume variance, in terms of
operating income, is:

A.
$20,000 unfavorable.

B.
$27,000 unfavorable.

C.
$36,000 unfavorable.

D.
$75,000 unfavorable.

E.
$90,000 unfavorable.

.
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 master budget operating income for September was:

A.
$78,000.

B.
$105,000.

C.
$108,000.

D.
$110,000.

E.
$135,000.

112. 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 total number of budgeted units reflected
in the master budget for September was:

A.
36,000 units.

B.
40,000 units.

C.
45,000 units.

D.
48,000 units.

E.
50,000 units.

113. 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 total sales revenue in the master budget
for September was:

A.
$300,000.

B.
$327,000.

C.
$350,000.

D.
$375,000.

E.
$425,000.

114. Shoemaker
Perkins Company uses a standard cost system and had 400 pounds of raw material
X15 on hand on September 1. The standard cost is $10 per pound. The standard
calls for 2 pounds of material X15 for each unit of the product manufactured.
The company manufactured 600 units of the product in September, and had 500
pounds of Material X-15 in stock on September 30. The actual price for Material
X-15 purchased during the month was $1 per pound below the standard cost. The material
usage variance in September was $3,000 unfavorable. What is the purchase-price
variance
for Material X in September?

A.
$1,100 favorable.

B.
$1,200 favorable.

C.
$1,300 favorable.

D.
$1,500 favorable.

E.
$1,600 favorable.

115. Sheldon
Company manufactures only one product and uses a standard cost system. During
the past month, the manufacturing operations had the following variances:
Direct labor rate variance = $30,000 Favorable. Direct labor efficiency
variance = $50,000 Unfavorable. Sheldon allows 5 standard direct labor hours
per unit produced, and its standard direct labor hourly rate is $50. During the
month, the company used 25 percent more direct labor hours than the standard
allowed. What was the direct labor flexible-budget (FB) variance for the month?

A.
$20,000 unfavorable.

B.
$25,000 unfavorable.

C.
$37,500 favorable.

D.
$62,500 unfavorable.

E.
$80,000 unfavorable.

116. Sheldon
Company manufactures only one product and uses a standard cost system. During
the past month, the manufacturing operations had the following variances:
Direct labor rate variance = $30,000 Favorable; direct labor efficiency
variance = $50,000 Unfavorable. Sheldon allows 5 standard direct labor hours
per unit produced, and its standard direct labor hourly rate is $50. During the
month, the company used 25 percent more direct labor hours than the standard
allowed. What were the total standard hours allowed for the units manufactured
during the month?

A.
1,000.

B.
2,500.

C.
4,000.

D.
5,000.

E.
6,000.

117. Sheldon
Company manufactures only one product and uses a standard cost system. During
the past month, the manufacturing operations had the following variances:
Direct labor rate variance $30,000 Favorable; direct labor efficiency variance
$50,000 Unfavorable. Sheldon allows 5 standard direct labor hours per unit
produced, and its standard direct labor hourly rate is $50. During the month,
the company used 25 percent more direct labor hours than the standard allowed.
What were the total actual direct hours worked?

A.
1,000.

B.
3,000.

C.
4,000.

D.
5,000.

E.
6,000.

118.Sheldon Company
manufactures only one product and uses a standard cost system. During the past
month, the manufacturing operations had the following variances: Direct labor
rate variance = $30,000 Favorable; direct labor efficiency variance = $50,000
Unfavorable. Sheldon allows 5 standard direct labor hours per unit produced,
and its standard direct labor hourly rate is $50. During the month, the

company
used 25 percent more direct labor hours than the standard allowed. What was the
actual hourly rate for direct labor?

A.
$30.

B.
$36.

C.
$44.

D.
$50.

E.
$56.

119. Sheldon
Company manufactures only one product and uses a standard cost system. During
the past month, the manufacturing operations had the following variances:
Direct labor rate variance $30,000 Favorable. Direct labor efficiency variance
50,000 Unfavorable Sheldon allows 5 standard direct labor hours per unit
produced, and its standard direct labor hourly rate is $50. During the month,
the company used 25 percent more direct labor hours than the standard allowed.
How many units of the product were produced during the past month?

A.
800.

B.
1,000.

C.
1,200.

D.
1,500.

E.
2,000.

120. Ventura
uses a just-in-time (JIT) manufacturing system for all of its materials,
components, and products. The master budget of the company for June called for
use of 11,000 square feet of materials, while the flexible budget for the
actual output of the month had 10,000 square feet of materials at a standard
cost of $9.60 per square foot. Company records show that the actual price paid
for the materials used in June was $9.50 per square foot, and that the direct
materials purchase-price variance for the month was $1,040.

The actual total
quantity of materials purchased during the month was:

A.
10,000 square feet.

B.
10,400 square feet.

C.
11,000 square feet.

D.
13,840 square feet.

E.
14,880 square feet.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$6.00

Description

107.
SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Determine
the amount of cost to be allocated to the Harborview Resort using revenue as an
allocation base.

A.
$1,050,000

B.
$1,950,000

C.
$1,500,000

D.
$420,000

E.
$1,680,000

108.
SeaScape Resorts owns and operates two resorts in a coastal town. Both resorts
are located on a barrier island that is connected to the

mainland
by a high bridge. One resort is located on the beach and is called the Crystal
Coast Resort. The other resort is located on the inland waterway which passes
between the town and the mainland; it is called the Harborview Resort. Some key
information about the two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

What is the
operating profit of the Crystal Coast Resort, using revenue as an allocation
base?

A.
$2,450,000

B.
$1,600,000

C.
$1,500,000

D.
$4,550,000

E.
$3,550,000

109.
SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Using
the information regarding the allocation of the $3 million to the four cost
drivers, determine the amount of cost to be allocated to the Harborview Resort.

A.
$1,050,000

B.
$1,950,000

C.
$1,500,000

D.
$715,000

E.
$1,680,000

110.SeaScape Resorts owns
and operates two resorts in a coastal town. Both resorts are located on a
barrier island that is connected to the mainland by a high bridge. One resort
is located on the beach and is called the Crystal Coast Resort. The other
resort is located on the inland waterway which passes between the town and the
mainland; it is called the Harborview Resort. Some key information about the
two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

Using the information regarding the
allocation of the $3 million to the four cost drivers, determine the operating
profit of the Crystal Coast Resort.

A.
$1,500,000

B.
$2,050,000

C.
$2,785,000

D.
$3,525,000

E.
$4,215,000

111. SeaScape
Resorts owns and operates two resorts in a coastal town. Both resorts are
located on a barrier island that is connected to the mainland by a high bridge.
One resort is located on the beach and is called the Crystal Coast Resort. The
other resort is located on the inland waterway which passes between the town
and the mainland; it is called the Harborview Resort. Some key information
about the two resorts for the current year is shown below.

The nontraceable
operating costs of the resort amount to $3 million. By careful study, the
management accountant at SeaScape has determined that, while the costs are not
directly traceable, the total of $3 million could be fairly allocated to the
four cost drivers as follows.

The Crystal
Coast resort is likely to be favored in terms of a lower cost allocation under:

A.
Revenue-based allocation.

B.
Cost-driver based
allocation.

C.
Cannot be determined
from the information.

D.
Would be the same for
both allocation methods.

112. Tough-Built
Corporation produces specialized truck body components, specializing in
hydraulic lifts for dump trucks. Founded 35 years ago by George Halloway, the
firm now employs 150 workers and has annual sales of over $10 million. George
operates the firm in a highly centralized way, and retains control over all
changes in operations. He is a regular visitor to the production area, which
helps him “keep his finger on the pulse of the firm.” Although George
Halloway is now 67 years old, he has no apparent management successor, and has
always hand-picked his department heads and staff personnel. He has been
generous to those who worked for him, paying substantial bonuses each year to
the employees based on his personal evaluation of each worker. Just six weeks
ago, a heart attack convinced George to consider retirement, and he decided to
sell the firm to his employees. You are assigned the task of recommending a set
of strategic performance measures for the firm, assuming that the new worker
management wants to operate as a decentralized firm. Required: What
major management problems do you foresee in the transition from sole owner to
employee ownership?

113. Harrison
Hartwell and Zenith is a successful law firm employing 26 professionals. There
is an internal controversy over allocation of the $104,000 purchase cost of a
highly sophisticated electronic law library. Each professional employee of the
firm has been assessed $4,000 as a charge against the profit distribution
account of each of the 26 members affected. In addition, it is expected to cost
about $2,600 per month to update information for the library system, resulting
in a monthly $100 assessment against each professional in the firm.

Required:
(a) As a new junior member of the professional legal group of 26, why might you
not like the proposed electronic library costallocation? (b) Propose an
alternate allocation method for both the initial purchase cost and the updating
charge that is more equitable (fair).(c) Could one argue for no allocation at
all in this case? On what basis?

114.

McShane Inc. manufactures
hair brushes that sell at wholesale for $6.00 per unit. Budgeted production in
both 2009 and 2010 was 2,000 units and fixed overhead budgeted was $25,000 in
each year. There was no beginning inventory in 2009. The following data
summarized the 2009 and 2010 operations:

Required:
Determine
income under both full costing and variable costing and explain the difference.

115. The
Daniels Tool & Die Corporation has been in existence for a little over
three years; its sales have been increasing each year as it has built a
reputation. The company manufactures dies to its customers’ specifications; as
a consequence, a job order cost system is employed. Factory overhead is applied
to the jobs based on direct labor hours. Actual variable overhead is the same
as applied variable overhead. Overapplied or underapplied overhead is treated
as an adjustment to cost of goods sold. The company’s income statements for the
last two years are presented below. Daniels used the same predetermined
overhead rate in applying overhead to production orders in both 2010 and 2011.
The rate was based on the following estimates:

In
2009 and 2010, actual direct labor hours expended were 20,000 and 23,000,
respectively. Raw materials put into production were $292,000 in 2009 and
$370,000 in 2010. Actual fixed overhead was $37,400 for 2010 and $42,300 for
2009, and the planned direct labor rate was the direct labor rate achieved. For
both years, all of the reported administrative costs were fixed, while the
variable portion of the reported selling expenses result from a commission of
five percent of sales revenue. Required: (1) For the year December 31,
2010, prepare a revised income statement for Daniels Tool & Die Corporation
utilizing the variable costing method. Be sure to include the contribution
margin on your statement. (2) Prepare a numerical reconciliation of the difference
in operating income between Daniels Tool & Die Corporation’s costing and
the revised 2010 income statement prepared on the basis of variable costing.
(3) Describe both the advantages and disadvantages of using variable costing.

116. Red
Apple Industries manufactures institutional-use furniture. Dept. A is
responsible for welding the base of the desk to the chair assembly. The desks
are then placed on an automatic conveyer to Dept. B, where the desktop is
riveted to the chair. The desks continue on the conveyer to Dept. C for further
assembly. Wanda, the manager of Dept. A, is responsible for moving 800 welded
desks per hour to Dept. B. A faulty circuit in Dept. B causes a delay in
processing in the department and prompts Rosie, the Dept. B manager, to ask
Wanda to stop the conveyer. Wanda refuses, necessitating the removal of the
welded desks from the conveyer until the riveting can resume. Rosie bills
Wanda’s department for the costs of this extra work. Wanda disputes the charge,
citing her responsibility to convey 800 desks/hour to Dept. B.

Required:
How should the managers’ dispute be resolved? How could it have been avoided?

117.Betty Jones and Penny
White are associates at the same law firm in Atlanta. They traveled to New York
City together recently to visit

their
respective clients. From the airport, they shared a cab ride to their hotel.
The cab ride for Betty alone would have cost $18.00, but for two passengers the
cost was $22.00. Had Betty not offered to share the cab ride, Penny (in
deference to her client’s frugality) would have taken the bus to Grand Central
Station, which is six blocks from the hotel, at a cost of $10.00.

Required:
How should the $22.00 cost of the cab ride be allocated to the two clients?

118. Divisional
managers of SIU Incorporated have been expressing growing dissatisfaction with
the current methods used to measure divisional performance. Divisional
operations are evaluated every quarter by comparison with the static budget
prepared during the prior year. Divisional managers claim that many factors are
completely out of their control but are included in this comparison. This
results in an unfair and misleading performance evaluation. The managers have
been particularly critical of the process used to establish standards and
budgets. The annual budget, stated by quarters, is prepared six months prior to
the beginning of the operating year. Pressure by top management to reflect
increased earnings has often caused divisional managers to overstate revenues
and/or understate expenses. In addition, once the budget had been established,
divisions were required to “live with the budget.” Frequently,
external factors such as the state of the economy, changes in consumer
preferences, and actions of competitors have not been adequately recognized in
the budget parameters that top management supplied to the divisions. The
credibility of the performance review is curtailed when the budget can not be
adjusted to incorporate these changes. Top management, recognizing the current
problems, has agreed to establish a committee to review the situation and to
make recommendations for a new performance evaluation system. The committee
consists of each division manager, the Corporate Controller, and the Executive
Vice President who serves as the chairman. At the first meeting one division
manager outlined an Achievement of Objectives System (AOS). In this performance
evaluation system, divisional managers would beevaluated
according to three criteria: ? Doing better than last year-
Various measures would be compared to the same measures of the
prior year. ? Planning realistically-
Actual performance for the current year would be compared to realistic plans
and/or goals. ?

Managing
current assets – Various measures would be used to evaluate the divisional
management’s achievements and reactions to changing business and economic
conditions. A division manager believed this system would overcome many of the
inconsistencies of the current system because divisions could be evaluated from
three different viewpoints. In addition, managers would have the opportunity to
show how they would react and account for changes in uncontrollable external
factorA second division manager was also in favor of the proposed AOS. However,
he cautioned that the success of a new performance evaluation system would be
limited unless it had the complete support of top management. Further, this
support should be visible within all divisions. He believed that the committee
should recommend some procedures which would enhance the motivational and
competitive spirit of the divisions. Required: (1) Explain whether or
not the proposed AOS would be an improvement over the measure of divisional
performance nowused by SIU Incorporated. (2) Develop specific
performance measures for each of the three criteria in the proposed AOS which
could be used to evaluate divisional managers. (3) Discuss the motivational and
behavioral aspects of the proposed performance system. Also, recommend specific
programs which could be instituted to promote morale and give incentives to
divisional management.

119. Chadd
Fisher was recently appointed vice president of operations for Cary
Corporation. He has a manufacturing background and previously served as
operations manager of Cary’s building products division. The business units of
Cary Corporation include divisions that manufacture building products, process
food, and provide financial services. In a recent conversation with Drew
Williams, Cary’s chief financial officer, Chadd suggested evaluating unit
managers on the basis of the business unit data in Cary’s annual financial
report. This report presents revenues, earnings, identifiable assets, and
depreciation for each business unit for a five-year period. He believes that
evaluating business unit managers by criteria similar to that used to evaluate
the company’s top management is appropriate. Drew has reservations about using
information from the annual financial report for this purpose and suggested
that Chadd consider other criteria to use in the evaluation.

Required:
1. Explain why the business unit information prepared for public reporting
purposes might not be appropriate for theevaluation of unit managers’
performance. 2. Describe the possible motivational impact on Cary Corporation’s
unit managers if Chadd’s proposal for their evaluation is accepted. 3. Identify
and describe several types of financial information that would be more
appropriate for Chadd Fisher to use when evaluating the performance of unit
managers.

120. Tyler
Company had the following manufacturing information for the current year.

Required:Determine
operating income under both full costing and variable costing and explain the
difference.

121. Greg
Peterson was recently appointed vice president of operations for Webster
Corporation. He has a manufacturing background and previously served as
operations manager of Webster’s tractor division. The business units of Webster
Corporation include divisions that manufacture heavy equipment, process food,
and provide financial services. In a recent conversation with Carol Andrews,
Webster’s chief financial officer, Greg suggested evaluating unit managers on
the basis of the business unit data in Webster’s annual financial report. This
report presents revenues, earnings, identifiable assets, and depreciation for
each business unit for a five-year period. He believes that evaluating business
unit managers by criteria similar to that used to evaluate the company’s top
management is appropriate. Carol has reservations about using information from
the annual financial report for this purpose and suggested that Greg consider
other criteria to use in the evaluation.

Required:
1. Explain why the business unit information prepared for public reporting
purposes might not be appropriate for the evaluation of unit managers’
performance. 2. Describe the possible motivational impact on Webster Corporation’s
unit managers if Greg’s proposal for their evaluation is accepted. 3. Identify
and describe several types of information that would be appropriate for Greg
Peterson to use when evaluating the performance of unit managers.

(CMA Adapted)

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

61.

Information
concerning Johnston Co.’s direct materials costs was as follows:

.gif”>

The actual
purchase price per pound is:

A.
$6.12.

B.
$6.15.

C.
$6.50.

D.
$6.75.

E.
$7.13.

62.
Information concerning Johnston Co.’s direct materials costs was as follows:

.jpg”>

The direct
materials usage variance is:

A.
$307.50 unfavorable.

B.
$307.50 favorable.

C.
$322.50 unfavorable.

D.
$322.50 favorable.

E.
$532.50 favorable.

63.
Norio Manufacturing uses
powdered plastics (PPS) to manufacture a high-pressure board used in digital
equipment, Flex 10. Information concerning its operation in June was as
follows:

.jpg”>

The actual
purchase price per pound of PPS used is:

A.
$5.20.

B.
$5.76.

C.
$6.24.

D.
$6.84.

E.
$7.20.

64.
Norio Manufacturing uses
powdered plastics (PPS) to manufacture a high-pressure board used in digital
equipment, Flex 10. Information concerning its operation in June was as
follows:

.jpg”>

The standard
cost per pound of PPS is:

A.
$5.20.

B.
$5.76.

C.
$6.24.

D.
$6.84.

E.
$7.20.

65.

Norio
Manufacturing uses powdered plastics (PPS) to manufacture a high-pressure board
used in digital equipment, Flex 10. Information concerning its operation in
June was as follows:

.gif”>

The direct
materials purchase-price variance is:

A.
$51,840 favorable.

B.
$56,160 favorable.

C.
$62,208 favorable.

D.
$64,840 favorable.

E.
$72,000 favorable.

66.
Norio Manufacturing uses
powdered plastics (PPS) to manufacture a high-pressure board used in digital
equipment, Flex 10. Information concerning its operation in June was as
follows:

.jpg”>

The cost of PPS
in the flexible budget for the output of the period is:

A.
$259,200.

B.
$280,800.

C.
$311,040.

D.
$324,000.

E.
$360,000.

67.
Lucky Company’s direct labor information for the month of February is as
follows:

.jpg”>

The actual
direct labor rate per hour is:

A.
$12.00.

B.
$12.30.

C.
$12.60.

D.
$13.20.

E.
$13.50.

68.
Lucky Company’s direct labor information for the month of February is as
follows:

.jpg”>

The standard
direct labor rate per hour is:

A.
$12.00.

B.
$12.30.

C.
$12.60.

D.
$13.20.

E.
$13.50.

69.
Lucky Company’s direct labor information for the month of February is as
follows:

.jpg”>

The total
standard direct labor cost for the period is:

A.
$738,000.

B.
$747,000.

C.
$756,000.

D.
$765,000.

E.
$774,900.

.
Lucky Company’s direct labor information for the month of February is as
follows:

.jpg”>

The direct labor
rate variance is:

A.
$36,900 unfavorable.

B.
$37,800 unfavorable.

C.
$55,350 unfavorable.

D.
$56,700 unfavorable.

E.
$73,800 unfavorable.

71.
Lucky Company’s direct labor information for the month of February is as
follows:

.jpg”>

The direct labor
flexible-budget variance is:

A.
$18,900 unfavorable.

B.
$42,300 unfavorable.

C.
$46,350 unfavorable.

D.
$44,500 unfavorable.

E.
$54,900 unfavorable.

72.
Minmax Co.’s direct labor information for February is as follows:

.jpg”>

The actual
direct labor rate per hour is:

A.
$13.44.

B.
$13.65.

C.
$13.78.

D.
$14.00.

E.
$14.35.

73.
Minmax Co.’s direct labor information for February is as follows:

.jpg”>

The standard
direct labor rate per hour is:

A.
$13.44.

B.
$13.65.

C.
$13.78.

D.
$14.00.

E.
$14.35.

74.
Minmax Co.’s direct labor information for February is as follows:

.jpg”>

The total
standard direct labor cost for the units manufactured in February is:

A.
$458,640.

B.
$470,400.

C.
$477,750.

D.
$478,240.

E.
$490,000.

75.

Minmax
Co.’s direct labor information for February is as follows:

.gif”>

The direct labor
efficiency variance in February is:

A.
$13,440 favorable.

B.
$13,650 favorable.

C.
$13,776 favorable.

D.
$14,000 favorable.

E.
$19,110 favorable.

76.
Minmax Co.’s direct labor information for February is as follows:

.jpg”>

The total direct
labor flexible-budget variance in February is:

A.
$7,350 favorable.

B.
$7,840 favorable.

C.
$30,870 favorable.

D.
$30,870 unfavorable.

E.
$31,360 favorable.

77.
Europa Company manufactures only one product. Presented below is direct labor
information for November.

.jpg”>

The actual
direct labor hours worked during November was:

A.
18,720.

B.
19,200.

C.
20,800.

D.
22,400.

E.
22,464.

78.
Europa Company manufactures only one product. Presented below is direct labor
information for November.

.jpg”>

The total
standard direct labor hours in November for the output produced are:

A.
18,720.

B.
19,200.

C.
20,800.

D.
22,400.

E.
22,464.

79.
Europa Company manufactures only one product. Presented below is direct labor
information for November.

.jpg”>

The direct labor
rate variance for November is:

A.
$26,624.00 unfavorable.

B.
$31,948.80 unfavorable.

C.
$39,936.00 favorable.

D.
$71,884.80 favorable.

E.
$103,833.60 favorable.

80.

Europa Company
manufactures only one product. Presented below is direct labor information for
November.

.gif”>

The direct labor
efficiency variance for November is:

A.
$26,624.00 unfavorable.

B.
$31,948.80 unfavorable.

C.
$39,936.00 favorable.

D.
$71,884.80 favorable.

E.
$103,833.60 favorable.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

51.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Full costing
operating income for 2009 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

52.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Full costing
operating income for 2010 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

53.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable costing
operating income for 2009 is calculated to be:

A.
$149.

B.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

54.
WriterOne Inc.
manufactures ball point pens that sell at wholesale for $0.80 per unit.
Budgeted production in both 2009 and 2010 was 8,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable costing
operating income for 2010 is calculated to be:

A.
$149.

.
$430.

C.
$655.

D.
$1,030.

E.
$1,180.

55.
The value stream income statement can be compared to:

A.
Value chain analysis.

B.
The contribution income
statement.

C.
A streamlined production
process.

D.
A streamlined accounting
system.

56.
The six steps Ittner and
Larcker propose for maximizing the value of nonfinancial measures when using a
balanced scorecard include all the following except:

A.
Continually refine the model.

B.
Assess outcomes.

C.
Gather data.

D.
Base actions on the
data.

E.
Base actions on the
findings.

57.
The balanced scorecard is particularly important in difficult economic times
because:

A.
Financial measures are even more
important.

B.
Nonfinancial measures
are even more important.

C.
Financial measures may
be distorted.

D.
Nonfinancial measures
may be distorted.

58.
The value stream income statement provides the following information not usually
contained in the contribution income statement:

A.
Contribution by CPC.

B.
Contribution by profit
center.

C.
A separate accounting
for the effect of inventory change on profit.

D.
A separate accounting
for the effect of productivity change on profit.

59. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Sales for 2010 are calculated
to be:

A.
$9,750,000.

B.
$12,675,000.

C.
$13,000,000.

D.
$13,900,000.

E.
$20,000,000.

60. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Full costing operating income
for 2010 is calculated to be:

A.
$1,525,000.

B.
$1,850,000.

C.
$1,935,000.

D.
$2,260,000.

E.
$2,750,000.

61. Tokless
Inc. planned and manufactured 400,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $50 per unit of
production. Planned and fixed manufacturing costs were $800,000. Marketing and
administrative costs (all fixed) were $600,000 in 2010. Tokless Inc. sold
195,000 units of product in 2010 at $65 per unit. Variable costing operating
income for 2010 is calculated to be:

A.
$1,525,000.

B.
$1,850,000.

C.
$1,935,000.

D.
$2,260,000.

E.
$2,750,000.

62.
Profit center income statements are most meaningful to managers when they are
prepared:

A.
On a full cost basis.

B.
On a cost behavior
basis.

C.
On a cash basis.

D.
In a single-step format.

E.
In a multiple-step
format.

63. A
unit of an organization is referred to as a profit center if it has:

A.
Authority to make decisions affecting
the major determinants of profit, including the power to choose its markets and
sources of supply.

B.
Authority to make
decisions affecting the major determinants of profit, including the power to
choose its markets and sources of supply and significant control over the
amount of invested capital.

C.
Authority to make
decisions over the most significant costs of operations, including the power to
choose the sources of supply.

D.
Authority to provide
specialized support to other units within the organization.

E.
Responsibility for
combining material, labor, and other factors of production into a final output.

.
A unit of an organization is referred to as an investment center if it has:

A.
Authority to make decisions affecting
the major determinants of profit, including the power to choose its markets and
sources of supply.

B. Authority
to make decisions affecting the major determinants of profit, including the
power to choose its markets and sources of supply and significant control over
the amount of invested capital.

C.
Authority to make
decisions over the most significant costs of operations, including the power to
choose the sources of supply.

D.
Authority to provide
specialized support to other units within the organization.

E.
Responsibility for
developing markets for and selling the output of the organization.

65.
Of most relevance in deciding how or which costs should be assigned to an SBU
is the degree of:

A.
Avoidability.

B.
Causality.

C.
Controllability.

D.
Reliability.

66. A
significant problem in comparing profitability measures among companies is the:

A.
Lack of general agreement over which
profitability measure is best.

B.
Differences in the size
of the companies.

C.
Differences in the
accounting methods used by the companies.

D.
Differences in the
dividend policies of the companies.

E.
Effect of interest rates
on net income.

67.
The most important objective of a strategic performance measurement system is:

A.
Budgeting.

B.
Motivation.

C.
Authority.

D.
Variances.

E.
Pricing.

68.
What costs are treated as product costs under variable costing?

A.
Only variable costs.

B.
Only variable production
costs.

C.
All variable costs.

D.
All variable and fixed
manufacturing costs.

69.
Inventory under the variable costing method includes:

A.
Direct materials cost, direct labor
cost, but no factory overhead cost.

B.
Direct materials cost,
direct labor cost, and variable factory overhead cost.

C.
Prime cost but not
conversion cost.

D.
Prime cost and all
conversion cost.

70.
In an income statement prepared using the variable costing method, which of the
following terms should appear?

A.
A

B.
B

C.
C

D.
D

71.
Other things being equal, income computed by the variable costing method will
exceed that computed by the full costing method if:

A.
Units produced exceed units sold.

B.
Units sold exceed units
produced.

C.
Fixed manufacturing
costs increase.

D.
Variable manufacturing
costs increase.

72. Home
Products Inc has failed to reach its planned activity level during its first
two years of operation. The following table shows the relationship between
units produced, sales, and normal activity for these years and the projected
relationship for Year 3. All prices and costs have remained the same for the
last two years and are expected to do so in Year 3. Income has been positive in
both Year 1 and Year 2.

Because Home
Products uses a full costing system, one would predict operating income for
Year 3 to be:

A.
Greater than operating income under
variable costing.

B.
Less than year 2.

.
The same as operating income under
variable costing.

D.
Less than the operating
income under variable costing.

73.
A company’s operating
income was $70,000 using variable costing for a given period. Beginning and
ending inventories for that period were 45,000 units and 50,000 units,
respectively. Ignoring income taxes, if the fixed overhead application rate was
$8.00 per unit, what would operating income have been using full costing?

A.
$30,000.

B.
$140,000.

C.
$110,000.

D.
$100,000.

E.
Cannot be determined
from the information given.

74. A
company had income of $50,000 using variable costing for a given period.
Beginning and ending inventories for that period were 80,000 units and 90,000
units, respectively. If the fixed overhead application rate were $10.00 per
unit, what would operating income have been using full costing?

A.
$(50,000).

B.
$170,000.

C.
$150,000.

D.
$0.

E.
Cannot be determined
from the information given.

75.
The balanced scorecard
is widely used in performance evaluation and management control. In which
regions around the world is it most and least, respectively, commonly used?

A.
Europe, Asia

B.
U.S and Canada, Africa

C.
U.S. and Canada, South
and Central America

D.
South and Central
America, Europe

76.
Operating income reported under full costing will exceed operating income
reported under variable costing for a given period if:

A.
Production equals sales for that period.

B.
Production exceeds sales
for that period.

C.
Sales exceed production
for that period.

D.
The variable overhead
exceeds the fixed overhead.

77. A
company’s operating income recently increased by 30% while its inventory
increased in a given year. Which of the following accounting methods would be
most likely to produce the favorable income results?

A.
Full costing.

B.
Direct costing.

C.
Variable costing.

D.
Standard direct costing.

78.
During January, Lang, Inc. produced 10,000 units of product with costs as
follows:

What is Lang’s
unit cost for January, calculated on the variable costing basis?

A.
$6.20.

B.
$7.20.

C.
$7.50.

D.
$8.50.

E.
$9.50.

79.
In the principal-agent model, the manager is modeled as having all of the
following elements except:

A.
Risk aversion

B.
Outcomes of actions

C.
Provides effort

D.
Decision Making

80.
During October, Rover Industries produced 35,000 units of product with costs as
follows:

What is Rover’s
unit cost for October, calculated on the variable costing basis?

A.
$3.25.

B.
$3.75.

C.
$4.00.

.
$4.50.

E.
$5.00.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$4.00

Description

81.
Under variable costing, fixed manufacturing overhead costs would be classified
as:

A.
Period costs.

B.
Product costs.

C.
Selling costs.

D.
Inventory costs.

82.
Under full costing, fixed manufacturing overhead costs would be classified as:

A.
Period costs.

B.
Product costs.

C.
Selling costs.

D.
Inventory costs.

83.
Under the
principal-agent model of contract relationships, situations such as machine
breakdowns or a decrease in market demand would be classified under:

A.
Lack of observability.

B.
Lack of responsibility.

C.
Uncertainty.

D.
Decentralization.

84. In
a formal management control system, top management sets expectations for
desired manager performance. Which of the following is not one of the
areas in which a formal individual management control system would be used?

A.
Hiring practices.

B.
Promotion policies.

C.
Operations.

D.
Sales.

E.
Organizational culture.

85. The
type of strategic business unit (SBU) where the SBU focuses on the selling
function of a specific product line or by a geographical location is referred
to as a(n):

A.
Profit center.

B.
Cost center.

C.
Revenue center.

D.
Investment center.

E.
All of the above.

86.
SBU is the acronym for:

A.
Small Business Unit.

B.
Sustainable Business
Unit.

C.
Standard Business Unit.

D.
Strategic Business Unit.

87. Quick
Technology Company is a supplier of high-end research equipment for the
pharmaceutical industry. Quick currently has a variety of different firms
producing computer chips for increased memory and improved processing speeds
which are installed in Quick’s equipment. In this case, having another firm
provide supplies for Quick’s equipment is an example of:

A.
Strategic positioning.

B.
Opportunity costing.

C.
Profitability
maximization.

D.
Outsourcing.

E.
Value chain analysis.

88.
Which of the following is not a criterion for choosing a cost allocation
method?

A.
Provide an incentive for managers to
make decisions consistent with top management’s goals.

B.
Provide an opportunity
for managers to make decisions consistent with the manager’s goals.

C.
Provide a basis for a
fair evaluation of manager’s performance.

D.
Motivate managers to
exert a high level of effort.

89.
Which one of the following is not an order-filling cost?

A.
Freight.

B.
Warehousing.

C.
Inspection.

D.
Collections.

90.
Controllable fixed costs:

A.
Are those costs that the profit center
manager can influence in approximately a year or less.

B.
Are those costs that the
profit center manager can influence in approximately a year or more.

C.
Include variable costs.

D.
Have no effect on
operating income.

91.

Using
the balanced scorecard to describe the firm’s strategy in detail through the
use of a cause-and-effect diagram which is also known as

a(n):

A.
Status Diagram.

B.
Strategy Map.

C.
Performance Flowchart.

D.
Organizational Diagram.

E.
Operational
Work-through.

92.
The cost method that is input-oriented and considers costs largely
uncontrollable at the planning stage is called the:

A.
Engineered-cost method.

B.
ABC costing.

C.
Discretionary-cost
method.

D.
Job costing.

E.
Standard costing.

93.
Costs such as depreciation, taxes and insurance and usually extending beyond
one year are considered:

A.
Controllable fixed costs.

B.
Noncontrollable fixed
costs.

C.
Noncontrollable variable
costs.

D.
Controllable variable
costs.

E.
Controllable margin
costs.

94.
Which of the following is not a revenue driver factor which affects
sales volume for a manufacturing firm?

A.
Price changes.

B.
Customer service.

C.
Delivery dates.

D.
Discounts.

E.
Productivity.

95.
Which of the following is an argument against the use of variable costing?

A.
Full costing overstates the balance
sheet value of inventories.

B.
Variable factory
overhead is a period cost.

C.
Fixed factory overhead
is difficult to allocate properly.

D.
Fixed factory overhead
is necessary for the production of a product.

96. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Sales for 2010 are
calculated to be:

A.
$1,000,000.

B.
$5,000,000.

C.
$7,500,000.

D.
$10,000,000.

E.
$12,500,000.

97. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Full costing
operating income for 2010 is calculated to be:

A.
$1,000,000.

B.
$3,200,000.

C.
$3,300,000.

D.
$4,200,000.

E.
$4,300,000.

98. Table
Inc. planned and manufactured 250,000 units of its single product in 2010, its
first year of operations. Variable manufacturing costs were $30 per unit of
production. Planned and actual fixed manufacturing costs were $500,000.
Marketing and administrative costs (all fixed) were $300,000 in 2010. Table
Inc. sold 200,000 units of product in 2010 at $50 per unit. Variable costing
operating income for 2010 is calculated to be:

A.
$1,000,000.

B.
$3,200,000.

C.
$3,300,000.

D.
$4,200,000.

E.
$4,300,000.

99.
Strategic performance measurement is a(n):

A.
Accounting system used by top management
for the evaluation of SBU managers.

B.
System of shared
responsibility.

C.
Accounting system for
determining strategy.

D.
System to design and
implement the balanced scorecard.

100.
Managers who are risk averse:

A.
Seek to accept options with low risk and
would choose an option with lower expected value if it had more risk.

B.
Seek to avoid options
with low risk and would choose an option with higher expected value if it had
more risk.

.
Seek to avoid options with high risk and
would choose an option with lower expected value if it had less risk.

D.
Seek to accept options
with high risk and would choose an option with lower expected value if it had
less risk.

E.
Seek to accept options
with low risk and would choose an option with higher expected value if it had
more risk.

101.
Managers who are risk prone:

A.
Seek risky projects that promise some
chance of a low benefit.

B.
Seek risky projects that
promise some chance of a high benefit, although the projects may have a risk of
low benefit.

C.
Seek risky projects.

D.
Seek high risk projects
that promise some chance of a high benefit, although the projects may have a
very significant risk of no benefit.

102.
Risk plays a critical
role in the decision making process. However, numerous studies have shown that
most executives, managers and individuals are considered to be:

A.
Risk neutral.

B.
Risk prone.

C.
Risk averse.

D.
Risk seekers.

103.
A value stream income statement is best associated with:

A.
Value chain analysis.

B.
Activity-based costing.

C.
The theory of
constraints.

D.
Lean manufacturing.

104.
A value stream is:

A.
A set of value-adding activities.

B.
A sequence of efficient
processes.

C.
A group of related
products.

D.
A strategy map with a
focus on value-adding activities.

105. Reasons
for failure to implement the balanced scorecard effectively include all but
which of the following:

A.
Failure to link nonfinancial measures to
strategy.

B.
Failure to validate the
assumptions in the strategy map.

C.
Setting the wrong
performance targets.

D.
Failure to include
financial reporting requirements to the SEC.

E.
Measuring the results
incorrectly.

106. The
sales life cycle has three phases: early, growth, and maturity. The appropriate
performance measures for the growth phase include

A.
Profitability, market penetration.

B.
Profitability, strategy.

C.
Revenue, strategy.

D.
Profitability, asset
management.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$5.00

Description

31.
Production or support SBUs within the firm that have the goal of providing the
best quality product or service at the lowest cost are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

.
Investment centers.

32.
SBUs that generate revenues and incur the major portion of the cost for
producing those revenues are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

E.
Investment centers.

33.
SBUs that include the assets they employ as well as profits in the performance
evaluation are:

A.
Revenue centers.

B.
Contribution centers.

C.
Profit centers.

D.
Cost centers.

E.
Investment centers.

34.
The replacing of controllable costs with non-controllable costs by a department
is:

A.
Budget slack.

B.
Cost shifting.

C.
Outsourcing.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

35.
For production and support departments, a method of implementing cost centers
that is input-oriented is the:

A.
Budget slack.

B.
Cost shifting approach.

C.
Outsourcing approach.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

36.
For production and support departments, a method of implementing cost centers
that is output-oriented is the:

A.
Budget slack method.

B.
Cost shifting approach.

C.
Outsourcing approach.

D.
Discretionary-cost
method.

E.
Engineered-cost
approach.

37.
Expenditures of revenue centers usually include:

A.
Order-purchasing costs.

B.
Order-getting costs.

C.
Order-producing costs.

D.
Order-scheduling costs.

E.
Order-delivering costs.

38.
The balanced scorecard measures the SBU’s performance in all of the following
areas except:

A.
Learning and growth.

B.
Managerial performance.

C.
Customer satisfaction.

D.
Internal business
processes.

E.
Accounting and tax
compliance.

39. Bilbo
owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each
restaurant was treated as a profit center for performance evaluation purposes.
Although the restaurants had separate kitchens, they shared a central baking
facility. The principal costs of the baking area included materials, supplies,
labor, and depreciation and maintenance on the equipment. Bilbo allocated the
monthly costs of the baking facility to the two restaurants based on the number
of tables served in each restaurant during the month using dual allocation and
equal sharing of fixed costs. In April, the costs were $40,000, of which
$16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut
served 3,600 tables.

The amount of joint cost
that should have been allocated to the Pork Palace in April is calculated to
be:

A.
$8,000.

B.
$10,800.

C.
$13,200.

D.
$18,800.

E.
$21,200.

40. Bilbo
owned two adjoining restaurants, the Pork Palace and the Chicken Hut. Each
restaurant was treated as a profit center for performance evaluation purposes.
Although the restaurants had separate kitchens, they shared a central baking
facility. The principal costs of the baking area included materials, supplies,
labor, and depreciation and maintenance on the equipment. Bilbo allocated the
monthly costs of the baking facility to the two restaurants based on the number
of tables served in each restaurant during the month using dual allocation and
equal sharing of fixed costs. In April, the costs were $40,000, of which
$16,000 were fixed. The Pork Palace served 4,400 tables, while the Chicken Hut
served 3,600 tables.

The amount of the joint
cost that should have been allocated to the Chicken Hut in April is calculated
to be:

A.
$8,000.

B.
$10,800.

C.
$13,200.

.
$18,800.

E.
$21,200.

41.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Kentucky research
facility is calculated to be:

A.
$24,000,000.

B.
$18,000,000.

C.
$9,000,000.

D.
$14,000,000.

E.
$26,000,000.

42.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Arizona research
facility is calculated to be:

A.
$25,000,000.

B.
$31,000,000.

C.
$44,000,000.

D.
$19,000,000.

E.
$36,000,000.

43.
Organic Laboratories
allocates research and development costs to its three research facilities based
on each facility’s total annual revenue from new product developments:

Using revenue as
an allocation base, the amount of costs allocated to the Illinois research
facility is calculated to be:

A.
$17,000,000.

B.
$33,000,000.

C.
$14,000,000.

D.
$28,000,000.

E.
$21,000,000.

44.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Lower School is
calculated to be:

A.
$240,000.

B.
$320,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

45.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Middle School is
calculated to be:

A.
$240,000.

B.
$320,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

46.
Todweed Academy allocates marketing and administrative costs to its three
schools based on total annual tuition revenue for the schools:

Using revenue as
an allocation base, the amount of costs allocated to the Upper School is
calculated to be:

A.
$240,000.

B.
$360,000.

C.
$400,000.

D.
$480,000.

E.
$600,000.

47.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Full costing
operating income for 2009 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

48.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Full costing
operating income for 2010 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

49.
Pane Inc. manufactures
hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in
both 2009 and 2010 was 3,000 units. There was no beginning inventory in 2009.
The following data summarized the 2009 and 2010 operations:

Variable costing
operating income for 2009 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

50.Pane
Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit.
Budgeted production in both 2009 and 2010 was 3,000 units. There was no
beginning inventory in 2009. The following data summarized the 2009 and 2010
operations:

Variable
costing operating income for 2010 is calculated to be:

A.
$935.

B.
$1,150.

C.
$1,200.

D.
$1,352.

E.
$1,395.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *

general business data bank

$3.00

Description

1. Performance evaluation in most firms is
applied at:

A.
Many different levels from top
management down to individual production and sales employees.

B.
All levels of
production, but only top levels of sales.

C.
Top and mid-management
levels only.

D.
Lower and mid-management
levels only.

E.
The mid-management level
only.

2. Risk aversion is by:

A.
Lack of a strategic emphasis in decision
making.

B.
Use of non-strategic
performance measurement systems.

C.
Presence of uncertainty
in a manager’s environment.

D.
A manager’s inability to
deal with stress.

3. 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:

A.
Performance measurement.

B.
Employee inspection.

C.
Goal congruence.

D.
Managerial evaluation.

E.
Management control.

4. Operational control has a
management-by-exception approach in contrast to management control, which is
more consistent with:

A.
The management-by-incentives approach.

B.
The
management-by-objectives approach.

C.
The “hands
off” approach.

D.
A non-quantitative set
of measures.

E.
A non-qualitative set of
measures.

5. A
strategic business unit (SBU) consists of a well-defined set of controllable
operating activities over/about which the SBU manager is:

A.
Knowledgeable.

B.
Responsible for
strategy.

C.
Responsible for strategy
and execution.

D.
Responsible for
strategy, execution, and performance.

6. The objectives of management control of the
manager include:

A.
Cost, quality, and functionality.

B.
Management by
objectives.

C.
Management by exception.

D.
Motivation, incentive
and fairness.

E.
Identification, response
and performance.

7. The principal-agent economic model applied to
employment contracts deals primarily with the two management performance
aspects of:

A.
Rights and duties.

B.
Uncertainty and lack of
observability.

C.
Performance and reward.

D.
Controllability and
responsibility.

E.
Risk and motivation.

8. The “risk-averse” manager will be
improperly biased to:

A.
Seek out decisions with uncertain
outcomes.

B.
Make risky decisions.

C.
Avoid decisions with
uncertain outcomes.

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

E.
Use resources beyond
his/her control.

9. In
properly developing formal systems at the team level that will have the desired
impact on employees’ performance, the management accountant should recognize
any existing informal systems and:

A.
Make plans to eliminate these informal
systems.

B.
Simply formalize them
into the system being developed.

C.
Try to eliminate them
prior to system development.

D.
Not let these
“culture” aspects affect system development.

E.
Try to capture valued
“culture” aspects in the formal system.

10.
The common factor among control systems in hiring practices, promotion
policies, and strategic performance measurement is:

A.
Management sets expectations for desired
employee performance.

B.
Employee-determined
expectations for desired employee performance.

.
Coordination of activities.

D.
Communication of
results.

11.
Among the benefits of centralized management in a firm is (are):

A.
Effective goal congruence.

B.
Utilization of top
management expertise.

C.
Effective participation
by all levels of management.

D.
A higher level of
motivation for divisional managers.

12.
The benefits of decentralized management in a firm include all the following except:

A.
Ability of SBU managers to use their
local knowledge effectively.

B.
Ability of SBU managers
to make more timely decisions.

C.
Motivation provided by
the freedom and responsibility of a decentralized environment.

D.
Improved coordination
among divisional managers.

13.
The need for coordination between the production and the selling function will
impact the choice of:

A.
Profit, cost or revenue center.

B.
Manager for the firm.

C.
Formal or informal
control systems.

D.
Profitability goal for
the firm.

E.
Control measures to
prevent fraud.

14.
By not distinguishing between direct and indirect costs in their performance
reporting, many companies:

A.
Generate more useful control potential
for managers.

B.
Can cause poor
decision-making.

C.
Focus on long-term
results.

D.
Focus on short-term
results.

E.
Clearly distinguish
between controllable and non-controllable costs.

15.
As a strategic issue, “budget slack” could represent a:

A.
Very minor issue in most firms.

B.
Self-correcting problem
over several operating periods.

C.
Problem only in a
decentralized management environment.

D.
Lower overall level of
expected performance than is achievable.

E.
Significant increase in
the relative risk aversion of managers.

16.
“Outsourcing” a cost center is often done to:

A.
Reduce cost and obtain strategic focus.

B.
Increase control over a
strategic resource.

C.
Reduce the firm’s
contractual relationships.

D.
Shift costs within
remaining cost centers.

17. Cost
allocation of service department costs to production departments make the
evaluation and control processes in the production departments:

A.
Simpler.

B.
More complex.

C.
Forthright and fair.

D.
Less efficient.

E.
Counter productive.

18.
From a strategic standpoint, profit centers tend to:

A.
Free the center manager from concerns
about markets.

B.
Place more cost emphasis
on rush orders.

C.
Provide incentive for
coordination among managers of different units.

D.
Focus managers on cost
control rather than revenue generation.

E.
All of the above answers
are correct.

19.
The contribution by profit center (CPU) expands the contribution margin income
statement by distinguishing:

A.
Variable and fixed costs.

B.
Short-term and long-term
fixed costs.

C.
Controllable and
non-controllable fixed costs.

D.
Noncontrollable and
untraceable fixed costs.

E.
Net income and
contribution margin.

20.
The main concept of the
balanced scorecard is that, to evaluate the SBU’s progress to strategic
success, a business must use all of the following except:

A.
Both financial and non-financial
measures.

B.
Value chain analysis.

C.
Attend to customer
satisfaction needs.

D.
Multiple measures for a
comprehensive evaluation.

21.
In a non-profit organization, you are more likely to see:

.
Cost centers.

B.
Revenue centers.

C.
Profit centers.

D.
Investment centers.

22.
The evaluation by upper-level managers of the performance of mid-level managers
is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

23.
The evaluation of operating level employees by mid-level managers is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

24.
The manager acting independently in such a way as to simultaneously achieve top
management’s objectives is:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

25.
A model that has been
used to better understand the key elements that contracts must have in order to
achieve the desired objectives is the:

A.
Performance evaluation.

B.
Operational control.

C.
Goal congruence.

D.
Principal-agent model.

E.
Management control.

26.
Order-filling costs:

A.
Include samples.

B.
Cannot often be
effectively managed as an engineered-cost center.

C.
Usually have a
relatively clear relationship to sales volume.

D.
Include commissions.

27.
Controllable margin is determined by subtracting short-term controllable fixed
costs from the:

A.
Long-term controllable fixed cost.

B.
Contribution margin.

C.
Variable costs.

D.
Fixed costs.

E.
Variable costs and fixed
costs.

28.
An employment contract
is an agreement between the manager and top management designed to provide
incentives for the manager to act:

A.
Independently to achieve top
management’s objectives.

B.
Consistently with that
of other managers.

C.
Independently to achieve
the manager’s objectives.

D.
Independently to achieve
the customer’s objectives.

29.
The least common type of SBU in a retail firm is the:

A.
Profit center.

B.
Cost center.

C.
Revenue center.

D.
Investment center.

30.
Which one of the following is a drawback of decentralization?

A.
Uses local knowledge only.

B.
May hinder coordination
among independent SBUs.

C.
Provides better
management control.

D.
Provides goal
congruence.

E.
Offers an efficient
method of performance evaluation.

Reviews

There are no reviews yet.

Be the first to review “general business data bank”

Your email address will not be published. Required fields are marked *