Explain how a customer focus can result in increased profits for a company.
1) Explain how a customer focus can result in increased profits for a company.
2) The scenario that resources should be spent if the expected benefits to the company exceed the expected costs describes:
A) cost-benefit approach
B) behavioral and technical considerations
C) balanced scorecard
D) different costs for different purposes
3) The act of simply measuring and reporting information:
A) focuses the attention of employees on those processes
B) diverts employee's attention to other activities
C) disproves the saying "What gets measured gets managed."
D) has no effect on employee behavior
4) Which statement is true?
A) Management is primarily a technical activity.
B) People do not react to measurements.
C) Employees spend more attention on those variables that are getting measured.
D) Resources should be spent if the expected benefits to the company are less than the expected costs.
5) The primary criterion when faced with a resource allocation decision is:
A) cost minimization
B) reduction in the amount of time required to perform a particular job
C) achievement of organizational goals
D) how well the alternative options help achieve organizational goals in relation to the costs incurred for these systems
6) Which of the following statements about the cost-benefit approach is true?
A) Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources.
B) In a cost-benefit analysis, both costs and benefits are easy to obtain.
C) Resources should be spent if the costs of a decision outweigh the benefits of the decision.
D) A cost-benefit approach would not be appropriate for a decision to install a budget system or not.
7) It is generally easy to quantify expected benefits and costs when applying the cost-benefit approach.
8) The technical considerations of budgeting encourage managers and other employees to strive for achieving the goals of the organization.
9) A cost concept used for external reporting purposes may not be appropriate for internal, routine reporting to managers.
10) Accounting method for internal reporting purposes are specified by Generally Accepted Accounting Principles (GAAP).
11) Discuss the cost-benefit approach guideline management accountants use to provide value in strategic decision making.
12) Discuss the potential behavior implications of performance evaluation.
13) The person(s) directly responsible for attaining of organizational objectives is/are:
A) the treasurer
B) line management
C) the controller
D) the chief financial officer
14) The person(s) responsible for providing advice and assistance to line managers is/are:
A) the controller
B) the chief financial officer
C) staff management
D) the treasurer
15) ________ includes providing financial information for reports to managers and shareholders, and overseeing the overall operations of the accounting system.
A) Internal audit
B) External audit
16) ________ includes banking and short- and long-term financing, investments, and cash management.
A) Risk management
B) Internal audit
17) Line management includes:
A) manufacturing managers
B) human-resource managers
C) information-technology managers
D) management-accounting managers
18) Staff management includes:
A) manufacturing managers
B) human-resource managers
C) purchasing managers
D) distribution managers
19) Responsibilities of a CFO include all of the following EXCEPT:
A) providing financial reports to shareholders
B) managing short-term and long-term financing
C) investing in new equipment
D) preparing federal, state, and international tax returns
20) The ________ is primarily responsible for management accounting and financial accounting. A) COO (Chief Operating Officer)
B) CIO (Chief Information Officer)
21) All of the following report to the CFO EXCEPT the:
B) tax department manager
C) production manager
22) Examples of the controller's functions include all EXCEPT:
A) operations administration
C) investor relations
D) general ledger
23) Long term financing is an integral part of the ________ function in an organization.
C) internal audit
24) Line management is directly responsible for attaining the goals of the organization.
25) Staff management should NOT provide advice and assistance to line management.
26) Treasury includes banking and short- and long-term financing, investments, and cash management.
27) The controller is usually responsible for banking, short- and long-term financing, investments, and cash management.
28) The controller (also called the chief accounting officer) is the financial executive primarily responsible for both management accounting and financial accounting.
29) An external audit includes reviewing and analyzing financial and other records to attest to the integrity of the organization's financial reports and to adherence to its policies and procedures.
30) The controller is generally a staff position.
31) Management accountants must have behavioral and interpersonal skills.
32) What areas of responsibility does a chief financial officer have in a typical organization?
33) How does a controller help "control" a company?
34) Products, services, departments, and customers may be cost objects. Answer: TRUE
35) Costs are accounted for in two basic stages: assignment followed by accumulation.
36) Actual costs and historical costs are two different terms referring to the same thing.
37) Accountants define a cost as a resource to be sacrificed to achieve a specific objective.
38) A cost object is always either a product or a service.
39) A customer could be considered a cost object.
40) Which of the following does NOT affect the direct/indirect classification of a cost?
A) the level of budgeted profit for the next year
B) the materiality of the cost in question
C) available technology to gather information about the cost
D) the design of the operation
41) Which of the following statements about the direct/indirect cost classification is NOT true?
A) Indirect costs are always traced.
B) Indirect costs are always allocated.
C) The design of operations affects the direct/indirect classification.
D) The direct/indirect classification depends on the choice of cost object.
42) Cost tracing is:
A) the assignment of direct costs to the chosen cost object
B) a function of cost allocation
C) the process of tracking both direct and indirect costs associated with a cost object
D) the process of determining the actual cost of the cost object
43) Cost allocation is:
A) the process of tracking both direct and indirect costs associated with a cost object B) the process of determining the actual cost of the cost object
C) the assignment of indirect costs to the chosen cost object
D) a function of cost tracing
44) The determination of a cost as either direct or indirect depends upon the: A) accounting system
B) allocation system
C) cost tracing system
D) cost object chosen
45) Classifying a cost as either direct or indirect depends upon:
A) the behavior of the cost in response to volume changes
B) whether the cost is expensed in the period in which it is incurred C) whether the cost can be easily identified with the cost object
D) whether an expenditure is avoidable or not in the future Answer: C
46) A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are:
A) beverages provided daily in the plant break room
B) monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver
C) salaries of the clerical staff that work in the company administrative offices
D) utilities paid for the manufacturing plant
47) A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is:
A) material used to make the soccer balls
B) labor to shape the leather used to make the soccer ball
C) shift supervisor for the soccer line
D) plant supervisor
48) Which one of the following items is a direct cost?
A) Customer-service costs of a multiproduct firm; Product A is the cost object.
B) Printing costs incurred for payroll check processing; payroll check processing is the cost object.
C) The salary of a maintenance supervisor in a multiproduct manufacturing plant; Product B is the cost object.
D) Utility costs of the administrative offices; the accounting department is the cost object.
49) Which of the following statements about net income (NI) is true?
A) NI = operating income plus nonoperating revenue.
B) NI = operating income plus operating costs.
C) NI = operating income less income taxes.
D) NI = operating income less cost of goods sold.
50) Which of the following is true about the assumptions underlying basic CVP analysis?
A) Only selling price is known and constant.
B) Only selling price and variable cost per unit are known and constant.
C) Only selling price, variable cost per unit, and total fixed costs are known and constant.
D) Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.
51) The contribution income statement:
A) reports gross margin
B) is allowed for external reporting to shareholders
C) categorizes costs as either direct or indirect
D) can be used to predict future profits at different levels of activity
52) Contribution margin equals:
A) revenues minus period costs
B) revenues minus product costs
C) revenues minus variable costs
D) revenues minus fixed costs
53) What is the budgeted revenue for the month assuming that Dr. Hunter plans to perform this procedure 200 times?
54) What is the budgeted operating income for the month assuming that Dr. Hunter plans to perform the procedure 200 times?
55) The contribution margin percentage is:
56) To achieve $100,000 in operating income, sales must total:
D) None of these answers are correct.
57) Sales total $200,000 when variable costs total $150,000 and fixed costs total $30,000. The breakeven point in sales dollars is:
C) $ 40,000
D) $ 30,000
58) The breakeven point in CVP analysis is defined as:
A) when fixed costs equal total revenues
B) fixed costs divided by the contribution margin per unit
C) revenues less variable costs equal operating income
D) when the contribution margin percentage equals total revenues divided by variable costs
59) Which of the following statements about determining the breakeven point is FALSE?
A) Operating income is equal to zero.
B) Contribution margin - fixed costs is equal to zero.
C) Revenues equal fixed costs plus variable costs.
D) Breakeven revenues equal fixed costs divided by the variable cost per unit.
60) What is the breakeven point in units, assuming a product's selling price is $100, fixed costs are $8,000, unit variable costs are $20, and operating income is $3,200?
A) 100 units
B) 300 units
C) 400 units
D) 500 units
61) In 2011, Grant Company has sales of $800,000, variable costs of $200,000, and fixed costs of $300,000. In 2012, the company expects annual property taxes to decrease by $15,000.
a. Calculate operating income and the breakeven point for 2011.
b. Calculate the breakeven point for 2012.
62) Suppose that management believes that a $24,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to justify this additional expenditure?
A) 320 units
B) 1,120 units
C) 240 units
D) None of these answers are correct.
63) Suppose that management believes that a 20% reduction in the selling price will result in a 20% increase in sales. If this proposed reduction in selling price is implemented:
A) operating income will decrease by $9,000
B) operating income will increase by $9,000
C) operating income will decrease by $20,000
D) operating income will increase by $15,000
64) If contribution margin decreases by $1 per unit, then operating profits will increase by $1 per unit. True or False?