Question 1

Costs that a manager CANNOT control are called:

Accepted Answer

A)  Direct costs 
B)  Indirect costs 
C)  Uncontrollable costs 
D)  Segment costs 
A)  Direct costs 
B)  Indirect costs 
C)  Uncontrollable costs 
D)  Segment costs

Question 2

Exhibit 19-1 The following information relates to Almira's operations for the month of August:
  
-Refer to Exhibit 19-1. Given the information above, the labor rate variance is:

Accepted Answer

A)  $40,000 unfavorable 
B)  $40,000 favorable 
C)  $42,000 unfavorable 
D)  $42,000 favorable 
A)  $40,000 unfavorable 
B)  $40,000 favorable 
C)  $42,000 unfavorable 
D)  $42,000 favorable

Question 3

Exhibit 19-9 The following data is known for Lyman, Inc.:
  Standards:
 
- Refer to Exhibit 19-9. Using the information above, compute the variable manufacturing overhead spending variance for Lyman, Inc.

Accepted Answer

A)  $10,000 favorable 
B)  $10,000 unfavorable 
C)  $6,500 favorable 
D)  $6,500 unfavorable 
A)  $10,000 favorable 
B)  $10,000 unfavorable 
C)  $6,500 favorable 
D)  $6,500 unfavorable

Question 4

Exhibit 19-2 The following information relates to Bergen Corporation:
 
-Refer to Exhibit 19-2. Based on the information above, the number of direct labor hours that should have been used is:

Accepted Answer

A)  5,900 hours 
B)  6,000 hours 
C)  6,100 hours 
D)  6,200 hours 
A)  5,900 hours 
B)  6,000 hours 
C)  6,100 hours 
D)  6,200 hours

Question 5

Exhibit 19-9 The following data is known for Lyman, Inc.:
  Standards:
  
-Refer to Exhibit 19-9. Using the information above, compute the variable manufacturing overhead efficiency variance for Lyman, Inc.

Accepted Answer

A)  $10,000 favorable 
B)  $10,000 unfavorable 
C)  $30,000 favorable 
D)  $30,000 unfavorable 
A)  $10,000 favorable 
B)  $10,000 unfavorable 
C)  $30,000 favorable 
D)  $30,000 unfavorable

Question 6

Return on investment is a direct function of all the following EXCEPT:

Accepted Answer

A)  Operating income 
B)  Net sales 
C)  Average total assets 
D)  Average inventory 
A)  Operating income 
B)  Net sales 
C)  Average total assets 
D)  Average inventory

Question 7

Profit center managers are most often evaluated on the basis of:

Accepted Answer

A)  A comparison of actual to standard costs 
B)  Segment margin 
C)  Return on investment 
D)  Earnings per share 
A)  A comparison of actual to standard costs 
B)  Segment margin 
C)  Return on investment 
D)  Earnings per share

Question 8

Medina Sports manufactures snowboards. Medina had budgeted 25 direct labor hours per unit and projected that 2,120 units would be produced. The budgeted fixed manufacturing overhead costs were $530,000. The actual overhead costs for the year were $544,000 and 2,150 units were produced. What is the fixed overhead budget variance?

Accepted Answer

A)  $14,000 favorable 
B)  $14,000 unfavorable 
C)  $7,500 favorable 
D)  $7,500 unfavorable 
A)  $14,000 favorable 
B)  $14,000 unfavorable 
C)  $7,500 favorable 
D)  $7,500 unfavorable

Question 9

Exhibit 19-5 Ridgeline Corporation has the following operating data for the year:
 
- Refer to Exhibit 19-5. Given the above data for Ridgeline Company, what is the profit margin assuming the minimum rate of return on assets is 10%?

Accepted Answer

A)  12.5% 
B)  25.6% 
C)  32% 
D)  57% 
A)  12.5% 
B)  25.6% 
C)  32% 
D)  57%

Question 10

The income a segment is able to earn above a specified minimum return is called:

Accepted Answer

A)  Gross margin 
B)  Profit margin 
C)  Net income 
D)  Residual income 
A)  Gross margin 
B)  Profit margin 
C)  Net income 
D)  Residual income

Question 11

The labor rate variance is the difference between the:

Accepted Answer

A)  Actual labor hours and the standard labor hours multiplied by the standard labor rate 
B)  Actual labor rate and the standard labor rate multiplied by standard hours 
C)  Standard labor rate and the actual labor rate multiplied by the actual labor hours 
D)  Standard labor rate and the actual labor rate multiplied by the difference in actual labor hours and standard labor costs 
A)  Actual labor hours and the standard labor hours multiplied by the standard labor rate 
B)  Actual labor rate and the standard labor rate multiplied by standard hours 
C)  Standard labor rate and the actual labor rate multiplied by the actual labor hours 
D)  Standard labor rate and the actual labor rate multiplied by the difference in actual labor hours and standard labor costs

Question 12

The following information has been gathered from the accounting department at a local grocery store:
   What is the return on investment and profit margin on sales for the local grocer?

Accepted Answer

The answer of The following information has been gathered from...

Question 13

Exhibit 19-2 The following information relates to Bergen Corporation:
 
-Refer to Exhibit 19-2. Based on the information above, the materials price variance for materials actually used is:

Accepted Answer

A)  $500 favorable 
B)  $500 unfavorable 
C)  $625 favorable 
D)  $625 unfavorable 
A)  $500 favorable 
B)  $500 unfavorable 
C)  $625 favorable 
D)  $625 unfavorable

Question 14

Exhibit 19-8 The following information is available for Granger Company:
  
-Refer to Exhibit 19-8. Given the information above, the variable manufacturing overhead efficiency variance is:

Accepted Answer

A)  $7,000 favorable 
B)  $7,000 unfavorable 
C)  $10,000 unfavorable 
D)  $17,000 unfavorable 
A)  $7,000 favorable 
B)  $7,000 unfavorable 
C)  $10,000 unfavorable 
D)  $17,000 unfavorable

Question 15

Walnut Company has sales of $1,000,000 and total expenses of $900,000. If operating assets are $500,000, the return on investment is:

Accepted Answer

A)  10% 
B)  20% 
C)  30% 
D)  40% 
A)  10% 
B)  20% 
C)  30% 
D)  40%

Question 16

Exhibit 19-2 The following information relates to Bergen Corporation:
 
-Refer to Exhibit 19-2. Based on the information above, the quantity of direct materials that should have been used is:

Accepted Answer

A)  7,800 pounds 
B)  8,000 pounds 
C)  12,000 pounds 
D)  12,500 pounds 
A)  7,800 pounds 
B)  8,000 pounds 
C)  12,000 pounds 
D)  12,500 pounds

Question 17

Which of the following will most likely increase the return on investment?

Accepted Answer

A)  Increasing costs 
B)  Increasing sales 
C)  Increasing the level of operating assets 
D)  Decreasing sales 
A)  Increasing costs 
B)  Increasing sales 
C)  Increasing the level of operating assets 
D)  Decreasing sales

Question 18

StoneWorks is a company that sells tile. It has three profit centers: ceramic, stone and granite. Financial information for the three centers for the year just ended follows:

Accepted Answer

The answer of StoneWorks is a company that sells tile....

Question 19

In which of the following is a manager responsible for costs and revenues?

Accepted Answer

A)  Responsibility center 
B)  Cost center 
C)  Profit center 
D)  Investment center 
A)  Responsibility center 
B)  Cost center 
C)  Profit center 
D)  Investment center

Question 20

If the actual amount spent for fixed manufacturing overhead is less than the budgeted amount, the result is:

Accepted Answer

A)  A favorable fixed overhead budget variance 
B)  An unfavorable fixed overhead budget variance 
C)  A favorable volume variance 
D)  An unfavorable volume variance 
A)  A favorable fixed overhead budget variance 
B)  An unfavorable fixed overhead budget variance 
C)  A favorable volume variance 
D)  An unfavorable volume variance

Exam 19: Controlling Cost and Profit

Costs that a manager CANNOT control are called:

Exhibit 19-1 The following information relates to Almira's operations for the month of August: -Refer to Exhibit 19-1. Given the information above, the labor rate variance is:

Exhibit 19-9 The following data is known for Lyman, Inc.: Standards: - Refer to Exhibit 19-9. Using the information above, compute the variable manufacturing overhead spending variance for Lyman, Inc.

Exhibit 19-2 The following information relates to Bergen Corporation: -Refer to Exhibit 19-2. Based on the information above, the number of direct labor hours that should have been used is:

Exhibit 19-9 The following data is known for Lyman, Inc.: Standards: -Refer to Exhibit 19-9. Using the information above, compute the variable manufacturing overhead efficiency variance for Lyman, Inc.

Return on investment is a direct function of all the following EXCEPT:

Profit center managers are most often evaluated on the basis of:

Exhibit 19-5 Ridgeline Corporation has the following operating data for the year: - Refer to Exhibit 19-5. Given the above data for Ridgeline Company, what is the profit margin assuming the minimum rate of return on assets is 10%?

The income a segment is able to earn above a specified minimum return is called:

The labor rate variance is the difference between the:

The following information has been gathered from the accounting department at a local grocery store: What is the return on investment and profit margin on sales for the local grocer?

Exhibit 19-2 The following information relates to Bergen Corporation: -Refer to Exhibit 19-2. Based on the information above, the materials price variance for materials actually used is:

Exhibit 19-8 The following information is available for Granger Company: -Refer to Exhibit 19-8. Given the information above, the variable manufacturing overhead efficiency variance is:

Walnut Company has sales of $1,000,000 and total expenses of $900,000. If operating assets are $500,000, the return on investment is:

Exhibit 19-2 The following information relates to Bergen Corporation: -Refer to Exhibit 19-2. Based on the information above, the quantity of direct materials that should have been used is:

Which of the following will most likely increase the return on investment?

StoneWorks is a company that sells tile. It has three profit centers: ceramic, stone and granite. Financial information for the three centers for the year just ended follows:

In which of the following is a manager responsible for costs and revenues?

If the actual amount spent for fixed manufacturing overhead is less than the budgeted amount, the result is:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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