Question 1

(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

Accepted Answer

A)  $41,000. 
B)  $103,000. 
C)  $107,000. 
D)  $140,000. 
A)  $41,000. 
B)  $103,000. 
C)  $107,000. 
D)  $140,000.

Question 2

What was Division A's residual income?

Accepted Answer

A)  $20,000. 
B)  $30,000. 
C)  $35,000. 
D)  $45,000. 
A)  $20,000. 
B)  $30,000. 
C)  $35,000. 
D)  $45,000.

Question 3

(Appendix 11A)When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Accepted Answer

A) True 
 B)False

Question 4

(Appendix 11A)Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

Accepted Answer

A)  $28. 
B)  $30. 
C)  $42. 
D)  $45. 
A)  $28. 
B)  $30. 
C)  $42. 
D)  $45.

Question 5

Segmented statements for internal use should be prepared in the contribution format.

Accepted Answer

A) True 
 B)False

Question 6

(Appendix 11A)Internal failure costs result when a defective product is used within the company.

Accepted Answer

A) True 
 B)False

Question 7

(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

Accepted Answer

A)  Supervision of testing and inspection activities. 
B)  Systems development. 
C)  Quality engineering. 
D)  Quality training. 
A)  Supervision of testing and inspection activities. 
B)  Systems development. 
C)  Quality engineering. 
D)  Quality training.

Question 8

(Appendix 11A)Larinore Corporation has a Castings Division that does casting work of various types.The company's Machine Products Division has asked the Castings Division to provide it with 20,000 special castings each year on a continuing basis.The special castings would require $10 per unit in variable production costs.The Machine Products Division has a bid from an outside supplier of $29 per unit for the castings.
In order to have time and space to produce the new castings,the Castings Division would have to cut back production of another casting: the RB4,which it presently is producing.The RB4 sells for $30 per unit,and requires $12 per unit in variable production costs.Boxing and shipping costs of the RB4 are $4 per unit.Boxing and shipping costs for the new special casting would be only $1 per unit.The company is now producing and selling 100,000 units of the RB4 each year.Production and sales of this casting would drop by 20% if the new casting is produced.
Required:
a)What is the range of transfer prices within which both the divisions' profits would increase as a result of agreeing to the transfer of 20,000 castings per year from the Castings Division to the Machine Products Division?
b)Is it in the best interests of Larinore Corporation for this transfer to take place? Explain.

Accepted Answer

a)From the perspective of the Castings D

Question 9

Fixed costs that are traceable to a segment may become common if the segment is divided into smaller units.

Accepted Answer

A) True 
 B)False

Question 10

(Appendix 11A)Suppose that Vega can sell 9,000 wheels each month to outside consumers,so transfers to the Walsh Division cut into outside sales.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

Accepted Answer

A)  $28.00. 
B)  $31.75. 
C)  $41.00. 
D)  $42.00. 
A)  $28.00. 
B)  $31.75. 
C)  $41.00. 
D)  $42.00.

Question 11

(Appendix 11A)External failure costs result when a defective product is shipped to a customer.

Accepted Answer

A) True 
 B)False

Question 12

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

Accepted Answer

A)  $80,000. 
B)  $107,000. 
C)  $324,000. 
D)  $481,000. 
A)  $80,000. 
B)  $107,000. 
C)  $324,000. 
D)  $481,000.

Question 13

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

Accepted Answer

A)  $75,000. 
B)  $109,000. 
C)  $286,000. 
D)  $533,000. 
A)  $75,000. 
B)  $109,000. 
C)  $286,000. 
D)  $533,000.

Question 14

What were the variable costs for the South area for the year?

Accepted Answer

A)  $65,000. 
B)  $162,500. 
C)  $185,000. 
D)  $230,000. 
A)  $65,000. 
B)  $162,500. 
C)  $185,000. 
D)  $230,000.

Question 15

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

Accepted Answer

A)  $119,000. 
B)  $143,000. 
C)  $277,000. 
D)  $628,000. 
A)  $119,000. 
B)  $143,000. 
C)  $277,000. 
D)  $628,000.

Question 16

If Axle sells 15,000 units per year,what would be the residual income?

Accepted Answer

A)  $10,000. 
B)  $30,000. 
C)  $50,000. 
D)  $100,000. 
A)  $10,000. 
B)  $30,000. 
C)  $50,000. 
D)  $100,000.

Question 17

(Appendix 11A)Flinders Company has two Service Departments-Factory Administration and Maintenance-and two Operating Departments.Selected information relating to these departments is given below:   
The company allocates Service Department costs by the step-down method.Factory Administration costs are allocated first on the basis of number of employees,and then Maintenance costs are allocated on the basis of total labour hours.
Required:
Prepare a schedule showing the allocation of Service Department costs to other departments.

Accepted Answer

The answer of (Appendix 11A)Flinders Company has two Service Departments-Factory...

Question 18

In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

Accepted Answer

A) True 
 B)False

Question 19

(Appendix 11A)Suppose the transfer of posts to the Lamp Division will cut into sales to outside customers by 15,000 units.Further suppose that an outside supplier is willing to provide the Lamp Division with basic posts at $1.45 each.If the Lamp Division chooses to buy all of its posts from the outside supplier instead of the Post Division,what will be the change in operating income for the company as a whole?

Accepted Answer

A)  $1,000 decrease. 
B)  $1,250 decrease. 
C)  $10,250 increase. 
D)  $13,750 decrease. 
A)  $1,000 decrease. 
B)  $1,250 decrease. 
C)  $10,250 increase. 
D)  $13,750 decrease.

Question 20

(Appendix 11A)Which of the following statements about the step-down method of allocating service department is correct?

Accepted Answer

A)  It is a less accurate method of allocation than the direct method. 
B)  It cannot be used when a company has more than two service departments. 
C)  It is a simpler allocation than the direct method. 
D)  It ignores some interdepartmental services. 
A)  It is a less accurate method of allocation than the direct method. 
B)  It cannot be used when a company has more than two service departments. 
C)  It is a simpler allocation than the direct method. 
D)  It ignores some interdepartmental services.

(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

What was Division A's residual income?

(Appendix 11A)When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

(Appendix 11A)Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

Segmented statements for internal use should be prepared in the contribution format.

(Appendix 11A)Internal failure costs result when a defective product is used within the company.

(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

Fixed costs that are traceable to a segment may become common if the segment is divided into smaller units.

(Appendix 11A)Suppose that Vega can sell 9,000 wheels each month to outside consumers,so transfers to the Walsh Division cut into outside sales.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

(Appendix 11A)External failure costs result when a defective product is shipped to a customer.

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

What were the variable costs for the South area for the year?

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

If Axle sells 15,000 units per year,what would be the residual income?

In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

(Appendix 11A)Which of the following statements about the step-down method of allocating service department is correct?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

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Exam 11: Reporting for Control

(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

What was Division A's residual income?

(Appendix 11A)When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

(Appendix 11A)Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

Segmented statements for internal use should be prepared in the contribution format.

(Appendix 11A)Internal failure costs result when a defective product is used within the company.

(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

Fixed costs that are traceable to a segment may become common if the segment is divided into smaller units.

(Appendix 11A)Suppose that Vega can sell 9,000 wheels each month to outside consumers,so transfers to the Walsh Division cut into outside sales.What should be the lowest acceptable transfer price from the perspective of the Vega Division?

(Appendix 11A)External failure costs result when a defective product is shipped to a customer.

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

What were the variable costs for the South area for the year?

(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

If Axle sells 15,000 units per year,what would be the residual income?

In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

(Appendix 11A)Which of the following statements about the step-down method of allocating service department is correct?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

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