Question 1

When managers make decisions,the accountant's primary role is ________.

Accepted Answer

A)  making the decision 
B)  providing information that may be useful to the manager 
C)  uncertain because it depends on the decision being made 
D)  uncertain because it depends on the manager 
A)  making the decision 
B)  providing information that may be useful to the manager 
C)  uncertain because it depends on the decision being made 
D)  uncertain because it depends on the manager

Question 2

With perfect competition,at some point marginal costs begin to rise with increases in production because facilities become inefficient.

Accepted Answer

A) True 
 B)False

Question 3

Accountants are sometimes forced to trade relevant information for accurate information.

Accepted Answer

A) True 
 B)False

Question 4

Product design affects a small amount of costs in the value chain.

Accepted Answer

A) True 
 B)False

Question 5

Butters Company has budgeted sales of $30,000 with the following budgeted costs:
$$\begin{array} { l l } 
\text { Direct materials } & \$ 6,300 \
\text { Direct labor } & \$ 4,100 \
\text { Variable factory overhead } & \$ 3,700 \
\text { Fixed factory overhead } & \$ 5,600 \
\text { Variable selling and administrative costs } & \$ 2,400 \
\text { Fixed selling and administrative costs } & \$ 3,200
\end{array}$$
What is the average target markup percentage for setting prices as a percentage of total manufacturing costs?

Accepted Answer

A)  34% 
B)  52% 
C)  61% 
D)  none of the above 
A)  34% 
B)  52% 
C)  61% 
D)  none of the above

Question 6

Information is relevant in business decisions if it is a(n)________.

Accepted Answer

A)  expected future revenue or it differs among alternatives 
B)  expected future revenue and it differs among alternatives 
C)  past revenue and it differs among alternatives 
D)  expected future revenue that differs from past revenue 
A)  expected future revenue or it differs among alternatives 
B)  expected future revenue and it differs among alternatives 
C)  past revenue and it differs among alternatives 
D)  expected future revenue that differs from past revenue

Question 7

Winter Company has no beginning and ending inventories,and reports the following data about its only product:
$\begin{array}{ll}
\text { Direct materials used } & \$ 200,000 \
\text { Direct labor } & \$ 80,000 \
\text { Fixed indirect manufacturing } & \$ 100,000 \
\text { Fixed selling and administrative } & \$ 300,000\\text { Variable indirect manufacturing } & \$ 20,000 \
\text { Variable selling and administrative } & \$ 60,000 \
\text { Selling price(per unit) } & \$ 150
\end{array}$
$\begin{array} { l  }
 \text {Units produced and sold }&10,000 \
\end{array}$

Winter Company uses the absorption approach to prepare the income statement.What is the gross margin?

Accepted Answer

A)  $740,000 
B)  $1,040,000 
C)  $1,100,000 
D)  $1,160,000 
A)  $740,000 
B)  $1,040,000 
C)  $1,100,000 
D)  $1,160,000

Question 8

In the short run,the sales price of a good or service must be high enough to cover all costs.

Accepted Answer

A) True 
 B)False

Question 9

Target costing sets prices by computing an average cost and then adding a desired markup.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following items is usually NOT important to special order decisions?

Accepted Answer

A)  affect of special order on regular business 
B)  whether idle capacity is available 
C)  total fixed costs 
D)  increase in variable costs per unit due to special order 
A)  affect of special order on regular business 
B)  whether idle capacity is available 
C)  total fixed costs 
D)  increase in variable costs per unit due to special order

Question 11

Brankov Company has budgeted sales of $30,000 with the following budgeted costs:
$$\begin{array} { l l } 
\text { Direct materials } & \$ 6,300 \
\text { Direct labor } & \$ 4,100 \
\text { Variable factory overhead } & \$ 3,700 \
\text { Fixed factory overhead } & \$ 5,600 \
\text { Variable selling and administrative costs } & \$ 2,400 \
\text { Fixed selling and administrative costs } & \$ 3,200
\end{array}$$
What is the average target markup percentage for setting prices as a percentage of variable manufacturing costs?

Accepted Answer

A)  53% 
B)  76% 
C)  113% 
D)  none of the above 
A)  53% 
B)  76% 
C)  113% 
D)  none of the above

Question 12

Chocolate Company is considering the production of a new product.Chocolate Company has the following data available:
$\begin{array}{ll}
\text { Expected sales(units) over product life } & 15,000 \
\text { Variable production costs } & \$ 42 \text { per unit } \
\text { Variable selling costs } & \$ 16 \text { per unit } \
\text { Annual fixed production costs } & \$ 15,000 \
\text { Annual fixed selling costs } & \$ 5,000 \
\text { Research and development costs } & \$ 184,000
\end{array}$
What is the total variable cost of the product over the product life cycle?

Accepted Answer

A)  $204,000 
B)  $716,000 
C)  $870,000 
D)  $880,000 
A)  $204,000 
B)  $716,000 
C)  $870,000 
D)  $880,000

Question 13

Surly Company makes small boats.The company produces and sells 5,500 boats per year at a selling price of $160 per boat.Surly Company has excess capacity and is trying to get special orders.A new retailer wants to purchase 1,000 boats for $125 per boat.Surly Company is going to decline the special order because it costs $130 to make a single boat as seen below:
 $\begin{array}{ll}
\text { Direct materials } & \$ 50 \text { per unit } \
\text { Direct manufacturing labor } & \$ 55 \text { per unit } \
\text { Variable manufacturing overhead } & \$ 10 \text { per unit } \
\text { Fixed manufacturing overhead } & \$ 15 \text { per unit } \
\text { Total } & \$ 130 \text { per unit }
\end{array}$ 
Required: 
A) Should Surly Company reject the special order from the new retailer? Why?
B) How much will Surly's net income increase with the special offer?

Accepted Answer

A)No,because net income will increase wi

Question 14

The difference between the gross margin and the market price is the target cost for a new product.

Accepted Answer

A) True 
 B)False

Question 15

In imperfect competition,a firm must decrease the sales price to generate additional sales.

Accepted Answer

A) True 
 B)False

Question 16

Management cannot influence the price of a new product.The market price is $100 per unit.The estimated production cost is $30 per unit.The estimated nonproduction cost is $40 per unit.If the gross profit is 40 percent of the market price,what is the target cost of the new product?

Accepted Answer

A)  $30 
B)  $40 
C)  $60 
D)  $70 
A)  $30 
B)  $40 
C)  $60 
D)  $70

Question 17

Overcapacity in some countries often causes aggressive pricing policies,particularly for a company's imported goods.

Accepted Answer

A) True 
 B)False

Question 18

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

Accepted Answer

A) True 
 B)False

Question 19

Qualitative aspects of information are those for which measurement in dollars and cents is easy and precise.

Accepted Answer

A) True 
 B)False

Question 20

Qualitative aspects of information can carry more weight than quantitative aspects in a business decision.

Accepted Answer

A) True 
 B)False

When managers make decisions,the accountant's primary role is ________.

With perfect competition,at some point marginal costs begin to rise with increases in production because facilities become inefficient.

Accountants are sometimes forced to trade relevant information for accurate information.

Product design affects a small amount of costs in the value chain.

Information is relevant in business decisions if it is a(n)________.

In the short run,the sales price of a good or service must be high enough to cover all costs.

Target costing sets prices by computing an average cost and then adding a desired markup.

Which of the following items is usually NOT important to special order decisions?

The difference between the gross margin and the market price is the target cost for a new product.

In imperfect competition,a firm must decrease the sales price to generate additional sales.

Management cannot influence the price of a new product.The market price is $100 per unit.The estimated production cost is $30 per unit.The estimated nonproduction cost is $40 per unit.If the gross profit is 40 percent of the market price,what is the target cost of the new product?

Overcapacity in some countries often causes aggressive pricing policies,particularly for a company's imported goods.

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

Qualitative aspects of information are those for which measurement in dollars and cents is easy and precise.

Qualitative aspects of information can carry more weight than quantitative aspects in a business decision.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

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Exam 5: Relevant Information for Decision Making With a Focus on Pricing Decisions

When managers make decisions,the accountant's primary role is ________.

With perfect competition,at some point marginal costs begin to rise with increases in production because facilities become inefficient.

Accountants are sometimes forced to trade relevant information for accurate information.

Product design affects a small amount of costs in the value chain.

Information is relevant in business decisions if it is a(n)________.

In the short run,the sales price of a good or service must be high enough to cover all costs.

Target costing sets prices by computing an average cost and then adding a desired markup.

Which of the following items is usually NOT important to special order decisions?

The difference between the gross margin and the market price is the target cost for a new product.

In imperfect competition,a firm must decrease the sales price to generate additional sales.

Management cannot influence the price of a new product.The market price is $100 per unit.The estimated production cost is $30 per unit.The estimated nonproduction cost is $40 per unit.If the gross profit is 40 percent of the market price,what is the target cost of the new product?

Overcapacity in some countries often causes aggressive pricing policies,particularly for a company's imported goods.

Relevant information is the historical costs and revenues that differ due to alternative courses of action.

Qualitative aspects of information are those for which measurement in dollars and cents is easy and precise.

Qualitative aspects of information can carry more weight than quantitative aspects in a business decision.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters