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Which of the following is NOT one of the features of an operational control information system?

a. To assist in continuous improvement of all aspects of the business.


b. To improve the value received by the customer.
c.

To improve profits by improving value.

d. To provide product cost information needed by management.


2.

The Manilla Company has provided the following data for the month of August:

The net income was:

a.
b.

$144,000
$99,000

c.

$154,000

d.

$231,000

3.

An office equipment firm is examining customer service costs. Data for the most recent year is given
below:

Using the high-low method, predict the cost for 200 service requests.

a.

$15,164
b.

$5,700

c.

$9,464

d.

$13,845

4.

In activity based costing, preliminary cost allocations assign costs to:

a.

departments.
b.

processes.
c.

products.

d.

activities.

5.

The following information pertains to Manassas Company for the month of September:

Overhead is applied for Job 456 at 140% of direct labor cost and at 150% for Job 458 and Job 502.
The total cost of Jobs 456 and 458 are identical. What amount of material belongs to Job 458?

a.

$5,670

b.

$3,200

c.

$1,400

d.

$1,500

6.

In a process costing system materials are assigned to each:

a.

work-in-process department.
b.

job cost sheet.

c.

raw materials inventory until sold.

d.

batch of products being produced.

7.

The Roma Company produces three products from the same process: Alene, Halene, and Palene.
Joint costs for this production run are $2,100.

Should Halene be processed further or sold at split-off?

a.
b.

Process further; profits will be $3,245 higher.


Process further; profits will be $55 higher.

c. Sold at split-off; profits will be $1,375 higher.


8.

Puerto Mont Company has the following budgeted data for a merchandising firm:

Assuming there was inventory on hand of $70,000 (at cost) on January 1, the desired ending inventory
(at cost) for the month of February would be:

a.

$180,000

b.

$300,000

c.

$240,000

d.

$160,000

9.

The following information is available for the Best Company:

During the month, 4,500 units are produced, 4,000 units were the denominator capacity, and 10,000
direct labor hours were worked. What is the fixed overhead volume variance?

a.

$39,500 F

b.

$10,000 F
c.

d.

$0

$7,000 U

10.

The following information pertains to Division X of Marlow Company:

What is the residual income for Division X?

a.
b.

$40,000
c.

d.

$4,800
$8,000
$72,000

11.

Prior to installing a JIT system, machine hours were used at Thompson Inc. to allocate maintenance
costs to Product A and Product B. Maintenance costs totaled $150,000 per year. The machine hours
used and quantity produced are as follows:

After JIT is implemented, two manufacturing cells were created and cell workers were trained to
perform maintenance. Total maintenance costs still amounted to $150,000, but now the maintenance
costs traceable to each cell amount to:

The maintenance cost per unit of Product A after JIT would be:

a.
b.
c.
d.

$6.50 per unit.


$15 per unit.
$8.50 per unit.
$10 per unit.

12.

The Ropo Company has developed cost formulas for the drivers of the following production activity:

The activity levels are projected:

What is budgeted for this projected activity level?

a.

$245,200

b.

$225,800

c.

$1,655,430

d.

$2,221,100

13.

At the beginning of 2005, Peterson Company installed a JIT purchasing and manufacturing system.
The following information has been gathered about one of the company's products:

Actual velocity is:

a.

2.5 units per hour.

b.

2.75 units per hour.

c.

2.32 units per hour.

d.

2.44 units per hour.

14.

Ramallah Corporation, reported the following operating costs and environmental quality costs for the
past four years. Assume that all environmental quality costs are variable and that all changes in the
quality cost ratios are due to an environmental cost reduction program.

What would be the impact on profit if environmental quality costs were reduced to two percent of
operating costs in 2005 instead of 15 percent?

a.

$559

b.

$731

c.

$520
d.

$0

15.

Productivity increases if:

a.

less output is produced with more input.

b. the same output is produced with more input.


c. the same output is produced with fewer inputs.
d.

laborers put in more effort.

16.

A value stream will include which of the following?

a.

Costs that are avoidable in the long-run.

b. Both value-added and non-value-added activities.


c.
d.

Costs of heterogeneous products.


Products with the same market shares.

17.

Following are projected figures for next year:

What are the variable costs per unit if the targeted before tax profit is $70,000?

a.

$100 per unit

b.

$180 per unit

c.

$3.50 per unit

d.

$1.75 per unit

18.

The following information pertains to the Norfolk Company's three products:

Assume that Product C is discontinued and the extra space is devoted to the production of Product A.
Product A production is increased to 500 units per year, but the selling price on all units of A is reduced
to $7.00 Assuming everything else remains the same as the original data, annual profits will:

a.

increase by $1,900

b.

increase by $100

c.

increase by $560

d.

decrease by $2,000

19.

Goshen Company is planning to introduce a new product. The following information has been found:

The company requires a 20% rate of return on investment on all products. Assuming that the company
uses a cost-plus approach to pricing, the markup on the variable costs would come closest to:

a.

72.9%.

b.

20.0%.

c.

77.8%.

d.

52.1%.

20.

The following information is given for the Tulsa Company below:

The company uses a required rate of return of 10% and depreciates equipment using the straight-line
method. The net present value for the investment is:

a.

$15,636

b.

$24,000

c.

$45,636

d.

$60,000

21.

Singapore Company sells 20,000 pocket calculators evenly throughout the year. The cost of carrying
one unit in inventory for one year is $4 and the ordering cost is $64 per order. What is the ordering
cost if the quantity ordered is 1,000?

d.

a.

$1,000

b.

$4,064

c.

$1,280
$64,000

22.

The standards of ethical conduct of management accountants promulgated by the Institute of


Management Accountants specifically state that management accountants' sole ethical responsibility
is to not break any laws.
True
False

23.

The focus of an activity based cost management system is to assign costs to organizational units and
hold unit managers responsible for controlling costs.
True
False

24.

Mixed costs have both fixed and variable elements.


True
False

25.

An activity inventory is a list of the nonfinancial and financial information items that describe individual
activities.
True
False

26.

Cost accumulation is about assigning costs to cost objects.


True
False

27.

In order to equitably allocate costs in a process costing system, dissimilar products are restated in
terms of equivalent units by weighting the number of units produced by their market values.
True
False

28.

The net realizable value for joint products is computed as selling price at split-off minus allocated joint
processing costs.
True
False

29.

Flexible budgets can only be used for planning purposes.

True
False

30.

Waste on the production line will result in a materials price variance.


True
False

31.

EVA is a dollar figure, not a percentage rate of return.


True
False

32.

An example of a product-level activity would be equipment set up.


True
False

33.

Activity selection decreases the time and resources required by different activities.
True
False

34.

Hours of employee training is an example of a lead measure/performance driver.


True
False

35.

As preventive and appraisal costs increase, internal failure costs are expected to increase.

36.

The measurement of the productivity of several inputs at a time is called partial productivity
measurement.
True
False

37.

Lean manufacturing is an approach designed to eliminate waste and maximize customer value.
True
False

38.

A single product is sold for $15 per unit. Last year, the company's sales revenue was $225,000 and its
net income was $18,000. If fixed costs totaled $72,000 for the year, the break-even point is 12,000
units.
True
False

39.

Joint costs are not considered relevant in sell-or-process further decisions.


True
False

40.

Variable costing is required for external reporting.


True
False

41.

When using the Net Present Value method to evaluate investment projects, a project would be

rejected if the discount rate does not equal the required rate of return.
True
False

42.

The objective of the economic order quantity is to minimize ordering costs and maximize purchase
discounts.
True
False