GB519: Measurement and Decision Making (Mid-term)

1.Which one of the following
would not be found in a merchandising company? (Points : 2)

Beginning
inventory.

Cost of goods
sold.

Ending
inventory.

Gross profit.

Work-in-process.

2.Which one of the following
critical success customer factors is best measured by warranty expense?
(Points : 2)

Quality.

Dealer and
distributor efficiency and effectiveness.

Timeliness of
delivery.

Customer
satisfaction.

3.Which one of the following is
not a type of cost driver? (Points : 2)

Structural
cost driver.

Executional
cost driver.

Volume-Based
cost driver.

Differential
cost driver.

Activity-Based
cost driver.

4.In the current business
environment, companies cannot survive without a long-term strategy. What
exactly should an effective strategy include? (Points : 2)

A set of
policies, procedures, and approaches to business that will result in
long-term success.

A focus on
accurate financial data, thus allowing the firm to effectively compete in any
environment.

A focus on
long-term nonfinancial information that will provide the company with
versatile management techniques capable of being used in a wide variety of
situations.

A clear,
concise mission statement, naming every product and outlining the company’s
long-term goals of success.

5.With the enactment of the
Sarbanes-Oxley Act of 2002, all public companies are now required by the
SEC to disclose whether or not the company has: (Points : 2)

An audit
committee.

Human
resources guidelines.

A code of
ethics.

A management
compensation plan.

6.Which of the following
organizations presents awards to firms that excel at execution of strategy,
based on criteria such as leadership, marketing, strategic planning and
process management? (Points : 2)

International
Organization for Standardization.

Malcolm
Baldrige National Quality Program.

Global
Reporting Initiative.

World
Resources Institute.

American
Institute of Certified Public Accountants.

7.The additional cost incurred
as the cost driver increases by one unit is: (Points : 2)

Average cost.

Controllable
cost.

Variable
cost.

Unit cost.

8.The cause and effect
relationships among critical success factors are best captured in: (Points
: 2)

The balanced
scorecard

Business intelligence

The value
chain

The strategy
map

SWOT analysis

9.After critical success
factors (CSFs) have been identified, the next step in developing a
competitive strategy is to develop relevant and reliable measures for these
CSFs. These measures are important to help the organization: (Points : 2)

Make profit
for any extended period.

Increase
sales above previous year(s).

Develop
policies to enhance customer profitability.

Improve productivity
in selected product areas.

Monitor
progress toward achieving strategic goals.

10.Which of the following aspect
of a contemporary management technique is a framework and process that
organizations use to manage the occurrence of possible events that could
negatively or positively affect the company’s competitiveness and success?
(Points : 2)

Total quality
management

Lean
accounting

The theory of
constraints

Enterprise
sustainability

Enterprise
risk management

11.Strategic analysis uses which
of the following to help a firm improve its competitive position through an
analysis of product and production complexity? (Points : 2)

Differential
cost drivers.

Discretionary
cost drivers.

Structural
cost drivers.

Marginal cost
drivers.

12.In order to assure that
accounting information is accurate and to avoid potentially costly mistakes
in the decision making process, firms should: (Points : 2)

Design and
monitor an effective system of internal accounting controls.

Have the
internal auditors and controller each check the accounting data before it is
released to management.

Purchase an
accounting system that is designed specifically for the industry in which the
firm conducts business.

Develop and
implement a code of ethics.

13.When cost relationships are
linear, total variable costs will vary in proportion to changes in: (Points
: 2)

Direct labor
hours.

Total
material cost.

Total
overhead cost.

Volume of
production.

Machine
hours.

14.JCH Company conducts business
in the lumber and building products industry. Last week, JCH purchased 50
railcars of lumber from a mill in Oregon and sold all 50 to a Home Depot
store in North Carolina. In this instance, JCH Company would most likely be
classified as a: (Points : 2)

Manufacturer.

Retailer.

Warehouse.

Wholesaler.

15.A manager of a small
manufacturing firm is interested in knowing what the company’s product
costs are. Which of the following would be considered a product cost for
the manager’s company? (Points : 2)

Direct
materials.

Product
design cost.

Office
expenses.

Selling
expenses.

Advertising
expense.

16.The sum of units transferred
out and ending inventory units, assuming no spoilage, determines the:
(Points : 2)

Units
completed during the period.

Units
spoiled.

Units
transferred in during the period.

Units
accounted for.

17.For job costing in service
industries, overhead costs are usually applied to jobs based on: (Points :
2)

Factory
overhead.

Indirect
labor.

Indirect
materials.

Direct
labor-hours or dollars.

Direct
materials.

18.In a process costing system,
the cost of abnormal spoilage should be: (Points : 2)

Prorated
between units transferred out and ending inventory.

Included in
the cost of units transferred out.

Treated as a
loss in the period incurred.

Ignored in
the period incurred.

19.Customer equity is a type of
analysis used to: (Points : 2)

Assess the ethical
practices of each salesperson-customer relationship.

Assess the
current profit potential of a customer.

Assess the
long term profit potential of a customer.

Assess the
current profit potential of all the firm’s customers.

Assess the
long term profit potential of all the firm’s customers.

20.The major limitation of
volume-based costing systems is the use of volume-based: (Points : 2)

Criteria.

Standards.

Rates.

Variances.

Restrictions.

21.The three major differences
between process and job order costing systems are those relating to:
(Points : 2)

Quantity,
quality, and cost.

Speed,
accuracy, and design.

Cost object,
product or service variety, and timing of unit cost calculation.

Responsibility
for cost, system design, and authorization codes.

22.Multistage ABC is used when:
(Points : 2)

There are
many departments in the organization.

Management
wants a higher level of accuracy from the ABC calculations.

There are
complex relationships among the activities.

To simplify
the ABC calculations.

There is no
such thing as Multistage ABC.

23.The journal entry to record
incurred direct labor would include a credit to: (Points : 2)

Work-in-Process
Inventory.

Accrued
Payroll.

Factory
Overhead.

Materials
Inventory.

Finished
Goods Inventory.

24.A time ticket: (Points : 2)

Shows the
time an employee worked on each job, pay rate, and total cost chargeable to
each job.

Shows the
time that a department’s employees worked on all jobs, the pay rate of each
employee, and the total cost chargeable to each job.

Shows the
time an employee worked on each job and the total cost chargeable to each job
only.

Shows the
time an employee worked on each job only.

25.Which method is a method used
to prepare the departmental production cost report when using a process
cost system? (Points : 2)

LIFO method.

FIFO method.

Weighted
production method.

Production
average method.

Throughput
average method

26.The number of the same or
similar units that could have been produced given the amount of work
actually performed on both complete and partially complete units is
referred to as: (Points : 2)

Physical
units.

Completed
units.

Equivalent
units.

Produced
units.

Units to account
for.

27.Which of the following
characteristics applies to process costing but not to job costing? (Points
: 2)

Identifiable
batches of production.

Average
costs.

Equivalent
units.

Application
of overhead.

28.Freight charges based on
number of units shipped to customers is a: (Points : 2)

Customer
unit-level cost.

Customer
batch-level cost.

Customer-sustaining
cost.

Distribution-channel
cost.

Sales-level
cost.

29.Under conventional job
costing, factory overhead costs are assigned to products or services using
labor or machine hours which are: (Points : 2)

Multiple cost
pools.

A homogeneous
cost pool.

Volume-based
cost drivers.

Nonvolume-based
cost drivers only.

30.Roussey Co. had the following
information for the month of June:

Work-in-Progress Inventory – 6/1	2,000 Units
Units Transferred In	10,000 Units
Work-in-Progress Inventory – 6/30	3,000 Units

Beginning
work-in-process inventory is 30 percent complete as to conversion. Ending
work-in-process inventory is 40 percent complete as to conversion.
Materials are added at the end of the process.

How many units were completed in June? (Points : 2)

12,000.

10,000.

9,600.

9,000.

31.Assume only the specified
parameters change in a sensitivity analysis. If the contribution margin
increases by $2 per unit, then operating profits will: (Points : 2)

Also increase
by $2 per unit.

Increase by
less than $2 per unit.

Decrease by
$2 per unit.

Increases,
but by an indeterminate amount.

32.Which one the following is a
variable that takes on values of 1, 2, 3,¼ for each period in sequence?
(Points : 2)

Dummy
variable.

Outlier.

Trend
variable.

Dependent
variable.

Independent
variable.

33.A plan that states the units
or costs of merchandise to be purchased by a retailer or wholesaler during
the budget period is called a: (Points : 2)

Production
budget.

Merchandise
purchases budget.

Accounts
payable budget.

Cash payments
budget.

Cost of goods
sold budget.

34.Becker Sofa Company expected
to sell 12,000 leather sofas. Fixed costs were $8,400,000; unit sales price
was $4,600; and unit variable costs were $2,200. Becker Sofa Company’s
margin of safety ratio is calculated to be: (Points : 2)

71.29%.

77.98%.

70.83%.

79.27%.

73.35%.

35.A plan of dollar amounts to
be spent on long-term projects is called a: (Points : 2)

Cash budget.

Capital
budget.

Rolling
budget.

Sales budget.

Rolling
financial forecast.

36.Framing House, Inc. produces
and sells picture frames. Variable costs are $17 per frame, and fixed costs
for the year total $130,000. The selling price is $25 per frame. The sales
units required to make an after-tax profit of $10,000, given an income tax
rate of 20 percent, are calculated to be (round up to nearest whole unit:
(Points : 2)

17,734 units.

16,583 units.

17,813 units.

17,049 units.

16,366 units.

37.Fresplanade Co. had the
following historical pattern for its credit sales:

75% collected in the month of sale

12% collected in the first month after sale

8% collected in the second month after sale

3% collected in the third month after sale

2% uncollectible

The sales on open account (credit sales) have been budgeted for the last
six months of the year as shown below:

July $72,000

August $84,000

September $96,000

October $108,000

November $120,000

December $102,000

The estimated cash collection during September from July, August, and
September accounts receivable is: (Points : 2)

$83,160.

$79,380.

$87,840.

$54,000.

$71,640.

38.Which of the following
factors is not involved in studying cost/volume/profit relationships?
(Points : 2)

Desired
profit.

Variable
costs.

Fixed costs.

Product mix.

Actual sales.

39.Which of the following is not
a potential benefit of having a sound budgeting process? (Points : 2)

Improved
decision-making.

Improved
performance-evaluation process.

Improved
coordination of business activities.

Improved
motivation for company employees.

Lower
acceptance rate for capital budgeting projects.

40.Which of the following best
describes the process of sales forecasting? (Points : 2)

Multiple
sales forecasting tools are available.

Trend
analysis cannot be used for sales forecasting.

Econometric
models cannot be used for sales forecasting because of their inherent
complexity.

Sales
forecasting works best with a simple visual plotting of past data on a graph.

41.Which of the following is not
used for evaluating a regression analysis? (Points : 2)

Correlation.

t-value.

R-Squared.

F value

Multicollinearity.

42.The p-value measures: (Points
: 2)

The
probability that the regression equation is reliable.

The
statistical significance of the dependent variable.

The risk that
a particular independent variable has only a chance relationship to the
dependent variable.

The
confidence range around the regression prediction.

43.Which one of the following is
defined as the ratio of the contribution margin to profit? (Points : 2)

Contribution
margin ratio.

Margin of
safety ratio.

Operating
leverage.

Breakeven
point.

Margin of
safety.

44.The process of examining how
a change in a single item in a budget (e.g., sales volume) affects one or
more items in the budget (e.g., budgeted sales revenue and budgeted
operating income) is generally referred to as: (Points : 2)

Flexible
budgeting.

Sensitivity
analysis.

Uncertainty
programming.

What-if
analysis.

Activity-based
budgeting (ABB).

45.ACEM Hardware purchased 5,000
gallons of paint in March. The store had 1,500 gallons on hand at the
beginning of March, and expects to have 1,000 gallons on hand at the end of
March. What is the budgeted number of gallons to be sold during March?
(Points : 2)

3,500.

4,500.

5,000.

5,500.

7,500.

46.All of the following are ways
of setting the budget, except: (Points : 2)

Negotiation-based
budgeting.

Two-stage
budgeting.

Participative
budgeting.

Authoritative
budgeting.

All of the
above are ways of setting the budget.

47.Which of the four types of
cost drivers – activity-based, volume-based, structural and executional –
are often best related to linear cost estimation methods? (Points : 2)

Activity-based
only.

Activity-based
and volume-based.

Structural
and volume-based.

Executional
and volume-based.

Structural
and executional.

48.The equation method and the
contribution margin method: (Points : 2)

Can determine
the breakeven point in units sold but not in sales dollars.

Can determine
the breakeven point in sales dollars but not in units sold.

Cannot
determine the breakeven point in units sold.

Cannot
determine the breakeven point in sales dollars.

Can determine
the breakeven point in units sold or sales dollars.

49.Which of the following
budgets is not a financial budget? (Points : 2)

Sales budget.

Cash receipts
budget.

Budgeted
cash-flow statement.

Budgeted
balance sheet.

Cash payments
budget.

50.OutlyTech Corp. expected to
sell 24,000 telephone switches. Fixed costs were $12,144,000, unit sales
price was $3,200, and unit variable costs were $1,440. OutlyTech’s margin
of safety ratio is: (Points : 2)

71.25%.

87.00%.

70.25%.

92.50%.

76.15%.

GB519: Measurement and Decision Making (Mid-term)

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