ACCY 207 Study Guide - Final Guide: Earnings Before Interest And Taxes, Income Statement, Discount Window

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12 Jan 2019

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1: roi measures how much income is generated on the investments in assets. Tim"s trucks has sales of ,000, average operating assets of ,000, and net operating income of ,000. 2: residual income measures net operating income earned less the minimum required return on average operating assets. Binford tools earns ,000 in the current period and has average operating assets of ,000. The required rate of return is 20% on these assets. What is residual income: ,000, ,000, ,000, ,000, herb huskie currently has an roi of 16%, average operating assets of ,500,000 and noi of ,000. The minimum required rate of return is 10%. Huskie can make an investment of ,000 for a new project that would generate a noi of ,000. 3: the managers of a firm are in the process of deciding whether to accept or reject a special offer for one of its products.

Related Questions

A decentralized organization is one in which:

a. each stockholder is given decision-making authority.

b. only top-level management is given decision-makingauthority.

c. each employee in the organization is given permission to makedecisions about their company.

d. managers at various levels throughout the organization aregiven decision-making authority.

A local chain department store grants each of its store managersthe authority to make buying decisions for their stores. Grantingmanagers this kind of authority is found in which type oforganization?

a. Desegmented

b. Centralized

c. Segmented

d. Decentralized

A local chain electronics store does not allow its store ordistrict managers to make important decisions about their stores.The main role of store managers is to supervise employees and makesure day-to-day transactions run smoothly while district managerssupervise store managers and report profitability data back totop-level management. Not allowing store or district managersdecision-making authority is most likely to be found in which typeof organization?

a. Centralized

b. Desegmented

c. Segmented

d. Decentralized

When a few individuals at the top of an organization retaindecision-making authority, the organization is referred to asa(n):

a. investment center.

b. centralized organization.

c. decentralized organization.

d. profit center.

Which of the following statements regarding the structure oforganizations is false?

a. In a decentralized organization, decision-making authority isconfined to top-level management.

b. Decentralization may make it difficult for managers to shareunique and innovative ideas.

c. When decision-making authority is spread among too manymanagers, managers may become so concerned with their own area ofresponsibility that they lose sight of the company's overallfocus.

d. In a decentralized organization, there may be a lack ofcoordination and communication between segments.

Which of the following is an advantage of decentralization?

a. It allows top-level management who normally work at corporateheadquarters to get involved with the day-to-day decisions thatneed to be made at lower levels.

b. It allows managers to focus on their own area ofresponsibility rather than what is best for the company as awhole.

c. It requires very little as far as manager training costs.

d. It allows decisions to be made in a more timely manner.

Which of the following is not an advantage ofdecentralization?

a. It allows lower-level managers to focus on their ownparticular goals and objectives without having to consider theoverall company's goals and objectives.

b. It allows top-level managers more time to devote tolong-range strategic planning.

c. It permits lower-level managers to gain valuable on-the-jobtraining in order to become better managers.

d. It often creates higher job satisfaction for managers.

Which of the following is often not a disadvantage ofdecentralization?

a. Lack of coordination and communication between segments.

b. Higher training costs for lower-level managers.

c. Lack of company focus as lower-level managers may makedecisions that benefit their own particular segment.

d. Decreased job satisfaction for lower-level managers.

Which of the following is a disadvantage ofdecentralization?

a. Lower training costs for lower-level managers.

b. Less timely decisions are able to be made on a day-to-daybasis.

c. Decreased job satisfaction for lower-level managers.

d. Lack of coordination and communication between segments.

"Responsibility accounting" is the concept that says:

a. managers should be responsible for both revenues and costs oftheir particular segment.

b. managers should be held entirely responsible for allinvestment decisions that impact the particular segment in whichthey are in charge.

c. managers should be held responsible for only those thingsunder their control.

d. managers should never be held entirely responsible for thingsthat happen within the particular segment in which they are incharge.

A budget for a single unit of a product or service is called asa:

a. real cost.

b. fixed cost.

c. total cost.

d. standard cost.

Which of the following statements is true regarding the budgetedcost for direct materials?

a. It must be determined after materials are purchased for theyear.

b. It can not be determined if a company uses a just-in-timeinventory system.

c. It would consist of two components - a standard quantity anda standard price.

d. It would be used on a static budget but not a flexiblebudget.

Variance analysis compares:

a. standard costs and actual costs.

b. static budgets and flexible budgets.

c. product costs and period costs.

d. practical standards and ideal standards.

Which of the following statements is false regarding taskanalysis?

a. It uses actual historical data in the determination ofstandard costs.

b. It emphasizes what it should cost to produce a product ratherthan historical costs.

c. It examines the production process in detail.

d. It may involve the use of engineers.

Task analysis:

a. is used to set standard costs.

b. is used to determine the tasks that production employeesshould complete on a daily basis.

c. is used to evaluate employee performance.

d. emphasizes the historical costs of a product.

A(n) ____ is attainable only when near-perfect conditionsexist.

a. static budget

b. ideal standard

c. flexible budget

d. practical standard

In most companies, machines break down occasionally andemployees are often less than perfect. Which type of standardacknowledges these characteristics when determining the standardcost of a product?

a. Practical standard

b. Ideal standard

c. Efficiency standard

d. Budgeted standard

Hathaway Inc. produces and sells golf umbrellas to localresorts. Hathaway anticipates April to be a busy month with thesale of 2,000 umbrellas. The company has prepared the followingstatic budget for April:

Sales revenue (2,000 units)	$60,000
Variable costs:
Direct materials	6,000
Direct labor	8,000
Overhead	2,500
Fixed costs	6,000
Net operating income	$37,500

During April, Hathaway actually produced and sold 2,300 umbrellas.What should be Hathaway's net operating income in April based on aflexible budget?

a. $35,025

b. $43,125

c. $44,025

d. $37,500

Hoppe Inc. manufactures widgets. Management has determined thateach widget has a standard materials cost of $3.50 when 2.5 ouncesof raw material at a cost of $1.40 per ounce are used. The staticbudget for the month of December showed an estimated production of4,000 widgets in December. During December, 4,300 widgets wereactually produced. The actual cost for each widget was $3.60 when2.25 ounces of raw material at a cost of $1.60 per ounce werepurchased and used. What should be the total direct materials costaccording to Hoppe's flexible budget for December?

a. $14,000

b. $15,480

c. $14,400

d. $15,050

Violetta Inc. manufactures plastic storage boxes. Management hasdetermined that each medium-sized box has a standard materials costof $1.20 when 4 pounds of raw material at a cost of $.30 per poundare used. The static budget for the month of March showed anestimated production of 15,000 boxes in March. During March, 17,000boxes were actually produced. The actual cost for each box was$1.56 when 3.9 pounds of raw material at a cost of $.40 per poundwere purchased and used. What should be the total direct materialscost according to Violetta's flexible budget for March?

a. $26,520

b. $23,400

c. $18,000

d. $20,400

13-A contribution price, one lower than the regular price ismost appropriate under the following conditions except: Select one:a. where there is full capacity b. where there is idle capacity c.where operating in a distress situation d. when faced with sharpcompetition e. when in a competitive bidding situation

14-

Examples of outsourcing decisions include all except:

Select one:

a. whether to buy or make sub components

b. whether to process payroll in-house or outside service

c. provide processing services internally or buy them

d. manage fleets of vehicles or use outside delivery service

e. use in house selling or inside marketing

15-

Management can relax a constraint by all but:

Select one:

a. expand the capacity of a bottleneck

b. outsourcing or subcontracting

c. working overtime

d. eliminate value-added activities at the bottleneck

e. retraining employees and shifting them to the bottleneck

16-Common mistakes to avoid in decision making when identifyingrelevant costs and benefits include all except:

Select one:

a. ignore sunk costs

b. beware of unitized fixed costs in decision making

c. beware of out-of-pocket-costs

d. beware of allocated fixed costs; identifying the avoidablecosts

e. fail to identify opportunity cost

17-

Long-term investment features include all except:

Select one:

a. large amounts of initial cash outlay

b. recurring cash in flows over the life of the investment

c. income tax factors

d. time value of money

e. segmenting profit margins

byzantiumclam639

QUESTION 1

Value stream costing eliminates most of the transactions associated with conventional cost accounting because it ...

	A.	makes more extensive use of standard costing.
	B.	gathers and reports financial data in summary form at the value stream level rather than for each production job or product.
	C.	automates financial reporting processes.
	D.	uses more detailed and accurate overhead cost allocations than standard costing.

1 points

QUESTION 2

In value stream costing, the labor costs assigned to a value stream ...

	A.	include the costs of all personnel assigned to the value stream, plus allocations for support staff in all departments that support the value stream.
	B.	include the costs of all personnel assigned to the value stream, but few if any allocations for any support staff outside the value stream.
	C.	include the costs of all direct and indirect labor hours in the value stream, plus allocations of staff outside the value stream providing production support; but exclude any sales, marketing, or administrative personnel in the value stream.
	D.	include the costs of all direct and indirect labor hours in the value stream, but exclude the costs of any sales, marketing or administrative personnel in the value stream.

1 points

QUESTION 3

Value stream costing simplifies accounting in part by ...

	A.	centralizing and consolidating the purchasing function.
	B.	increasing the number of cost centers to more easily expose cost overruns.
	C.	allocating all overhead using actual direct labor hours or machine hours rather than relying on more complex calculations.
	D.	eliminating detailed labor reporting, including the distinction between direct and indirect labor.

1 points

QUESTION 4

When using value stream costing, managers evaluate decisions about product rationalization (keeping or dropping a product) by ...

	A.	examining the effects on overall value stream results of continuing to produce and sell a product versus dropping it.
	B.	comparing the production cost per unit of all products in the value stream.
	C.	disregarding the financial impact, and examining instead the effects on the value stream operating measures shown in the box score of continuing to produce and sell a product versus dropping it.
	D.	comparing the gross profit margins for all products.

1 points

QUESTION 5

Exotic Chocolates had material costs of $24,000 and conversion costs of $18,000 in their most recent month containing 20 working days. At the end of the month, Exotic Chocolates had material on hand equal to six days of production, work-in-process equal to three days of production, and finished goods equal to eight days of production. The value for ending inventory using the âdays of stockâ method is ...

A.

$ 28,950

B.

$ 32,550

C.

$ 35,700

D.

$ 42,000

1 points

QUESTION 6

Which of the following is an example of a good use of the value stream box score?

	A.	Plant and division managers using the box score analyze variances from budgeted standard costs.
	B.	Plant and division managers using the box score to encourage and evaluate the results of competition between their value streams for best overall performance.
	C.	Value stream continuous improvement teams using the box score to design high-impact kaizen events and improvement plans.
	D.	Employees in the production cells using the box score to manage daily performance.

1 points

QUESTION 7

The box score measures three dimensions of performance in the value stream: operational, financial, and ...

A.

quality.

B.

capacity.

C.

flow.

D.

strategic.

1 points

QUESTION 8

Displaying actual value stream results in a box score with a column for each week in a quarter is a good way to use the box score to ...

	A.	show the effects of planned lean improvements.
	B.	track value stream performance and continuous improvement.
	C.	evaluate the effect of tactical decision alternatives, such as accepting a special order.
	D.	evaluate the effect of management decision alternatives, such as adding a product line.

1 points

QUESTION 9

Displaying current state performance and future states based on the expected results of pursuing different strategy alternatives. is a good way to use the box score to ...

	A.	evaluate the effect of strategic decision alternatives, such as adding a product line.
	B.	track value stream performance and continuous improvement.
	C.	show the effects of planned lean improvements.
	D.	show the impact of actual lean improvements.

1 points

QUESTION 10

A good way to use the box score to evaluate the impact of lean improvements is to ...

	A.	display current state performance and a future state based on planned improvements.
	B.	display current state performance and future states based on the expected results of pursuing different strategy alternatives.
	C.	display actual box score results for all the weeks in a quarter to show the trends in performance.
	D.	display current performance for the most current week or month, without reference to expected future states or performance trends.

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ACCY 207 Study Guide - Final Guide: Earnings Before Interest And Taxes, Income Statement, Discount Window

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