GB519 Management Level Control quiz 5

| March 13, 2016

The goals of coordinating manufacturing processes, reducing the amount of inventory, and improving overall productivity is particularly important in a: (Points : 2)

Standard cost system.

Just-in-time system.

Normal costing system.

Activity based costing system.

Total quality management system.

2. Throughput margin is defined as sales less: (Points : 2)

Direct labor costs.

Direct material costs.

Direct labor and material costs.

Processing costs.

Manufacturing costs.

3. The theory of constraints (TOC) emphasizes which of the following? (Points : 2)

Developing competitive constraints.

Finding and eliminating design constraints.

Removing bottlenecks from the production process.

Improving overall production efficiency.

4. When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising: (Points : 2)

Target costing.

Life cycle costing.

Variable costing.

Absorption costing.

Competitive costing.

5. The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the: (Points : 2)

Total flexible-budget variance.

Sales volume variance.

Selling price variance.

Operating income flexible-budget variance.

Operating income variance.

6. The direct materials usage ratio for a given period is: (Points : 2)

Defined as the ratio of quantity purchased to quantity used.

Defined as the inverse of the materials quantity variance for the period.

Entered into its own variance account at the end of the period.

A useful indicator of performance by the manufacturing department.

A useful indicator of performance of the purchasing department.

7. An organization’s overall management accounting and control system: (Points : 2)

Includes the planning function.

Is also referred as the organization’s core performance-measurement system.

Is separate from its operational control system.

Includes nonfinancial, but not financial, performance measures.

Focuses on strategic, not operational, control

8. The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the: (Points : 2)

Controllable variance.

Master budget variance.

Flexible-budget variance.

Quantity (or efficiency) variance.

Price variance.

9. The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the: (Points : 2)

Fixed overhead efficiency variance.

Fixed overhead production-volume variance.

Fixed overhead spending variance.

Fixed overhead rate variance.

10. Causes of random variances are beyond the control of management, and are most often found in: (Points : 2)

Fixed costs.

Commodity products exchanged in open markets.

Wages and salaries.

Depreciation charges.

Specialized industries.

11. Finding a single cost driver that changes in the same proportion as variable factory overhead costs is: (Points : 2)

Simplified by breaking out the fixed portion of overhead cost.

The first step in variable overhead cost assignment.

Difficult but manageable using advanced statistical techniques.

An important goal of effective cost system design.

Virtually impossible because of the underlying nature of variable overhead costs.

12. If inventories in a business using a standard cost system are insignificant, the firm would be justified (in a practical sense) by disposing of variances each year: (Points : 2)

As an adjustment to the finished goods inventory only.

As an adjustment to cost of goods sold only.

As adjustments to both inventory accounts and the cost of goods sold for the period.

As a special item (gain or loss) on the income statement for the period.

13. Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line “ECC” DVD player for a price of $250. It costs ECC $210 to make the player. ECC’s main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.

Irrespective of the competitor’s price, what is EEC’s required selling price if the target profit is 25% of sales and current costs cannot be reduced? (Points : 2)

$280.00.

$292.50.

$299.00.

$308.50.

14. A company’s flexible budget for 15,000 units of production showed sales of $48,000; variable costs of $18,000; and fixed costs of $12,000. The operating income in the master budget for 20,000 units is: (Points : 2)

$8,000.

$13,500.

$24,000.

$28,000.

$30,000.

15. Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line “ECC” DVD player for a price of $250. It costs ECC $210 to make the player. ECC’s main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.

Assuming sales and marketing are not correct in their estimation and the volume of sales is not changed and ECC meets the competitive price, what is the target cost if ECC wants to maintain its same income level? (Points : 2)

$210.

$200.

$190.

$180.

. Which of the following is not a step to maximize the value of nonfinancial measures, as suggested by Ittner and Larcker? (Points : 1)

Benchmark with similar firms.

Base actions on findings.

Develop a causal model.

Assess outcomes.

2. Target cost can be defined as: (Points : 1)

Manufacturing cost – sales price.

Competitive price – desired profit.

Desired profit – market price.

Target price – manufacturing cost.

3. A type of strategic pricing based on analytical methods is used to: (Points : 1)

Optimally determine the best price.

Utilize knowledge of the sales life cycle in setting price.

More accurately determine life cycle costs as a basis for setting price.

Employ improved design methods that reduce cost and improve price.

4. Which of the following would not likely be useful for addressing the variance-investigation decision under uncertainty? (Points : 1)

The use of payoff tables.

Linear optimization analysis.

Calculating the indifference probability.

Knowing, or having a good estimate of, the probability of a nonrandom variance.

The value of perfect information.

5. Caldwell Company desires to enter a market with a new product. As part of this process the following tasks will be performed:

1- Determine a desired profit margin.

2- Use Kaizen costing.

3- Design and engineer the product.

4- Determine the product’s cost.

5- Determine the suggested selling price.

Which task would Caldwell Company perform first if it plans to use target costing? (Points : 1)

Determine a desired profit margin.

Use Kaizen costing.

Design and engineer the product.

Determine the product’s cost.

Determine the suggested selling price.

6. The balanced scorecard is widely used in performance evaluation and management control. In which regions around the world is it most and least, respectively, commonly used: (Points : 1)

Europe, Asia

U.S and Canada, Africa

U.S. and Canada, South and Central America

South and Central America, Europe

7. The five tasks that follow take place with the concept known as target costing:

1- Use value engineering to identify ways to reduce product cost.

2- Determine the market price.

3- Determine the desired profit.

4- Use kaizen costing and operational control to reduce costs.

5- Calculate the target cost at market price less desired profit.

Which of the following choices depicts the correct sequence of these tasks? (Points : 1)

1, 2, 3, 4, 5

2, 3, 5, 1, 4

3, 2, 5, 4, 1

3, 2, 5, 1, 4

5, 3, 2, 4, 1

8. Which of the following statements is correct? (Points : 1)

Random variances are typically investigated because they can repeat.

Systematic variances are considered uncontrollable.

Most standard cost variances call for investigation and corrective action.

Random variances are typically not investigated.

Most variances from ideal standards will be favorable.

9. Since it is based on cash flows, the discounted cash flow (DCF) method of valuation has the added advantage that it is not subject to the bias of different: (Points : 1)

Discount rates.

Internal rates of return.

Monetary systems.

Accounting policies for determining total assets and net income.

10. Place the five steps in implementing a target costing approach in the proper order:

1 – Determine desired profit

2 – Use kaizen costing and operational control to reduce costs

3 – Determine the market price

4 – Use value engineering to identify ways to reduce product costs

5 – Calculate the target cost at market price less desired profit (Points : 1)

3, 2, 1, 4, 5.

2, 5, 4, 1, 3.

4, 5, 1, 3, 2.

3, 1, 5, 4, 2.

11. A CFO whose compensation plan may have had the effect of creating an incentive for unethical actions includes: (Points : 1)

Kenneth Lay

Scott Sullivan

Bernie Madoff

Dennis Kozlowski

12. The price-earnings ratio for firms in the Standard & Poor’s 500 Index has averaged _____ over the last 50 years. (Points : 1)

11.

16.

17.

23.

30.

13. Precilla Company uses a standard costing system that allows 2 pounds of direct materials for one finished unit. During July, the company purchased 40,000 pounds of direct materials for $210,000 and manufactured 12,000 finished units. The standard direct materials cost allowed for the units manufactured is $120,000. The performance report shows that Pricilla has an unfavorable direct materials usage variance of $5,000. Also, the company records any price variance for materials at time of purchase.

The number of pounds of direct materials used to produce July’s output was: (Points : 1)

12,000 pounds.

20,000 pounds.

24,000 pounds.

25,000 pounds.

40,000 pounds.

14. Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day.

Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour.

Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week.

What is the least amount of monthly capacity you would have to add to the bottleneck(s) to shift the bottleneck to a different process? (Points : 1)

2,000,001 juicers per month.

600,001 juicers per month.

1,320,001 juicers per month.

50,001 juicers per month

15. Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day.

Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour.

Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week.

How many JM50 machines can Bryan Inc. manufacture per month (assume an average 30-day month)? (Points : 1)

4,320,000 juicers.

3,600,000 juicers.

3,000,000 juicers.

3,200,000 juicers

Order your essay today and save 20% with the discount code: ESSAYHELP
Order your essay today and save 20% with the discount code: ESSAYHELPOrder Now