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1. (TCO 7) Two or more products that result from common inputs are called (Points : 4)
2. (TCO 8) Activity based pricing seeks to (Points : 4)
charge customers with the costs they are creating.
make greater profits by charging all customers more.
maintain all customers in the customer base.
all of the above.
3. (TCO 8) When deciding to accept or reject a special order, which of the following costs would most likely not be relevant? (Points : 4)
The wages of direct labor to make the order.
Depreciation on the machinery used to make the order.
The raw material used to make the order.
The electricity used to run the machine to make the order.
4. (TCO 9) The required rate of return used to compute net present value is related to the firm’s (Points : 4)
cost of capital.
5. (TCO 9) Projects with a negative present value will always have a(n) (Points : 4)
payback period longer than three years.
internal rate of return less than the required rate of return.
negative accounting rate of return.
series of cash outflows that total more than the initial cost of the project.
6. (TCO 10) In a bottom-up approach to budgeting (Points : 4)
the CFO alone determines the budget.
only the budget for the next month is prepared.
lower level managers are the primary source of budget information.
the production budget is prepared before the sales budget.
7. (TCO 10) Which budget is prepared first? (Points : 4)
Cash disbursement budget
8. (TCO 10) The difference between standard costs and budgeted costs is that standard costs (Points : 4)
refer to a single unit while budgeted costs refer to the cost, at standard, for the total number of budgeted units.
are calculated under ideal conditions, while budgeted costs are calculated for attainable conditions.
are calculated for material while budgeted costs are calculated for labor.
are part of the management accounting system, while budgets are part of the financial accounting system.
9. (TCO 10) Which of the following are components of a direct labor variance? (Points : 4)
Rate and efficiency
Attainable and ideal
Price and quantity
Volume and controllable
10. (TCO 10) The type of center that has responsibility for generating revenue as well as controlling costs is a(n) (Points : 4)
11. (TCO 10) Which of the following is not an advantage of decentralization for a company? (Points : 4)
Subunit managers have better information.
Subunit managers will act to benefit the organization as a whole.
Subunit managers can respond quicker to changing circumstances.
Subunit managers can receive training to move into top level management positions.
12. (TCO 10) Which ratio measures the rate earned on total capital provided by the owners? (Points : 4)
Return on assets
Return on stockholders’ equity
Earnings per share
Price earnings ratio