Reference no: EM131779937

Final Exam

Q1. The four key behavioral considerations in management accounting and control system design include all of the following EXCEPT:

a. integrating the organization's pay scale

b. using a mix of short- and long-term qualitative and quantitative performance measures

c. empowering employees to be involved in decision making and MACS design

d. developing an appropriate incentive system to reward performance

Q2. Pressures on managers to act unethically include all of the following EXCEPT:

a. pressures to act in the long-run best interest of the shareholders

b. solicitations for confidential information

c. requests to falsify reports

d. requests to bias information in favor of certain stakeholders

Q3. To the extent that an ethical hierarchy exists, _____ have the highest authority.

a. societal norms

b. legal rules

c. organizational norms

d. personal norms

Q4. When a manager's and employee's goals are aligned with organizational goals, it is referred to as:

a. a diagnostic control system

b. the intensity factor

c. goal congruence

d. monitoring

Q5. The roles of performance measurement systems in organizations include all of the following EXCEPT:

a. motivate employees to help the organization achieve its strategic objectives

b. help managers with resource allocation

c. create value from intangible assets as well as their physical and financial assets

d. communicate the company's strategic objectives

Q6. The Balanced Scorecard is said to be "balanced" because it measures:

a. short-term and long-term objectives

b. financial and nonfinancial objectives

c. internal and external objectives

d. All of the above are correct.

Q7. The ______________ perspective of the Balanced Scorecard asks, "At which processes must we excel to satisfy our customers and shareholders?"

a. learning and growth

b. customer

c. process

d. shareholder

Q8. The __________ perspective of the Balanced Scorecard focuses on creating value for customers.

a. Value

b. Financial

c. Stakeholder

d. Customer

Q9. Measures of employees' skills and capabilities are included in the ________ perspective of the Balanced Scorecard.

a. financial

b. internal

c. customer

d. learning and growth perspective

Q10. A chain of cause-and-effect relationships that appropriately link the four balanced scorecard perspectives is:

a. a high return on investment causes customer loyalty that results in skilled production workers that improve process quality

b. skilled production workers help to produce process quality that results in customer loyalty that helps to increase return on investment

c. customer loyalty results in a high return on investment that results in the ability to attract skilled production workers that improve process quality

d. improved process quality results in a high return on investment that causes customer loyalty that results in the ability to attract skilled production workers

Q11. Participative budgeting is an approach to budgeting that

a. is top-down in nature.

b. allows top management to set the budget.

c. discourages budget slack.

d. is more likely to motivate people to work towards the organization's goals t than a top-down approach.

Q12. Which of the following is not included in the operating budget?

a. Budgeted balance sheet

b. Sales budget

c. Selling and administrative budget

d. Raw materials purchases budget

Q13. A primary financial budget is the

a.. Production budget

b. Cash budget

c. Inventory budget

d. Selling and administrative budget

Q14. Jackel Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Jackel Company's ending finished goods inventory policy is 10% of the following month's sales. What is budgeted finished goods inventory for May?

a. 1,000

b. 1,300

c. 1,600

d. 2,100

Q15. In which order are the following developed?

A = Production plan B = Materials purchasing plan

C = Demand forecast D = Sales plan

a. first to last: A, B, C, D

b. first to last: C, D, A, B

c. first to last: D, C, B, A

d. first to last: C, A, D, B

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 16 -18.

For the next six months, Berry Company projects the following information (in units).

	July	Aug.	Sept.	Oct.	Nov.	Dec.
Retained demand	100	100	150	150	200	200
Dealer demand	200	250	300	350	400	450
Shop capacity	500	500	500	500	500	500
Painting capacity	350	350	350	600	600	600

Demand drives production for that month and cannot be carried over from one month to another. Retail customers are satisfied first.

16. The production for July is projected to be:

a. 100 units

b. 300 units

c. 350 units

d. 500 units

Q17. The number of dealer units that will be produced and sold in September is:

a. 300 units

b. 350 units

c. 500 units

d. 200 units

Q18. Painting capacity appears to be:

a. short-term capacity

b. intermediate-term capacity

c. long-term capacity

d. total demand

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 19 -21

The following information for the second quarter of 2006 pertains to Huffman Company:

Month                  Sales                      Purchases

April                    $45,000                 $24,000

May                     $60,000                 $30,000

June                    $75,000                 $42,000

Cash is collected from customers in the following manner:

Month of sale 30%

Month following the sale 70%

40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

Labor costs are 20% of sales. Other operating costs are $22,500 per month (including $6,000 of depreciation). Both of these are paid in the month incurred.

The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $1,500.

No loans outstanding on June 1.

Q19. How much cash will be collected from customers in June?

a. $64,500

b. $70,500

c. $75,000

d. None of the above is correct.

Q20. How much cash will be paid to suppliers in June?

a. $34,800

b. $28,000

c. $44,000

d. None of the above is correct.

Q21. How much cash will be disbursed for labor and operating costs in June?

a. $31,500

b. $35,000

c. $44,200

d. $48,200

Q22. In __________, as one budget period passes, planners delete that budget period from the master budget and add another one.

a. zero-based budgeting

b. periodic budgeting

c. incremental budgeting

d. continuous budgeting

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 23 - 25.

Community Manufacturing Inc., developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.

                                      Standard quantity                     Standard price

Direct materials               0.20 pounds                               $25 per pound

Direct labor                     0.10 hours                                 $15 per hour

During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.

Q23. May's direct material price variance was:

a. $2,800 favorable

b. $2,200 favorable

c. $5,000 unfavorable

d. None of the above is correct.

Q24. May's direct material quantity variance was:

a. $2,800 unfavorable

b. $2,200 favorable

c. $5,000 unfavorable

d. None of the above is correct.

Q25. May's direct labor rate variance was:

a. $750.00 unfavorable

b. $262.50 favorable

c. $487.50 favorable

d. indeterminable using the above information

Q26. Which of the following methods is calculated as annual net income as a percentage of the original investment in assets?

a. Accounting rate of return

b. Payback period

c. Net present value

d. Internal rate of return

Q27. Sorius Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $100,000. The equipment will have an initial cost of $400,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the annual net income? Ignore income taxes.

a. $25,000

b. $35,000

c. $165,000

d. $175,000

Q28. Peet's Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $100,000. The equipment will have an initial cost of $400,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the payback period? Ignore income taxes.

a. 3.25 years

b. 4.00 years

c. 4.75 years

d. 7.00 years

Q29. Marchand Corp is considering the purchase of a new piece of equipment, which would have an initial cost of $500,000, a 7 year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:

Year 1	$99,000
Year 2	$91,000
Year 3	$89,000
Year 4	$78,000
Year 5	$75,000
Year 6	$70,000
Year 7	$64,000

What is the payback period?

a. 5.51 years

b. 5.97 years

c. 6.00 years

d. 6.18 years

Q30. The idea that the value of money changes over time because it can be invested to earn interest is the

a. net present value of money.

b. accounting value of money.

c. time value of money.

d. investment value of money.

Q31. When making screening decisions using the net present value method, a project is acceptable if

a. the NPV is greater than the hurdle rate.

b. the NPV is greater than the IRR.

c. the NPV is positive.

d. the NPV is negative.

Q32. Minne Corp is considering the purchase of a new piece of equipment. When discounted at a hurdle rate of 8%, the project has a net present value of $24,580. When discounted at a hurdle rate of 10%, the project has a net present value of ($28,940). The internal rate of return of the project is

a. zero.

b. between zero and 8%.

c. between 8% and 10%.

d. greater than 10%.

Q33. An analysis that reveals whether changing the underlying assumptions would affect the decision is a

a. net present value analysis.

b. internal rate of return analysis.

c. payback period analysis.

d. sensitivity analysis

Q34. Jonas Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $120,000 over its estimated life, while the total cost to buy the equipment will be $75,000 over its estimated life. At Jonas's required rate of return, the net present value of the cost of leasing the equipment is $73,700 and the net present value of the cost of buying the equipment is $68,000. Based on financial factors, Jonas should

a. lease the equipment, saving $45,000 over buying.

b. buy the equipment, saving $45,000 over leasing.

c. lease the equipment, saving $5,700 over buying.

d. buy the equipment, saving $5,700 over leasing.

Q35. In a decentralized organization:

a. local-division managers must receive higher approval for most business decisions

b. company-wide standard operating procedures are common

c. local-division managers have an opportunity to gain decision-making experience

d. decisions are made by senior executives

Q36. All of the following are true of responsibility centers EXCEPT that they:

a. operate like a small business

b. promote the interests of the larger organization

c. coordinate activities with other responsibility centers

d. are best used in a centralized organization

Q37. Segment margin includes:

a. all costs traceable to the segment

b. the segment's share of allocated corporate costs

c. the segment's share of allocated unavoidable costs

d. All of the above are correct.

Q38 The primary goal of transfer pricing is to:

a. motivate the decision maker to act in the organization's best interests

b. obtain a high transfer price for the supplying unit

c. obtain a high transfer price for the receiving unit

d. agree on a price for external sales

Q39. Return on investment (ROI) can be increased by:

a. increasing sales

b. decreasing operating assets

c. decreasing operating income

d. decreasing asset turnover

Q40. Randall Company makes and distributes outdoor play equipment. Last year sales were $2,400,000, operating income was $600,000, and the assets used were $3,000,000.The return on investment (ROI) is:

a. 20%

b. 80%

c. 25%

d. 125%