EXAM 3 example #70299

A common fixed cost is a fixed cost that supports more than one business segment and is traceable in whole or in part to at least one of the business segments.

Common fixed costs should not be charged to the individual segments when preparing a segmented income statement.

If a cost must be arbitrarily allocated in order to be assigned to a particular segment, then that cost should not be considered a common cost.

A common fixed cost is a fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated.

Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

When using segmented income statements, the dollar sales for a company to break even equals the sum of the traceable fixed expenses and the common fixed expenses divided by the overall CM ratio.

Common fixed expenses should be allocated to business segments when performing break-even calculations and making decisions.

When using segmented income statements, the dollar sales for a segment to break even equals the common fixed expenses of the segment divided by the segment CM ratio.

If a cost is a common cost of the segments on a segmented income statement, the cost should:

If a cost is a common cost of the segments on a segmented income statement, the cost should:

When using data from a segmented income statement, the dollar sales for the company to break even overall is equal to:

The principal difference between variable costing and absorption costing centers on

A national retail company has segmented its income statement by sales territories. If each sales territory statement is further segmented by individual stores, which of the following will most likely occur

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:

Managers will often allocate common fixed expenses to business segments because:

If a company operates at the break even point for each of its segments, it will lose money overall if common fixed expenses exist

Because absorption costing emphasizes costs by behavior, it works well with cost-volume-profit analysis

Under absorption costing, fixed manufacturing overhead cost is not included in product cost

Under variable costing, product cost does not contain any fixed manufacturing overhead cost.

The contribution margin ratio is equal to:

Under absorption costing, fixed manufacturing overhead costs

George Corporation has no beginning inventory and manufactures a single product. If the number of units produced exceeds the number of units sold, then net operating income under the absorption method for the year will

Under variable costing, which of the following is not expensed in its entirety in the period in which it is incurred?

The term gross margin is used in reports prepared using:

If a cost must be arbitrarily allocated in order to be assigned to a particular segment, then that cost should not be considered a common cost.

Segment margin is a better measure of the long-run profitability of a segment than contribution margin

A common fixed cost is a fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated.

The direct labor budget is based on:

Which of the following represents the normal sequence in which the below budgets are prepared?

The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together.

Budgets are used to plan and to control operations.

The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.

On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.

Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.

The sales budget is usually prepared before the production budget.

The sales budget often includes a schedule of expected cash collections.

The cash budget is usually prepared after the budgeted income statement.

The direct labor budget is based on:

All the following are considered to be benefits of participative budgeting, except for:

A direct materials quantity standard generally includes an allowance for waste.

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased.

Waste on the production line will result in an unfavorable materials quantity variance.

A materials price variance is unfavorable if the actual price exceeds the standard price.

A favorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

The standard price per unit for direct materials should not include the cost of delivering the materials.

Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance.

An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates.

The standard labor rate per hour defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits.

The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used.

A quantity standard indicates how much output should have been produced.

The standard cost per unit is computed by dividing the standard quantity or hours by the standard price or rate.

Poor quality materials could have an unfavorable effect on which of the following variances?

Which of the following would produce a labor rate variance?

During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

In a company's standard costing system direct labor-hours are used as the base for applying variable manufacturing overhead costs. The standard direct labor rate is twice the variable overhead rate. Last period the labor efficiency variance was unfavorable. From this information one can conclude that last period the variable overhead efficiency variance was:

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

Which of the following comparisons best isolates the impact that changes in operating efficiency have on performance?

The variance that is usually most useful in assessing the performance of the purchasing department manager is:

Which of the following would produce a materials price variance?

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.

Fixed costs should be ignored when evaluating how well a manager has controlled costs

A flexible budget cannot be used to estimate what costs should have been at a given level of activity.

Fixed costs should be included in a flexible budget even though they do not change when the level of activity changes.

A flexible budget should not be used when making comparisons to actual results such as actual expenses.

A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be

A revenue variance is favorable if the actual revenue exceeds what the revenue should have been for the actual level of activity of the period.

A spending variance is the difference between the cost in the static planning budget and the actual amount of the cost for the period.

Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

Unfavorable materials price and quantity variances are generally the responsibility of the

The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $15,000 unfavorable. What is the standard price per pound?

A static planning budget is:

The direct materials quantity standard would not be expressed in

The direct materials quantity standard should

What is a standard cost?

A standard cost is

Allowance for spoilage is part of the direct

An unfavorable materials quantity variance would occur if

The total materials variance is equal to the

The direct labor quantity standard is sometimes called the direct labor

A major weakness of flexible budgets is that:

A total materials variance is analyzed in terms of

The difference between a budget and a standard is that

Comparing actual results to a budget based on the actual activity for the period is possible with the use of a:

An unfavorable labor quantity variance may be caused by

Which one of the following statements is true?