Question 1.Which of the following is considered to be an advantage of using both nonfinancial and financial information in the balanced scorecard? (Points : 2)        Nonfinancial information is most helpful in analyzing a company's past performance, while financial information is most useful in evaluating potential future performance.        Nonfinancial information provides the short-term perspective while financial information provides the long-term perspective of performance.        Nonfinancial information reflects the company's current and potential competitive advantage, while financial information tends to focus on a firm's achieved financial performance.        Nonfinancial information should be included with financial information because it is more reliable than financial information. Question 2.Over the past several years it has become increasingly important for firms to improve achievement towards their social and environmental responsibilities. What is the best way the management accountant can help the firm improve on sustainability? (Points : 2)        Participate in programs of environmental organizations.        Develop and implement a legal staff and public relations staff for dealing with sustainability issues that may affect the firm.        Develop and implement a sustainability scorecard.        Risk management. Question 3.The range of the cost driver in which the actual value of the driver is expected to fall is  the: (Points : 2)        Actual cost range.        Driver range.        Activity range.        Relevant range. Question 4.The difference between wholesalers and retailers is: (Points : 2)        Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell to other merchandisers.        Wholesalers are merchandisers that sell to other merchandisers whereas retailers are merchandisers that sell directly to consumers.        Wholesalers are merchandisers that sell directly to the government whereas retailers are merchandisers that sell to other merchandisers.        Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell directly to the government. Question 5.In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique? (Points : 2)        Benchmarking.        Activity-Based Costing.        Theory of Constraints.        Continuous Improvement.        Total Quality Management. Question 6.Assume the following information pertaining to Moonbeam Company:   Beginning Finished Goods Inventory = $130,000 Ending Finished Goods Inventory = $124,000 Beginning WIP Inventory = $85,000 Ending WIP Inventory = $104,000 Beginning Direct Materials = $117,000 Ending Direct Materials = $130,000   Costs incurred during the period are as follows: Total Manufacturing Costs = $896,000 Factory Overhead = $199,000 ...

1. Question 1.Which of the following is considered to be an
advantage of using both nonfinancial and financial information
in the balanced scorecard? (Points : 2)
Nonfinancial information is most helpful in analyzing a
company's past performance, while financial information is
most useful in evaluating potential future performance.
Nonfinancial information provides the short-term
perspective while financial information provides the long-term
perspective of performance.
Nonfinancial information reflects the company's current
and potential competitive advantage, while financial
information tends to focus on a firm's achieved financial
performance.
Nonfinancial information should be included with financial
information because it is more reliable than financial
information.
Question 2.Over the past several years it has become
increasingly important for firms to improve achievement
towards their social and environmental responsibilities. What is
the best way the management accountant can help the firm
improve on sustainability? (Points : 2)
Participate in programs of environmental organizations.
Develop and implement a legal staff and public relations
staff for dealing with sustainability issues that may affect the
firm.
Develop and implement a sustainability scorecard.
Risk management.
Question 3.The range of the cost driver in which the actual
value of the driver is expected to fall is the: (Points : 2)
Actual cost range.

2. Driver range.
Activity range.
Relevant range.
Question 4.The difference between wholesalers and retailers is:
(Points : 2)
Wholesalers are merchandisers that sell directly to
customers whereas retailers are merchandisers that sell to other
merchandisers.
Wholesalers are merchandisers that sell to other
merchandisers whereas retailers are merchandisers that sell
directly to consumers.
Wholesalers are merchandisers that sell directly to the
government whereas retailers are merchandisers that sell to
other merchandisers.
Wholesalers are merchandisers that sell directly to
customers whereas retailers are merchandisers that sell directly
to the government.
Question 5.In a local factory, employees are rewarded for
finding new and better ways of changing the way they work.
This company is motivating its employees to use what
management technique? (Points : 2)
Benchmarking.
Activity-Based Costing.
Theory of Constraints.
Continuous Improvement.
Total Quality Management.
Question 6.Assume the following information pertaining to
Moonbeam Company:
Beginning Finished Goods Inventory = $130,000

3. Ending Finished Goods Inventory = $124,000
Beginning WIP Inventory = $85,000
Ending WIP Inventory = $104,000
Beginning Direct Materials = $117,000
Ending Direct Materials = $130,000
Costs incurred during the period are as follows:
Total Manufacturing Costs = $896,000
Factory Overhead = $199,000
Direct Materials Used = $156.000
Materials purchases are calculated to be: (Points : 2)
$143,000.
$156,000.
$91,000.
$169,000.
$140,000.
Question 7.Assume the following information pertaining to a
Company:
Prime costs = $195,000
Conversion Costs = $221,000
Direct Materials used = $85,000
Beginning Work-in-Process = $98,000
Ending Work-in-Process = $81,000
Cost of goods manufactured is calculated to be: (Points : 2)
$289,000.
$348,000.
$314,000.
$297,000.
$323,000.

4. Question 8.Which of the following activities is a facility-level
activity? (Points : 2)
Plant management salaries.
Depreciation on a highly specialized piece of production
equipment.
Direct labor.
Product design.
Question 9.Abnormal spoilage: (Points : 2)
Is considered part of good production.
Arises under efficient operating conditions.
Is controllable in the short run.
Is unacceptable spoilage that should not occur under
efficient operating conditions.
Is part of inventory product cost.
Question 10.Process cost systems are used in all of the
following industries except: (Points : 2)
Chemicals.
Ship building.
Oil refining.
Textiles.
Steel.
Question 11.When completed units are sold: (Points : 2)
Cost of Goods Sold account is credited.
Cost of Goods Manufactured account is credited.
Finished Goods Inventory account is credited.
Work-in-Process Inventory account is credited.
Finished Goods Inventory account is debited.
Question 12.Multistage ABC is used when: (Points : 2)

5. There are many departments in the organization.
Management wants a higher level of accuracy from the
ABC calculations.
There are complex relationships among the activities.
To simplify the ABC calculations.
Question 13.East Bay Fisheries Inc. processes king salmon for
various distributors. Two departments are involved —
processing and packaging. Data relating to tons of king salmon
processed in the processing department during June 2013 are
provided below:
Tons
of Percent CompletedKing
Salmon MaterialsConversion
Work-in-Process Inventory – June 1 1,500
90 80
Work-in-Process Inventory – June 1
2,800 60 40
Started processing during June 7,800
Total equivalent units for materials under the weighted-average
method are calculated to be: (Points : 2)
6,830 equivalent units.
8,180 equivalent units.
6,980 equivalent units.
7,140 equivalent units.
7,620 equivalent units.
Question 14. Wings Co. budgeted $555,600 manufacturing
direct wages, 2,315 direct labor hours, and had the following
manufacturing overhead:
Overhead Cost Pool - Budgeted O/H $ - Budgeted Level for

6. Cost Driver - O/H Cost Driver
Materials Handling $160,000 3,200
lbs. Material Weight
Machine Setup 13,200 390
S/U’s # of S/Us
Machine Repair 1,380 30,000 Mach.
Hrs Machine Hrs.
Inspections 10,560 160
Inspections # of Inspections
Requirements for Job #971 which included 4 Units of
Production:
D/L Hours = 20 Hours
D/Mat’ls = 130 lbs.
Machine S/U = 30 Set-ups
Machine Hrs. = 15,000 Machine Hours
Inspections = 15 Inspections.
Using ABC, the materials handling overhead cost assigned to
Job #971 is: (Points : 2)
$2,300.
$990.
$6,500.
$690.
$1,020.
Question 15. Firm X has a production process that has a total
joint cost of $15,000. At the split-off point, there are 2,000
pounds of Product 1 and 3,000 pounds of Product 2. What is the
cost per pound of Product 1 using the physical measure method?
(Points : 2)
$2.50.
$3.00.
$3.50.
$4.00.

7. Question 16. Which of the following is required for multiple
regression? (Points : 2)
The use of dummy variables.
The use of more than one cost driver.
The use of more than one dependent variable.
The use of a trend variable.
The use of multiple sets of data.
Question 17.An overhead cost that can be traced directly to
either a service or production department: (Points : 2)
Is called a "flow through" cost.
Requires less allocation effort.
Is charged directly to that department.
Must be variable.
Must be fixed.
Question 18.The CVP profit-planning model assumes that over
the relevant range of activity: (Points : 2)
Only revenues are linear.
Only revenues and fixed costs are linear.
Only revenues and variable costs are linear.
Variable cost per unit decreases because of increases in
productivity.
Both revenues and total costs are linear.
Question 19.Joint products are products that: (Points : 2)
Have minor total sales value.
Have substantial sales value.
Come from different production processes.
Are marketed in a joint marketing program.

8. Question 20. Variable costs will generally be relevant for
decision making because they: (Points : 2)
Differ between options.
Are volume-based.
Have not been committed and differ between options.
Differ between options and have been committed.
Measure opportunity cost.
Question 21. Jackson, Inc. is preparing a budget for the coming
year and requires a breakdown of the cost of electrical power
used in its factory into the fixed and variable elements. The
following data on the cost of power used and direct labor hours
worked are available for the last six months of this year:
Month $ for Power DL Hours
July $ 15,850 3,000
Aug 13,400 2,050
Sept 16,370 2,900
Oct 19,800 3,650
Nov 17,600 2,670
Dec 18,500 2,650
Total $101,520 16,920
Assuming that Jackson uses the high-low method of analysis,
the estimated variable cost of steam per direct labor hour is:
(Points : 2)
$4.00.
$5.42.
$5.82.
$6.00.
Question 22.The decision to keep or drop products or services
involves strategic consideration of all the following except:
(Points : 2)

9. Potential impact on remaining products or services.
Impact on employee morale.
Impact on organizational effectiveness.
Growth potential of the firm.
The desired inventory levels of the product.
Question 23.Which of the following is not true regarding the
appropriate discount rate to be used in conjunction with
discounted cash flow (DCF) decision models? (Points : 2)
For projects of "above average" risk, the appropriate
discount rate is the weighted-average cost of capital (WACC)
It includes an estimate of the after-tax cost of debt.
It can differ across investment projects, according to
perceived risk.
It is also sometimes referred to as the "hurdle rate" for
capital budgeting purposes.
Question 24.One of the key management functions is to perform
a regular review of product profitability. Which question(s)
below would not be asked when performing the analysis?
(Points : 2)
Are the products priced properly?
Which products are the most profitable?
Which products should be advertised more aggressively?
Should any product manager be rewarded?
What was the product manager paid last year?
Question 25.You just bought a new car for $125,000. Before
you had time to get insurance, the car was wrecked. Weird
Wally offers to take it off your hands for $10,000. You can then
purchase a similar model for $128,000. A body-shop with an
excellent reputation offers to rebuild it for $90,000 and loan
you a similar model while the vehicle is being rebuilt. Once

10. rebuilt, the body-shop claiams, it will run like a new car and
nobody will be able to tell the difference. What would you do
from a financial point of view? (Points : 2)
Rebuild to save $13,000.
Rebuild to save $28,000.
Rebuild to save $38,000.
Sell to Weird Wally and save $7,000.
Question 26.Which of the following statements regarding
"opportunity costs" is TRUE? (Points : 2)
These costs are recorded routinely by cost accounting
systems.
These costs relate to the benefit lost or foregone when a
chosen option (course of action) precludes the benefits from an
alternative option.
These costs are generally deductible for federal income tax
purposes.
In terms of most short-run decisions, they are irrelevant.
Question 27.Throughput margin is defined as sales less: (Points
: 2)
Direct labor costs.
Direct material costs.
Direct labor and material costs.
Processing costs.
Manufacturing costs.
Question 28. Pique Corporation wants to purchase a new
machine for $300,000. Management predicts that the machine
can produce sales of $200,000 each year for the next 5 years.
Expenses are expected to include direct materials, direct labor,
and factory overhead (excluding depreciation) totaling $80,000
per year. The firm uses straight-line depreciation with no

11. residual value for all depreciable assets. Pique's combined
income tax rate is 40%. Management requires a minimum after-
tax rate of return of 10% on all investments.
What is the approximate internal rate of return (IRR) of the
investment? (NOTE: To answer this question, students must
have access to Table 2 from Appendix C, Chapter 12.) (Points :
2)
Less than 12%.
Somewhere between 12% and 14%.
Somewhere between 15% and 20%.
Somewhere between 20% and 25%.
Over 25%.
Question 29. 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.
Question 30.For internal reporting purposes, it is recommended
that fixed overhead allocation rates in a standard costing system
be based on: (Points : 2)
Budgeted capacity usage.
Theoretical capacity since this is the level required under
generally accepted accounting principles.
Actual capacity utilization.
Expected capacity usage.
Practical capacity.
Question 31. A "standard cost" is a predetermined amount (e.g.,
cost) that: (Points : 2)

12. Should be incurred under relatively efficient operating
conditions.
Will be incurred for an operation or a specific objective.
Must occur for an operation or a specific objective.
Cannot be changed once it is established by management.
Question 32. 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.
Question 33.Which of the following benefits is not typically
associated with a move to a just-in-time (JIT) manufacturing
system? (Points : 2)
Raw materials are delivered as close as possible to time of
production.
Existence of long-term contracts with selected suppliers.
Reduction in employee training and education costs.
Decreases in manufacturing lead time.
Improved customer-response time (CRT).
Question 34.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.

13. Question 35. In September, Larson Inc. sold 40,000 units of its
only product for $240,000 and incurred a total cost of $225,000,
of which $25,000 is fixed costs. The flexible budget for
September showed total sales of $300,000. Among variances of
the period were: total variable cost flexible-budget variance,
$8,000U; total flexible-budget variance, $63,000U; and, sales
volume variance, in terms of contribution margin, $27,000U
The actual amount of operating income earned in September
was: (Points : 2)
$15,000.
$40,000.
$63,000.
$78,000.
$105,000.
Question 36.. SBU is the acronym for: (Points : 2)
Small Business Unit.
Sustainable Business Unit.
Standard Business Unit.
Strategic Business Unit.
Question 37.The common factor among control systems in
hiring practices, promotion policies, and strategic performance
measurement is: (Points : 2)
Management sets expectations for desired employee
performance.
Employee-determined expectations for desired employee
performance.
Coordination of activities.
Communication of results.

14. Question 38.The balanced scorecard measures the SBU's
performance in all of the following areas except: (Points : 2)
Learning and growth.
Managerial performance.
Customer satisfaction.
Internal business processes.
Accounting and tax compliance.
Question 39.The need for coordination between the production
and the selling function will impact the choice of: (Points : 2)
Profit, cost or revenue center.
Manager for the firm.
Formal or informal control systems.
Profitability goal for the firm.
Control measures to prevent fraud.
Question 40.Of most relevance in deciding how or which costs
should be assigned to an SBU is the degree of: (Points : 2)
Avoidability.
Causality.
Controllability.
Reliability.
Question 41. The "risk-averse" manager will be improperly
biased to: (Points : 2)
Seek out decisions with uncertain outcomes.
Make risky decisions.
Avoid decisions with uncertain outcomes.
Maximize his or her own risk and minimize the company's
risk.
Use resources beyond his/her control.

15. Question 42.A method for determining a bonus based upon the
performance of the unit is a(n): (Points : 2)
Segment-based pool.
Unit-based pool.
Firm-based pool.
Activity-based pool.
Function-based pool.
Question 43.Jackson Supply Company has a 2 to 1 current ratio.
This ratio would increase to more than 2 to 1 if the company:
(Points : 2)
Purchased a marketable security for cash.
Wrote off an uncollectible receivable.
Sold merchandise on account that earned a normal gross
margin.
Purchased inventory on account.
Question 44.The stock option form of bonus payments to
managers usually: (Points : 2)
Motivates well even in extended market downturns.
Can lose some motivation because of the delay in reward.
Focuses on the short-term.
Is not consistent with shareholder interests.
Has less risk than other types of bonus payment plans.
Question 45.An increase in the market price of a company's
common stock will immediately affect its: (Points : 2)
Stock return.
Debt to equity ratio.
Earnings per share.
Economic value added.
Return on equity.

16. Question 46. Which one of the following refers to the firm's
ability to pay its current operating expenses and maturing debt?
(Points : 2)
Discounted cash flow.
Liquidity.
Earnings base.
Profitability.
Purchasing power.
Question 47. Economic value added is calculated from: (Points :
2)
Average total assets, current liabilities, net income, and the
cost of capital.
EVA net income and EVA invested capital.
Net income, cost of capital, and net assets.
Net income and the cost of capital.
EVA net income, the cost of capital, and EVA invested
capital.
Question 48. The King Mattress Company had the following
operating results for 2012-2013. In addition, the company paid
dividends in both 2012 and 2013 of $60,000 per year and made
capital expenditures in both years of $30,000 per year. The
company's stock price in 2012 was $8 and $7 in 2013. The
industry average earnings multiple for the mattress industry was
9 in 2013 and the free cash flow and sales multiples were 18
and 1.5, respectively. The company is publicly owned and has
1,200,000 shares of outstanding stock at the end of 2013.
Balance Sheet, December 3120132012
Cash $ 340,000 $
100,000

17. Accounts Receivable 350,000
400,000
Inventory 250,000 300,00
0
Total Current Assets $ 940,000 $
800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $
1,900,000
Current Liabilities $ 200,000 $
300,000
Long-Term Liabilities 600,000
500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $
1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $
4,500,000
Cost of Sales
4,100,000 4,000,000
Gross Margin $ 650,000 $
500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $
100,000
Taxes 120,000 40,0
00
Net Income $ 180,000
$ 60,000
Cash Flow from Operations
Net Income $ 180,000
$ 60,000

18. Plus Depreciation Expense
50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000
- 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0
–
Cash Flow from Operations $ 230,000 $
110,000
The inventory turnover ratio for 2013 is (rounded): (Points : 2)
11.2
12.7
13.7
14.9
Question 49. During October, Rover Industries produced 35,000
units of product with costs as follows:
DM = $ 84,000
DL = 43,000
Variable O/H = 13,000
Fixed O/H = 147,000
Total =$ 287,000
What is Rover's unit cost for October, calculated on the variable
costing basis? (Points : 2)
$3.25.
$3.75.
$4.00.
$4.50.
$5.00.
Question 50. The King Mattress Company had the following
operating results for 2012-2013. In addition, the company paid
dividends in both 2012 and 2013 of $60,000 per year and made
capital expenditures in both years of $30,000 per year. The

19. company's stock price in 2012 was $8 and $7 in 2013. The
industry average earnings multiple for the mattress industry was
9 in 2013 and the free cash flow and sales multiples were 18
and 1.5, respectively. The company is publicly owned and has
1,200,000 shares of outstanding stock at the end of 2013.
Balance Sheet, December 3120132012
Cash $ 340,000 $
100,000
Accounts Receivable 350,000
400,000
Inventory
250,000 300,000
Total Current Assets $ 940,000 $
800,000
Long Lived Assets 1,080,000 1,100,000
Total Assets $ 2,020,000 $
1,900,000
Current Liabilities $ 200,000 $
300,000
Long-Term Liabilities 600,000
500,000
Stockholder’s Equity 1,220,000 1,100,000
Total Liabilities & Equity $ 2,020,000 $
1,900,000
Income Statement for the Year Ended December 31
Sales $ 4,750,000 $
4,500,000
Cost of
Sales 4,100,000 4,000,000
Gross Margin $ 650,000 $
500,000
Operating Expenses 350,000 400,000
Operating Income $ 300,000 $
100,000

20. Taxes 120,000 40,0
00
Net Income $ 180,000
$ 60,000
Cash Flow from Operations
Net Income $ 180,000
$ 60,000
Plus Depreciation Expense
50,000 50,000
+Decrease (-Inc) in A/T and Inventory 100,000
- 0 -
+Increase (-Dec) in Current Liabilities (100,000) - 0
–
Cash Flow from Operations $ 230,000 $
110,000
The current ratio for 2013 is: (Points : 2)
1.8
2.0
3.9
4.7