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25 Cards in this Set
- Front
- Back
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What type of responsibility center has to manage costs, revenues, and investments? cost center investment center sales center profit center |
investment center |
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Considering the balanced scorecard, which of the following perspectives is not used to evaluate a manager's performance? customers perspective financial perspective budget perspective learning/growth perspective |
Budget Perspective |
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According to the expanded (Dupont) formula, ROI consists of: gross Profit * Asset Turnover Gross Profit * Sales Turnover Profit Margin * Sales Turnover Profit Margin * Asset Turnover |
Profit Margin * Asset Turnover |
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If operating income is 10,000, investable assets is 100,000, and net sales is 250,000, and the company's target return is 8%, then ROI is? 10% 25% 40% 8% |
Operating income/ investable assets 10,000/100,000= 10% |
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If operating income is 10,000, investable assets is 100,000, and net sales is 250,000, and the company's target return is 8%, then residual income is? 8,000 2,000 -10,000 -15,000 |
10,000-(.08*100,000)=2,000 |
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What is the name of the variance when you compare actual results to flexible budget? |
Flexible Budget Variance |
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If the flexible Budget for Direct Materials shows $10,000, the static budget for direct materials shows $12,000, and the actual results for direct materials shows $14,000, then the flexible budget variance is equal to:
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4,000 unfavorable 10,000 static - 14,000 actually = 4,000 unfavorable |
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If the residual income is positive, then the ROI will be ______ than the target return equal lower higher
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Higher |
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In making short-term decisions, ______ costs are not relevant. variable fixed sunk mixed |
Sunk |
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Cost plus pricing is used when a company is a price-setter. Which calculation reflects cost plus pricing? Full product cost + desired Profit Variable product cost + desired profit Fixed product cost + desired Profit
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Full product cost + desired Profit |
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Fixed costs that do not differ between two alternatives are considered irrelevacant to the decision important only if they represent a material dollar amount
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considered irrelevant to the decision |
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A company is planning to replace an old machine with a new one. Which of the following is a sunk cost in this decision? a cost of the new machine selling price of the old machine future maintenance costs of the old machine original cost of the old machine |
original cost of the old machine |
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T company manufactures and sells watches for $40 each. W company has offered T $25 per watch for a one-time order of 6,000 watches. The total manufacturing cost per watch is $30 per unit, and consists of variable costs of $22 per watch and fixed overhead costs of $8 per watch. T has excess capacity and the special order would not adversely affect regular sales. The affect on operating income from accepting the order is? 18,000 decrease 18,000 increase 30,000 decrease 30,000 increase |
18,000 increase 150,000 Revenue -132,000 Variable Cost =18,000 |
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Which of the following strategies should a company take if it wishes to be a price-setter? produce a generic mass-market product enter a competitive market and boost profits by cost cutting produce a unique product produce a commodity |
produce a unique product |
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The sales price of a lamp is $25, variable costs are $17, and 2 machine hours are required per lamp. In addition, total fixed costs are $30,000, and ABC can sell a maximum of 10,000 units annually. Machine hour capacity is 25,000 hours per year. What is the contribution margin per machine hour? |
$4 per machine hours |
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Which of the following phrases most accurately describe opportunity cost? the cost incurred to gain the opportunity to make a sale the benefit gained by choosing a certain course of action the benefit given up by not choosing an alternative course of action |
the benefit given up by not choosing an alternative course of action |
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S produces 400,000 computer chips per month with a computer made in-house. The variable costs to make the component are $1.20 per unit, and the fixed costs run $1,200,000 per month. S has been approached by X who can supply the component, ready-made and with acceptable quality standards for $1.10 each. If S chooses to outsource, it could reduce the fixed costs by 40%. S does not have any other use for the facilities currently employed in making the component. The effect on operating income if the company decides to outsource is? There would be no effect on operating income Operating income would go up by $520,000. Operating income would go up by $440,000. Operating income would go down by $80,000. |
Operating Income would go up by 520,000 1.20-1.10=$0.10 * 40,000 = 440,000 |
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Which of the following describes the word |
it involves deciding among various long-term investments decisions |
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Which capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations? payback accounting rate of return net present value internal rate of return |
net present value |
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Nordic Avionics makes aircraft instrumentation. Its basic navigation radio and requires $80 in variable costs and requires $2,000 per month in fixed costs. If they upgrade the radio further to enhance its functionality, it will require an additional $25 per unit of variable costs, but no change to the fixed costs. The marketing manager believes that the company would be able to boost the price of the radio from $260 to $280. If it does so, how would the change effect operating income? |
It would go down by $5 20-25 |
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Fantabulous products sells 2,000 kayaks per year at a price of $450 per unit. Fantabulous sells in a highly competitive market and uses target pricing. The company has $1,000,000 of assets and the shareholders wish to make a profit of 18% on assets. How much is the target full product cost? 720,000 1,800,000 1,000,000 |
720,000 Revenue (2,000*450)=900,000 less: Profit (1,000,000 * 18%) =180,000 Target full product cost $720,000 |
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Kurtz logistics provides the following information: operating income $750,000 Net sales $10,000,000 average total assets $1,500,000 Management's target rate of return 15% What is the company's return on investment (ROI)? 7.5% 66.67% 15% 50% |
50% ROI= Operating income/average assets 750,000/1,500,000 |
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Number of repeat customers and percentage of market share are indicators of the _______ perspective Financial Customer Internal Business Learning and Growth |
Customer |
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Uwf paper Inc. sells paper products in Florida. WHich one of the following is most likely to be a cost center for UWF paper? the paper product lines a retail store selling its products the legal department a booth selling its products at a trade show |
The legal department |
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Which of the following phases most accurately describes opportunity cost? the cost incurred to gain the opportunity to make a sale the benefit gained by choosing a certain course of action the benefit given up by not choosing an alternative course of action
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the benefit given up by not choosing an alternative course of action |
