4. 1 POINT 2 POINTS 3 POINTS 4 POINTS 5 POINTS BUDGETING 1 POINT 4 POINTS 3 POINTS 2 POINTS2 POINTS 3 POINTS 2 POINTS 5 POINTS 2 POINTS 3 POINTS 4 POINTS 5 POINTS 4 POINTS 3 POINTS 4 POINTS 5 POINTS COST ALLOCATION & ABC DIFFERENTIAL ANALYSIS DECENTRALIZED OPERATIONS VARIANCES

5. THIS TYPE OF BUDGETING MAINTAINS A 12 MONTH PROJECTION INTO THE FUTURE 1 POINT

6. WHAT IS CONTINUOUS BUDGETING?

7. ONCE A BUDGET HAS BEEN CREATED, THE TASK OF CO-ORDINATING OPERATIONS TO ACHIEVE THE BUDGET’S GOALS FALLS WITHIN THIS STEP OF THE MANAGEMENT CYCLE – LIGHTS, CAMERA, ACTION! 2 POINTS

8. WHAT IS DIRECTING?

9. THIS BUDGETARY APPROACH REQUIRES MANAGERS TO ESTIMATE SALES, PRODUCTION, AND OTHER OPERATING DATA AS THOUGH OPERATIONS WERE BEING STARTED FOR THE FIRST TIME 3 POINTS

10. WHAT IS ZERO-BASED BUDGETING?

11. OF THE FOLLOWING, WHICH IS NOT A TYPE OF BUDGET DISCUSSED IN THE CHAPTER? COST OF GOODS SOLD BUDGET PRODUCTION BUDGET VARIANCE BUDGET DIRECT MATERIALS BUDGET DIRECT LABOR BUDGET FACTORY OVERHEAD BUDGET 4 POINTS

12. WHAT IS A VARIANCE BUDGET?

13. GIVEN THE FOLLOWING, THE AMOUNT OF CASH EXPECTED TO BE COLLECTED IN FEBRUARY: ACME PRODUCTS HAS THE FOLLOWING BUDGETED SALES FOR THE FIRST QUARTER, 2009: JANUARYFEBRUARYMARCH $1,000,000$1,200,000$900,000 10% OF EACH MONTH’S SALES ARE FOR CASH. OF THE REMAINING SALES, 60% ARE COLLECTED IN THE MONTH OF SALE, AND THE REMAINDER IN THE MONTH AFTER. 5 POINTS

14. WHAT IS $1,128,000? FEBRUARY CASH SALES $1,200,000 * 10%$120,000 FEBRUARY CREDIT SALES COLLECTIONS $1,200,000 * 90% * 60%$648,000 JANUARY CREDIT SALES COLLECTIONS $1,000,000 * 90% * 40%$360,000 $1,128,000

15. THE VARIANCE COMPUTED BY THE FORMULA: (ACTUAL PRICE – STANDARD PRICE) * ACTUAL QUANTITY 1 POINT

16. WHAT IS THE DIRECT MATERIALS PRICE VARIANCE?

17. DAILY DOUBLE!

18. THE TERM USED FOR ACCOUNTING SYSTEMS THAT USE PERFORMANCE GOALS FOR DIRECT MATERIALS, DIRECT LABOR, AND FACTORY OVERHEAD 2 POINTS

19. WHAT ARE STANDARD COST SYSTEMS?

20. THE TERM USED FOR STANDARDS THAT ARE ACHIEVED UNDER PERFECT OPERATING CONDITIONS – FOR EXAMPLE, NO MATERIALS SPOILAGE, NO IDLE TIME, NO BREAKDOWNS 3 POINTS

21. WHAT ARE IDEAL STANDARDS?

22. THE TERM USED WHEN A COMPANY MEASURES RESULTS SUCH AS CUSTOMER SATISFACTION 4 POINTS

23. WHAT IS NON-FINANCIAL PERFORMANCE MEASURE?

24. GIVEN THE FOLLOWING, THE AMOUNT (AND DIRECTION) OF THE FACTORY OVERHEAD VOLUME VARIANCE, GIVEN THAT FACTORY OVERHEAD IS APPLIED BASED ON DIRECT LABOR HOURS: ACTUAL COSTS: VARIABLE FACTORY OVERHEAD$10,400 FIXED FACTORY OVERHEAD$12,000 STANDARD FIXED OVERHEAD RATE$2.40/dlh STANDARD VARIABLE OVERHEAD RATE$3.60/dlh 100% OF NORMAL CAPACITY5,000 dlh STANDARD HRS @ ACTUAL PRODUCTION4,000 dlh 5 POINTS

25. WHAT IS $2,400 U? 100% OF NORMAL CAPACITY5,000 dlh STANDARD HRS @ ACTUAL PROD4,000 dlh CAPACITY NOT USED1,000 dlh STANDARD FIXED OVERHEAD RATE* 2.40 / dlh VOLUME VARIANCE$2,400 U

26. IN THIS TYPE OF RESPONSIBILITY CENTER, THE MANAGER ONLY HAS THE RESPONSIBILITY AND AUTHORITY FOR CONTROLLING THE COSTS INCURRED 1 POINT

27. WHAT IS A COST CENTER?

28. IN A PROFIT CENTER, THE RESPONSIBLE MANAGER’S PERFORMANCE REPORT INCLUDES NOT ONLY REVENUES AND OPERATING EXPENSES, BUT CHARGES FROM THESE INTERNAL ORGANIZATIONS 2 POINTS

29. WHAT ARE SERVICE DEPARTMENTS?

30. IN AN INVESTMENT CENTER, THE RESPONSIBLE MANAGER IS RESPONSIBLE FOR PROFITS, COSTS, AND THESE BALANCE SHEET ITEMS 3 POINTS

31. WHAT ARE ASSETS?

32. THE ANALYSIS FOR RETURN ON INVESTMENT CAN BE EXPANDED VIA A FORMULA, NAMED FOR THIS COMPANY THAT DEVELOPED NYLON IN 1935 4 POINTS

33. WHAT IS DuPONT?

34. THE NAMES OF THE TWO RATIOS IN THE EXPANDED ROI FORMULA 5 POINTS

35. WHAT ARE PROFIT MARGIN AND INVESTMENT TURNOVER?

36. THIS TYPE OF COST IS NOT RELEVANT IN DIFFERENTIAL ANALYSIS, AND SOUNDS LIKE IT BELONGS IN A GAME OF “BATTLESHIP” 1 POINT

37. WHAT IS A SUNK COST?

38. WHEN SETTING NORMAL PRODUCT SELLING PRICES, COMPANIES CAN CHOOSE BETWEEN COST-PLUS METHODS AND THESE? 2 POINTS

39. WHAT ARE MARKET METHODS?

40. IN THIS COST-PLUS METHOD, ONLY THE COSTS OF MANUFACTURING ARE INCLUDED IN THE COST AMOUNT TO WHICH THE MARKUP IS APPLIED 3 POINTS

41. WHAT IS THE PRODUCT COST CONCEPT?

42. DAILY DOUBLE!

43. THE TERM USED FOR THE AMOUNT OF INCOME FOREGONE FROM AN ALTERNATIVE USE OF AN ASSET 4 POINTS

44. WHAT IS OPPORTUNITY COST?

45. THE PRODUCT WHICH WILL MAXIMIZE INCOME UNDER THE FOLLOWING SCENARIO: STUDGEYSER BREWING MAKES THREE FERMENTED BEVERAGES: RED RIBBON, STALE ALE, AND COLT.47 THE FERMENTING PROCESS HAS LIMITED CAPACITY AND QUALIFIES AS A BOTTLENECK. RED RIBBONSTALE ALE COLT.47 SALES PRICE$20 $15$30 VARIABLE COST$10 $ 8$15 HOURS IN THE FERMENTER 5 7 10 5 POINTS

46. WHAT IS RED RIBBON? RED RIBBONSTALE ALE COLT.47 SALES PRICE$20 $15$30 VARIABLE COST$10 $ 8$15 CONT. MARGIN $10 $ 7 $15 HOURS IN THE FERMENTER ÷ 5 ÷7 ÷ 10 CM PER BOTTLE- NECK HOUR$2 $1$1.50

47. THE THREE FACTORY OVERHEAD ALLOCATION METHODS ARE ACTIVITY- BASED COSTING, A SINGLE PLANTWIDE RATE, AND THIS 1 POINT

48. WHAT IS MULTIPLE PRODUCTION DEPARTMENT RATE?

49. TERM USED FOR THE TYPE OF COSTING SYSTEM USED TO DETERMINE THE PROFITABILITY OF A MANUFACTURED ITEM 2 POINTS

50. WHAT IS PRODUCT COSTING?

51. USING A MULTIPLE PRODUCTION DEPARTMENT OR ACTIVITY-BASED COSTING RATE HELPS PREVENT THIS FROM OCCURRING 3 POINTS

52. WHAT IS DISTORTING THE PRODUCT COST (AND ULTIMATELY THE SELLING PRICE)?

53. WHEN USING ACTIVITY-BASED COSTING, FACTORY OVERHEAD COSTS ARE GROUPED TOGETHER IN THESE 4 POINTS

54. WHAT ARE ACTIVITY POOLS?

55. THE SINGLE PLANT-WIDE FACTORY OVERHEAD RATE FOR THE FOLLWING SCENARIO: ACTIVE ADULTS, INC. MAKES THREE PRODUCTS: ADULT DIAPERS, ADULT NUTRITION DRINK, AND WALKERS. BUDGETED FACTORY OVERHEAD IS $156,800, AND OVERHEAD IS APPLIED BASED ON DIRECT LABOR HOURS. FOLLOWING ARE THE BUDGETED PRODUCTION VOLUMES AND DLH PER UNIT: VOLUMEDLH/UNIT DIAPERS2,800 UNITS0.6 DRINK 7001.8 WALKERS1,4001.4 5 POINTS

56. WHAT IS $32/DLH? DIAPERS2,800 * 0.6 = 1,680 DRINK 700 * 1.8 = 1,260 WALKERS1,400 * 1.4 = 1,960 TOTAL DLH 4,900 FACTORY OVERHEAD RATE: $156,800 ÷ 4,900 DLH = $32/DLH

58. CATEGORY: DIFFERENTIAL ANALYSIS AND ACTIVITY-BASED COSTING MAKE YOUR WAGER!

59. ANSWER: THE COSTING METHOD THAT COMBINES MARKET-BASED PRICING WITH A COST- REDUCTION EMPHASIS

60. QUESTION WHAT IS TARGET COSTING?