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1) One variance often influences another variance. If the direct materials price variance is favorable, then it is possible that this variance will cause A) the direct materials quantity variance to be unfavorable B) the direct labor price variance to be unfavorable C) the direct labor price variance to be favorable D) the direct materials quantity variance to be favorable 2) Which of the following is NOT an example of efficient performance? A) Direct labor hours used per unit were less than expected. B) Direct material used per unit was less than expected. More outputs were achieved with less inputs than predicted. D) More outputs were produced than expected. 3) Purple Rain Company planned to sell 35,000 units. Actual sales were 30,000 units. Based on this information, Blue Company was A) efficient B) inefficient C) effective D) ineffective 4) Yellow Cake Company planned to produce and sell 900 units at a total cost of $180,000. Actual production and sales were 900 units at a cost of $170,000. The company was A) efficient and ineffective B) inefficient and ineffective C) inefficient and effective D) efficient and effective 5) is the degree to which an organization minimizes the used to achieve an objective A) Efficiency: costs B) Efficiency, resources C) Effectiveness, resources D) Effectiveness, costs 6) Variable overhead efficiency variances are unfavorable when A) the actual cost-driver activity exceeds the standard activity allowed for the actual output B) the actual cost-driver activity is less than the standard activity allowed for the actual output C) the actual cost-driver activity exceeds the standard activity allowed for the static budget output D) the actual cost-driver activity is less than the standard activity allowed for the static budget output Western Community College Management Accounting 7) The variable overhead efficiency variance depends on whether the quantity of the cost driver used is more or less than A) the standard amount of output for the expected amount of output B) the quantity allowed for the expected amount of output the quantity allowed for the state budget amount of output D) the standard quantity allowed for the actual output Activate Windows 8) The variable overhead spending variance combines and effects A) price: quantity B) price, efficiency C) efficiency, sales activity D) rate, sales activity 9) Variable overhead efficiency variances are unfavorable when actual cost driver activity exceeds the A) standard cost-driver activity allowed for the actual output B) activity allowed for the expected output activity allowed for the planned output D) activity allowed for last period's output 10) For fixed overhead costs, the spending variance is equal to the flexible budget variance. A) always B) sometimes C) never D) indeterminate 11) What does a decentralized company expect from its transfer pricing system? A) to increase the transferring segment's profits only B) to increase the buying segment's profits only to increase the company's overall profits only D) to increase the transferring segment's profits and the company's overall profits 12) In companies with segment autonomy, who determines the transfer price for internal sales and purchases of products? A) all segment managers B) segment mangers involved in transfer C) upper management D) outside suppliers Western Community College Management Accounting 13) Which of the following statements about the establishment of transfer prices for intemal sales and purchases between segments is FALSE? A) In decentralized organizations, transfer pricing policy sometimes leads to dysfunctional decisions B) There is seldom a perfect transfer pricing policy. Organizations use a variety of methods to determine transfer prices D) In centralized organizations, segment managers se transfer prices 14) Transfer prices are A) revenues of the segment producing the transferred product B) costs of the segment acquiring the transferred product costs of the segment producing the transferred product D) revenues of the segment producing the transferred product and costs of the segment acquiring the transferred product 15) A transfer price exists when two segments of the same organization sell A) a product to the same customer B) a product to each other C) a product in a foreign country D) the same service to customers 16) Transfer prices are the amounts charged by one segment of an organisation for a product that it supplies to an outside firm. A) TRUE B) FALSE 17) The transfer price is revenue to the acquiring segment, and it is a cost to the segment producing the product A) TRUE B) FALSE 18) Tf capacity constraints prevent a segment from meeting internal and extemal demand for a product, the opportunity cost of selling internally equals A) the variable cost of producing the product B) the controllable costs of producing the product C) the contribution margin the producing segment could have received from selling in the external market rather than the internal market D) the variable cost plus the avoidable fixed cost of producing the product Western Community College Management Accounting 19) Division AA does not have excess capacity to produce Product OC The division can sell Product for $10 per unit outside the company. Variable costs are per unit. Division wants to purchase Products from Division AA to use in Product ZZ. The selling price of Product ZZ is ses per unit and variable costs to finish the product after the transfer are 512 per unit. An outside supplier will sell Product XO for 512 per unit. What is the minimum transfer price for Division AA? A) 54 per unit Activate Windows $10 per D) 512 per Go to Settings to per una 20) Division South does not have excess capacity to produce Product Y. The division can sell Product Y for $10 per unit outside the company. Variable costs are $6 per unit. Division North wants to purchase Product Y from Division South to use in Product ZZ. The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit. An outside supplier will sell Product Y for $12 per unit. What is the maximum price Division North will pay for Product Y? A) 512 per unit B) 513 per unit $25 per unit D) none of the above 21) When allocating service department costs to producing departments, which of the following guidelines is NOT followed? A) Allocate variable- and fixed-cost pools separately. B) Establish the cost-allocation procedure before rendering the service. Evaluate performance using flexible budgets for each service department. D) Establish the cost-allocation procedure after rendering the service 22) The Computer Department in a large company provides services to many departments. The cost driver for costs in the Computer Department is the number of computer hours. When allocating variable costs of the Computer Department to a ser department, which of the following formulas is used? A) actual computer hours used total budgeted variable costs of Computer Department total budgeted computer hours of Computer Department) B) budgeted computer hours to be used (total budgeted variable costs of Computer Department/ total budgeted computer hours of Computer Department) actual computer hours used total actual variable costs of Computer Department total actual computer hours of Computer Department) D) budgeted computer hours to be used = (total actual variable costs of Computer Department/ total budgeted computer hours of Computer Department) Western Community College Management Accounting 23) The Computer Department in a large company provides services to many departments. The cost driver for costs in the Computer Department is the number of computer hours. When allocating fred costs of the Computer Department to a ser department such as Department A which of the following formula is used? A) budgeted fixed cost budgeted hours to be used by Department Altal available capacity hours of Computer Department) 1) budgeted fed contactal hours used by Department total available capacity hours of Computer Department Activate Windows schaal fined cont budgeted hours to be used by Department A/total available capacity brengs to Computer Department) D) acea fecoactual hours used by Department Areal available capacity hour of Computerdows. Department 24) Department) 24) The allocation of fixed costs in service departments to user departments is based on A) actual capacity used in last period B) budgeted capacity available to user C) actual usage by user department D) actual usage by service department 25) Variable costs of service departments are allocated to user departments using instead of cost rates. A) actual; budgeted B) budgeted; actual C) long-range, short-range D) short-range: long-range cost rates 26) Budgeted cost rates are used for allocating variable costs of service departments to user departments because A) it provides service departments a greater incentive to be efficient B) it protects user departments from inefficiencies in service departments C) it protects managers in service departments from inflation D) A and B 27) The preferred guidelines for allocating service department costs to user departments include A) combining variable-cost and fixed-cost pools B) establishing details about cost allocation after providing services C) using actual costs for allocation of fixed costs and variable costs D) allocating variable-cost and fixed-cost pools separately Western Community College Management Accounting 28) Which of the following formulas should be used to allocate variable costs from service departments to user departments? A) budgeted unit rate total budgeted units planned to be used B) actual unit rate total budgeted units planned to be used budgeted unit rate actual units used D) actual unit rate actual units used 29) Robert Company has two production departments called Assembly and Finishing. The maintenance department serves both production departments. Maintenance costs are allocated based on labor hours. Budgeted fixed costs for the maintenance department are $30,000. Budgeted variable costs for the maintenance department are $5.00 per labor hour. Actual maintenance department costs are $36,000 fixed and $100,000 variable. Other relevant data follow: Capacity available Capacity used Assembly 20.000 labor hours 15,000 labor hours Finishing 15,000 labor hours 9,000 labor hours The amount of variable maintenance department costs allocated to the Assembly Department should be A) S48.000 B) 2.500 C$75,000 D) $100.000 to service departments 30) Managers trace to service departments Managers allocate A) producing department costs, service department costs B) producing department costs, producing department costs direct costs, indirect costs D) direct costs, producing department costs 31) The statement of financial position is also called the A) income statement B) statement of cash flows C) statement of retained earnings D) balance sheet 32) Economic resources that a company owns and expects to provide future benefits are called A) stockholders' equity B) assets C) liabilities D) retained earnings Western Community College Management Accounting 33) For a corporation, the excess of assets over abilities are called A) tained earning B) paid-in capital C) common stock D) stockholders equity 34) An entity's economic obligations to monowners are called Awesequity 1) liabilities Activate Windows Go to Settings to D) and earning 35) Which financial statement discloses the economic resources of the organization and the claims against those resources? A) income statement B) statement of cash flows C) statement of retained carings D) balance sheet 36) The main sections of the balance sheet include A) revenues, assets and liabilities B) assets, liabilities and expenses expenses, revenues and stockholders' equity D) assets, liabilities and stockholders' equity 37) Which of the following statements is FALSE? A) Assets are economic resources that are expected to provide future benefits. B) Liabilities are economic obligations or claims against the assets of an organization by nonowners. C) Assets must always equal the sum of liabilities and owners' equity. D) Owners' equity equals the sum of assets and liabilities. 38) The ownership claim arising from funds contributed by the owners of the business is called A) liabilities B) retained carnings C) note payable D) paid-in capital 39) The ownership claim arising from the reinvestment of previous profits is called A) net assets B) stockholders' equity C) investment income D) retained earnings and 40) In a corporation, stockholders' equity has two parts called A) dividends; net profit B) paid in capital; dividends C) net profit, retained earnings D) paid-in capital; retained earnings

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