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Q1. This course includes _ modules.
Q2. I am required to purchase a textbook for this course.
Q3. Which of the following activities is NOT required in each module?
Q4. The following tool(s) will help me use the discussion forums:
Q5. If I have a problem in the course I should:
Q1. Which of the following best describes the concept of capacity?
Q2. Theoretical and practical capacity are what types of capacity measures?
Q3. There is one main measure of capacity used by most firms.
Q1. Which of the following bests describes a constraint?
Q2. When addressing a constraint in the short-term or the intermediate-term, a useful accounting measure designed to maximize efficient use of the most constrained resource is “contribution margin per unit of constrained resource.”
Q3. Ryan Incorporated can produce a total of 100,000 units of its two main products per month. Total demand for these products is greater than 150,000 units per month.
Given this scenario, which of the following statements is true?
Q1. Galena Corporation produces automobile tires. They have a single factory and own the machinery and equipment used to produce the tires. The total capacity cost is $100,000 per year.
Galena’s managers estimate that the factory, if run 24 hours per day, every day, could produce 100,000 tires per year. However, given the machinery and equipment need regular maintenance, and employees require holidays, vacation time, and sick time, a more realistic estimate is 80,000 tires per year. Over the past five years, the average demand is 50,000 tires per year. This year, managers anticipate demand of 75,000 tires.
What is the capacity cost per tire if managers use normal capacity as the basis?
Q2. Rochelle Company is an Internet service provider. They own a large number of servers and other equipment, which costs $200,000 per year.
Capacity costs estimates are reported on a per service hour basis.
Managers estimate that, on average, the cost per hour demanded is $2.50 per hour. This year, managers estimate that the cost per hour demanded is $2.67 per hour. When managers take into account normal server downtime, the cost per hour supplied is $2.22. Ignoring this normal server downtime, the cost per hour supplied is $2.00.
Based on this information, what is Rochelle Company’s budgeted capacity?
Q3. Rockford Incorporated produces two products, Product A and
Product B.
Product A’s selling price and variable costs are $20 and $12
per unit, respectively.
Product B’s selling price and variable costs are $18 and $11
per unit, respectively.
Machine time used to produce both products is constrained. Product A uses 2 hours per unit to produce one unit. Product B uses 1.7 hours per unit to produce one unit.
Given this information, which of the following statements are
correct? (Check all that apply.)
Q4. Mendota Company produces two products, Product X and Product
Y.
The selling price and variable costs for Product X are $45
and $24, respectively.
The selling price and variable costs for Product Y are $52
and $27, respectively.
Both products use two types of labor, from two separate
pools of employees: specialized labor
employees and general labor employees.
For the coming quarter, the specialized labor pool has
17,000 hours available and the general labor pool has 19,000 hours available.
Each unit of Product X uses 0.75 hour of specialized labor
and 2 hours of general labor, per unit.
Each unit of Product Y uses 1 hour of specialized labor and
1.75 hours of general labor, per unit.
Which of the following statements are true?
Q5. El Paso Industries produces two products: the Deluxe model
and the Ultimate model.
Information about the Deluxe model is as follows:
Selling price – $14
Direct materials – $5
Direct labor – $7
Labor time required – 1
hour
Machine time required – 2
hours
Information about the Ultimate model is as follows:
Selling price – $25
Direct materials – $8
Direct labor – $14
Labor time required – 2
hours
Machine time required – 3
hours
El Paso has 2,000 labor hours available during the next
period, and 3,000 machine hours.
Which of the following statements are true? (Check all that
apply.)
Q1. Which of the following best describes the concept of capacity?
Q2. Which of the following describes theoretical capacity?
Q3. Which of the following describes normal capacity?
Q4. Gina Corporation has the following quantitative measures of capacity:
Which of the following statements must be true regarding these measures?
Q5. Which of the following best describes a constraint?
Q6. Jocelyn Corporation produces components for flat-screen televisions, which they sell to major television manufacturers.
Jocelyn Corp. relies on the following resources to achieve its goals: specialized labor responsible for designing components, high-quality electrical conductors, and the ultimate demand for flat-screen televisions, driven by the state of the market in which Jocelyn’s customers sell their products.
Which of the following resources represent demand-based constraints? (Check all that apply.)
Q7. When addressing a constraint in the short-term or the intermediate-term, a useful accounting measure designed to maximize efficient use of the most constrained resource is “contribution margin per unit of constrained resource.”
Q8. Ryan Incorporated can produce a total of 100,000 units of its two main products per month. Total demand for these products is greater than 150,000 units per month.
Given this scenario, which of the following statements are true? (Check all that apply.)
Q1. Costs is one category of factors that potentially influences products’ prices?
Q2. Which of the following is an advantage of the cost-based approach to product pricing?
Q3. A product’s price influences revenues via two inter-related mechanisms: (1) the price is the amount earned per unit sold and (2) the price influences the market demand for the product, and thus the number of units sold.
Q1. Which of the following best describes decentralization?
Q2. Which of the following is a disadvantage of decentralization?
Q3. Which of the following statements best describes a transfer price within an organization?
Q1. A product’s price influences revenues via two inter-related mechanisms: (1) the price is the amount earned per unit sold and (2) the price influences the market demand for the product, and thus the number of units sold.
Q2. Customers is one category of factors that potentially influences products’ prices?
Q3. Daniel Corporation is determining the pricing for its portfolio of products.
Which of the following statements are true regarding this decision? (Check all that apply.)
Q4. Which of the following is an advantage of the cost-based approach to product pricing?
Q5. Which of the following best describes decentralization?
Q6. Which of the following statements best describes a transfer price within an organization?
Q7. Which of the following are approaches to transfer pricing within organizations? (Check all that apply.)
Q8. All else equal, and from an economic perspective, when the supplier division has excess capacity to produce units required by the buying division, the supplying division will accept a price equal to or greater than the variable costs required to produce the transferred units, plus the contribution margin earned on normal sales of the product.
Q1. GoGo Company is currently pricing its main product, a flash drive for data storage.
Per unit information is as follows:
Direct materials – $8
Direct labor – $2
Variable overhead – $3
Fixed overhead (estimated) – $2
GoGo managers usually markup their products by 10%.
What will the price be if GoGo managers use variable costs as the basis for the pricing decision?
Q2. BeBops Group sells lawn furniture. They are part of a very competitive market in which customers have a number of different options for lawn furniture. Thus, BeBops managers usually adhere to market prices.
The market price for one of BeBops main products is $25.
Per unit cost information is as follows:
Direct materials – $10
Direct labor – $3
Variable overhead – $4
Fixed overhead (estimated) – $2
BeBops target a profit margin of 20% on products of this type.
Which of the following statements are true? (Check all that apply.)
Q3. Aggregate Industries is comprised of many individual, wholly-owned subsidiaries, many of which engage in transactions with each other involving the transfer of goods and services. Aggregate adopts a heavily decentralized approach, allowing subsidiary managers to decide whether to engage in internal transactions and decide the price on a case-by-case basis.
One such transfer involves Standard Division and Bubble Division. Standard produces electrical components, some of which Bubble uses in the production of its circuit boards. Both Standard and Bubble have the opportunities to transact with other entities, outside of Aggregate.
Currently, Standard can produce 10,000 components per month. The normal selling price is $10 per component. Variable costs amount to $6 per unit, and fixed costs per unit (estimated) amount to $1 per unit.
Bubble can purchase the component from an outside supplier at $9 per component. Its monthly needs are 2,000 components per month, all from the same supplier.
Assume that Standard currently has orders for 10,000 components.
Given this information, which of the following statements are true? (Check all that apply.)
Q4. Total Corporation is comprised of many individual, wholly-owned subsidiaries, many of which engage in transactions with each other involving the transfer of goods and services.
Total adopts a heavily decentralized approach, allowing subsidiary managers to decide whether to engage in internal transactions and decide the price on a case-by-case basis.
One such transfer involves Super Division and Byer Division.
Super Division produces plastics, some of which Byer uses in its various products, which are then sold to customers outside of Total Corp.
Both Super and Byer have opportunities to transact with other entities, outside of Total.
Currently, Super can produce 1,000 kilograms of plastics per month. The normal selling price is $5 per kilogram. Variable costs amount to $2 per unit, and fixed costs per unit (estimated) amount to $1 per unit.
Byer can purchase similar plastics from an outside supplier at $4 per kilogram. Its monthly needs are 300 kilograms per month, all from the same supplier.
Assume that Super currently has orders for 700 kilograms.
Given this information, which of the following statements are true? (Check all that apply.)
Q1. Which of the following best describes a budget?
Q2. Budgets fulfill the decision-facilitating and decision-influencing roles of managerial accounting.
Q3. Which of the following is true about the sales budget?
Q1. Which of the following best describes a standard?
Q2. Favorable variances are good news, and unfavorable variances are bad news.
Q3. Which of the following best describes variance analysis?
Q1. Which of the following best describes a budget?
Q2. When creating the master budget, managers usually start with the sales budget.
Q3. Which of the following is true about the sales budget?
Q4. Which of the following best describes a standard?
Q5. Variance analysis provides a comparison of actual and expected outcomes.
Q6. A static cost budget presents how much a company should have spent given the actual level of production.
Q7. Which of the following is true regarding an unfavorable variance?
Q8. Fixed cost variances include efficiency variances.
Q1. Kaplan Inc. had 100,000 in unit sales during the last quarter of last year. Managers expect the sales to increase by 10% each quarter over the next four quarters.
The selling price is expected to remain the same for the next four quarters at $2 per unit.
What is the quarter-specific budgeted sales revenue for the 4th quarter of the coming year?
Q2. Waunakee Metals expects sales for the year to be 100,000 units, with quarterly sales of 20%, 25%, 30%, and 25%, respectively. The sales price is expected to be $40.
Management desires an ending finished goods inventory each quarter of 20% of the next quarter’s sales volume.
Each unit requires 3 kilograms of materials at a cost of $5 per kilogram. Management desires an ending raw materials inventory each quarter of 10% of the next quarter’s production needs.
What is the budgeted production (in units) in Q2?
Q3. Waunakee Metals expects sales for the year to be 100,000 units, with quarterly sales of 20%, 25%, 30%, and 25%, respectively. The sales price is expected to be $40.
Management desires an ending finished goods inventory each quarter of 20% of the next quarter’s sales volume.
Each unit requires 3 kilograms of materials at a cost of $5 per kilogram. Management desires an ending raw materials inventory each quarter of 10% of the next quarter’s production needs.
What is the materials to be purchased (in kilograms) in Q3?
Q4. Marbles Company has the following information available regarding its materials:
Managers expected to pay $5 per kilogram, but ended up paying $6 per kilogram. Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms. Finally, the company planned to produce 1,000 units, but only produced 950.
Calculate the materials spending variance.
Q5. Marbles Company has the following information available regarding its labor:
Managers expected to pay $11 per direct labor hour, but ended up paying $10 per labor hour. Each unit produced should take 1 direct labor hour; actual total usage was 990 direct labor hours. Finally, the company planned to produce 1,000 units, but only produced 950.
Calculate the labor efficiency variance.
Q6. Marbles Company has the following information available regarding its materials:
Managers expected to pay $5 per kilogram, but ended up paying $6 per kilogram. Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms. Finally, the company planned to produce 1,000 units, but only produced 950.
Calculate the materials activity variance.
Q1. Return on investment can be manipulated due to the number of choices to use as profit and/or investment measures.
Q2. Which of the following performance measurement issues stems from the potential for employees to free-ride?
Q3. Profit is more informative than return on investment because profit is the bottom-line of the income statement.
Q1. Which of the following is a key purpose of strategic performance measurement systems?
Q2. Developing and implementing a performance measurement, evaluation, and compensation system is relatively straightforward.
Q3. Which of the following is a perspective in the Balanced Scorecard?
Q1. Which of the following best describes the concept of a strategy?
Q2. The differentiation strategy relates to how an organization can be different from competition.
Q3. Which of the following performance measurement issues best reflects the following scenario:
A division employee does not expend a lot of effort in his job because other employees are not expending effort.
Q4. Which of the following best describes return on investment?
Q5. Relative to other financial measures, the financial measure of “profit” has the advantage of being more informative.
Q6. Courage Incorporated has the following reported information for the last quarter.
Sales – $1,200,000
Total assets – $1,000,000
Profit – $100,000
Courage’s return on sales is , while its return on investment is .
Q7. Which of the following are disadvantages of financial performance measures? (Check all that apply.)
Q8. Which of the following is a quality of non-financial performance measures that is an advantage?
Q9. Which of the following are purposes of strategic performance measurement systems? (Check all that apply.)
Q10. The Balanced Scorecard establishes multiple alternative perspectives of the firm with the financial perspective, and establishes the connections between the goals, objectives, and measures within each of these perspectives.
Strategic Innovation: Building and Sustaining Innovative Organizations Quiz Answers