Preset costs for delivering a product or service under normal conditions.

The usual budget period for most companies is:

An annual period separated into quarterly and monthly budgets.

To determine a product selling price based on the total cost method, management should include:

Total product and selling, general, and administrative costs plus a markup.

Which of the following is the objective of capital budgeting decisions?

To earn a satisfactory return on investment.

The time value of money concept:

Means that a dollar tomorrow is worth less than a dollar today.

Which of the following is not necessary for budgets to be effective?

All amounts must be spent to ensure that budgets aren’t reduced next period

All of the following are considered cost centers except:

Juice product line division at Coca Cola.

Which methods of evaluating a capital investment project ignore the time value of money?

Payback period and accounting rate of return.

Is the potential benefit lost by taking a specific action.

If a division can sell every product at market price, what is the lowest transfer price the division would accept?

The market price charged to outside customers.

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Final Review - ACCT 1B

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Questions 20

Answers

1
Restating future cash flows in present values and then determining the payback period using these present values is:
Internal rate of return method.
Accounting rate of return method.
Present value method.
Net present value method.
Break-even time (BET)
2
Performance evaluations are best done using:
Controllable costs.
Direct costs.
Uncontrollable expenses.
Departmental contributions to overhead.
Contribution percentages.
3
Standard costs are:
Uniform among companies within an industry.
Established by using management by exception.
Preset costs for delivering a product or service under normal conditions.
Rarely achieved.
Actual costs incurred to produce a specific product or perform a service.
4
Which of the following must be prepared before the direct labor budget?
Selling expense budget
Merchandise purchases budget.
Capital expenditures budget.
Production budget.
Budgeted income statement.
5
When management focuses attention on the most significant differences between actual costs and standard costs:
Management by objectives.
Management by exception.
Management by variance.
Performance management.
Controllable management.
6
The usual budget period for most companies is:
An annual period separated into quarterly and monthly budgets.
An annual period of 250 working days.
A quarterly period separated into weekly budgets.
An annual period separated into weekly budgets.
A monthly period separated into daily budgets.
7
To determine a product selling price based on the total cost method, management should include:
Total product costs plus a markup.
Total product and selling, general, and administrative costs only.
Total selling, general, and administrative costs plus a markup.
Total product and selling, general, and administrative costs plus a markup.
Only a markup.
8
Which of the following is the objective of capital budgeting decisions?
To reduce the number of investment activities.
To eliminate all risk.
To discount all future and past cash flows.
To earn a satisfactory return on investment.
To reverse past decisions.
9
The time value of money concept:
Means that a dollar tomorrow is worth less than a dollar today.
Does not involve the concept of compound interest.
Means that a dollar today is worth less than a dollar tomorrow.
Means that a dollar tomorrow is worth more than a dollar today.
Means that "Time is money."
10
A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to decisions:
Uncontrollable cost.
Opportunity cost.
Incremental cost.
Sunk cost.
Out-of-pocket cost.
11
Which of the following is not necessary for budgets to be effective?
Evaluations offer opportunities to explain variances.
All amounts must be spent to ensure that budgets aren’t reduced next period
Goals reflected in a budget should be challenging but attainable.
Employees affected by a budget should help prepare it.
12
All of the following are considered cost centers except:
Purchasing department at Best Buy.
Juice product line division at Coca Cola.
Accounting department at Warner Bros.
Research department at Microsoft.
Advertising department at Hertz.
13
Costs that are incurred for more than one department and cannot be readily traced to only one department are:
Uncontrollable expenses.
Direct expenses.
Indirect expenses.
Fixed expenses.
Variable expenses.
14
A budget that is based on more than one amount of sales or other activity measure is called a:
Rolling budget.
Fixed budget.
Merchandise purchases budget.
Flexible budget.
Production budget.
15
A formal statement of a company’s plans in dollars is a:
Variance analysis.
Variance report.
Prospectus.
Budget.
Position statement.
16
Which methods of evaluating a capital investment project ignore the time value of money?
Internal rate of return and payback period.
Payback period and accounting rate of return.
Net present value and accounting rate of return.
Net present value and payback period.
Accounting rate of return and internal rate of return.
17
An additional cost from selecting a certain course of action is a(n):
Sunk cost.
Pocket cost.
Period cost.
Discount cost.
Incremental cost.
18
Managers use sales variances for:
Budgeting purposes only.
Planning purposes only.
Planning and budgeting purposes.
Control purposes only.
Planning and control purposes.
19
An opportunity cost:
Is the potential benefit lost by taking a specific action.
Results from past managerial decisions.
Requires a future outlay of cash.
Is irrelevant in decision making because it occurred in the past.
20
If a division can sell every product at market price, what is the lowest transfer price the division would accept?
The market price charged to outside customers.
The fixed cost of producing a unit of product.
Total cost of producing a unit of product.
The variable cost of producing a unit of product.

Final Review - ACCT 1B Flashcards | StudBud