1. A plant operating at a capacity would suggest that _________. a. on

QUESTION

1. A plant operating at a capacity would suggest that _________. a. only some specific machines or processes are operating at the maximum rate possible b. fixed costs will need to change to accommodate increased demand c. managers should produce those products with the highest contribution margin in order to deal with the constrained resource.2. The economic impact of inability to reach a target denominator level of activity would best be measured by ____________. a. the contribution margin lost by failing to meet the target denominator level of activity b. the amount of fixed overhead budget variance c. the amount of variable overhead efficiency variance3. The cost of fire insurance for a manufacturing plant is generally considered to be a a. product cost b. period cost c. variable cost4. A company paid off a $10,000 long-term not by issuing common stock to the creditor. This transaction would be reflected on the companys statement of cash flow as: a. an addition of $10,000 and a deduction of $10,000 under investing activities b. a direct exchange transaction in a separate schedule accompanying the statement of cash flows c. an addition of $10,000 under financing activities5. The break even point in sales for Rice Company is $360,000, and the companys contribution margin ratio is 30 percent. If Rice Company desires an income of $84,000, sales would have to total _______. a. $640,000 b. $480,000 c. $ 560,0006. A decrease in the discount rate ___________. a. will increase present values of future cash flows. b. is one way to compensate for greater risk in a project c. will reduce present values of future cash flows.7. Constribution income statements are used to measure the performance of ________. a. cost centers b. both cost centers and profit centers c. both profit centers and investment centers8. Overhead is applied to work in process in a standard costing system by _______. a. multiplying standard hours allowed for the output of the period times the predetermined rate b. multiplying actual hours times actual rate c. multiplying standard hours allowed for the output of the period times the actual rate9. Which of the following would be considered a finanacing activity that is a source of cash for purposes of constructing a statement of cash flows? a. Borrowing on a long-term note b. Income from rental property c. Collection of a loan made to another company10. Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products. A cost that is not relevant is _______. a. variable overhead b. fixed overhead that will be avoided if the special offer is accepted c. common fixed overhead that will continue if the special offer is not accepted.11. When computing the net cash provided by operating activities using the indirect approach on the statement of cash flows, which item below would not be added to net income? a. depreciation expense b. loss on the sale of an asset c. decrease in accounts payable12. The ratio of cash, trade receivables, and marketable securities to current liabilities is _______. a. the working capital of a firm b. the acid-test ratio c. the current ratio13. The materials price variance should be computed _________?????? a. when materials are purchased b. when materials are used in production c. based upon the amount of materials used in production when only a portion of materials purchased are actually used14. Street Companys fixed expenses total $150,000, its variable expense ratio is 60% and its variable expenses are $4.50 per unit. Based on this information, the breakeven point in units is _______. a. 50,000 b. 33,333 c. 100,00015. Expense A is a fixed cost, expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that ________. a. expense B has decreased b. expense A has decreased c. expense B has increased16. If the level of activity increases within the relevant range _________. a. variable cost per unit and total fixed costs also increase b. fixed cost per unit and total variable cost also increase c. variable cost per unit and total cost also increase17. Which of the following would be an argument for the use of net book value in the computation of operating assets in return on invenstment calculations? a. It allows ROI to decrease over time as assets get older b. It is consistent with how plant and equipment items are reported on the balance sheet c. It eliminates both age of equipment and method of depreciation as factors in ROI computations18. A companys current ratio and acid-test ratios are both greater than one (1). The collection of a current accounts receivable of $29,000 would ____________. a. decrease the current ratio b. not affect the current ratio or the acid-test ratio c. decrease the acid-test ratio19. Which of the following costs would contain both variable and a fixed cost element with respect to the total output of the company? a. Sales commissions b. Manufacturing overhead c. Administrative salaries20. When a flexible budget is used, a decrease in the activity level would _______. a. increase total fixed costs b. increase variable cost per unit c. decrease total costs
1.b. fixed costs will need to change to accommodate increased demand 2.a. the contribution margin lost by failing to meet the target denominator level of activity 3.a. product cost 4.c. an addition of $10,000 under financing activities 5.a. $640,000 6.c.will reduce present values of future cash flows.7.b.both cost centers and profit centers 8.a.multiplying standard hours allowed for the output of the period times the predetermined rate 9.c.Collection of a loan made to another company 10.c.common fixed overhead that will continue if the special offer is not¦

ccepted 11.c.decrease in accounts payable 12.. the current ratio 13.a.when materials are purchased14.a. 50,000 15.c.expense B has increased16.c.variable cost per unit and total cost also increase 17.b. It is consistent with how plant and equipment items are reported on the balance sheet 18.a.decrease the current ratio19.b.Manufacturing overhead 20.1. c. decrease total costs

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