Management Accounting

At 40,000 direct labor hours, the flexible budget for indirect labor is $160,000. If $172,000 of indirect labor costs are incurred at 44,000 direct labor hours, the flexible budget report should show the following difference for indirect labor.

Controllable fixed costs are deducted form the contribution margin to arrive at 

The numerator in computing return on investment is

The effectiveness of the budget program is directly related to its acceptance by all levels of management.

The sales budget is the first budget prepared and each of the other budgets depends on it.

The quantities of direct materials in the direct materials budget are derived from the formula: Desired Endig Direct Material Units + Direct Materials Units Required for Production - Beginning Direct Materials units = Required Direct Materials Units to be purchased.

The budgeted income statement indicates the expected profitability of operations for the next year and provides the basis for evaluating company performance.

In a competitive, common-product environment the company must set a target selling price using cost-plus pricing

Joint product costs are relevant for any sell-or-process further decision.

Opportunity costs are costs that have already been incurred and will not be avoided by any future decision.

Long-range planning differs from budgeting in the time period involved, emphasis, and the amount of detail presented.

A formal written statement of management's plans for a specified future time period, expressed in financial terms is a(n)

Which of the following is not a benefit of budgeting?

All of the following are financial budgets except the

If required production units are 75,000, budgeted sales units are 65,000, required direct materials purchases units are 3,000, and beginning finished goods units are 5,000, then desired ending finished goods units would be

Once a company determined the target price, it can deterimne its target cost by setting a desired profit

Fixed manufacturing costs will never be relevant in a make or buy decision

Book value is a sunk cost and is therefore relevant in incremental analysis of retain or replace equipment

Under variable costing, all variable costs are considered production costs. 

The labor charge inclueds the direct labor cost of employees, selling, adiministrative, and similiar overhead costs; and an allowance for a desired profit per hour.

The charges for any particular job are the sum of the labor charge, the materials charge, and the material loading charge.

An appropriate transfered price should assist the company in making proper purchasing decisions.

The market-based transfer price approach provides a fairer allocation of the company's contribution margin to each devision than the cost-based approach.

In order to maximize income, and minimize income tax, companies can adjust the transfer prices they use on transfer between divisions located in different countries.

Operating leverage refers to the extent to which a company’s net income reacts to a given change in production.

The target cost of a product 

In the cost-plus pricing approach, the markup percentage is computed by dividing the 

All of the following are steps in the time-and-material pricing approach except calculating the 

The total contribution margin to a company in the market-based transfer price approach is 

Absorption-cost pricing

Determining and evaluating possible courses of action is a step in management's decision-making process.

In incremental analysis fixed costs may not change under alternative courses of action, while variable costs may change.

The relevant data to consider in accpeting an order at a special price are the additional manufactruing costs incurred and expected revenues.

The basic decision rule to sell or process further is: process further as long as the incremental revenue from such processing exceeds the incremental processing costs.

When multiple products exist, the break-even point in dollars is computed by dividing fixed costs by the weighted –average contribution margin. 

In deciding on the future status of an unprofitable segment, management should consider the effect of elimination on the remaining product lines.

Any trade-in allowance or cash disposal value of the old asset is relevant in a retain or replace equipment decision.

The margin of safety indicates how much sales must increase before a company will be operating at a profit

Which of the following is not a step in management's decision-making process?

If revenues are $315,000 under alternative A and $324,000 under alternative B, and costs are $285,0000 for A and $306,000 for B, then using the basic approach in incremental analysis, incremental revenues, costs, and net income, in coparing A to B are respectively