1. During the sales life cycle, which is an example of what happens during the maturity phase? (Points : 2) Sales and price decline, as do the number of competitors. Sales continue to increase but at a decreasing rate. The number of competitors and product variety decline. Sales increase rapidly along with an increase in product variety. Sales rise slowly as customers become aware of the new product or service. Product variety is limited. 2. The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the: (Points : 2) Sales life cycle. Target life cycle. Market life cycle. Critical life cycle. Cost life cycle. 3. Which of the following is a theory of constraints (TOC) measure of product profitability that equals price less materials cost, including all purchased components and materials handling costs? (Points : 2) Takt time. Throughput margin. Profitability margin. Price analysis. 4. Henry Ford was an early pioneer in the use of: (Points : 2) the theory of constraints. target costing. life cycle costing. just-in-time manufacturing. 5. Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are: (Points : 2) Substitutions for one another. Complementary. Auxiliary. Responsive. Parallel. 6. Which of the following is a common type of value engineering in which the performance and cost of each major function or feature of the product is examined? (Points : 2) Cost analysis. Variable design engineering. Cost-based value engineering. Functional analysis. Design analysis. 7. One important short-term goal for a company is to earn the projected operating income for the period. Attainment of this goal is measured by comparing the actual operating income to the: (Points : 2) Flexible-budget operating income. Prior period's operating income. The income reflected in the company's balanced scorecard. Master budget operating income. Industry average operating income. 8. Differences in expectation levels lead to two basic types of standards in a standard cost system: (Points : 2) Ideal and real. Ideal and currently attainable. Normal and conceptual. Attainable and real. Current and future. 9. Target cost can be defined as: (Points : 2) Manufacturing cost - sales price. Competitive price - desired profit. Desired profit - market price. Target price - manufacturing cost. 10. Customer-response time (CRT) is defined as: (Points : 2) The time between when a customer places an order and the time when the order is received by the customer. The elapsed time between initial customer contact and the time a customer places an order. The time between when a customer places an order and when that order is manufactured. The time between when an order is started into production and when that order is completed. 11. An organization planned to use $82 of material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for materials is: (Points : 2) $80,000. $82,000. $96,000. $98,400. 12. During the sales life cycle, which is an example of what happens during the introduction phase? (Points : 2) Sales and price decline, as do the number of competitors. Sales continue to increase but at a decreasing rate. The number of competitors and product variety decline. Sales increase rapidly along with an increase in product variety. Sales rise slowly as customers become aware of the new product or service. Product variety is limited. 13. Electronic Component Company is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year. Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced? (Points : 2) $280.00. $292.50. $299.00. $308.50. 14. Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except: (Points : 2) Flexibility in refining its design. Ability to quickly incorporate customer suggestions. Cost savings because of time saved. More detailed analysis of product functionality. 15. Which of the following statements about the standard variable factory overhead application rate is true? (Points : 2) The rate is a function of the denominator volume chosen. The rate is used for cost-control, but not product-costing purposes. The rate is used for product-costing, but not cost-control purposes. The same rate is used for both product-costing and cost-control purposes. Generally speaking, the rate will be independent of the allocation base chosen to apply overhead. 16. Using an activity-based costing system (ABC) enables a firm to calculate overhead variances for: (Points : 2) Sales volume and production volume. Spending and selling price. Each activity-based cost driver. Semi-variable overhead costs. Federal income tax purposes. 17. If there is a 90 percent chance that an observed variance is random, the cost of conducting an investigation is $1,000, the cost to correct a variance if the investigation reveals a nonrandom cause, and the amount of loss a company expects to incur if it does not investigate a variance that had a nonrandom cause is $30,000, what is the expected cost of not investigating the variance? (Points : 2) $30,000. $1,500. $0. $3,900. $3,000. 18. Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. Under a four-way breakdown (decomposition) of the total overhead variance, what is the variable factory overhead spending variance for December? (Points : 2) $50 favorable. $225 favorable. $425 unfavorable. $610 unfavorable. $650 unfavorable. 19. Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. Assuming the use of a two-way breakdown (decomposition) of the total overhead variance, what is the factory overhead efficiency variance for December? (Points : 2) N/Athis variance does not exist under a two-way breakdown of the total overead variance. $90 unfavorable. $150 unfavorable. $225 favorable. $425 unfavorable. 20. Gerhan Company's flexible budget for the units actually manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company spent 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. Under a three-variance breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance for May? (Points : 2) N/Athis variance does not exist in a three-variance analysis of the total overhead variance. $300 favorable. $380 unfavorable. $480 unfavorable. $1,160 unfavorable. 21. Which of the following is not a cost system proposed as an extension to ABC systems, with the overall goal of more accurately allocating manufacturing overhead costs to outputs? (Points : 2) Resource consumption accounting (RCA). Flexible standard costing. GPK (Grenzplankostenregnung). Variable costing. 22. If inventories in a business using a standard cost system are insignificant, the firm would be justified (in a practical sense) by disposing of variances each year: (Points : 2) As an adjustment to the finished goods inventory only. As an adjustment to cost of goods sold only. As adjustments to both inventory accounts and the cost of goods sold for the period. As a special item (gain or loss) on the income statement for the period. As an adjustment to the work-in-process (WIP) inventory only. 23. In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 is fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U. The total number of budgeted units reflected in the master budget for September was: (Points : 2) 36,000 units. 40,000 units. 45,000 units. 48,000 units. 50,000 units. 24. Which of the following is not a plausible cause of a systematic variance? (Points : 2) Prediction error. Modeling error. Implementation error. Measurement error. Random error. 25. Which one of the following is the difference in direct material costs between the actual amount incurred and the total standard cost in the flexible budget for the units manufactured during the period? (Points : 2) Direct materials price variance. Direct materials mix variance. Direct materials usage variance. Direct materials flexible-budget variance. Direct materials efficiency variance