A labour efficiency variance resulting from the use of poor quality materials should be charged to which/whom?

Select one:

a. The production manager.

b. The engineering department.

c. Manufacturing overhead.

d. The purchasing agent.

All other things being equal, which of the following is a consequence of an increase in a division's traceable fixed expenses?

Select one:

a. The division's segment margin will decrease.

b. The division's segment margin ratio will remain the same.

c. The division's contribution margin ratio will decrease.

d. The overall company operating income will remain the same.

Johnson Company operates two plants: Plant A and Plant B. Johnson Company reported for the year just ended a contribution margin of $50,000 for Plant A. Plant B had sales of $200,000 and a contribution margin ratio of 30%. Net operating income for the company was $20,000 and traceable fixed costs for the two plants totalled $50,000. What were Johnson Company's common fixed costs for last year?

Select one:

a. $50,000.

b. $40,000.

c. $90,000.

d. $70,000.

Which of the following best describes a plant operating at capacity?

Select one:

a. Managers should produce those products with the highest contribution margin in order to deal with the constrained resource.

b. Only some specific machines or processes are operating at the maximum rate possible.

c. Every machine and person in the plant is working at the maximum possible rate.

d. Fixed costs will need to change to accommodate increased demand.

Which of the following is NOT an effective way of dealing with a production constraint (i.e., bottleneck)?

Select one:

a. Pay overtime to workers assigned to the bottleneck.

b. Pay overtime to workers assigned to workstations located after the bottleneck in the production process.

c. Subcontract work that would otherwise require use of the bottleneck.

d. Reduce the number of defective units produced at the bottleneck.

Why are the net present value and internal rate of return methods of capital budgeting superior to the payback method?

Select one:

a. Because they consider the time value of money.

b. Because they reflect the effects of depreciation and income taxes.

c. Because they are easier to implement.

d. Because they require less input.

Which of the following statements about the evaluation of an investment having uneven cash flows using the payback method is correct?

Select one:

a. It can be done only by matching cash inflows and investment outflows on a year-by-year basis.

b. It CANNOT be done.

c. It will produce essentially the same results as those obtained through the use of discounted cash flow techniques.

d. It requires the use of a sophisticated calculator or computer software.