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16. Refer to the information above. What will be Mitchell's monthly operating income if 1,800 units are sold each month? +5pts A. $153,00 0. B. $136,50 0. C. $30,60 0. D. $14,10 0. 17. Which factor is not relevant in deciding whether or not to accept a special order? +2pts A. Incremental revenue that will be earned. B. Additional costs that will be incurred. C. The effect that the order will have on the company's regular sales volume and selling prices. D. The average cost of production if the special order is accepted. 18. The primary difference between profit centers and cost centers is that: +2pts A. Profit centers generate revenue. B. Cost centers incur costs. C. Profit centers are evaluated using return on investment criteria. 19. D. Profit centers provide services to other centers in the organization. An investment center: +2pts A. Is a profit center for which management is able to objectively measure the cost of the assets used in the center's operations. B. Is a cost center for which management is able to identify the original amount invested. C. May be either a cost center or a profit center. D. Is a subunit of the organization that provides services to other centers within the organization. 20. Which of the following is not considered an operating budget? +2pts A. Manufacturing cost budget. B. Production schedule. C. Capital expenditures budget. D. Sales forecast. 21. A budget that can be easily adjusted to show budgeted revenues, costs, and cash flows at different levels of activity is known as: +2pts A. A flexible budget. B. A master budget. C. A production budget. 22. D. A multi-level budget. Explain what is meant by "profit rich, yet cash poor". +3pts 23. There will be a favorable materials price variance if: +2pts A. The standard price per unit is less than the actual price per unit. B. The standard price per unit is greater than the actual price per unit. C. The actual quantity purchased is greater than expected. D. The actual quantity purchased is less than expected. 24. Greenleaf's flexible budget for June, based on actual output, called for the use of 10,000 square feet of materials at a standard cost of $9.90 per square foot. Company records show that the actual price paid for the materials used in June was $9.70 per square foot, and that the direct materials price variance for the month was $2,090 favorable. The materials quantity variance for Greenleaf's June operations was: +3pts A. $1,000 favorable. B. $4,455 unfavorable. C. $4,365 favorable. D. Impossible to determine from the data given. Maple Company's flexible budget, based upon the number of equivalent units produced, called for the use of 5,000 square yards of fabric at a standard cost of $2.45 per square yard. The Production Department actually used 5,200 square yards costing $2.35 per square yard during June. 25. Refer to the information above. The materials price variance for Maple Company for June is: +3pts A. $520 favorable. B. $990 favorable. C. $30 unfavorable. D. $520 unfavorable. Eagle Company uses a standard cost system which has provided the following data: 26. Refer to the information above. The direct labor rate variance for the period was: +3pts A. $425 favorable. B. $360 favorable. C. $360 unfavorable. D. $425 unfavorable. 27. Identify the criticisms of using ROI (Return on investment) as the only performance measure. +5pts 28. Explain the importance of incentive systems for motivating performance. +5pts 29. Capital budget audit Briefly discuss the reasons that a company's management would conduct a regular capital budget audit. +5pts 30. Accounting terminology Listed below are nine technical accounting terms introduced or emphasized in this chapter: +2pts Each of the following statements may (or may not) describe one of these technical terms. In the space provided beside each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. ____ (a) The amount by which sales revenue exceeds total variable cost expressed as a percentage of sales. ____ (b) The amount by which sales volume exceeds the break-even point. ____ (c) The study of financial statements by a potential investor or creditor as a means of evaluating the profitability and solvency of a business. ____ (d) A type of activity that has a causal effect in the occurrence of a particular cost. ____ (e) The level of sales at which revenue equals operating expenses. ____ (f) A cost that responds to changes in sales volume by less than a proportionate amount. ____ (g) A mathematical technique used to determine the fixed and variable elements of a mixed or semi-variable cost. 16. Refer to the information above. What will be Mitchell's monthly operating income if 1,800 units are sold each month? +5 pts A. $153,000. B. $136,500 C. $30,600. D. $14,100. 17. Which factor is not relevant in deciding whether or not to accept a special order? +2pts A. Incremental revenue that will be earned. B. Additional costs that will be incurred. C. The effect that the order will have on the company's regular sales volume and selling prices. D. The average cost of production if the special order is accepted. 18. The primary difference between profit centers and cost centers is that: +2pts A. Profit centers generate revenue. B. Cost centers incur costs. C. Profit centers are evaluated using return on investment criteria. D. Profit centers provide services to other centers in the organization. 19. An investment center: +2pts A. Is a profit center for which management is able to objectively measure the cost of the assets used in the center's operations. B. Is a cost center for which management is able to identify the original amount invested. C. May be either a cost center or a profit center. D. Is a subunit of the organization that provides services to other centers within the organization. 20. Which of the following is not considered an operating budget? +2pts A. Manufacturing cost budget. B. Production schedule. C. Capital expenditures budget. D. Sales forecast. 21. A budget that can be easily adjusted to show budgeted revenues, costs, and cash flows at different levels of activity is known as: +2pts A. A flexible budget. 8. A master budget. C. A production budget. D. A multi-level budget. 22. Explain what is meant by "profit rich, yet cash poor". +3 pts OQ Thnrn uni" Inn 0 'nunrnhln mnfnrinlo nrinn unrinnnn i' LOn'lo22. Explain what is meant by "profit rich, yet cash poor". +3 pts 23. There will be a favorable materials price variance if: +2pts A. The standard price per unit is less than the actual price per unit. B. The standard price per unit is greater than the actual price per unit. C. The actual quantity purchased is greater than expected. D. The actual quantity purchased is less than expected. 24. Greenleaf's flexible budget for June, based on actual output, called for the use of 10,000 square feet of materials ata standard cost of $9.90 per square foot. Company records show that the actual price paid for the materials used in June was $970 per square foot, and that the direct materials price variance for the month was $2,090 favorable. The materials quantity variance for Greenleaf's June operations was: +3 pts A. $i,000 favorable. B. $4,455 unfavorable. C. $4,365 favorable. D. Impossible to determine from the data given. Maple Company's flexible budget, based upon the number of equivalent units produced, called for the use of 5,000 square yards of fabric ata standard cost of $2.45 per square yard. The Production Department actually used 5,200 square yards costing $2.35 per square yard during June. 25. Refer to the information above. The materials price variance for Maple Company for June is: +3 pts A. $520 favorable. B. $990 favorable. C. $30 unfavorable. D. $520 unfavorable. Eagle Company uses a standard cost system which has provided the following data: Units of output manufactured: 80 Direct labor: Standard hours allowed: 2 hours per unit of product Standard wage rate: $16 per hour Actual direct labor: 180 hours, total cost of $3,240 26. Refer to the information above. The direct labor rate variance for the period was: +3pts A. $425 favorable. B. $360 favorable. C. $360 unfavorable. D. $425 unfavorable. 27. Identify the criticisms of using ROI (Return on investment) as the only performance measure. +5 pts 28. Explain the importance of incentive systems for motivating performance. +5 pts 29. Capital budget audit Briefly discuss the reasons that a company's management would conduct a regular capital budget audit. +5pts30. Accounting terminology Listed below are nine technical accounting terms introduced or emphasized in this chapter: +2pts Cdsbvol-urnopmfihzalysis CBE'aaizEr Contribution margin ratio Margin of safety Variable cost > "fi High-low method Break-even point contribution tnargin Activitybase ' ii 7 Each of the following statements may (or may not) describe one of these technical terms. In the space provided beside each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. - (a) The amount by which sales revenue exceeds total variable cost expressed as a percentage of sales. - (b) The amount by which sales volume exceeds the break-even point. - (c) The study of financial statements by a potential investor or creditor as a means of evaluating the profitability and solvency of a business. - (d) A type of activity that has a causal effect in the occurrence of a particular cost. - (e) The level of sales at which revenue equals operating expenses. - (f) A cost that responds to changes in sales volume by less than a proportionate amount. - (g) A mathematical technique used to determine the fixed and variable elements of a mixed or semi-variable cost