INSTRUCTIONS: CHOOSE THE BEST ANSWER FOR EACH OF THE FOLLOWING MCQS: 1. COST OF GOODS AVAILABLE FOR SALE IS REPORTED ON THE INCOME STATEMENT OF A. A MERCHANDISING COMPANY BUT NOT A MANUFACTURING COMPANY. B. A MANUFACTURING COMPANY BUT NOT A MERCHANDISING COMPANY. C. A MERCHANDISING COMPANY AND A MANUFACTURING COMPANY. D. NEITHER A MANUFACTURING COMPANY NOR A MERCHANDISING COMPANY. 2. A COST OF GOODS MANUFACTURED SCHEDULE SHOWS BEGINNING AND ENDING INVENTORIES FOR: A. RAW MATERIALS AND WORK IN PROCESS ONLY. B. WORK IN PROCESS ONLY. C. RAW MATERIALS ONLY. D. RAW MATERIALS, WORK IN PROCESS, AND FINISHED GOODS. 3. VARIABLE COSTS ARE COSTS THAT: A. VARY IN TOTAL DIRECTLY AND PROPORTIONATELY WITH CHANGES IN THE ACTIVITY LEVEL. B. REMAIN THE SAME PER UNIT AT EVERY ACTIVITY LEVEL. C. NEITHER OF THE ABOVE. D. BOTH (A) AND (B) ABOVE. 4. YOUR PHONE SERVICE PROVIDER OFFERS A PLAN THAT IS CLASSIFIED AS A MIXED COST. THE COST PER MONTH FOR 1,000 MINUTES IS $50. IF YOU USE 2,000 MINUTES THIS MONTH, YOUR COST WILL BE: A. $50. B. $100. c. MORE THAN $100. D. BETWEEN $50 AND $100. 5. WHEN COMPARING A TRADITIONAL INCOME STATEMENT TO A CVP INCOME STATEMENT: A. NET INCOME WILL ALWAYS BE GREATER ON THE TRADITIONAL STATEMENT. B. NET INCOME WILL ALWAYS BE LESS ON THE TRADITIONAL STATEMENT. c. NET INCOME WILL ALWAYS BE IDENTICAL ON BOTH. D. NET INCOME WILL BE GREATER OR LESS DEPENDING ON THE SALES VOLUME. 6. CONTRIBUTION MARGIN: A. IS REVENUE REMAINING AFTER DEDUCTING VARIABLE COSTS? B. MAY BE EXPRESSED AS CONTRIBUTION MARGIN PER UNIT. c. IS SELLING PRICE LESS COST OF GOODS SOLD? D. BOTH (A) AND (B) ABOVE. 7. THE BUDGETED BALANCE SHEET IS: A. DEVELOPED FROM THE BUDGETED BALANCE SHEET FOR THE PRECEDING YEAR AND THE BUDGETS FOR THE CURRENT YEAR. B. THE LAST OPERATING BUDGET PREPARED. c. USED TO PREPARE THE CASH BUDGET. D. ALL OF THE ABOVE. 8. BUDGETARY CONTROL INVOLVES ALL BUT ONE OF THE FOLLOWING: A. MODIFYING FUTURE PLANS. B. ANALYZING DIFFERENCES. c. USING STATIC BUDGETS. D. DETERMINING DIFFERENCES BETWEEN ACTUAL AND PLANNED RESULTS. 9. A STATIC BUDGET IS: A. A PROJECTION OF BUDGET DATA AT SEVERAL LEVELS OF ACTIVITY WITHIN THE RELEVANT RANGE OF ACTIVITY. B. A PROJECTION OF BUDGET DATA AT A SINGLE LEVEL OF ACTIVITY. C. COMPARED TO A FLEXIBLE BUDGET IN A BUDGET REPORT. D. NEVER APPROPRIATE IN EVALUATING A MANAGER'S EFFECTIVENESS IN CONTROLLING COSTS. 10. AT 9,000 DIRECT LABOR HOURS, THE FLEXIBLE BUDGET FOR INDIRECT MATERIALS IS $27,000. IF $28,000 OF INDIRECT MATERIALS COSTS ARE INCURRED AT 9,200 DIRECT LABOR HOURS, THE FLEXIBLE BUDGET REPORT SHOULD SHOW THE FOLLOWING DIFFERENCE FOR INDIRECT MATERIALS: A. $1,000 UNFAVORABLE. B. $1,000 FAVORABLE. c. $400 FAVORABLE. D. $400 UNFAVORABLE. 11. JOBART COMPANY IS CURRENTLY OPERATING AT FULL CAPACITY. IT IS CONSIDERING BUYING A PART FROM AN OUTSIDE SUPPLIER RATHER THAN MAKING IT IN-HOUSE. IF JOBART PURCHASES THE PART, IT CAN USE THE RELEASED PRODUCTIVE CAPACITY TO GENERATE ADDITIONAL INCOME OF $30,000 FROM PRODUCING A DIFFERENT PRODUCT. WHEN CONDUCTING INCREMENTAL ANALYSIS IN THIS MAKE-OR-BUY DECISION, THE COMPANY SHOULD: A. IGNORE THE $30,000. B. ADD $30,000 TO OTHER COSTS IN THE "MAKE" COLUMN. c. ADD $30,000 TO OTHER COSTS IN THE "BUY" COLUMN. D. SUBTRACT $30,000 FROM THE OTHER COSTS IN THE "MAKE" COLUMN. CONTAINED,,, 12. IF AN UNPROFITABLE SEGMENT IS ELIMINATED: A. NET INCOME WILL ALWAYS INCREASE. B. VARIABLE EXPENSES OF THE ELIMINATED SEGMENT WILL HAVE TO BE ABSORBED BY OTHER SEGMENTS. c. FIXED EXPENSES ALLOCATED TO THE ELIMINATED SEGMENT WILL HAVE TO BE ABSORBED BY OTHER SEGMENTS. D. NET INCOME WILL ALWAYS DECREASE
