1. The cost of direct materials placed into production is computed by adding the cost of purchases to the ending inventory of raw materials.

1. True(b) False

1. Elite Company has unlimited demand for either Candy Coin or Candy Bars. However, they have a limited capacity of machine hours to produce either product. Candy Coins sells for 10 per unit and has a variable cost of 6 per unit and it takes 6 minutes to produce one unit. Candy Bars sells for 15 per unit and has a variable cost of 3 per unit and it takes 10 minutes to produce one unit. Which of the following decisions would maximize Elite's net income?

1. Allocate all machine hours to the production of Candy Coins
2. Allocate all machine hours to the production of Candy Bars
3. Allocate 50% of the machine hours to Candy Coins and 50% to Candy Bars
4. Allocate 75% of the machine hours to Candy Coins and 25% to Candy Bars

1. Which of the following is NOT a step in Activity-based management?

1. Score each activity as high or low value-added as perceived by the customer
2. Calculate a cost-driver rate for each activity
3. Identify the opportunities to enhance value-added activities
4. Identify activities as value-added or non-value added

Please use the following information for questions 4 and 5:

Ruben Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for 7.50 each, and the variable cost to manufacture them was 2.25 per unit. The company needed to sell 20,000 shirts to break even. The net income last year was 5,040. Ruben's expectations for the coming year include the following:

- The sales price of the T-shirts will be 9 - Variable costs to manufacture will increase by one-third - Fixed costs will increase by 10%

4. The selling price that would maintain the same contribution margin ratio as last year is:

1. 8.25
2. 9.00
3. 9.75
4. 10.00

1. The number of T-shirts Ruben Corporation must sell to break even in the coming year is:
2. 17,500
3. 19,250
4. 20,000
5. 22,000
6. Which of the following methods would be most helpful in identifying outliers?

1. Account analysis
2. Multiple regression
3. Scatter graph
4. All of the above

1. Which of the following is NOT a cost of decentralisation?

1. Managers in a decentralized organization might have a narrow focus on their own unit's performance rather than the attainment of their organization's overall goals
2. Managers might have a tendency to ignore the consequences of their actions on the organization's other subunits
3. Delegating decision making to the lowest level possible enables an organization to respond in a timely way to opportunities and problems
4. Both (a) and (b)

1. Which of the following statements about choosing the best cost driver base is NOT true?

1. The base should logically have a cause and effect relationship with the activity and the use of resources
2. The cost driver should be based on the theoretical capacity of the resource to support activities
3. The base should be feasible to measure
4. The base should predict or explain activities use of resources with reasonable accuracy

1. Which of the following is an example of a value-added-activity?

1. Storing excess inventory for future sales
2. Manual data entry
3. Making customer contacts and sales
4. Reworking faulty products

1. Josh Corp. has the following sales and operating expense data for July and August:

	July	August
Units Sold	10,000	15,000
Operating Costs:
Cost A	45,000	45,000
Cost B	47,000	67,000
Cost C	40,000	60,000

If 12,000 units are produced during December, what would be the projected total cost for Cost B during Decemberusing the High-Low method?

1. 48,000
2. 55,000
3. 69,400
4. None of the above

1. Movement of materials for products in production is classified as:
2. Unit-level resources
3. Batch-level resources
4. Product-level resources
5. Facility-level resources

1. At the break-even point of 1,500 units, variable costs are 60,000, and fixed costs are 30,000. What would operating income be if 1,501 units are sold?

1. 20
2. 40
3. 90
4. 140

1. Ricardo Industries is preparing a bid for a special project requiring the production of 35,000 units. The engineering personnel have advised that the units can be produced in groups with the first group consisting of 1,000 units. A labour time needed per unit will be progressively smaller by a constant percentage rate as experience is gained in the production process. The method that would best estimate Ricardo's total cost for the project is:

1. Learning curve analysis
2. Multiple regression analysis
3. Account analysis
4. Both (a) and (c)

1. Faulk Industries (FI) produces low cost digital cameras that sell for 100. FI requires a 25% return on sales. Currently feasible costs are 5,160,000 and a cost reduction of 660,000 is required to meet their target. FI assumes they will sell ____ cameras.

1. 60,000 cameras
2. 75,000 cameras
3. 85,000 cameras
4. None of the above

1. Which of the following describes a sunk cost?
2. A cost that is not intended to vary with production or sales volume
3. Foregone benefit that could have been realized from the best alternative use of resources
4. Past resourcespayments that cannot be changed by any current or future decision
5. Costs that can be changed quickly and easily

Please use the following information for questions 16 and 17:

Belsky Bay Inc. has two divisions. The company, in trying to develop performance measures has noted that different accounting methods and inflation rates exist for the assets of the divisions. Because of the difference, the company is considering the use of multiple performance measures. The following information for the divisions for last year is below:

The company's required rate of return is 12 percent.

1. What are Division A and B's ROIs based on net book values, respectively (round to two decimals)?

1. 64.65%; 23.23%
2. 48.55%; 41.74%
3. 41.74%; 46.38%
4. 23.65%; 65.00%

1. What are Division A and B's residual income, based on gross book values, respectively?

1. 85,500; 126,100
2. 126,100; 85,500
3. 55,600; 130,000
4. 130,300; 55,600
5. The Mercury Division of Planet Enterprises had pre-tax income of 1,500,000. Total assets were 13,000,000 while current liabilities were 3,000,000. The weighted average cost of capital is 10.0%. The tax rate for Planet Enterprises is 25%

What is the EVA for the Mercury Division?

1. (125,000)
2. 125,000
3. 500,000
4. 750,000

1. The Gold Division of the Currency Company has net income in the amount of 500,000, an average total asset base of 3,000,000 and residual income of 50,000. The imputed interest would be:

1. 5%
2. 10%
3. 15%
4. 20%

Please use the following information for questions 20 and 21:

You have the following information for Delta company for 2018:

Sales revenue	418,000
Administrative costs	87,500
Manufacturing building depreciation	54,000
Indirect materials and supplies	12,600
Sales commissions	29,000
Raw material inventory, 1 January	36,800
Direct labour	71,200
Raw material inventory, 31 December	38,000
Finished goods inventory, 1 January	21,800
Finished goods inventory, 31 December	17,000
Raw material purchases	44,600
Work-in-progress inventory, 31 December	26,200
Supervisory and indirect labour	28,800
Property taxes, manufacturing plant	16,800
Plant utilities and power	47,000
Work-in-progress inventory, 1 January	30,800

1. The cost of sales for 2018 is:

1. 304,600
2. 300,200
3. 278,400
4. 283,200
5. Operating Profit for the year 2018 is (you need to use your answer from question 21):

1. 134,800
2. 18,300
3. 23,100
4. 139,600

1. Beta Corp. sells a product for 30 per unit. The fixed costs are 517,500 and the unit variable costs are 70% of the selling price. What sales would be necessary in order for Beta Corp. to realise a profit of 15% of sales?

1. 115,000
2. 1,725,000
3. 1,150,000
4. 3,450,000

This information is to be used for questions 23 & 24

A company manufactures two products, Product Alpha and Product Beta. Both are produced in a very labour-intensive environment and use similar processes. Alpha and Beta differ by volume. Beta is a high-volume product, while Alpha is a low-volume product. Details of product inputs, outputs and the costs of activities are as follows:

Product	Annual output (units)	Number of purchase orders	Number of set-ups	Direct labour hours
Alpha	1,200	75	40	10,000
Beta	12,000	85	60	60,000
	160	100	70,000

Fixed overhead costs amount to a total of 420,000 and have been analysed as follows:

Purchasing related 145,000

Set-up related 175,000

Other overhead costs 100,000

Other overhead costs are absorbed on the basis of labour hours.

1. Using a traditional method of overhead absorption based on labour hours, what is the overhead cost per unit, to one decimal place, for each unit of product Alpha?

1. 50
2. 22.2
3. 126.6
4. 30

1. Using Activity Based Costing as method of overhead absorption, what is the overhead cost per unit, to one decimal place, for each unit of product Alpha?

1. 50
2. 22.2
3. 126.6
4. 30

1. The objectives of customer profitability analysis include

1. Identify the effectiveness of the current marketing program
2. Determine which customers are profitable
3. Determine which customer related activities can be modified to improve overall company profitability
4. All of the above