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    Managerial Accounting of Original Works on Commission

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    An artist creates original works on commission. She is likely to use what type of costing?
    job order
    process
    actual
    normal

    John Adams is a cash receipts clerk for Boro Company. He receives payments from customers and records the payments to the customers' accounts. John receives a payment from Bobbie Jones for merchandise purchased on account. But, instead of recording the payment to Jones' account and depositing the cash, he pockets the cash. Later, John receives a payment from Shorty Cobb. Instead of recording the payment to Cobb's account, he records it to Jones' account. This is an example of
    misstating inventory
    floating
    lapping
    understating accounts receivables

    A potential capital investment will be depreciated $5,000 per year for five years. Which of the following pieces of information would a manager need to calculate the cash flow associated with depreciation?
    the asset's residual value
    the discount rate
    the tax rate
    none of the above, since there is no cash flow associated with depreciation

    Capital investment decisions typically involve several kinds of cash flows. Which kind best describes an asset's residual value?
    annuity due
    lump sum
    ordinary annuity
    none of the above

    Choosing the proper method of allocating costs to products and services can have a major impact on what?
    the selling price of the product or service if selling price is based on competition
    arriving at a proper cost for the product or service
    total manufacturing costs
    the method used doesn't matter

    In large firms where different divisions compete for limited investment capital, managers are tempted to make liberal cash flow assumptions that show positive Net Present Values (NPV) to obtain approval for their projects. What can senior management do to offset this tendency?
    senior management should stipulate a discount rate much higher than the company's cost of capital to reduce the present value of projects
    senior management should stipulate a discount rate slightly higher than the company's cost of capital to reduce the present value of projects
    senior management should stipulate a discount rate much lower than the company's cost of capital to reduce the present value of projects
    senior management should stipulate a discount rate slightly lower than the company's cost of capital to reduce the present value of projects

    It is estimated that the cost of electricity to run a machine for an entire 8-hour shift is $16. The machine can produce 200 units of product for each hour of operation. How much electricity cost is allocated to each unit of product?
    $0.01
    $0.10
    $1.00
    cannot calculate from the information given

    Fast Delivery Company delivers packages and business documents for local businesses located in the Houston metropolitan area. If the company decided to adopt an ABC costing system to accumulate costs for its service, what would be an appropriate cost driver to use for the cost of the packaging envelopes provided to customers?
    number of miles to be driven in the delivery
    number of drivers on the truck
    number of packages
    number of orders

    Which of the following elements of Cooper's cost hierarchy is most difficult to allocate because they cannot be associated directly with a product?
    unit-level costs
    batch-level costs
    product-level costs
    facility-level costs

    All of the following are strategic decisions except
    the types of products a company should manufacture
    how products should be distributed
    whether to enter new markets
    improving machine setup times

    Sebastian, an investment center manager in RKH Corporation, is trying to boost the current period's return on investment. Which of the following actions will achieve that goal?
    purchasing a new piece of equipment on the last day of the fiscal year
    raising commission rates for salespeople from 3% to 4%
    delaying preventive maintenance on existing equipment until next year
    all of the above will increase the current period's ROI

    A collection of related operating budgets is known as a
    pro forma financial statement
    flexible budget
    static budget
    master budget

    Hamilton has budgeted total manufacturing overhead costs for the year as $125,000 based on 20,000 direct labor hours. The ratio of variable manufacturing overhead costs to fixed manufacturing overhead costs is 2:1. In a given month 2,000 direct labor hours are budgeted for production. How much overhead is budgeted?
    $12,500.00
    $11,805.55
    $11,110.42
    $10,416.67

    Research has shown that managers perform best when
    there is no budget to worry about
    there is a moderately difficult but achievable budget
    the budget is obviously unachievable, but presents a tremendous challenge
    budgets contain a maximum of slack

    Kirland Company collected the following information to prepare its cash budget for the first quarter of a recent fiscal period.
    If Kirkland wants an ending cash balance of $4,000, how much will it have to borrow in the first quarter?
    Beginning cash balance $4,250
    Capital Expenditures 3,000
    Collections on account 23,000
    Depreciation on factory equipment 1,000
    Dividends 1,000
    Period costs 11,100
    Product costs (excludes depreciation) 20,150

    $0
    $12,000
    $13,000
    some other amount

    The cost of customer ill will caused by a defective product is an example of a(n)
    prevention cost
    appraisal cost
    internal failure cost
    external failure cost

    Control charts may be used for each of the following except
    provide a warning for an unexpected change
    return the system to an "in-control" status
    decrease inspection costs
    identify errors in the process and determine basic causes

    All of the above are key elements of just-in-time except
    cycle times are longer
    high quality output is required
    inventory levels are reduced
    suppliers become partners rather than adversaries

    If a materials quantity variance is based on the amount of material used in a period, who should be held accountable for managing the variance?
    production manager
    purchasing manager
    accounting manager
    cannot be determined from the information given

    Which of the following statements is TRUE?
    marketing managers never contribute to production variances
    unfavorable materials quantity variances are always the responsibility of the production manager
    both 1 and 2 are true
    neither 1 nor 2 is true

    Product variability has what effect on costs and customer satisfaction?
    increases costs and increases customer dissatisfaction
    decreases costs and increases customer dissatisfaction
    increases costs and decreases customer dissatisfaction
    decreases costs and decreases customer dissatisfaction

    Holding all other factors equal, if net income increases, what will be the effect on return on investment (ROI)?
    it will increase proportionately
    it will decrease proportionately
    it will remain the same
    ROI will increase at twice the rate of the increase in net income

    All of the following are disadvantages of the just-in-time manufacturing philosophy except
    producing in small batches increases the number of machine setups
    having lower inventory levels decreases carrying costs
    maintaining low levels of inventory can cause the company to miss a sales opportunity
    receiving raw materials in small batches increases shipping costs

    Bottlenecks are generally caused by
    inefficient machine operators
    poor management
    a machine that produces at a slower rate than other machines in the process
    none of the above will generally produce bottlenecks

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    Solution Summary

    The solution explains some multiple choice questions in managerial accounting

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