1. Companies must ALWAYS examine their pricing:based on the supply of the productbased on the cost of producing the productthrough the eyes of their competitorsthrough the eyes of their customersQuestion 21. All of the following are true regarding target costing EXCEPT:improvements are implemented in small incremental amountscustomer input is essential to the target costing processinput is requested from suppliers and distributorsa key goal is to minimize costs over the product’s useful lifeQuestion 31. Braun’s Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:ModelX ModelY Model ZSelling price $50 $60 $70Direct materials 6 6 6Direct labor ($12 per hour) 12 12 24Variable support costs ($4 per march hour) 4 8 8Fixed support costs 10 10 10Which model has the greatest contribution margin per unit?Model XModel YModel ZModels X and YQuestion 41. The FIRST step to successful balanced scorecard implementation is clarifying the:organization’s vision and strategyelements that pertain to value-added aspects of the businessowner’s expectations about return on investmentobjectives of all four balanced scorecard measurement perspectivesQuestion 51. Balanced scorecard objectives are in balance when:debits equal creditsfinancial performance measurements are less than the majority of measurementsthe measurements are fairthe measurements reflect an improvement over the previous yearQuestion 61. The capital budgeting method that calculates the discount rate at which the present value of expected cash inflows from a project equals the present value of expected cash outflows is the:net present value methodaccrual accounting rate-of-return methodpayback methodinternal rate of returnQuestion 71. Crush Company makes internal transfers at 160% of full cost. The Soda Refining Division purchases 40,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $40 per container via an external shipper. To reduce costs, the company located an independent supplier in Illinois who is willing to sell 40,000 containers at $30 each, delivered to Crush Company’s Shipping Division in Missouri. The company’s Shipping Division in Missouri has excess capacity and can ship the 40,000 containers at a variable cost of $4.50 per container. What is the total cost of purchasing the water from the Illinois supplier and shipping it to the Soda Division?$1,200,000$1,380,000$1,600,000$180,000Question 81. Caruso Cool manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $95 per air conditioner, consisting of 75% variable costs and 25% fixed costs. The company has surplus capacity available. It is Caruso Cool’s policy to add a 30% markup to full costs.Caruso is invited to bid on a one-time-only special order to supply 50 air conditioners. What is the lowest price Caruso should bid on this special order?$4,750.00$3,562.50$6,250.00$6,175.00Question 91. Timothy Company has invested $2,000,000 in a plant to make vending machines. The target operating income desired from the plant is $300,000 annually. The company plans annual sales of 1,500 vending machines at a selling price of $2,000 each.What is the markup percentage as a percentage of cost for Timothy Company?15.0%17.6%10.0%11.1%Question 101. A(n) ________ is a binding agreement between a multinational and the United States Internal Revenue Service to obtain approval for a specific transfer price for a number of years.Tax TreatyAdvanced Pricing AgreementRevenue RulingDual Price RulingQuestion 111. Which of the following is a force that shapes an organization’s profit potential?InvestorsPotential entrants into the marketCreditorsResearch and developmentQuestion 121. The economic order quantity ignores:purchasing costsrelevant ordering costsstockout costsBoth A and C are correct.Question 131. Dakoil Corporation has two divisions, Refining and Production. The company’s primary product is Enkoil Oil. Each division’s costs are provided below:The Refining Division has been operating at a capacity of 40,000 barrels a day and usually purchases 25,000 barrels of oil from the Production Division and 15,000 barrels from other suppliers at $20 per barrel.Production: Variable costs per barrel of oil $3Fixed costs per barrel of oil $2Refining: Variable costs per barrel of oil $10Fixed costs per barrel of oil $12What is the transfer price per barrel from the Production Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 110% of full costs?$5.50$22.00$24.20$29.70Question 141. The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant:stockout costs and carrying costsordering costs and carrying costsordering costs and stockout costsordering costs and purchasing costsQuestion 151. The FIRST step to successful balanced scorecard implementation is clarifying the:organization’s vision and strategyelements that pertain to value-added aspects of the businessowner’s expectations about return on investmentobjectives of all four balanced scorecard measurement perspectivesQuestion 161. Which capital budgeting technique(s) measure all expected future cash inflows and outflows as if they occurred at a single point in time?net present valueinternal rate of returnpaybackBoth A and B are correct.Question 171. ________ means minimum constraints and maximum freedom for managers at the lowest levels of an organization to make decisions and to take actions.Total centralizationUse of market-based transfer pricingTotal decentralizationUse of negotiated transfer pricingQuestion 181. Not counting spoiled units in the equivalent-unit calculation results in:lower cost per good unit.higher cost per good unitbetter management informationBoth A and C are correct.Question 191. In evaluating different alternatives, it is useful to concentrate on:variable costsfixed coststotal costsrelevant costsQuestion 201. When target costing and target pricing are used together:the target cost is established first, then the target pricethe target cost is the estimated long-run cost that enables a product or service to achieve a desired profitthe focus of target pricing is to undercut the competitiontarget costs are generally higher than current costsQuestion 211. Should assets be defined as total assets or net assets? This question is considered part of which step in designing an accounting-based performance measure?Choose performance measures that align with top management’s financial goals.Choose the time horizon of each performance measure.Choose a definition for each performance measure.Choose a measurement alternative for each performance measure.Question 221. Which of the following costs always differ among future alternatives?fixed costshistorical costsrelevant costsvariable costsQuestion 231. Braun’s Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:Model X Model Y Model ZSelling price $50 $60 $70Direct materials 6 6 6Direct labor ($12 per hour) 12 12 24Variable support costs ($4 per match hour) 4 8 8Fixed support costs 10 10 10Which model has the greatest contribution margin per machine-hour?Model XModel YModel ZModels X and YQuestion 241. What are the major relevant costs in maintaining safety stock?carrying costs and purchasing costsordering costs and purchasing costsordering costs and stockout costsstockout costs and carrying costsQuestion 251. The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process. May production is 4,000 widgets; 7,000 gizmos; and 8,000 turnbols. Respective per unit selling prices at splitoff are $15, $10, and $5. Joint costs up to the splitoff point are $75,000. If joint costs are allocated based upon the sales value at splitoff, what amount of joint costs will be allocated to the widgets?$30,882$26,471$17,647$28,125Question 261. If Ferry Company has a safety stock of 160 units and the average daily demand is 20 units, how many days can be covered if the shipment from the supplier is delayed by 12 days?12.0 days10.0 days8.0 days6.7 daysQuestion 271. Assume your goal in life is to retire with one million dollars. How much would you need to save at the end of each year if interest rates average 6% and you have a 20-year work life?$14,565$27,184$120,102$376,476Question 281. Using residual income as a measure of performance rather than return on investment promotes goal congruence because residual income:places importance on the reduction of underperforming assetscalculates a percentage return rather than an absolute returnconcentrates on maximizing the return on salesconcentrates on maximizing an absolute amount of dollarsQuestion 291. The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:Relevant ordering costs per purchase order $150Relevant carrying costs per yearRequired annual return on investment 10%Required other costs per year 10%Required other costs per year $1.40Annual demand is 10,000 packages per year. The purchase price per package is $16What is the economic order quantity?150,000 units1,000 units75,000 units5,000 unitsQuestion 301. Crystal Manufacturing Company provides glassware machines for major department store retailers. The company has been investigating a new piece of machinery for its production department. The old equipment has a remaining life of five years and the new equipment has a value of $115,500 with a five-year life. The expected additional cash inflows are $35,000 per year. What is the payback period on this investment?2.5 years3.3 years3 years5 yearsQuestion 311. All of the following are methods that aid management in analyzing the expected results of capital budgeting decisions EXCEPT:accrual accounting rate-of-return methoddiscounted cash-flow methodfuture-value cash-flow methodpayback methodQuestion 321. Crush Company makes internal transfers at 180% of full cost. The Soda Refining Division purchases 30,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $30 per container via an external shipper. To reduce costs, the company located an independent supplier in Missouri who is willing to sell 30,000 containers at $20 each, delivered to Crush Company’s Shipping Division in Missouri. The company’s Shipping Division in Missouri has excess capacity and can ship the 30,000 containers at a variable cost of $2.50 per container. What is the total cost to Crush Company if the carbonated water is purchased from the local supplier?$ 900,000$1,200,000$1,501,000$1,620,000