Category Archives: ACCT 434 Devry

ACCT 434 Week 7 Quality Control Inventory Management

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1. Question : (TCO 11)The four cost categories in a cost of quality program are

2. Question : (TCO 11) ________ is a formal means ofdistinguishing between random and nonrandom variation in an operatingprocess.

3. Question : (TCO 11) Which of the following is NOT one of the steps in managingbottlenecks under the theory of constraints?

4. Question : (TCO 11)Scrap is an example of

5. Question : (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management iswilling to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3%of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company’s average external failuresaverage 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?
6. Question : (TCO 12) Which of the following is NOT a major feature of a just-in-timeproduction system?

7. Question : (TCO 12)Quality costs include

8. Question : (TCO 12) Which of the following statements about theeconomic-order-quantity decision model is FALSE?

9. Question : (TCO 12) When using a vendor-managed inventory system to enhance thefeatures of supply-chain management, a challenging issue is

10. Question : (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $40. There are no flag displays on hand butLiberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.

If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is.

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ACCT 434 Week 6 Customer Profitability Capital Budgeting

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1.Question :
(TCO 9) To guide cost allocation decisions,the benefits-received criterion
2.Question :
(TCO 9) A challenge to using cost-benefit criteria for allocating costs isthat
3.Question :
(TCO 9) The MOST likely reason for NOT allocating corporate costs todivisions include that
4.Question :
(TCO 9)Identifying homogeneous cost pools
5.Question :
(TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?
6.Question :
(TCO 10) All of the following are methods that aid management in analyzingthe expected results of capital budgeting decisions EXCEPT the
7.Question :
(TCO 10) Assume your goal in life is to retire with $1.5 million. Howmuch would you need to save at the end of each year if interest ratesaverage 5% and you have a 25-year work life?
8.Question :
(TCO 10) Thedefinition of an annuity is
9.Question :
(TCO 10) A “what-if” technique that examines how a result will change ifthe original predicted data are not achieved or if an underlying assumptionchanges is called
10.Question :
(TCO 10) Shirt Company wants to purchase a new cutting machine for itssewing plant. The investment is expected to generate annual cash inflowsof $300,000. The required rate of return is 12% and the current machine isexpected to last for four years. What is the maximum dollar amount ShirtCompany would be willing to spend for the machine, assuming its life isalsofour years? Income taxes are not considered. 

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ACCT 434 Week 5 Pricing Decisions Management Control Systems

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1. Question : (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are factors of

2. Question : (TCO 7) The first step in implementing target pricing and target costing is

3. Question : (TCO 7) The markup percentage is usually higher if the cost base used is

4. Question : (TCO 7) An understanding of life-cycle costs can lead to

5. Question : (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units?

6.  Question : (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The product is known as

7. Question : (TCO 8) Transfer prices should be judged by whether they promote

8. Question : (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called

9. Question : (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that

10. Question : (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit. Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally?

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ACCT 434 Week 4 Midterm Exam

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1.Question : (TCO1) ABC systems create


2.Question : (TCO 1) Merriamn Company provides the following ABC costing information:


Total Costs

Activity-cost drivers

Account inquiry hours


10,000 hours

Account billing lines


4,000,000 lines

Account verification accounts


40,000 accounts

Correspondence letters

$ 50,000

4,000 letters

Total costs


The above activities are used by Department A and B as follows:

Department A

Department B

Account inquiry hours

2,000 hours

4,000 hours

Account billing lines

400,000 lines

200,000 lines

Account verification accounts

10,000 accounts

8,000 accounts

Correspondence letters

1,000 letters

1,600 letters

How much of the account billing cost will be assigned to Department B?


3. Question : (TCO 2) A master budget


4.Question : (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?


5.Question : (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?


6.Question : (TCO 4) In evaluating different alternatives, it is useful to concentrate on


7.Question : (TCO 5) The theory of constraints is used for cost analysis when


8.Question : (TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:

Direct materials


Direct labor


Variable factory overhead


Fixed factory overhead


Total costs


Of the fixed factory overhead costs, $30,000 is avoidable.

Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should


9. Question : (TCO 3) The cost function + 10X


10.Question : (TCO 4) Sunk costs

1.Question :

(TCO 1) For each of the following drivers identify an appropriate activity.

a. # of machines

b. # of setups

c. # of inspections

d. # of orders

e. # of runs

f. # of bins or aisles

g. # of engineers

2.Question :

(TCO 2) Favata Company has the following information:

Month Budgeted Sales

June $60,000

July 51,000

August 40,000

September 70,000

October 72,000

In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month’s cost of sales.

Prepare a purchases budget for July through September.

3.Question :

(TCO 3) Patrick Ross, the president of Ross’s Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Month Machine-hours Overhead Costs

February 1,700 $20,500

March 2,800 22,250

April 1,000 19,950

May 2,500 21,500

June 3,500 23,950

Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

4.Question :

(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are:

Direct materials $0.60

Direct manufacturing labor 3.00

Variable manufacturing overhead 1.20

Fixed manufacturing overhead 1.60

Total $6.40

Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.

a. What is the relevant per unit cost for the original part?

b. Which alternative is best for Kirkland Company? By how much?

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ACCT 434 Week 3 Cost Behavior Decision Making Quality

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1.Question :  (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified?

2.Question : (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. W hat cost function best represents these costs?

3.Question : (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?

4.Question : (TCO 3) Penny’s TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 20X8 operations: Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager’s salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated total costs if Penny’s expects to sell 3,000 units next year?

5.Question : (TCO 4) The formal process of choosing among alternatives is known as a(n)

6.Question : (TCO 4) When using the five-step decision process, which one of the following steps should be done last?

7.Question : (TCO 4) Sunk costs

8.Question : (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods’ policy to add a 50% markup to full costs. A large hotel chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order?

9.Question : (TCO 5) Throughput contribution equals revenues minus

10.Question : (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines. One way the company can overcome the bottleneck is

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ACCT 434 Week 2 Master Budget Flexible Budgets

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1.Question :(TCO 2) Operating budgets and financial budgets
2.Question :(TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget.
3.Question :
(TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?
4.Question :(TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to be worked on during the period can be computed at the start of that period. This feature of standard costing makes it possible to
5.Question :(TCO 2) An unfavorable variance indicates that
6.Question :(TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing?
7.Question :(TCO 2) Overhead costs have been increasing due to all of the following except
8.Question :(TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted sales for 20X9?
9.Question :(TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009.
July 1, 2008 June 30, 2009
Raw material (note) 40,000 10,000
Work in process 8,000 8,000
Finished goods 30,000 5,000
(note) Three units of raw material are needed to produce each unit of finished product.
If Hester Company plans to sell 600,000 units during the 2008-2009 fiscal year, the number of units it would have to manufacture during the year would be
10.Question :(TCO 2) Information pertaining to Brenton Corporation’s sales revenue is presented in the following table:
February March April
Cash Sales $160,000 $150,000 $120,000
Credit Sales 300,000 400,000 280,000
Total Sales $460,000 $550,000 $400,000
Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month’s projected total sales. ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.
Brenton’s budgeted total cash payments in March for inventory purchases are

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ACCT 434 Week 1 to 7 All Discussion Questions

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Week 1 DQ 1 ABC Journey

Week 1 DQ 2 Workout Room

Week 2 DQ 1 Flexible versus Static Budgets

Week 2 DQ 2 Workout Room

Week 3 DQ1 Relevant Costs

Week 3 DQ 2 Workout Room

Week 4 DQ 1 Accounting for Primary Products

Week 4 DQ 2 Workout Room

Week 5 DQ 1 Pricing Decision

Week 5 DQ 2 Workout Room

Week 6 DQ 1 Evaluating Managers

Week 6 DQ 2 Workout Room

Week 7 DQ 1 Quality and Performance

Week 7 DQ 2 Workout Room 

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ACCT 434 Week 1 Quiz Activity Based Costing

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1. Question : (TCO 1) The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
Marblette Italian Marble
Purchase volume 20,000 1,000
Purchase cost per unit $50 $250
Shipments received 12 12
Hours used per shipment * 5 3
* These data were accumulated after a careful activity analysis.
Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of its receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.
Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?

2. Question : (TCO 1) The allocation of indirect costs in an activity-based costing system

3. Question : (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management?

4. Question : (TCO 1) A company produces three products; if one product is overcosted then

5. Question : (TCO 1) To set realistic selling prices

6. Question : (TCO 1) Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT

7. Question : (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis

8. Question : (TCO 1) Companies use ABC system information to

9. Question : (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help to

10. Question : (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? 

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ACCT 434 Entire Course Advanced Cost Management

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ACCT 434 Week 1-7 All Discussion Questions

ACCT 434 Week 1 Quiz Activity Based Costing

ACCT 434 Week 2 Master Budget Flexible Budgets

ACCT 434 Week 3 Cost Behavior Decision Making Quality

ACCT 434 Week 4 Midterm Exam

ACCT 434 Week 5 Pricing Decisions Management Control Systems

ACCT 434 Week 6 Customer Profitability Capital Budgeting

ACCT 434 Week 7 Quality Control Inventory Management

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