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The Cornell Milling Company manufactures an intermediate product identified

1. The Cornell Milling Company manufactures an intermediate product identified as W1. Variablemanufacturing costs per unit of W1 are as follows:Direct materials$5Direct labor$15Variable manufacturing overhead $10Ithaca Tools has offered to sell Cornell Milling 10,000 units of W1 for $40 per unit. If Cornell Millingaccepts the offer, $50,000 of fixed manufacturing overhead will be eliminated.Applying differential analysis to the situation, Cornell Milling should:Buy W1; the savings is $100,000Buy W1; the savings is $50,000Make W1; the savings is $100,000Make W1; the savings is $50,0002. HS Barker Company has sales of 1,500 units at $60 per unit. Variable expenses are35% of the selling price. If total fixed expenses are $40,000, the degree of operatingleverage is:1.503.163.505.003. Which of the following can be considered to be unethical behavior?Assigning direct labor costs to Contract A and Contract B using different rates for differentemployeesAssigning different direct material costs to Contract A and Contract B based on usageAssigning overhead costs to Contract A based on labor hours and Contract B based onmachine hoursAssigning costs of Contract A to Contract B to avoid an unfavorable performance report onContract A4. A cost that is constant within a relevant range but differs outside the relevant range of activityis best classified as what type of cost?Variable costFixed costMixed costStep cost5. To compete on the basis of service, the seller must carefully manage:The degree to which products or services meet customer’s needsTimely delivery and customer supportCommunications between buyer and sellerOperating and maintenance costs6. Costs are classified according to behavior on which of the following?Contribution Income StatementFunctional Income StatementCost of Goods SoldCost of Goods Manufactured7. Which of the following is not a period cost?The president’s salarySales commissionsDepreciation on the mainframe computer in the Information Systems DepartmentSubsidy of the plant cafeteria8. Which one of the following tools of analyses is not commonly used in cost estimation?High-low estimationLinear programmingLeast-squares regressionScatter diagrams9. Which of the following would best describe a goal for your new business?To provide high quality lawn services and make a profit.To add five new customers per month.Identify new lawn services that will attract new customers and increase revenues.Become the largest provider of lawn services in the city.10. Which of the following is the most reasonable cost driver for direct material costs?The quantity of direct materials usedPurchasing department activityDirect labor hoursSquare footage of the warehouse used to store raw materials11. Eva Company sells one product at a price of $25 per unit. Variable expenses are 40 percent ofsales, and fixed expenses are $25,000. The sales dollars level required to break even are:$ 2,500$10,000$33,333$41,66712. According to Michael Porter, which of the following is an example of cost leadership as abusiness strategy?A regional beer brewer that caters to local tastes.A glass manufacturer utilizing research and development to identify new applications forglass and ceramics.An online bookseller utilizing efficient scale facilities and overhead cost control.A manufacturer focused on designing and building corporate jet aircraft.13. The external acquisition of services or components is called:Avoidable costingConversionOutsourcingNetworking14. Which of the following performance factors is least relevant for a "world-class" company tocompete globally?Price/CostLocationServiceQuality15. To compete on the basis of price, the seller must carefully manage:The degree to which products or services meet customer’s needs.Timely delivery and customer support.Communications between buyer and seller.Operating and maintenance costs.16. Product or service differentiation involves:Any changes made to a product or serviceThe use of new technologies in manufacturingShifting sales to growing marketsCreating something that is perceived as unique and worth a premium price17. Operating leverage is best described as:A measure of the extent to which an organization’s costs are financed by equityA measure of the extent to which an organization’s contribution margin is affected by salesmix of productsA measure of the extent to which an organization’s operations are financed by debtA measure of the extent to which an organization’s operations are fixed18. The following costs related to Summertime Company for a relevant range of up to 20,000units annually:Variable Costs:Direct materials $5.00Direct labor 1.50Manufacturing Overhead 2.50Selling and administrative 3.00Fixed Costs:Manufacturing overhead $20,000Selling and Administrative 10,000The selling price per unit of product is $15.00.At a sales volume of 15,000 units, what is the total profit for Summertime Company?$ 30,000$ 15,000$225,000$300,00019. Betsy’s Brew is a successful brewery engaged in the development and production ofspecialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities.During the past year, it has incurred $1,450,000 of product development costs, $950,000 ofmaterials handling costs, $2,500,000 of production line labor costs, $900,000 for productionsetup costs, $500,000 in power costs for cooling beer and running equipment and $1,750,000 formanufacturing facility management.Using the manufacturing cost hierarchy, what is the total cost that would be classified as batchlevel activity costs?$ 900,000$ 700,000$1,200,000$1,250,00020. The following data was input into a spreadsheet program to determine the Intercept, Slope and R 2(RSQ) for Patient Days and Maintenance Costs for a local hospital:MonthJanuaryFebruaryMarchAprilMayJuneJulyInterceptSlopeRSQMaintenance Costs(Y)6,600$8,9008,100$9,5006,000$8,4007,500$9,2008,300$10,1009,000$10,8005,200$8,800Patent Days (X)$5,468$0.5410.79The estimated variable maintenance cost for the hospital is:$3,088$3,431$0.759$0.54121. The determination of the mathematical relationship between activity level and cost is knownas:Cost controlCost estimationCost predictionRegression analysis22. For which of the following manufactured products would process costing be more appropriate?Bridge constructionCrude oil refiningCustom-made jewelryHigh rise buildings23. Partially completed goods that are in the process of being converted into a finish product are definedas:Work-in-process inventoriesConversion inventoriesRaw materials inventoriesOperational inventories24. The following data was input into a spreadsheet program to determine the Intercept, Slope and R 2(RSQ) for Patient Days and Maintenance Costs for a local hospital:MonthJanuaryFebruaryMaintenance Costs(Y)6,600$8,9008,100$9,500Patent Days (X)MarchAprilMayJuneJulyInterceptSlopeRSQ6,0007,5008,3009,0005,200$8,400$9,200$10,100$10,800$8,800$5,468$0.5410.79The estimated total maintenance cost for August based on an estimated 7,000 patient days is:$9,255$7,186$7,985$7,52925. The purpose of the statement of cost of goods manufactured is to:Calculate the cost of goods transferred to finished goods inventory during the period.Calculate cost of goods sold.Calculate net income.Both A and B26. Costs are classified according to behavior on a:Abrams-Ingram cost gridContribution income statementFunctional income statementStatement of financial position27. Which of the following would best describe a strategy for your new business?To provide high quality lawn services and make a profitTo add five new customers per monthIdentify new lawn services that will attract new customers and increase revenuesBecome the largest provider of lawn services in the city28. For which of the following manufactured products would job costing be more appropriate than processcosting?PaintDesigner dresses sold to celebritiesChemicalsLiquid soap29. The point in the production process where joint products become separatelyidentifiable is called:The conversion pointThe point of saleThe split-off pointThe throughput point30. Which of the following descriptions best describes the process of controlling?Comparing the budget with actual resultsPreparing a budget for an organization that meets sales goals for the upcoming yearDelegating authority to employees to address customer complaintsAssigning managers to different regional centers to facilitate distribution of goods tocustomers31. The Titanic hit an iceberg and sank. In deciding whether or not to salvage the ship,its book value is a(n):Relevant costSunk costOpportunity costDiscretionary cost32. Which of the following would best describe planning for your new business?Assigning workers to perform lawn services for various clientsPreparing a cash budget to estimate your monthly revenues and expendituresComparing the actual cash balance with the budgeted cash budget each monthPreparing monthly billing statements for clients33. In order to be useful to managers, management accounting reports:Should be prepared according to the stated Institute of Management Accounting guidelinesShould be prepared according to Generally Accepted Accounting PrincipalsShould be prepared to meet the specific needs of decision makersShould not be prepared prior to the end of a fiscal reporting period34. Managerial accounting is primarily focused on:Providing information for internal and external usersProviding general purpose financial statements *Providing special-purpose information and reportsFollowing generally accepted accounting principles35. What is the purpose for using predetermined overhead rates?Delays in product costing can be avoidedVariation in cost assignment due to seasonality can be preventedVariation in cost assignment due to short-term variations in volume can be preventedUse of predetermined overhead rates serves all the above purposes36. Number of parts per unit is most appropriate as a cost driver for which of the following typesof activity costs?MachiningPurchasingAssemblyPayroll37. Brahtz Company uses an activity-based costing system. It has the following manufacturingactivity areas, related cost drivers and cost allocation rates:ActivityCost DriverCost AllocationRateMachine setupMaterials handlingMachiningAssemblyInspectionNumber of setupsNumber of partsMachine hoursDirect labor hoursNumber of finishedunits$25.000.2513.0022.007.00During the month, 100 units were produced, with no defects, requiring three setups. Each unit consistedof 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit.What is the total manufacturing cost for the period?$ 8,675$11,625$13,675$16,05038. Which of the following would best describe controlling for your new business?Assigning workers to perform lawn services for various clientsPreparing a cash budget to estimate your monthly revenues and expendituresComparing the actual cash balance with the budgeted cash budget each monthPreparing monthly billing statements for clients39. Madison Company sells its product for $6 a unit. Next year, fixed expenses are expectedto be $200,000 and variable expenses are estimated at $4 per unit.How many units must Madison sell to generate net operating income of $50,000?50,000 units60,000 units125,000 units120,000 units40. Total contribution margin is calculated by subtracting:Cost of goods sold from total revenuesFixed costs from total revenuesTotal manufacturing costs from total revenuesTotal variable costs from total revenues41. Under variable costing, which of the following costs are assigned to inventory?Fixed manufacturing costsVariable non-manufacturing costsVariable manufacturing costsNone of the above42. Process service costing measures the average cost of:All services performed by the company in a given periodIdentical or similar services performed by the company in a given periodActivities for activity based costing overhead ratesServices received from the company’s vendors43. A single product produced by a continuous manufacturing process is an example of:Process managementJob CostingProcess manufacturingProcess reengineering44. The Apollo Delivery Service has the following information about its truck fleet miles andoperating costs:Year Miles Operating Costs2011 250,000 $160,0002012 300,000 $175,0002013 350,000 $210,000What is the best estimate of fixed costs for fleet operating expenses in 2014 using thehigh-low method?$100,000$ 35,000$175,000$ 50,00045. Using cost-volume-profit analysis, we can conclude that a 20 percent reduction invariable costs will:Not affect the break-even sales volume if there is an offsetting 20 percent increase in fixedcostsReduce the break-even sales volume by 20 percentReduce total costs by 20 percentReduce the slope of the total costs line by 20 percent46. Step costs:Are constant within certain ranges of activity but differ outside those ranges of activityAre variable within narrowly defined ranges of activity, but constant over wider ranges ofactivityIncrease with each additional unit producedHave no relation to number of units produced47. Which of the following is not included in work-in-process inventory?Direct materials costsApplied manufacturing overheadDirect manufacturing labor costsSales commissions48. When finished goods are sold, there is an increase in which of the followingaccounts?Cost of Goods SoldCost of Goods ManufacturedFinished Goods InventoryWork-in-Process49. Which of the followingmathematicalexpressions bestdescribes a mixed cost?Y=bXY=aY = a + bXY = ai50. Nickolas Rentals offers machine rental services for concrete cutting. Consider the following costsof the company over the relevant range of 5,000 to 8,000 hours of operating time for its concretecutting equipment.Hours of Operating Time5,000Total Costs:Variable CostsFixed CostsTotal CostsCost per hour:Variable costFixed costTotal cost perhour6,0007,0008,000?????????????????????$ 40,000168,000$208000What are the estimated total costs at a volume of 6,000 hours?$25.00$28.00$32.00$37.60

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