1. Which of the following might cause a materials variance?
Failing to take purchase discounts. Using a better grade of raw material. Changes in the market supply for the raw materials. All of the above.
2. What is the term that describes the rate companies frequently use to apply fixed overhead costs to units produced?
Predetermined overhead rate.
3. Activity-based costing is commonly used with standard costing. Using more activity drivers increases the potential for managers to get much more information from activity-based costing than from the traditional approach.
4. What is the result of substituting computerized equipment for direct labor?
Less direct labor and more manufacturing …show more content…
AP ́ AQ $19.00 ́ 11,000 = $209,000
SP ́ AQ $20.00 ́ 11,000 = $220,000
SP ́ SQ $20.00 ́ (0.05 ́ 200,000) = $200,000
|_____$11,000 F _____|________ $20,000 U_____|
Direct labor price variance = $11,000 F Direct labor variance = $20,000 U Total direct labor variance = $9,000 U
11. Which statement is true concerning decentralization?
Decentralization divides large, complex problems into manageable pieces.
12. Which of the following is a disadvantage of decentralization?
Decentralization may promote non-goal-congruent behavior.
13. The value assigned to a transaction where goods are bought by one unit of an organization from another unit of the same organization known as which of the following?
14. Which of the following is management’s challenge when setting transfer prices?
Ensuring both the buyer and seller have goal congruence with respect to the organization’s goals.
15. What is generally considered the best transfer pricing basis when there is a competitive market for the product and market prices are readily available?
Market price-based transfer pricing
16. Because tax rates are different in different countries, companies have incentives to set transfer prices that will
increase revenues in low-tax countries.
17. A shortcoming of return on investment (ROI) is that it may not lead managers to accept good investment opportunities