(Test Bank) Managerial Accounting

Jiambalvo, 6

Business

Test Bank

6th Edition

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Test Bank for Managerial Accounting, The downloadable file consists of 687 pages, and the total size of the file is 4.15 MB. Purchase now only for highly discounted price.

Author(s): Jiambalvo

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CHAPTER 1 Managerial Accounting in the Information Age Summary of Questions by Objectives and Bloom’s Taxonomy Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT True -False Statements 1. 1 K 11. 1 K 21. 2 K 31. 4 K 41. 5 C 2. 1 K 12. 1 K 22. 2 K 32. 4 K 42. 5 K 3. 1 K 13. 1 K 23. 2 K 33. 4 K 43. 5 K 4. 1 K 14. 1 K 24. 2 K 34. 4 K 44. 5 K 5. 1 K 15. 1 K 25. 2 K 35. 4 K 45. 5 K 6. 1 K 16. 1 K 26. 3 K 36. 4 K 46. 5 K 7. 1 C 17. 1 K 27. 3 K 37. 4 K 47. 5 K 8. 1 K 18. 2 K 28. 3 K 38. 4 K 48. 5 K 9. 1 K 19. 2 K 29. 3 C 39. 4 K 10. 1 K 20. 2 K 30. 3 K 40. 4 K Multiple Choice Questions 49. 1 K 68. 2 C 87. 2 AP 106. 3 K 125. 5 K 50. 1 K 69. 2 K 88. 2 AP 107. 3 C 126. 5 K 51. 1 K 70. 2 K 89. 2 AP 108. 3 C 127. 5 K 52. 1 C 71. 2 K 90. 2 AP 109. 3 AP 128. 2 AP 53. 1 C 72. 2 K 91. 2 K 110. 3 AP 129. 2 AP 54. 1 K 73. 2 K 92. 2 AP 111. 3 AP 130. 2 AP 55. 1 K 74. 2 K 93. 2 AP 112. 3 AP 131. 2 AP 56. 1 K 75. 2 C 94. 2 AP 113. 3 AP 132. 2 AP 57. 1 K 76. 2 C 95. 2 AP 114. 3 AP 133. 2 AP 58. 1 K 77. 2 K 96. 2 AP 115. 3 K 134. 2 AP 59. 1 K 78. 2 K 97. 2 Ap 116. 4 K 135. 3 AP 60. 1 K 79. 2 C 98. 2 AP 117. 4 K 136. 3 AP 61. 1 K 80. 2 C 99. 3 AP 118. 4 K 137. 2 AP 62. 1 K 81. 2 K 100. 3 AP 119. 5 K 138. 2 AP 63. 2 K 82. 2 AP 101. 3 AP 120. 5 K 139. 2 AP 64. 2 K 83. 2 AP 102. 3 K 121. 5 K 140. 2 AP 65. 2 AP 84. 2 AP 103. 3 K 122. 5 K 141. 2 AP 66. 2 C 85. 2 AP 104. 3 K 123. 5 K 142. 2 AP 67. 2 C 86. 2 AP 105. 3 K 124. 5 K Matching 143. 1,2,3,4 7,7 K Exercises 144. 1 K 147. 2 AP 150. 2 AP 153. 2,3 AP 156. 2,3 AP 145. 2 K 148. 2 K 151. 2,3 AP 154. 2,3 AP 157. 2,3 AN 146. 2 AP 149. 2 K 152. 2 AP 155. 1,2 AP 158. 2,3 AN Challenge Exercises 159. 2,3 AN 160. 2,3 AN Short -Answer Essays 161. 1 K 163. 1 C 165. 3 C 167. 4 C 162. 1 K 164. 2 C 166. 3 C Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-2 TRUE -FALSE STATEMENTS 1. Financial accounting stresses accounting concepts and procedures that are relevant to preparing reports for internal users of accounting information. 2. The goal of managerial accounting is to provide information for planning, controlling, and reporting information to shareholders. 3. A thorough understanding of managerial accounting is essential to be an effective manager. 4. A producti on cost budget provides details of planned production amounts and the cost of resources needed for production. 5. Budgets can be used to communicate a company’s goals to employees. 6. Only amounts that can be expressed in dollars and cents can be used in preparing budgets. 7. A favorable evaluation of an operation indicates that the manager of that operation is performing adequately. 8. Performance reports are used for control purposes. 9. Performance reports, like other managerial accounting reports, must follow GAAP. 10. Budgets show comparisons of current period performance to the planned performance. 11. Management by exception requires managers to investigate every difference between actual and budgeted costs that causes profit to be less than budgeted. 12. Decisions to reward or punish managers are part of the planning and control process. 13. Managerial accounting is directed at internal users of accounting information. 14. Financial accounting must follow generally accepted accounting principles, whereas managerial accounting stresses information that is useful to managers. 15 Managerial accounting may present more detailed information than financial accounting. 16. Managerial accounting stresses that the information provided should be useful to decision makers such as creditors and shareholders. 17. Financial accounting is concerned with presenting results of past transactions, while managerial accounting places considerable emphasis on the future. 18. Variable costs in total incr ease or decrease in proportion with changes in the level of business activity. 19. Equipment depreciation is generally a controllable cost for a factory department supervisor. 20. Fixed cost per unit remains the same even though there is a change in the number of units produced. 21. Variable cost per unit remains constant when the number of units produced changes. Chapter 1 Managerial Accounting in the Information Age 1-3 22. Sunk costs are never a consideration in incremental analysis. 23. Opportunity costs are the value of benefits forgone when one alternati ve is selected over another. 24. Indirect costs are directly traceable to a product, activity, or department. 25. Since a manager can influence noncontrollable costs, they should be considered when evaluating a manager’s performance. 26. Incremental analysis involves calculating the difference in revenue and difference in costs between alternatives. 27. The actions of a manager are influenced by the performan ce measures that are used to evaluate the manager. 28. Incremental analysis is the appropriate way to approach the solution to all business problems. 29. A good single measure of performance for a sales force would be the ratio of sales to new customers to total sales. 30. Costs that increase due to a special order are not considered as incremental. 31. Managerial accounting is a key provider of information that impacts the information age. 32. Firm value is created when the value to the customer of r eceiving products and services exceeds the cost of these activities, 33. One aspect of the value chain involves information flows between a company and its customers. 34. Businesses sometimes share sales databases with suppliers so suppliers can respond more quickly. 35. Enterprise resource planning systems focus on managing a variety of customer interactions. 36. Enterprise resource planning systems (ERP) often support accounting, human resources, and e-commerce, in addition to production. 37. Supply chain management systems (SCM) allow suppliers some access to a company’s databases so goods can more profitably be delivered to a company’s customers. 38. Customer Relationship Management Systems (CRM) involve activities between companies and its suppliers in an effort to enhance production and delivery of goods to customers. 39. A Customer Relationship Management System (CRM) might allow a customer to tra ck his/her package as it is being shipped across the country. 40. Walmart and Procter & Gamble are two companies that collaborate in the use of Supply Chain Management (SCM). 41. Managers that are able to recognize all ethical dilemmas have the most pro fitable businesses. Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-4 42. A good code of ethics eliminates potential unethical behavior. 43. The U.S. government has charged the Institute of Management Accountants with primary responsibility for developing ethics laws that businesses must follow. 44. The Sarbanes -Oxley Act requires that companies provide relevant managerial accounting information to decision -makers. 45. In most organizations, the controller is the top managerial accountant. 46. The treasurer usually reports to the controller. 47. The controller is responsible for preparing reports for planning and evaluating company activities. 48. The treasurer has custody of cash and funds invested in marketable securities. Answers to True -False 1 F 9 F 17 T 25 F 33 T 41 F 2 F 10 F 18 T 26 T 34 T 42 F 3 T 11 F 19 F 27 T 35 F 43 F 4 T 12 T 20 F 28 T 36 T 44 F 5 T 13 T 21 T 29 T 37 T 45 T 6 F 14 T 22 T 30 F 38 F 46 F 7 F 15 T 23 T 31 T 39 T 47 T 8 T 16 F 24 F 32 T 40 T 48 T Chapter 1 Managerial Accounting in the Information Age 1-5 MULTIPLE CHOICE 49. Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for A. investors and banks. B. internal users of accounting information. C. shareholders and creditors. D. the Securities and Exchange Commission (SEC). 50. The goal of managerial accounting is to provide information that managers need for A. planning, control, and financial reporting. B. control, evaluation, and financial reporting. C. planning, control, and decision making. D. preparin g reports for external users. 51. The financial plans prepared by managerial accountants are referred to as A. budgets. B. financial statements. C. treasurer’s reports. D. controller’s opinions. 52. Which of the following is not a reason that current per iod performance results may differ from the company’s budget for that period? A. The plan may not have been followed properly. B. The plan may not have been well thought -out. C. Changing circumstances may have made the plan out of date. D. All of the above are reasons that actual results may differ from the company’s plan. 53. Which one of the following is true as it relates to the management function of control? A. It is achieved by evaluating the performance of managers. B. It is achieved by evaluating the operations for which a manager is responsible. C. It is necessary only when performance is less than expected. D. It is achieved by evaluating the performance of managers and the operations for which they are responsible. 54. Which one of the following is the last step in the planning and control process? A. Implement a plan. B. Construct a plan. C. Make decisions based on the evaluation of the results. D. Compare actual results to the planned results. 55. Performance reports often compare cur rent performance with A. a competing company’s performance. B. shareholders’ expected level of performance. C. industry standards. D. performance in a prior period or budgeted performance. 56. When using management by exception, a difference between actua l costs and budgeted costs A. should be investigated if the amount is large. B. indicates that the planned cost was poorly estimated. C. indicates that the manager is doing a poor job. D. should be ignored if it increases profit. Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-6 57. Wilson Company’s mana gers investigate departures from the budget that appear to be significant. What principle is being followed? A. Small amounts do not matter B. Management by exception C. Incremental analysis D. You get what you measure 58. Below is a performance report that compares budgeted and actual profit of Atlanta Enterprises for the month of June: Budget Actual Difference Sales $182,000 $180,000 ($2,000) Less: Cost of ingredients 145,000 141,000 4,000 Salaries 24,000 23,000 1,000 Controllable profit $ 13,000 $ 16,000 $ 3,000 In evaluating the department in terms of its changes in sales and expenses, what will be most important to investigate? A. Sales B. Cost of ingredients C. Salaries D. Debtors 59. Managerial accounting A. is primarily directed at external users of account ing information. B. is required by taxing authorities such as the IRS. C. must follow GAAP. D. focuses on future performance. 60. The fundamental difference between managerial and financial accounting is that A. all financial accounting information is audited by Certified Public Accountants whereas managerial accounting information is audited by the IMA. B. managerial accounting is concerned principally with budgets, whereas financial accounting is concerned with a wider range of the organization’s activities. C. managerial accounting provides information for decision -makers within the organization, whereas financial ac counting provides information for individuals and institutions external to the organization. D. financial accounting information follows U.S. Generally Accepted Accounting Principles, whereas managerial accounting information generally follows rules set f orth by the Institute of Management Accountants. 61. Which of the following is a difference between financial accounting and managerial accounting? A. Managerial accounting is primarily concerned with reporting the past, while financial accounting is more concerned with future decisions that external users may need to make. B. Managerial accounting uses monetary and nonmonetary information, whereas financial accounting reports monetary information. C. Managerial accounting is primarily concerned with provi ding information for external users while financial accounting is concerned with internal users. D. Financial accounting is rather detailed, while managerial accounting is more summarized. Chapter 1 Managerial Accounting in the Information Age 1-7 62. Which one of the following is most likely to make use of Rals ton Enterprises’ managerial accounting information? A. The IRS B. An individual contemplating an investment in Ralston Enterprises C. A company that is one of Ralston’s main suppliers D. The production manager of Ralston’s plant in Georgia 63. Which of th e following costs will change when the level of business activity changes? A. Total fixed costs B. Variable cost per unit C. A company’s total costs D. Sunk cost 64. Variable cost per unit A. increases when the number of units produced increases. B. does not change when the number of units produced increases. C. decreases when the number of units produced increases. D. decreases when the number of units produced decreases. 65. Kilwin’s Candies produced and sold 600 boxes of chocolate co vered popcorn last month and had total variable costs of $2,100 that reflected the costs of chocolate and popcorn (ingredients). Each box of popcorn sells for $12.00. If production and sales are expected to increase by 10% next month, which of the followin g statements is true? A. Total variable costs are expected to be $1,785 B. Variable cost per unit is expected to be $3.50 C. The incremental cost per unit is expected to be $0.35 D. Unit variable costs are expected to be $2.10 66. A company has a cost tha t is $3.00 per unit at a volume of 9,000 units and $3.00 per unit at a volume of 11,000 units. What type of cost is this? A. Fixed B. Variable C. Sunk D. Noncontrollable 67. Which of the following is most likely to be a fixed cost? A. Cost of wheels for a lawn mower manufacturer B. Rent on a factory building C. Cost of labor for cashiers at a retail store D. Supplies used by the housekeeping staff that cleans hotel rooms 68. Bagel Time produced and sold 2,500 bagels last month and incurred fixed costs totaling $8,000. If production and sales are expected to decrease by 10% next month, which of the following statements is true? A. Total fixed costs will increase. B. Total fixed costs will decrease. C. Fixed cost per unit will increase. D. Fixed cos t per unit will decrease. Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-8 69. Which of the following statements regarding fixed costs is true? A. When production increases, fixed cost per unit increases. B. When production decreases, total fixed costs decrease. C. When production increases, fixed cost per unit decreases. D. When production decreases, total fixed costs increase. 70. Costs incurred in the past that are not incremental to present decisions are A. fixed costs. B. sunk costs. C. opportunity costs. D. variable costs. 71. A sunk cost is a c ost A. expected to be incurred in the future which is not relevant to present decisions. B. incurred in the current period which changes with changes in production activity. C. incurred in the current period which remains constant even though activity chan ges. D. incurred in the past that is not relevant for future decisions. 72. Sunk costs A. can be incremental or not incremental, depending on the decision to be made. B. include all incremental costs to management decisions. C. are costs that cannot be directly traded to a product, activity, or department. D. None of these answer choices are correct. 73. Opportunity costs are A. considered to be fixed costs in the short -term. B. another term for sunk costs. C. costs that are controlled by most effective managers. D. the value of benefits forgone when one decision alternative is selected over another. 74. Which of the following is a benefit given up when one decision alternative is selected over another? A. Sunk cost B. Controllable cost C. Opportunity cost D. Incremental cost 75. You own a car and are trying to decide whether to trade it in and buy a new car. Which of the following costs is an opportunity cost in this situation ? A. The trip to Europe that you will not be able to take if you buy the car B. The cost of the car you are trading in C. The cost of toothpaste and soap that you need for the next few months D. The cost of your meals for the last week 76. A retailer purc hased some trendy clothes that have gone out of style and must be marked down to 60% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation? A. The current selling price B. The original selling price C. The original purchase price D. The anticipated profit Chapter 1 Managerial Accounting in the Information Age 1-9 77. A cost which is directly traceable to a product, activity, or department is a(n) A. fixed cost. B. managerial cost. C. opportunity cost. D. direct cost. 78. Which of the following statements rega rding direct and indirect costs is true? A. Direct costs are always variable and indirect costs are always fixed. B. Sunk costs are always direct, and opportunity costs are always fixed. C. The distinction between a direct and indirect cost depends on the product, activity, or department to which the cost pertains. D. If a cost is indirect to a department within a plant, it will also be indirect for the plant as a whole. 79. Which of the following is a direct cost in relation to the cost of teaching the ma nagerial accounting course in a college? A. The cost of the paper that is given as handouts in the class B. The cost of the electricity to light the classroom C. The cost of the registration system D. The cost of the financial aid department of the college 80. Which of the following is likely to be a noncontrollable cost of a department supervisor? A. Labor in the department B. Materials used in the department C. Insurance on the plant D. Overtime premium pay earned by those working in the department 81. On which of the following costs should a manager not be evaluated? A. Noncontrollable costs B. Opportunity costs C. Fixed costs D. Variable costs 82. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. How much is the budgeted variable cost per unit? A. $0.35 B. $0.45 C. $0.80 D. None of these answer choices are correct. Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-10 83. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. What is the budgeted total variable cost? A. $8,400 B. $9,500 C. $10,400 D. $10,800 84. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. What is the budgeted total fixed cost? A. $7,300 B. $2,400 C. $8,400 D. $10,800 85. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. What is the budgeted fixed cost per unit? A. $0.35 B. $0.80 C. $0.10 D. $0.17 Chapter 1 Managerial Accounting in the Information Age 1-11 86. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. What is Hurricane Wings’ budgeted profit? A. $8,400 B. $19,200 C. $10,800 D. $13,200 87. Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. How much will Hurricane Wing’s profit increase if 100 more wings were sold? A. $80.00 B. $35.00 C. $45.00 D. None of these answer choices are correct. 88. Dent Lab Car Repair projects variable labor costs of $21,500 in July when 8,600 units are produced. If production is expected to drop to 8,000 units in August, what is the expected labor cost in August? A. $21,500 B. $20,000 C. $23,113 D. $20,900 89. Sweet Time Candies projects its factory rent to be $8,000 in August when 4,000 pounds of candy are expected to be produced. If rent is a fixed cost, and if production is expected to increase to 6,000 units in September, what is the expected cost of rent in September? A. $12,000 B. $8,000 C. $7,000 D. Not enough information is provided to determine the answer. 90. Rincon Gifts had the following costs in May when 400 ceramic pots were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. Which one of the following is the c orrect cost for Rincon? A. The fixed cost per unit is $3.75 B. The variable cost per unit is $14.50 C. The fixed cost per unit is $19.50 D. The total cost per unit is $14.50 Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-12 91. Rincon Gifts had the following costs in May when 400 ceramic pots were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. If production changes to 500 units, which of the following costs will stay the same? A. Variable cost per unit B. Fixed cost per unit C. Total var iable cost D. Total cost per unit 92. Rincon Gifts had the following costs in May when 400 ceramic pots were produced: materials, $4,200; hourly labor, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. If the production level changes to 500 units, how much will the total costs be? A. $9,750 B. $7,800 C. $9,250 D. $1,950 93. Variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00 in a period when 4,000 units are produced. If production is actually 5 ,100 units, what is the expected total cost of the units produced? A. $52,000 B. $60,800 C. $66,300 D. $40,800 94. In a period when anticipated production is 5,000 units, budgeted variable costs are $75,000 and budgeted fixed costs are $24,000. If 5,600 u nits are actually produced, what is the expected total cost? A. $110,600 B. $84,000 C. $108,000 D. $88,394 95. In a period when anticipated production is 20,000 units, budgeted variable costs are $85,000 and budgeted fixed costs are $45,000. If 15,000 units are actually produced, what is the expected total cost? A. $130,000 B. $97,500 C. $108,750 D. $118,750 96. Rom Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60 genera tors were: Materials cost $ 5,200 Labor cost 2,600 Rent 1,200 Depreciation 1,700 Other fixed costs 4,600 Total $15,300 Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much is the expected total cost on the August budget? A. $17,850 B. $16,600 C. $9,100 D. $15,300 Chapter 1 Managerial Accounting in the Information Age 1-13 97. Rom Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60 generators were: Materials cost $ 5,200 Labor cost 2,600 Rent 1,200 Depreciation 1,700 Other fixed costs 4,600 Total $15,300 Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much is the expected total variable cost on the August budget? A. $17,850 B. $16,600 C. $9,100 D. $15,300 98. Rom Generators is in the pro cess of preparing a production cost budget for August. Actual costs in July for the production of 60 generators were: Materials cost $ 5,200 Labor cost 2,600 Rent 1,200 Depreciation 1,700 Other fixed costs 4,600 Total $15,300 Materials and labor are the only variable costs. The company has estimated that it can increase sales to 70 generators in August if it changes the selling price of generators to $450 instead of the current $480 per unit. What is expected to occur to the co st per unit given the expected changes? A. It will decline because fixed costs do not increase with increases in volume. B. It will decline because selling price per unit declines. C. It will increase because more units will be produced. D. It will increa se because fixed costs do not increase with increases in volume. 99. Barney & Robles plans to produce 50,000 books next year at a total cost of $1,900,000. The fixed costs total $120,000. Selling price per book is $65.00. Management is considering lowerin g the price to $62.00 per unit, and feels that this action will cause sales to climb to 54,000 books. What is the incremental revenue generated if 54,000 units are sold? A. $44,400 B. $98,000 C. $3,348,000 D. $3,250,000 100. Hanover Binding plans to produ ce 40,000 books next year at a total cost of $1,640,000 with a selling price per book of $66.00. The fixed costs total $280,000. Management is considering lowering the price to $60.00 per book, and feels that this action will cause sales to climb to 50,000 books. What will be the incremental costs incurred if 50,000 books are sold? A. $340,000 B. $20,000 C. $1,700,000 D. $1,300,000 Test Bank to accompany Jiambalvo Managerial Accounting, 6th Edition 1-14 101. Hanover Binding plans to produce 40,000 books next year at a total cost of $1,640,000 with a selling price per book of $66.00. The fixed costs total $280,000. Management is considering lowering the price to $60.00 per book, and feels that this action will cause sales to climb to 50,000 books. What is the amount of incremental profit if 50,000 books are sold? A. $340,000 pr ofit B. $20,000 profit C. $1,700,000 profit D. $1,300,000 profit 102. Which of the following terms involves calculating the difference in revenue and the difference in cost between decision alternatives? A. Budgeting production B. Incremental analysis C. Profit planning D. Systems development 103. Which of the following statements regarding incremental analysis is true? Assume that there are no opportunity costs and that the capacity exists to complete any of the alternatives. A. The preferred alternative will have revenues that are greater than the revenues of the other alternatives. B. The preferred alternative will have expenses that are greater than the expenses of the other alternatives. C. The preferred alternative will have fixed expenses that are l ess than the fixed expenses of the other alternatives. D. The preferred alternative will have profits that are greater than the profits of the other alternatives. 104. Which one of the following will most likely influence the actions of managers? A. Sunk costs B. Performance measures C. Noncontrollable costs D. GAAP 105. Which of the following is not a reasonable measure of a plant manager’s performance? A. Net income B. Cost of insurance for the plant C. Number of orders delivered on time D. Change in market share 106. “You get what you measure!” refers to the relationship between A. managerial accounting and financial accounting. B. ethical and unethical behavior. C. duties of the CEO and duties of the controller. D. performance measures and actions of managers. 107. If management informs employees that bonuses will depend solely on improving the gross profit ratio (gross profit/sales), which of the following behaviors would most likely be observed? A. Sales people would quit trying to sell high volume, low margin core products B. Overall sales would fall C. Overall gross profit would fall D. All of these answer choices are correct Chapter 1 Managerial Accounting in the Information Age 1-15 108. Which of the following statements regarding performance measures is true? A. GAAP requires performance me asures for all employees. B. Companies must select from performance measures published by its own industry when deciding how they want to assess performance. C. Employees tend to direct their attention to what is measured and may neglect what is not measur ed. D. Companies need to place emphasis on a single performance measure so employees know what to expect. 109. ProLight plans to sell 1,600 white lights that enhance indoor plant growth next year with total budgeted sales of $48,000 and estimated profit of $8,000. Variable costs are projected to be $17.50 per unit. Customer A offers to pay $10,000 to buy 400 lights from Pr oLight. Total fixed costs are $12,000 per year. This offer does not affect ProLight’s other planned operations. How much is the incremental revenue associated with the offer from Customer A? A. $58,000 B. $10,000 C. $48,000 D. $3,000 110. ProLight plans t o sell 1,600 white lights that enhance indoor plant growth next year with total budgeted sales of $48,000 and estimated profit of $8,000. Variable costs are projected to be $17.50 per unit. Customer A offers to pay $10,000 to buy 400 lights from ProLight. Total fixed costs are $12,000 per year. This offer does not affect ProLight’s other planned operations. What is the incremental cost associated with the offer from Customer A? A. $58,000 B. $10,000 C. $48,000 D. $7,000 111. ProLight plans to sell 1,600 wh ite lights that enhance indoor plant growth next year with total budgeted sales of $48,000 and estimated profit of $8,000. Variable costs are projected to be $17.50 per unit. Customer A offers to pay $10,000 to buy 400 lights from ProLight. Total fixed costs are $12,000 per year. This offer does not affect ProLight’s other planned operations. How much is incremental profit associated with the offer from Customer A? A. $3,000 B. $10,000 C. $48,000 D. $7,000 112. Goody Buy Electronics has received an offer from a customer for $21,600 to purchase 12,000 external hard drives. Good Buy has budgeted sales of 200,000 hard drives totaling $500,000, with fixed costs of $260,000 and total costs of $420,000. Assuming that Good Buy has the capacity to produce the addi tional units and that accepting this order will not affect any other orders, what effect will accepting the order have on Good Buy’s profit? A. Incremental profit will increase by $21,600 B. Incremental profit will decrease by $9,600 C. Incremental profit will increase by $12,000 D. Incremental profit will decrease by $3,600