ACCT 6302 Exam 2 Review

• Accounting
• Year 4

ACCT 6302 Exam 2 Review

Welcome to Exam 2 Review for ACCT 6302

Let's do amazing on this exam!!

- Prof Lizzy

A cost is not relevant for decision making if it:

1. Does not differ for each option available to the decision maker
2. Is a fixed cost
3. changes from period to period
4. is a future cost

A cost is not relevant for decision-making if it:

A cost is not relevant for decision making if it does not differ for each option available to the decision maker. This is because relevant costs are those that vary between alternatives being considered. Irrelevant costs, on the other hand, do not change based on the decision made and therefore do not impact the decision-making process

An R-squared value that approaches one (1.0) would indicate:

1. the presence of outliers
2. a low degree of explanatory power
3. the absence of outliers
4. a high degree of explanatory power

An R-squared value that approaches one (1.0) would indicate:

R-squared is a number between zero and 1 and often is described as a measure of the explanatory power of the regression; that is, the degree to which changes in the dependent variable can be explained by changes in the independent variable(s). The higher the R-squared, the more reliable the regression model is for cost estimation. 

Which of the following is not a potential benefit of having a sound budgeting process?

1. improved performance-evaluation process
2. improved coordination of business activities
3. lower acceptance rate for capital budgeting projects
4. improved motivation for company employees

Which of the following is not a potential benefit of having a sound budgeting process?

A sound budgeting process typically aims to improve various aspects of business operations, such as performance evaluation, coordination, motivation, and decision-making. However, it does not inherently aim to lower the acceptance rate for capital budgeting projects

Which one of the following is not one of the five steps in theory of constraints (TOC) analysis?

1. identify the binding constraints
2. determine the most efficient utilization for each binding constraint
3. manage the flow through the binding constraint
4. identify those responsible for bottlenecks and make adjustments as needed

Which one of the following is not one of the five steps in theory of constraints (TOC) analysis?

Steps in the Theory of Constraints Analysis (TOC):

1. Identify the constraint.

2. Determine the most profitable product mix given the constraint.

3. Maximize the flow through the constraint.

4. Add capacity to the constraint.

5. Redesign the manufacturing process for flexibility and fast cycle time.

Opportunity costs:

1. unless they are zero are always relevant for decision making
2. are the result of a completed event or transaction
3. can sometimes be deductible for U.S. federal income tax purposes
4. result in a cash outlay

Opportunity costs:

 The benefit lost when choosing one option precludes receiving the benefits from an alternative option. By definition, opportunity costs are always relevant and therefore should be included in the decision-making process unless they are ZERO

The breakeven point is:

1. the sales volume at which revenues equal total cost plus an operating profit of zero
2. the sales volume at which revenues equal variable cost and profit is zero
3. the sales volume at which the total contribution margin exceeds total variable costs
4. the sales volume at which revenues equal fixed cost and profit is zero

The breakeven point is:

The sales volume at which revenues equal total cost plus an operating profit of zero: correct because the breakeven point is defined as the point where total revenues equal total costs (both fixed and variable), resulting in zero profit. This means the business is covering all its costs but not making any profit.

The difference between sales price per unit and variable cost per unit is the:

1. Contribution Margin Ratio
2. Breakeven Point
3. Contribution Margin per unit
4. Total Contribution Margin

The difference between sales price per unit and variable cost per unit is the:

Contribution Margin Per Unit: The difference between the selling price per unit (p) and the variable cost per unit (v); a measure of the change in operating profit for each unit change in sales. 

Fixed costs will often be irrelevant for short-term decision-making because they:

1. are not committed
2. do not vary on a per-unit-of-output basis
3. are the same each time period
4. typically do not differ in total between decision alternatives being considered

Fixed costs will often be irrelevant for short-term decision making because they:

Fixed costs often are irrelevant because typically they

do not differ between or across the decision alternatives.

High operating leverage represents increased risk associated with relatively:

1. High sales revenue combined with high variable costs
2. High variable costs in the firm's cost structure
3. High fixed cost in the firm's cost structure
4. High asset turnover

High operating leverage represents increased risk associated with relatively:

High fixed cost in the firm's cost structure: correct because high operating leverage means that a firm has a higher proportion of fixed costs relative to variable costs. This increases risk because fixed costs must be paid regardless of sales volume, leading to greater fluctuations in profit with changes in sales volume.

Budgeting for production (i.e., units to be produced in an upcoming budget period):

1. Involves the sales budget and both beginning and ending finished goods inventory amounts
2. Is prepared after the materials purchases budget is prepared
3. Is simply an extension of the sales forecast:
4. Is normally the first major step in the master budgeting process

Budgeting for production (i.e., units to be produced in an upcoming budget period:

Involves the sales budget and both beginning and ending finished goods inventory amounts: correct because the production budget is based on the sales budget and takes into account the desired ending inventory and the beginning inventory of finished goods. This ensures that the company produces enough units to meet sales demand while maintaining appropriate inventory levels.

A "special sales order" within the context of Chapter 11 is:

1. A profitable opportunity to sell a specified quantity of a firm's product or service:
2. A one-time opportunity to sell a specified quantity of a product or service
3. In most cases, a rush order
4. A particularly large customer order

A "special sales order" within the context of Chapter 11 is:

A one-time opportunity to sell a specified quantity of a product or service: correct because a “special sales order” typically refers to a unique, one-time opportunity to sell a specific quantity of a product or service, often at a reduced price or under special terms. This is distinct from regular sales and is not expected to recur.

In deciding whether to drop or keep a product line, all the following are relevant to the decision except:

1. Whether dropping the product line today would eliminate future options for growth and expansion
2. Effect of the decision on overall company morale
3. The segment margin generated by the product line
4. The level of unavoidable fixed costs

 In deciding whether to drop or keep a product line, all the following are relevant to the decision except:

The level of unavoidable fixed costs: correct because unavoidable fixed costs are costs that will remain regardless of whether the product line is dropped or kept. Since these costs do not change with the decision, they are not relevant to the decision-making process.

What is the manufacturing cycle time?

1. The time from the start of production to the end of production
2. The time from the start of the design process to the end of production
3. The time from the start of production to when the product is sold
4. The time from the start of production to the shipment of the order

What is the manufacturing cycle time?

The time from the start of production to the shipment of the order: correct because the manufacturing cycle time, also known as throughput time, is defined as the total time taken from the start of production to the shipment of the finished product. This includes all stages of production, including processing, inspection, moving, and waiting.

1. $1.35
2. $1.15
3. $1.40
4. $1.25

THE END

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