113) From a purely financial standpoint, if a product line has a negative contribution margin, the product line should be discontinued. 114) Fixed costs that exist even after a product is discontinued are called unavoidable fixed costs. 115) When deciding whether to discontinue a product, managers should only consider the costs that will be saved. 116) If a product has a negative contribution margin, it should not be discontinued. 117) Fixed costs that will continue to exist if a product is discontinued are relevant. 118) Unavoidable fixed costs are A) irrelevant to the decision of whether to discontinue a product […]

130) Which of the following is an example of a financial budget? A) Budgeted balance sheet B) Sales budget C) Budgeted income statement D) Operating expenses budget 131) All of the following are considered when preparing the cash budget except A) payments for inventory. B) cash receipts from customers. C) depreciation expense. D) cash payments to suppliers. 132) The final step in the preparation of the financial budget is the preparation of which of the following? A) Master budget B) Cash budget C) Operating budgets D) Budgeted balance sheet 133) Distribution Corporation collects 40% of a month's sales in the […]

162) To maximize profits, produce the product with the lowest contribution margin per unit of the constraint. 163) When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales demand. 164) When making product mix decisions, companies are most profitable when they maximize production of the product with the greatest sales price. 165) All of the following are product mix considerations except A) What constraint(s) stops us from making (or displaying) all of the units we can sell? B) Which products offer the highest contribution margin per unit of the constraint? […]

91) A rate variance for direct labor measures how well a company keeps unit prices of labor inputs within standards. 92) If the standard quantity allowed for direct labor is less than the actual quantity used, the efficiency variance is favorable. 93) Which variance is directly impacted if the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired? A) Materials price variance B) Materials quantity variance C) Labor efficiency variance D) Labor rate variance 94) How is the direct labor rate variance calculated? A) The difference between the standard […]

118) Golden Corporation has operating income of $336,000, a sales margin of 16%, and capital turnover of 3.0. The return on investment (ROI) for Golden Corporation would be closest to A) 5%. B) 48%. C) 2%. D) 160%. 119) Kleeman Company has a sales margin of 16%, operating income of $336,000, and capital turnover of 3.0. The sales in dollars for Kleeman Company would be closest to A) $ 3,760. B) $ 12,000. C) $1,008,000. D) $2,100,000. 120) Lewis Company has operating income of $336,000. Its return on investment (ROI) is 48%, while its target rate of return is 10%. […]