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11) Company A’s revenues are $300 on invested capital of $240. Expenses are currently 70% of sales. If Angelo Company can reduce its capital investment by 20% in Company A, return on investment will be _____.

A.   75% B.   93.75% C.   18.75% D.   46.88%




12) When the variable costing method is used, fixed factory overhead appears on the income statement as a _____.

A.   component of cost of goods sold

B.   fixed expense C.   production-volume variance D.   component of gross profit


13) In absorption costing, costs are separated into the major categories of _____.

A.   manufacturing and nonmanufacturing B.   manufacturing and fixed C.   fixed and variable D.   variable and nonmanufacturing


14) _____ is another term for variable costing.

A.   Full costing B.   Direct costing C.   Traditional costing D.   Absorption costing


15) Budgeted service department cost rates protects the user departments from _____.

A.   service department efficiencies

B.   price fluctuations C.   service outages D.   employee control


16) _____ is an example of the external financial-reporting purpose of the cost management systems.

A.   The cost of a manufacturing process  B.   The product mix to optimize profitability C.   The amount of inventory that should appear on the balance sheet

D.   Budget reporting


17) The level of sales at which revenues equal expenses and net income is zero is called the _____.

A.   margin of safety B.   contribution margin C.   break-even point D.   marginal income point



18) Output measures of both resources and activities are _____.

A.   cost drivers B.   stages of production

C.   fixed activities D.   variable activities


19) The break-even point is where _____.

A.   total sales revenue equals total cost plus desired profit. B.   the contribution margin equals net income plus fixed costs.

C.   total sales revenue equals total cost. D.   the variable cost equals total cost.


20) _____ budgeting is when budgets are formulated with the active participation of all affected employees.

A.   Financial B.   Team C.   Participative

D.   Shared


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