Finance

Q: Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Q: __________ are useful if we can assume that market demands will stay fairly steady over time.

Q: __________ forecasting tries a variety of computer models and selects the best one for a particular application.

Q: Standard costs can be used by management to assess the reasonableness of actual costs incurred.

Q: The __________ measures the strength of the relationship between two variables.

Q: __________ is a time-series forecasting method that fits a trend line to a series of historical data points and then projects the line into the future for forecasts.

Q: When one constant is used to smooth the forecast average and a second constant is used to smooth the trend, the forecasting method is __________.

Q: __________ is a measure of overall forecast error for a model.

Q: A measure of forecast error that does not depend on the magnitude of the item being forecast is the __________.

Q: Linear regression is known as a(n) __________ because it incorporates variables or factors that might influence the quantity being forecast.

Q: The smoothing constant is a weighting factor used in __________.

Q: A(n) __________ forecast uses an average of the most recent periods of data to forecast the next period.

Q: __________ forecasts use a series of past data points to make a forecast.

Q: __________ forecasts employ one or more mathematical models that rely on historical data and/or associative variables to forecast demand.

Q: __________ forecasts address the business cycle by predicting inflation rates, money supplies, housing starts, and other planning indicators.

Q: __________ forecasts are concerned with rates of technological progress, which can result in the birth of exciting new products, requiring new plants and equipment.

Q: If Brandon Edward were working to develop a forecast using a moving averages approach, but he noticed a detectable trend in the historical data, he shouldA) use weights to place more emphasis on recent dataB) use weights to minimize the importance of the trendC) change to a nave approachD) use a simple moving averageE) change to a qualitative approach

Q: A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ___________________.

Q: __________ expresses the error as a percent of the actual values, undistorted by a single large value.A) MADB) MSEC) MAPED) FITE) The smoothing constant

Q: Suppose that demand in period 1 was 7 units and the demand in period 2 was 9 units. Assume that the forecast for period 1 was for 5 units. If the firm uses exponential smoothing with an alpha value of .20, what should be the forecast for period 3? (Round answers to two decimal places.)A) 9.00B) 3.72C) 9.48D) 5.00E) 6.12

Q: Which of the following most requires long-range forecasting (as opposed to short-range or medium-range forecasting) for its planning purposes?A) job schedulingB) production levelsC) cash budgetingD) capital expendituresE) purchasing

Q: Many services maintain records of sales notingA) the day of the weekB) unusual eventsC) weatherD) holidaysE) all of the above

Q: Computer monitoring of tracking signals and self-adjustment if a signal passes a preset limit is characteristic ofA) exponential smoothing including trendB) adaptive smoothingC) trend projectionD) focus forecastingE) multiple regression analysis

Q: __________ are preset costs for delivering a product or service under normal conditions.

Q: Gala Enterprises collected the following data regarding production of one of its products. Compute the variable overhead cost variance, the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead spending variance, and the fixed overhead volume variance. Direct labor standard (2 hrs. @ $15/hr.) $30.00 per finished unit Actual direct labor hours 60,800 hrs. Budgeted units 31,000 units Actual finished units produced 30,000 units Standard variable OH rate (2 hrs. @ $14.00/hr.) $28.00 per finished unit Standard fixed OH rate ($310,000/31,000 units) $10.00 per unit Actual variable overhead costs incurred $857,600 Actual fixed overhead costs incurred $312,000

Q: Gala Enterprises reports the following information regarding the production on one of its products for the month. Compute the direct labor cost variance, the direct labor rate variance, the direct labor efficiency variance and identify each as either favorable or unfavorable. Direct labor standard (2 hrs. @ $15/hr.) $30 per finished unit Actual direct labor hours 60,800 hrs. Actual finished units produced 30,000 units Actual cost of direct labor $905,920 Answer: Direct labor cost variance: Actual units at actual cost = $905,920 Standard units at standard cost = 30,000 * 2 * $15.00 = $900,000 Labor cost variance = $5,920 unfavorable Direct labor rate variance Actual cost = $905,920 AH * SR = (60,800 * $15.00) = $912,000 Direct labor rate variance = $6,080 favorable Direct labor efficiency variance AH * SR = (60,800 * $15.00) = $912,000 SH * SR = (30,000 * 2 * $15.00) = $900,000 Direct labor efficiency variance = $12,000 unfavorable

Q: If two variables were perfectly correlated, the correlation coefficient r would equalA) 0B) -1C) 1D) B or CE) none of the above

Q: Gala Enterprises reports the following information regarding the production of one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable. Direct materials standard (6 lbs. @ $3/lb.) $18 per finished unit Actual direct materials used 179,000 lbs. Actual finished units produced 30,000 units Actual cost of direct materials used $554,900

Q: The degree or strength of a relationship between two variables is shown by theA) alphaB) meanC) mean absolute deviationD) correlation coefficientE) cumulative error

Q: A fundamental distinction between trend projection and linear regression is thatA) trend projection uses least squares while linear regression does notB) only linear regression can have a negative slopeC) in trend projection the independent variable is time; in linear regression the independent variable need not be time, but can be any variable with explanatory powerD) trend projection can be a function of several variables, while linear regression can only be a function of one variableE) trend projection uses two smoothing constants, not just one

Q: Firenze Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000. Sales (20,000 units) $800,000 Cost of goods sold: Direct materials $160,000 Direct labor 150,000 Variable overhead 100,000 Fixed overhead 120,000 530,000 Gross profit $ 270,000 Selling expenses: Sales commissions(all variable) 40,000 Advertising (all fixed) 50,000 General and administrative expenses: Salaries (all fixed) 80,000 Rent (all fixed) 30,000 Depreciation (all fixed) 20,000 220,000 Net income from operations $ 50,000

Q: Naches Co. assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at the standard $8 per hour rate. The direct labor rate variance for the month was $200 favorable and the direct labor efficiency variance was $150 favorable. Prepare the journal entry to charge Work in Process Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor variances. Assuming that the direct labor variances are immaterial, prepare the journal entry that Naches would make to close the variance accounts.

Q: The quarterly "make meeting" of Lexus dealers is an example of a sales force composite forecast.

Q: Demand for a certain product is forecast to be 800 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 1.25. What is the seasonally-adjusted sales forecast for January?A) 640 unitsB) 798.75 unitsC) 801.25 unitsD) 1000 unitsE) 88.33 units

Q: Hatter, Inc. allocates fixed overhead at a rate of $17 per direct labor hour. This amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During July, Hatter produced 5,500 units. Budgeted fixed overhead is $66,000, and overhead incurred was $67,000. Required: Determine the volume variance for July.

Q: A time-series model uses a series of past data points to make the forecast.

Q: Selected information from Richards Company's flexible budget is presented below: Operating Levels 80% 90% 100% Budgeted production in units 4,800 5,400 6,000 Budgeted labor (standard hours) 9,600 10,800 12,000 Budgeted overhead: Variable overhead $86,400 $97,200 $108,000 Fixed overhead 63,600 63,600 63,600 Richards Company applies overhead to production at a rate of $31.25 per unit based on a normal operating level of 80% of capacity. For the current period, Richards Company produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs. The company used 11,000 labor hours to produce the 5,400 units. Calculate the variable overhead spending and efficiency variances, and the fixed overhead spending and volume variances. Indicate whether each variance is favorable or unfavorable.

Q: Which of the following is true regarding the two smoothing constants of the Forecast Including Trend (FIT) model?A) One constant is positive, while the other is negative.B) They are called MAD and cumulative error.C) Alpha is always smaller than beta.D) One constant smoothes the regression intercept, whereas the other smoothes the regression slope.E) Their values are determined independently.

Q: During November, Gliem Company allocated overhead to products at the rate of $26.00 per direct labor hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Gliem Company operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70% of capacity is $38,900, and overhead actually incurred was $38,000. What is the company's volume variance for November? (Indicate whether the variance is favorable or unfavorable)

Q: The sales force composite forecasting method relies on salespersons' estimates of expected sales.

Q: If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

Q: Yamaha manufactures which set of products with complementary demands to address seasonal fluctuations?A) golf clubs and skisB) swimming suits and winter jacketsC) jet skis and snowmobilesD) pianos and guitarsE) ice skates and water skis

Q: Most forecasting techniques assume that there is some underlying stability in the system.

Q: For a given product demand, the time series trend equation is 53 - 4 X. The negative sign on the slope of the equationA) is a mathematical impossibilityB) is an indication that the forecast is biased, with forecast values lower than actual valuesC) is an indication that product demand is decliningD) implies that the coefficient of determination will also be negativeE) implies that the cumulative error will be negative

Q: Forecasts of individual products tend to be more accurate than forecasts of product families.

Q: The following information comes from the records of Barney Co. for the current period. a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable. b. Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts. Actual costs and quantities: Direct materials used "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 37,000 feet @ $6.20 per foot Direct labor hours used "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 50,660 hours Direct labor rate per hour "u00a6"u00a6"u00a6"u00a6"u00a6. $16.50 25,000 units were produced during the period. Standard costs and quantities per unit: Direct materials "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 1.5 ft. @ $6.10 per ft. Direct labor "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... 2 hours @ $17 per hour

Q: Beluga Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. The standard costs per unit are: Direct materials (0.5 lbs. @ $1/1b.) "u00a6"u00a6 $0.50 per unit Direct labor (1 hour @ $6/hour) "u00a6"u00a6"u00a6. $6.00 per unit Overhead (1 hour @ $2.05/hour) "u00a6"u00a6"u00a6 $2.05 per unit Beluga actually produced 330,000 units at 75% of capacity and actual costs for the period were: Direct materials (162,000 lbs.) "u00a6"u00a6"u00a6. $ 170,100 Direct labor (329,500 hours) "u00a6"u00a6"u00a6"u00a6. $2,042,900 Fixed overhead "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 438,000 Variable overhead "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. $ 262,000 Calculate the following variances and indicate whether each variance is favorable or unfavorable: (1) Direct labor efficiency variance: $__________________ (2) Direct materials price variance: $__________________ (3) Controllable overhead variance: $__________________

Q: A time series trend equation is 25.3 + 2.1 X. What is your forecast for period 7?A) 23.2B) 25.3C) 27.4D) 40.0E) cannot be determined

Q: Demand (sales) forecasts serve as inputs to financial, marketing, and personnel planning.

Q: Linx Company's output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275, what was the total actual cost of direct labor incurred during the period?

Q: The last four months of sales were 8, 10, 15, and 9 units. The last four forecasts were 5, 6, 11, and 12 units. The Mean Absolute Deviation (MAD) isA) 2B) -10C) 3.5D) 9E) 10.5

Q: Maxwell Co. collected the following information about its production activities for the current year. a. Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable. b. Prepare the journal entry to record the issuance of direct materials into production. Actual costs and quantities: Direct materials used 95,000 lbs. @ $6.30 per lb. Units completed during the year, 50,000 units Standard costs and quantities: Price per lb. of direct material, $6.05 Two lbs. of direct material per unit

Q: The forecasting time horizon and the forecasting techniques used tend to vary over the life cycle of a product.

Q: Given forecast errors of -1, 4, 8, and -3, what is the mean absolute deviation?A) 2B) 3C) 4D) 8E) 16

Q: Lionaire, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Per Unit Direct materials (6 lbs. @ $2.00/lb.) $12.00 Direct labor (1 hrs. @ $8.00/hr.) 8.00 During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Direct materials (760,000 lbs.) $1,558,000 Direct labor (126,000 hrs.) 1,014,300 Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. Direct materials: Price variance Quantity variance Direct labor: Rate variance Efficiency variance

Q: A nave forecast for September sales of a product would be equal to the forecast for August.

Q: Ransom, Inc. budgets direct materials cost at $1.10/liter and each product requires 4 liters per unit of finished product. April's activities show usage of 832 liters to complete 196 units at a cost of $798.72. Compute the direct materials price and quantity variances.Indicate if the variance is favorable or unfavorable.

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