Finance

Q: The primary purpose of the mean absolute deviation (MAD) in forecasting is toA) estimate the trend lineB) eliminate forecast errorsC) measure forecast accuracyD) seasonally adjust the forecastE) all of the above

Q: The following information describes production activities of the Midtown Corp.: Raw materials used "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 16,000 lbs. at $4.05 per lb. Factory payroll "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... 5,545 hours for a total of $72,085 30,000 units were completed during the year Budgeted standards for each unit produced: 1/2 lb. of raw material at $4.15 per lb. 10 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Q: Which of the following values of alpha would cause exponential smoothing to respond the most slowly to forecast errors?A) 0.10B) 0.20C) 0.40D) 0.80E) cannot be determined

Q: In producing 700 units of product last period, Azure Company used 5,000 pounds of Material K, costing $34,250. The company has established the standard of using 7.2 pounds of Material K per unit of product, at a price of $7.50 per pound. Calculate the materials price and quantity variances associated with producing the 700 units, and indicate whether they are favorable or unfavorable:

Q: Given an actual demand of 61, a previous forecast of 58, and an alpha of .3, what would the forecast for the next period be using simple exponential smoothing?A) 45.5B) 57.1C) 58.9D) 61.0E) 65.5

Q: LJ Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. LJ's standard labor cost is $11.00 per hour. During March, LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is LJ's labor rate variance for March?

Q: A forecast based on the previous forecast plus a percentage of the forecast error is a(n)A) qualitative forecastB) naive forecastC) moving average forecastD) weighted moving average forecastE) exponentially smoothed forecast

Q: Given an actual demand of 103, a previous forecast value of 99, and an alpha of .4, the exponential smoothing forecast for the next period would beA) 94.6B) 97.4C) 100.6D) 101.6E) 103.0

Q: Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials quantity variance.

Q: Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?A) 0B) 1 divided by the number of periodsC) 0.5D) 1.0E) cannot be determined

Q: Which is not a characteristic of exponential smoothing?A) smoothes random variations in the dataB) easily altered weighting schemeC) weights each historical value equallyD) has minimal data storage requirementsE) None of the above; they are all characteristics of exponential smoothing.

Q: Which time-series model uses past forecasts and past demand data to generate a new forecast?A) naiveB) moving averageC) weighted moving averageD) exponential smoothingE) regression analysis

Q: Which of the following statements comparing the weighted moving average technique and exponential smoothing is true?A) Exponential smoothing is more easily used in combination with the Delphi method.B) More emphasis can be placed on recent values using the weighted moving average.C) Exponential smoothing is considerably more difficult to implement on a computer.D) Exponential smoothing typically requires less record keeping of past data.E) Exponential smoothing allows one to develop forecasts for multiple periods, whereas weighted moving averages does not.

Q: Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense ofA) manager understandingB) accuracyC) stabilityD) responsiveness to changesE) All of the above are diminished when the number of periods increases.

Q: A six-month moving average forecast is generally better than a three-month moving average forecast if demandA) is rather stableB) has been changing due to recent promotional effortsC) follows a downward trendD) exceeds one million units per yearE) follows an upward trend

Q: Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units. Using a contribution margin format: Prepare a flexible budget income statement for the actual level of sales and production.

Q: Anniston Co. planned to produce and sell 40,000 units. At that volume level, variable costs are determined to be $320,000 and fixed costs are $30,000. The planned selling price is $10 per unit. Anniston actually produced and sold 42,000 units. Using a contribution margin format: (a) Prepare a fixed budget income statement for the planned level of sales and production. (b) Prepare a flexible budget income statement for the actual level of sales and production.

Q: In time series, which of the following cannot be predicted?A) large increases in demandB) cyclesC) seasonal fluctuationsD) random fluctuationsE) large decreases in demand

Q: Based on predicted production of 25,000 units, Marvel Mix Co. anticipates $175,000 of variable costs and $137,500 of fixed costs. What are the flexible budget amounts of total costs for 28,000 units?

Q: The fundamental difference between cycles and seasonality is theA) duration of the repeating patternsB) magnitude of the variationC) ability to attribute the pattern to a causeD) all of the aboveE) none of the above

Q: Based on predicted production of 25,000 units, FreshCo. anticipates $175,000 of fixed costs and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

Q: Which of the following is not present in a time series?A) seasonalityB) operational variationsC) trendD) cyclesE) random variations

Q: Gradual movement in time-series data over time is calledA) seasonal variationB) a cycleC) a trendD) exponential variationE) random variation

Q: Time-series data may exhibit which of the following behaviors?A) trendB) random variationsC) seasonalityD) cyclesE) They may exhibit all of the above.

Q: Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the following data. Compute the sales price and the sales volume variances for each product. Budget Actual Unit sales price Classic "u00a6. $15 $16 Unit sales priceMod "u00a6"u00a6. $20 $19 Unit salesClassic "u00a6"u00a6"u00a6"u00a6 2,400 2,500 Unit salesMod "u00a6"u00a6"u00a6"u00a6.. 2,000 1,900

Q: Which of the following statements about time-series forecasting is true?A) It is based on the assumption that future demand will be the same as past demand.B) It makes extensive use of the data collected in the qualitative approach.C) It is based on the assumption that the analysis of past demand helps predict future demand.D) Because it accounts for trends, cycles, and seasonal patterns, it is always more powerful than associative forecasting.E) All of the above are true.

Q: Joseph, Inc., provides the following results of June's operations: Direct materials price variance "u00a6"u00a6"u00a6"u00a6.. $ 400F Direct materials quantity variance "u00a6"u00a6"u00a6. 2,000U Direct labor rate variance "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 100U Direct labor efficiency variance "u00a6"u00a6"u00a6.... 1,200F Variable overhead spending variance "u00a6"u00a6 400U Variable overhead efficiency variance "u00a6.. 800F Fixed overhead spending variance "u00a6"u00a6"u00a6. 100U Fixed overhead volume variance "u00a6"u00a6"u00a6... 600F Required: (a) Determine the total overhead cost variance for June. (b) Applying the management by exception approach, which of the variances shown are of greatest concern? Why?

Q: Which of the following techniques uses variables such as price and promotional expenditures, which are related to product demand, to predict demand?A) associative modelsB) exponential smoothingC) weighted moving averageD) simple moving averageE) time series

Q: Which of the following is not a type of qualitative forecasting?A) executive opinionsB) sales force compositesC) consumer surveysD) the Delphi methodE) moving average

Q: The forecasting model that pools the opinions of a group of experts or managers is known as theA) expert judgment modelB) multiple regression modelC) jury of executive opinion modelD) consumer market survey modelE) management coefficients model

Q: Which of the following uses three types of participants: decision makers, staff personnel, and respondents?A) executive opinionsB) sales force compositesC) the Delphi methodD) associative modelsE) time series analysis

Q: The two general approaches to forecasting areA) qualitative and quantitativeB) mathematical and statisticalC) judgmental and qualitativeD) historical and associativeE) judgmental and associative

Q: Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?

Q: Which of the following is not a step in the forecasting process?A) Determine the use of the forecast.B) Eliminate any assumptions.C) Determine the time horizon.D) Select forecasting model.E) Validate and implement the results.

Q: Organizations use which three major types of forecasts, including two that may fall outside the role of the operations manager?A) strategic, tactical, and operationalB) economic, technological, and demandC) exponential smoothing, Delphi, and regressionD) causal, time-series, and seasonalE) departmental, organizational, and territorial

Q: Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize aA) short-range time horizonB) medium-range time horizonC) long-range time horizonD) naive method, because there is no data historyE) all of the above

Q: A forecast with a time horizon of about 3 months to 3 years is typically called aA) long-range forecastB) medium-range forecastC) short-range forecastD) weather forecastE) strategic forecast

Q: Forecasts are usually classified by time horizon into three categoriesA) short-range, medium-range, and long-rangeB) finance/accounting, marketing, and operationsC) strategic, tactical, and operationalD) exponential smoothing, regression, and time seriesE) departmental, organizational, and industrial

Q: One use of short-range forecasts is to determineA) planning for new productsB) capital expendituresC) research and development plansD) facility locationE) job assignments

Q: ForecastsA) become more accurate with longer time horizonsB) are rarely perfectC) are more accurate for individual items than for groups of itemsD) all of the aboveE) none of the above

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

Q: Many service firms use point-of-sale computers to collect detailed records needed for accurate short-term forecasts.

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

Q: A; 2. B; 3. E; 4. H; 5. D; 6. G; 7. C; 8. F Short Answer Questions

Q: If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased.

Q: Demand cycles for individual products can be driven by product life cycles.

Q: B; 2. G; 3. E; 4. I; 5. C; 6. H; 7. D; 8. F; 9. J; 10. A

Q: A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y for every unit of time that passes.

Q: Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through 10. Enter the letter of the term with the definition, using the space preceding the definition. (a) Cost variance (b) Volume variance (c) Price variance (d) Quantity variance (e) Standard costs (f) Controllable variance (g) Fixed budget (h) Flexible budget (i) Variance analysis (j) Management by exception __________ (1) Occurs when there is a difference between the actual and standard volume of production. __________ (2) A planning budget based on a single predicted amount of sales or other activity measure. __________ (3) Preset costs for delivering a product, or service under normal conditions. __________ (4) A process of examining differences between actual and budgeted sales or costs and describing them in terms of the price and quantity differences. __________ (5) The difference between actual price per unit of input and standard price per unit of input. __________ (6) A budget prepared based on several different amounts of sales, often including a best-case and worst-case scenario. __________ (7) The difference between actual quantity of input used and standard quantity of input used. __________ (8) The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget. __________ (9) A management process to focus on significant variances and give less attention to areas where performance is close to the standard. __________ (10) The difference between actual and standard cost.

Q: The larger the standard error of the estimate, the more accurate the forecasting model.

Q: ShipCo produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is assigned at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card? A.$25.02. B.$11.52. C.$2.40. D.$2.52. E.$3.42.

Q: Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables.

Q: Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10 per gram and .25 direct labor hours at $12.00 per hour. Overhead is assigned at the rate of $18 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card? A.$7.00. B.$8.50. C.$11.50. D.$7.50. E.$25.00.

Q: Patterns in the data that occur every several years are called circuits.

Q: Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance. Direct labor standard (2 hrs. @ $12.75/hr.) $25.50 per finished unit Actual direct labor hours 81,500 hrs. Budgeted units 42,000 units Actual finished units produced 40,000 units Standard variable OH rate (2 hrs. @ $14.30/hr.) $28.60 per finished unit Standard fixed OH rate ($336,000/42,000 units) $8.00 per unit Actual cost of variable overhead costs incurred $1,140,000 Actual cost of fixed overhead costs incurred $ 338,000 A.$14,300 unfavorable. B.$21,450 favorable. C.$4,000 unfavorable. D.$4,000 unfavorable. E.$21,450 unfavorable.

Q: Seasonal indices adjust raw data for patterns that repeat at regular time intervals.

Q: In trend projection, a negative regression slope is mathematically impossible.

Q: In trend projection, the trend component is the slope of the regression equation.

Q: Mean Squared Error and Coefficient of Correlation are two measures of the overall error of a forecasting model.

Q: One advantage of exponential smoothing is the limited amount of record keeping involved.

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

Q: Cycles and random variations are both components of time series.

Q: Consider the network presented in the following table. Calculate a. All possible paths b. The critical path c. The slack available at any non-critical points d. The minimum project duration Task Duration (Days) Immediate Predecessors A 5 None B 3 A C 4 A D 2 C E 1 B,D

Q: Given the critical path below, calculate the following a. The crash cost per unit time savings for each activity. b. The maximum total crash time savings and cost. c. The maximum total time-savings with a $3000 budget. Activity Normal Time Normal Cost Crash Duration Crash Cost A 8 days $8,000 7 days $12,000 B 5 days $2,000 3 days $10,000 C 10 days $9,000 9 days $12,000

Q: Claremont Company specializes in selling refurbished copiers. During the month, the company sold 180 copiers at an average price of $3,000 each. The budget for the month was to sell 175 copiers at an average price of $3,200. The expected total sales for 180 copiers were. A.$540,000. B.$576,000. C.$525,000. D.$560,000. E.$550,000.

Q: Pirmin's Bike Shop is behind on a custom bike and needs to crash 8 hours of time from the 8-step project. Given the project table below calculate the crash cost for 8 hours of time-savings. Suppose Pirmin calls the customer and asks for a project extension, reducing the amount of time he needs to crash. Calculate both the maximum time-savings available on a $25 crash budget and the cost to crash four hours of savings. Activity Normal Duration (hours) Normal Cost ($) Crash Duration (hours) Crash Cost (S) Immediate Predecessors A 2 10 2 0 None B 3 15 2 23 A C 5 25 4 30 B D 3 20 1 24 C E 6 30 4 45 C F 1 5 1 0 C,E G 7 35 6 50 F H 10 50 7 80 D,G

Q: Given the project within the table below calculate a. The critical path b. The minimum project duration c. The amount of slack for each activity Activity Duration (hours) Immediate Predecessors A 4 None B 3 None C 10 None D 7 B,C E 1 D F 1 E G 5 A,F

Q: Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month. A.$22,000 unfavorable. B.$10,000 favorable. C.$22,000 favorable. D.$32,000 unfavorable. E.$32,000 favorable.

Q: Draw the AOA and AON networks for the following project and calculate the minimum project duration. Activity Duration (days) Immediate Predecessors A 10 --- B 8 --- C 2 A D 4 A E 5 B,C, D

Q: A network consists of the following list. Times are given in weeks. Activity Preceding Optimistic Probable Pessimistic A -- 5 11 14 B - 3 3 9 C -- 6 10 14 D A, B 3 5 7 E B 4 6 11 F C 6 8 13 G D, E 2 4 6 H F 3 3 9 a. Draw the network diagram. b. Calculate the expected duration and variance of each activity. c. Calculate the expected duration and variance of the critical path. d. Calculate the probability that the project will be completed in less than 28 weeks.

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