AccountingforManagersSampleExam2Questions

Student:___________________________________________________________________________
1.Allotherthingsthesame,whichofthefollowingwouldincreaseresidualincome?
A.Increaseinaverageoperatingassets.
B.Decreaseinaverageoperatingassets.
C.Increaseinminimumrequiredreturn.
D.Decreaseinnetoperatingincome.

2.SalesandaverageoperatingassetsforCompanyPandCompanyQaregivenbelow:

Whatisthemarginthateachcompanywillhavetoearninordertogenerateareturnoninvestmentof20%?
A.12%and16%
B.50%and100%
C.8%and4%
D.2.5%and5%

3.Acompany'scurrentnetoperatingincomeis$16,800anditsaverageoperatingassetsare$80,000.The
company'srequiredrateofreturnis18%.Anewprojectbeingconsideredwouldrequireaninvestmentof
$15,000andwouldgenerateannualnetoperatingincomeof$3,000.Whatistheresidualincomeofthenew
project?
A.20.8%
B.20%
C.($150)
D.$300

4.ClovisMidwifery'scostformulaforitswagesandsalariesis$2,680permonthplus$245perbirth.Forthe
monthofSeptember,thecompanyplannedforactivityof118births,buttheactuallevelofactivitywas121
births.Theactualwagesandsalariesforthemonthwas$33,290.Thewagesandsalariesintheflexiblebudget
forSeptemberwouldbeclosestto:
A.$32,393
B.$31,590
C.$32,325
D.$33,290

5.GradertFraming'scostformulaforitssuppliescostis$1,540permonthplus$12perframe.Forthemonthof
September,thecompanyplannedforactivityof668frames,buttheactuallevelofactivitywas666frames.The
actualsuppliescostforthemonthwas$9,980.ThesuppliescostintheplanningbudgetforSeptemberwouldbe
closestto:
A.$10,010
B.$9,532
C.$9,556
D.$9,980

6.OrschelnSnowRemoval'scostformulaforitsvehicleoperatingcostis$2,800permonthplus$381per
snowday.ForthemonthofFebruary,thecompanyplannedforactivityof17snowdays,buttheactuallevelof
activitywas14snowdays.Theactualvehicleoperatingcostforthemonthwas$7,920.Theactivityvariance
forvehicleoperatingcostinFebruarywouldbeclosestto:
A.$1,357F
B.$1,357U
C.$1,143F
D.$1,143U

7.BrayboyTileInstallationCorporationmeasuresitsactivityintermsofsquarefeetoftileinstalled.Last
month,thebudgetedlevelofactivitywas1,360squarefeetandtheactuallevelofactivitywas1,300square
feet.Thecompany'sownerbudgetsforsupplycosts,avariablecost,at$3.90persquarefoot.Theactualsupply
costlastmonthwas$4,300.Inthecompany'sflexiblebudgetperformancereportforlastmonth,whatwould
havebeenthespendingvarianceforsupplycosts?
A.$770F
B.$1,004F
C.$198F
D.$234F

8.Thestandardsfordirectlaborforaproductare2.5hoursat$8perhour.Lastmonth,9,000unitsofthe
productweremadeandthelaborefficiencyvariancewas$8,000F.Theactualnumberofhoursworkedduring
thepastperiodwas:
A.23,500
B.22,500
C.20,500
D.21,500

9.TheCoxCompanyusesstandardcosting.ThefollowingdataareavailableforApril:

ThestandardquantityofmaterialallowedforAprilproductionis:
A.14,200gallons
B.12,700gallons
C.11,700gallons
D.10,200gallons

10.BordenEnterprisesusesstandardcosting.ForthemonthofApril,thecompanyreportedthefollowingdata:
Standarddirectlaborrate:$10perhour
Standardhoursallowedforactualproduction:8,000hours
Actualdirectlaborrate:$9.50perhour
Laborefficiencyvariance:$4,800Favorable
ThelaborratevarianceforAprilis:
A.$3,760U
B.$3,760F
C.$2,850F
D.$2,850U

11.GorryCompany'smanagementhasfoundthatevery7%increaseinthesellingpriceofoneofthecompany's
productsleadstoa11%decreaseintheproduct'stotalunitsales.Theproduct'sabsorptioncostingunitproduct
costis$13.00.Thevariableproductioncostoftheproductis$4.00perunitandthevariablesellingand
administrativecostis$5.40perunit.
Accordingtotheformulainthetext,theproduct'sprofitmaximizingpriceisclosestto:
A.$22.41
B.$31.00
C.$23.60
D.$20.06

12.LafaveCorporationusestheabsorptioncostingapproachtocostpluspricingdescribedinthetexttoset
pricesforitsproducts.Basedonbudgetedsalesof79,000unitsnextyear,theunitproductcostofaparticular
productis$50.80.Thecompany'ssellingandadministrativeexpensesforthisproductarebudgetedtobe
$1,896,000intotalfortheyear.Thecompanyhasinvested$260,000inthisproductandexpectsareturnon
investmentof15%.
Themarkuponabsorptioncostforthisproductwouldbeclosestto:
A.62.2%
B.15.0%
C.47.2%
D.48.2%

13.FreestoneCompanyisconsideringrentingMachineYtoreplaceMachineX.ItisexpectedthatYwillwaste
lessdirectmaterialsthandoesX.IfYisrented,Xwillbesoldontheopenmarket.Forthisdecision,whichof
thefollowingfactorsis(are)relevant?
I.Costofdirectmaterialsused
II.ResalevalueofMachineX
A.OnlyI
B.OnlyII
C.BothIandII
D.NeitherInorII

14.TheKelshCompanyhastwodivisionsNorthandSouth.Thedivisionshavethefollowingrevenuesand
expenses:

ManagementatKelshisponderingtheeliminationofNorthDivision.IfNorthDivisionwereeliminated,its
traceablefixedexpensescouldbeavoided.Thetotalcommoncorporateexpenseswouldbeunaffected.Given
thesedata,theeliminationofNorthDivisionwouldresultinanoverallcompanynetoperatingincomeof:
A.$100,000
B.$150,000
C.$(140,000)
D.$50,000

15.PartI51isusedinoneofPriesCorporation'sproducts.Thecompanymakes18,000unitsofthisparteach
year.Thecompany'sAccountingDepartmentreportsthefollowingcostsofproducingthepartatthislevelof
activity:

Anoutsidesupplierhasofferedtoproducethispartandsellittothecompanyfor$15.80each.Ifthisofferis
accepted,thesupervisor'ssalaryandallofthevariablecosts,includingdirectlabor,canbeavoided.Thespecial
equipmentusedtomakethepartwaspurchasedmanyyearsagoandhasnosalvagevalueorotheruse.The
allocatedgeneraloverheadrepresentsfixedcostsoftheentirecompany.Iftheoutsidesupplier'sofferwere
accepted,only$26,000oftheseallocatedgeneraloverheadcostswouldbeavoided.
IfmanagementdecidestobuypartI51fromtheoutsidesupplierratherthantocontinuemakingthepart,what
wouldbetheannualimpactonthecompany'soverallnetoperatingincome?
A.Netoperatingincomewoulddeclineby$81,800peryear.
B.Netoperatingincomewoulddeclineby$55,800peryear.
C.Netoperatingincomewoulddeclineby$119,800peryear.
D.Netoperatingincomewoulddeclineby$29,800peryear.

16.EllisTelevisionmakesandsellsportabletelevisions.Eachtelevisionregularlysellsfor$210.Thefollowing
costdatapertelevisionisbasedonafullcapacityof10,000televisionsproducedeachperiod.

AspecialorderhasbeenreceivedbyEllisforasaleof2,000televisionstoanoverseascustomer.Theonly
sellingcoststhatwouldbeincurredonthisorderwouldbe$6pertelevisionforshipping.Ellisisnowselling
6,000televisionsthroughregularchannelseachperiod.Whatshouldbetheminimumsellingpriceper
televisioninnegotiatingapriceforthisspecialorder?
A.$174
B.$168
C.$210
D.$180

TheVaroneCompanymakesasingleproductcalledaHom.Thecompanyhasthecapacitytoproduce40,000
Homsperyear.PerunitcoststoproduceandselloneHomatthatactivitylevelare:

TheregularsellingpriceforoneHomis$60.AspecialorderhasbeenreceivedatVaronefromtheFairview
Companytopurchase8,000Homsnextyearat15%offtheregularsellingprice.Ifthisspecialorderwere
accepted,thevariablesellingexpensewouldbereducedby25%.However,Varonewouldhavetopurchasea
specializedmachinetoengravetheFairviewnameoneachHominthespecialorder.Thismachinewouldcost
$12,000anditwouldhavenouseafterthespecialorderwasfilled.Thetotalfixedcosts,bothmanufacturing
andselling,areconstantwithintherelevantrangeof30,000to40,000Homsperyear.Assumedirectlaborisa
variablecost.

17.IfVaronecanexpecttosell32,000Homsnextyearthroughregularchannelsandthespecialorderis
acceptedat15%offtheregularsellingprice,theeffectonnetoperatingincomenextyearduetoacceptingthis
orderwouldbea:
A.$52,000increase
B.$80,000increase
C.$24,000decrease
D.$68,000increase

AFM_Sample_Exam2Key

1.Allotherthingsthesame,whichofthefollowingwouldincreaseresidualincome?
A.Increaseinaverageoperatingassets.
B.Decreaseinaverageoperatingassets.
C.Increaseinminimumrequiredreturn.
D.Decreaseinnetoperatingincome.

AACSB:ReflectiveThinking
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Comprehension
GarrisonChapter11#19
LearningObjective:1102Computeresidualincomeandunderstanditsstrengthsandweaknesses
Level:Medium

2.SalesandaverageoperatingassetsforCompanyPandCompanyQaregivenbelow:

Whatisthemarginthateachcompanywillhavetoearninordertogenerateareturnoninvestmentof20%?
A.12%and16%
B.50%and100%
C.8%and4%
D.2.5%and5%
CompanyP:
Turnover=SalesAverageoperatingassets=$20,000$8,000=2.5
ROITurnover=Margin=20%2.5=8%
CompanyQ:
Turnover=SalesAverageoperatingassets=$50,000$10,000=5
ROITurnover=Margin=20%5=4%

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter11#24
LearningObjective:1101Computereturnoninvestment(ROI)andshowhowchangesinsales;expenses;andassetsaffectROI
Level:Hard

3.Acompany'scurrentnetoperatingincomeis$16,800anditsaverageoperatingassetsare$80,000.The
company'srequiredrateofreturnis18%.Anewprojectbeingconsideredwouldrequireaninvestmentof
$15,000andwouldgenerateannualnetoperatingincomeof$3,000.Whatistheresidualincomeofthenew
project?
A.20.8%
B.20%
C.($150)
D.$300

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter11#26
LearningObjective:1102Computeresidualincomeandunderstanditsstrengthsandweaknesses
Level:Easy

4.ClovisMidwifery'scostformulaforitswagesandsalariesis$2,680permonthplus$245perbirth.Forthe
monthofSeptember,thecompanyplannedforactivityof118births,buttheactuallevelofactivitywas121
births.Theactualwagesandsalariesforthemonthwas$33,290.Thewagesandsalariesintheflexiblebudget
forSeptemberwouldbeclosestto:
A.$32,393
B.$31,590
C.$32,325
D.$33,290
Cost=Fixedcost+Variablecostperunitq
=$2,680+$245121=$32,325

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter09#28
LearningObjective:0901Prepareaflexiblebudget
Level:Easy

5.GradertFraming'scostformulaforitssuppliescostis$1,540permonthplus$12perframe.Forthemonthof
September,thecompanyplannedforactivityof668frames,buttheactuallevelofactivitywas666frames.The
actualsuppliescostforthemonthwas$9,980.ThesuppliescostintheplanningbudgetforSeptemberwouldbe
closestto:
A.$10,010
B.$9,532
C.$9,556
D.$9,980
Cost=Fixedcost+Variablecostperunitq
=$1,540+$12668=$9,556

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter09#29
LearningObjective:0901Prepareaflexiblebudget
Level:Easy

6.OrschelnSnowRemoval'scostformulaforitsvehicleoperatingcostis$2,800permonthplus$381per
snowday.ForthemonthofFebruary,thecompanyplannedforactivityof17snowdays,buttheactuallevelof
activitywas14snowdays.Theactualvehicleoperatingcostforthemonthwas$7,920.Theactivityvariance
forvehicleoperatingcostinFebruarywouldbeclosestto:
A.$1,357F
B.$1,357U
C.$1,143F
D.$1,143U

Becausetheflexiblebudgetislessthantheplanningbudget,thevarianceisfavorable(F).

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter09#35
LearningObjective:0902Prepareareportshowingactivityvariances
Level:Easy

7.BrayboyTileInstallationCorporationmeasuresitsactivityintermsofsquarefeetoftileinstalled.Last
month,thebudgetedlevelofactivitywas1,360squarefeetandtheactuallevelofactivitywas1,300square
feet.Thecompany'sownerbudgetsforsupplycosts,avariablecost,at$3.90persquarefoot.Theactualsupply
costlastmonthwas$4,300.Inthecompany'sflexiblebudgetperformancereportforlastmonth,whatwould
havebeenthespendingvarianceforsupplycosts?
A.$770F
B.$1,004F
C.$198F
D.$234F

Becausetheactualexpenseislessthantheflexiblebudget,thevarianceisfavorable(F).

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter09#42
LearningObjective:0903Prepareareportshowingrevenueandspendingvariances
Level:Easy

8.Thestandardsfordirectlaborforaproductare2.5hoursat$8perhour.Lastmonth,9,000unitsofthe
productweremadeandthelaborefficiencyvariancewas$8,000F.Theactualnumberofhoursworkedduring
thepastperiodwas:
A.23,500
B.22,500
C.20,500
D.21,500
SH=9,000units2.5hoursperunit=22,500hours
Laborefficiencyvariance=(AHSH)SR
=(AH22,500hours)$8perhour=$8,000
AH$8perhour$180,000=$8,000
AH$8perhour=$172,000
AH=$172,000$8perhour
AH=21,500hours

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter10#32
LearningObjective:1002Computethedirectlaborefficiencyandratevariancesandexplaintheirsignificance
Level:Hard

9.TheCoxCompanyusesstandardcosting.ThefollowingdataareavailableforApril:

ThestandardquantityofmaterialallowedforAprilproductionis:
A.14,200gallons
B.12,700gallons
C.11,700gallons
D.10,200gallons
Materialsquantityvariance=(AQSQ)SP
(12,200gallonsSQ)$4pergallon=$2,000U
($48,800SQ)$4pergallon=$2,000U
SQ$4pergallon=$46,800
SQ=$46,800$4pergallon
SQ=11,700gallons

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter10#28
LearningObjective:1001Computethedirectmaterialsquantityandpricevariancesandexplaintheirsignificance
Level:Hard

10.BordenEnterprisesusesstandardcosting.ForthemonthofApril,thecompanyreportedthefollowingdata:
Standarddirectlaborrate:$10perhour
Standardhoursallowedforactualproduction:8,000hours
Actualdirectlaborrate:$9.50perhour
Laborefficiencyvariance:$4,800Favorable
ThelaborratevarianceforAprilis:
A.$3,760U
B.$3,760F
C.$2,850F
D.$2,850U
Laborefficiencyvariance=(AHSH)SR
=(AH8,000hours)$10perhour=$4,800
AH$10perhour$80,000=$4,800
AH$10perhour=$75,200
AH=$75,200$10perhour
AH=7,520
Laborratevariance=AH(ARSR)
=7,520hours($9.50perhour$10.00perhour)
=7,520hours($0.50perhour)=$3,760F

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter10#34
LearningObjective:1002Computethedirectlaborefficiencyandratevariancesandexplaintheirsignificance
Level:Hard

11.GorryCompany'smanagementhasfoundthatevery7%increaseinthesellingpriceofoneofthecompany's
productsleadstoa11%decreaseintheproduct'stotalunitsales.Theproduct'sabsorptioncostingunitproduct
costis$13.00.Thevariableproductioncostoftheproductis$4.00perunitandthevariablesellingand
administrativecostis$5.40perunit.
Accordingtotheformulainthetext,theproduct'sprofitmaximizingpriceisclosestto:
A.$22.41
B.$31.00
C.$23.60
D.$20.06
d=ln(1+%changeinquantitysold)/ln(1+%changeinprice)
=ln(1+(0.11))/ln(1+0.07)=1.72
Profitmaximizingmarkuponvariablecost=1/(1+d)
=1/(1+(1.72))=1.39
Profitmaximizingprice=(1+Profitmaximizingmarkuponvariablecost)Variablecostperunit
=(1+1.38)($4.00+$5.40)=$22.47(theexactanswerwithoutroundingerroris$22.41)

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonAppendixA...#20
LearningObjective:AppA01Computetheprofitmaximizingpriceofaproductorserviceusingthepriceelasticityofdemandandvariablecost
Level:Medium

12.LafaveCorporationusestheabsorptioncostingapproachtocostpluspricingdescribedinthetexttoset
pricesforitsproducts.Basedonbudgetedsalesof79,000unitsnextyear,theunitproductcostofaparticular
productis$50.80.Thecompany'ssellingandadministrativeexpensesforthisproductarebudgetedtobe
$1,896,000intotalfortheyear.Thecompanyhasinvested$260,000inthisproductandexpectsareturnon
investmentof15%.
Themarkuponabsorptioncostforthisproductwouldbeclosestto:
A.62.2%
B.15.0%
C.47.2%
D.48.2%
Markuppercentageonabsorptioncost=[(RequiredROIInvestment)+Sellingandadministrativeexpenses]
(UnitproductcostUnitsales)
=[(15%$260,000)+$1,896,000]($50.80perunit79,000units)
=($39,000+$1,896,000)$4,013,200
=$1,935,000$4,013,200=48.2%

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonAppendixA...#26
LearningObjective:AppA02Computethesellingpriceofaproductusingtheabsorptioncostingapproach
Level:Medium

13.FreestoneCompanyisconsideringrentingMachineYtoreplaceMachineX.ItisexpectedthatYwillwaste
lessdirectmaterialsthandoesX.IfYisrented,Xwillbesoldontheopenmarket.Forthisdecision,whichof
thefollowingfactorsis(are)relevant?
I.Costofdirectmaterialsused
II.ResalevalueofMachineX
A.OnlyI
B.OnlyII
C.BothIandII
D.NeitherInorII

AACSB:ReflectiveThinking
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Knowledge
GarrisonChapter12#20
LearningObjective:1201Identifyrelevantandirrelevantcostsandbenefitsinadecision
Level:Easy

14.TheKelshCompanyhastwodivisionsNorthandSouth.Thedivisionshavethefollowingrevenuesand
expenses:

ManagementatKelshisponderingtheeliminationofNorthDivision.IfNorthDivisionwereeliminated,its
traceablefixedexpensescouldbeavoided.Thetotalcommoncorporateexpenseswouldbeunaffected.Given
thesedata,theeliminationofNorthDivisionwouldresultinanoverallcompanynetoperatingincomeof:
A.$100,000
B.$150,000
C.$(140,000)
D.$50,000

Thecompanycurrentlyhasanetoperatingincomeof$50,000thecombinedeffectoftheapparent$50,000
lossintheNorthDivisionandtheapparent$100,000profitintheSouthDivision.DroppingtheNorthDivision
wouldreducenetoperatingincomeby$190,000.Therefore,afterdroppingtheNorthDivision,theoverall
companynetoperatinglosswouldbe$140,000(=$50,000$190,000).

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter12#32
LearningObjective:1202Prepareananalysisshowingwhetheraproductlineorotherbusinesssegmentshouldbeaddedordropped
Level:Medium

15.PartI51isusedinoneofPriesCorporation'sproducts.Thecompanymakes18,000unitsofthisparteach
year.Thecompany'sAccountingDepartmentreportsthefollowingcostsofproducingthepartatthislevelof
activity:

Anoutsidesupplierhasofferedtoproducethispartandsellittothecompanyfor$15.80each.Ifthisofferis
accepted,thesupervisor'ssalaryandallofthevariablecosts,includingdirectlabor,canbeavoided.Thespecial
equipmentusedtomakethepartwaspurchasedmanyyearsagoandhasnosalvagevalueorotheruse.The
allocatedgeneraloverheadrepresentsfixedcostsoftheentirecompany.Iftheoutsidesupplier'sofferwere
accepted,only$26,000oftheseallocatedgeneraloverheadcostswouldbeavoided.
IfmanagementdecidestobuypartI51fromtheoutsidesupplierratherthantocontinuemakingthepart,what
wouldbetheannualimpactonthecompany'soverallnetoperatingincome?
A.Netoperatingincomewoulddeclineby$81,800peryear.
B.Netoperatingincomewoulddeclineby$55,800peryear.
C.Netoperatingincomewoulddeclineby$119,800peryear.
D.Netoperatingincomewoulddeclineby$29,800peryear.

Netoperatingincomewoulddeclineby$119,800peryearifthepartwerepurchasedratherthanmade
internally.

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter12#38
LearningObjective:1203Prepareamakeorbuyanalysis
Level:Easy

16.EllisTelevisionmakesandsellsportabletelevisions.Eachtelevisionregularlysellsfor$210.Thefollowing
costdatapertelevisionisbasedonafullcapacityof10,000televisionsproducedeachperiod.

AspecialorderhasbeenreceivedbyEllisforasaleof2,000televisionstoanoverseascustomer.Theonly
sellingcoststhatwouldbeincurredonthisorderwouldbe$6pertelevisionforshipping.Ellisisnowselling
6,000televisionsthroughregularchannelseachperiod.Whatshouldbetheminimumsellingpriceper
televisioninnegotiatingapriceforthisspecialorder?
A.$174
B.$168
C.$210
D.$180

Thesellingpriceshouldatleastcoverthevariablecostof$174perunit.

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter12#46
LearningObjective:1204Prepareananalysisshowingwhetheraspecialordershouldbeaccepted
Level:Medium

TheVaroneCompanymakesasingleproductcalledaHom.Thecompanyhasthecapacitytoproduce40,000
Homsperyear.PerunitcoststoproduceandselloneHomatthatactivitylevelare:

TheregularsellingpriceforoneHomis$60.AspecialorderhasbeenreceivedatVaronefromtheFairview
Companytopurchase8,000Homsnextyearat15%offtheregularsellingprice.Ifthisspecialorderwere
accepted,thevariablesellingexpensewouldbereducedby25%.However,Varonewouldhavetopurchasea
specializedmachinetoengravetheFairviewnameoneachHominthespecialorder.Thismachinewouldcost
$12,000anditwouldhavenouseafterthespecialorderwasfilled.Thetotalfixedcosts,bothmanufacturing
andselling,areconstantwithintherelevantrangeof30,000to40,000Homsperyear.Assumedirectlaborisa
variablecost.

GarrisonChapter12

17.IfVaronecanexpecttosell32,000Homsnextyearthroughregularchannelsandthespecialorderis
acceptedat15%offtheregularsellingprice,theeffectonnetoperatingincomenextyearduetoacceptingthis
orderwouldbea:
A.$52,000increase
B.$80,000increase
C.$24,000decrease
D.$68,000increase

*Regularsellingprice:$60(115%)=$51
**Variablesellingexpense:$8(125%)=$6

AACSB:Analytic
AICPABB:CriticalThinking
AICPAFN:Measurement
Blooms:Application
GarrisonChapter12#93
LearningObjective:1204Prepareananalysisshowingwhetheraspecialordershouldbeaccepted
Level:Medium

AFM_Sample_Exam2Summary
Category
AACSB:Analytic

#ofQuestio
ns
15

AACSB:ReflectiveThinking

AICPABB:CriticalThinking

17

AICPAFN:Measurement

17

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Application

Blooms:Comprehension

Blooms:Knowledge

GarrisonAppendixA...

GarrisonChapter09

GarrisonChapter10

GarrisonChapter11

GarrisonChapter12

LearningObjective:0901Prepareaflexiblebudget

LearningObjective:0902Prepareareportshowingactivityvariances

LearningObjective:0903Prepareareportshowingrevenueandspendingvariances

LearningObjective:1001Computethedirectmaterialsquantityandpricevariancesandexplaintheirsignificance

LearningObjective:1002Computethedirectlaborefficiencyandratevariancesandexplaintheirsignificance

LearningObjective:1101Computereturnoninvestment(ROI)andshowhowchangesinsales;expenses;andassetsaffectROI

LearningObjective:1102Computeresidualincomeandunderstanditsstrengthsandweaknesses

LearningObjective:1201Identifyrelevantandirrelevantcostsandbenefitsinadecision

LearningObjective:1202Prepareananalysisshowingwhetheraproductlineorotherbusinesssegmentshouldbeaddedordropp
ed

LearningObjective:1203Prepareamakeorbuyanalysis

LearningObjective:1204Prepareananalysisshowingwhetheraspecialordershouldbeaccepted

LearningObjective:AppA01Computetheprofitmaximizingpriceofaproductorserviceusingthepriceelasticityofdemandan
dvariablecost

LearningObjective:AppA02Computethesellingpriceofaproductusingtheabsorptioncostingapproach

Level:Easy

Level:Hard

Level:Medium