QUESTION: 1 Exam Topic: 1

Return on investment (ROI) is a performance measure that requires managers to respond to several factors that are under theirInfluence or control Decisions Intended to influence ROI are often from a short-term perspective and may conflict with the long-term objectives of the organization. This lack of goal congruence can be minimized by

providing the manager with limitationson what can be used to influence the factors involved in computing the ROI.
using the two components of ROI (investment turnover and return on sales) instead of only ROI.
allowing different minimum returns for different investments.
requiring multiple-year measures of ROI and evaluating these results along with the residual incomes from the same periods.

Answer(s): D

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QUESTION: 2 Exam Topic: 1

A company has two service departments Security and Human Resources and two operating departments Assembly and Finishing Cost data for these departments are shown below

To determine the full costs of conducting Business m the operating departments the company allocates service department costs to the operating departments Security costs are allocated based on the number of employees and Human Resources costs are allocated based on the number of Human Resources hours used using the step-down method, what amount of Security costs would be allocated to the Assembly department?

$12,727.
$13,333.
$18,773.
$20,000.

Answer(s): C

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QUESTION: 3 Exam Topic: 1

Aeronautics Inc. has designed anew airplane that entails an extremely complex manufacturing process Upon reviewing the market Aeronautics' management believes the price of the plane will need to be set below current manufacturing costs. Some on the management team have recommended stopping the project, however, the CFO believes that the plane will become profitable in the near future. The CFO most likely used which forecasting method?

Time series.
Learning curve analysis
Exponential smoothing
Cost-volume-profit analysis

Answer(s): A

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QUESTION: 4 Exam Topic: 1

MJC Co. is considering adopting a variable costing system using variable costing rather than absorption costing will be more advantageous to MJC because the variable costing system

more readily provides data needed for cost/volume/profitanalyses done by management
focuses on gross profit as the best indicator of a company's ability to cover its expenses
assigns all costs of manufacturing to products in order to properly match cost of production with revenues
allows the financialstatements released to internal users to agree with the GAAP financial statements issued for external use

Answer(s): A

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