Accounting and Economic Analysis: Activity-Based Costing, Financial Principles, and Oligopoly Market Dynamics

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Accounting and Economic Analysis: Activity-Based Costing, Financial Principles,and Oligopoly Market Dynamics1) A well-designed activity-based costing system starts with __________.A.analyzing the activities performed to manufacture a productB.assigning manufacturing overhead costs for each activity cost pool to productsC.computing the activity-based overhead rateD.identifying the activity-cost pools2) "Generally accepted" in the phrase generally accepted accounting principles means that theprinciples __________.A.have been approved for use by the managements of business firmsB.have been approved by the Internal Revenue ServiceC.have substantial authoritative supportD.are proven theories of accounting3) The income statement and balance sheet columns of Pine Company's worksheet reflects thefollowing totals:Income StatementBalance SheetDr.Cr.Dr.Cr.Totals$58,000$48,000$34,000$44,000The net income (or loss) for the period is __________.A.not determinableB.$10,000 lossC.$10,000 incomeD.$48,000 income4) These are selected account balances on December 31, 2008.Land (location of the corporation's office building)$150,000Land (held for future use)225,000Corporate Office Building900,000Inventory300,000Equipment675,000Office Furniture150,000Accumulated Depreciation450,000What is the net amount of property, plant, and equipment that will appear on the balance sheet?A.$1,425,000B.$1,950,000C.$2,400,000D.$1,650,0005) The first step in activity-based costing is to __________.

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A.identify the cost driver that has a strong correlation to the activity cost poolB.assign manufacturing overhead costs for each activity cost pool to productsC.identify and classify the major activities involved in the manufacture of specific productsD.compute the activity-based overhead rate per cost driver6) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of$74,400 and sales for the current year of $100,000. How much is Hess’s break even point?A.2,133 unitsB.4,600 unitsC.6,200 unitsD.$25,6007) Sam's Used Cars uses the specific identification method of costing inventory. During March,Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two carsare sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. Whatis Sam’s gross profit for March?A.$8,250B.$5,250C.$750D.$4,5008) These are selected account balances on December 31, 2008.Land (location of the corporation's office building)$100,000Land (held for future use)150,000Corporate Office Building600,000Inventory200,000Equipment450,000Office Furniture100,000Accumulated Depreciation300,000What is the net amount of property, plant, and equipment that will appear on the balance sheet?A.$950,000B.$1,300,000C.$1,600,000D.$1,100,0009) The income statement and balance sheet columns of Pine Company's worksheet reflects thefollowing totals:Income StatementBalance SheetDr.Cr.Dr.Cr.Totals$58,000$48,000$34,000$44,000Closing entries are necessary for __________.A.permanent or real accounts onlyB.permanent accounts onlyC.both permanent and temporary accounts

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D.temporary accounts only10) As Plant Controller, you are trying to determine which costs over which you have the mostcontrol on a day to day basis. Your goal is to achieve better profitability. The Plant OperationsManager suggests that overhead is the easiest area to directly reduce costs. Which of thefollowing items would be classified as manufacturing overhead?A.The western division’s vice president’s salaryB.Factory janitorC.Cost of landscaping the corporate officeD.General corporate liability insurance11) The cost of an asset and its fair market value are __________.A.the same on the date of acquisitionB.never the sameC.the same when the asset is soldD.irrelevant when the asset is used by the business in its operations12) One of Astro Company's activity cost pools is machine setups, with estimated overhead of$150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of themachine setup cost pool should be assigned to sparklers?A.$90,000B.$150,000C.$60,000D.$75,00013) The cost principle is the basis for preparing financial statements because it is __________.A.the most accurate measure of purchasing powerB.a conservative valueC.relevant and objectively measured, and verifiableD.an international accounting standard14) Which one of the following items is not generally used in preparing a statement of cash flows?A.Additional informationB.Adjusted trial balanceC.Comparative balance sheetsD.Current income statement15) To move the allocation of resources closer to the social optimum, policymakers shouldtypically try to induce firms in an oligopoly to __________.A.cooperate rather than compete with each otherB.collude with each otherC.form various degrees of cartelsD.compete rather than cooperate with each other16) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take otherfirms' production levels as given. Then in equilibrium the output effect __________.A.can be larger or smaller than the price effectB.must dominate the price effect

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C.must be smaller than the price effectD.must balance with the price effect17) The price of a good that prevails in a world market is called theA.world price.B.absolute price.C.relative price.D.comparative price.18) A country's consumption possibilities frontier can be outside its production possibilitiesfrontier if __________.A.the country imports more than it exportsB.the country’s technology is superior to the technologies of other countriesC.the citizens of the country have a greater desire to consume goods and services than do the citizensof other countriesD.the country engages in trade19) When, in a particular market, the law of demand and the law of supply both apply, theimposition of a binding price ceiling in that market causes quantity demanded to be __________.A.double the quantity suppliedB.less than quantity suppliedC.greater than quantity suppliedD.equal to quantity supplied20) If a binding price ceiling were imposed in the computer market, __________.A.the quality of computers would increaseB.the supply of computers would decreaseC.the demand for computers would increaseD.a shortage of computers would develop21) For a college student who wishes to calculate the true costs of going to college, the costs ofroom and board __________.A.plus the cost of tuition, equals the opportunity cost of going to collegeB.should be counted only to the extent that they are more expensive at college than elsewhereC.should be counted in full, regardless of the costs of eating and sleeping elsewhereD.usually exceed the opportunity cost of going to college22) In the market for foreign-currency exchange in the open economy macroeconomic model, theamount of net capital outflow represents the quantity of dollars __________.A.demanded for the purpose of importing foreign goods and servicesB.supplied for the purpose of buying assets abroadC.supplied for the purpose of selling assets domesticallyD.demanded for the purpose of buying U.S. net exports of goods and services23) The part of the balance of payments account that records the amount of foreign currency thegovernment buys or sells is the:

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A.balance of trade.B.financial and capital account.C.current account.D.government financial account.24) The balance of payment account is made up of:A.a monetary account and a fiscal account.B.an import account and an export account.C.a current account and a financial and capital account.D.an investment account and a consumption account.25) The model of aggregate demand and aggregate supply explains the relationship between__________.A.real GDP and the price levelB.unemployment and outputC.the price and quantity of a particular goodD.wages and employment26) The open-economy macroeconomic model includes __________.A.neither the market for loanable funds or the market for foreign-currency exchangeB.only the market for foreign-currency exchangeC.only the market for loanable fundsD.both the market for loanable funds and the market for foreign-currency exchange27) The principal lag for monetary policy __________.A.is the time it takes for policy to change spending. The principal lag for fiscal policy is the timeit takes to implement itB.is the time it takes to implement policy. The principal lag for fiscal policy is the time it takes forpolicy to change spendingC.and fiscal policy is the time it takes for policy to change spendingD.and fiscal policy is the time it takes to implement policy28) Which of the following best describes a mental image of a possible and desirable future stateof the organization?A.Horizontal communicationB.Vertical communicationC.VisionD.MissionE.Leadership29) Sebastian Stabilio just joined a team of people from throughout his organization whoseprimary task is to recommend valuable uses for the scrap generated in the manufacturingprocess. The team meets twice per week; otherwise members work within the usualorganizational structure. The team, not permanent, which Sebastian has joined, would beconsidered a:A.Parallel teamB.Project teamC.Working group

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