..1 T-Mobile Wi-Fi 5:43 AM angie 2017 Test IV Standards that represent levels of

Question

..1 T-Mobile Wi-Fi 5:43 AM angie 2017 Test IV Standards that represent levels of operation that can be attained with reasonable effort are called: a. "Best Case standards b. Queen standards c. King standards d. noemal standands 2. By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money: a has an international rate of exchanpe b. is the language of business e. is the measure of assets, liabilities, and stockholders equity on financial statements d has a time value 3. For higher levels of management, responsibility accounting reports: a, are more detailed than for lower levels of management b are more summarizod than for lower levels of management c. contain about the same level of detail as reports for kower levels of management d. are rarely provided or reviewed 4.Aresponsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n): a profit center b investment center c, volame center d cost center 5. A cost that will not be affected by later decisions is termed a(n) a historical cost b differential cost s, sunk cost Multiple Choice (5 Points each) Please circle the correct answe 6, A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and S28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. 560,000 cost decrease b.S180,000 cost increase e. $60,000 cost increase d $180,000 cost decrease

Explanation / Answer

Question 1:

The answer is d) Normal standards.....

Reason: Normal standards are the standards that can be attained with reasonable efforts. These are kept, in order tyo compare with actuals...This shows, the normal target that can be achieved with working normally, as every time...i.e. With the same level of efforts and at the same level of operations.

Question 2:

The answer is d) Time value of money.

Reason:

The main concept of discounting is the time value of money. I will get 10$ after one year, if I invest 8$ today.....Then the same 8$ increased to 10$ in one year time....That implies that today's 8$ equals 10$ after one year....It means that the value of the money changed......WHY???

Because of time of one year...Hence, the major consideration is time value of money...The other options are irrelevant,

Question 3:

The answer is, b) The reports are more summarised than for the lower levels of management.

Reason:

The top management has to coordinate entire organisation. Yhey need to check the working of every part of the organisation.So, it is not possible for them to go indepth on every work. They need only overall report inorder to take actions. Hence They need only summarised data... If they want to focus indepth, then they can ask the respective departments to forward their data......Its the lower levels of management, which needs to maintain full reports.

Question 4:

The answer is a)profit center.

Reason:

The profit center is a place which is responsible for booking profits. The profits can be booked by comparing the costs and revenues. Hence the place where he is responsible for costs and revenues is profit center.

Cost center is responsible only for COST.

Revenue center is responsible only for REVENUE

Investment center is responsible for INVESTMENT.

Hence the answer is a)Profit center

Question 5:

The answer may be a)historical cost or c)Sunk cost....

Historical cost is the cost which is incurred in past history period....There is no use of this today or in future for decision making.

Sunk cost is the cost which has no relevance at all.....Its just sunk, means it is done......may be already incurred or already agrred to incur,,, These will not change the decision making....Hence these are irrelevant.

The answer is a)historical cost   and    c)Sunk cost....If we need more appropriately, its    c)SUNK cost.

Question 6:

Given that the unused capacity can be used to manufacture the parts...So, 15000 units can be made with the unused capacity.

The fixed cost is FIXED, even we doesn't manufacture it....The costs other than fixed cost is $28.......

But for purchase it is $ 24......So, we will incur $ 4 for each part by manufacturing rather than purchasing it.

So, for 15000 parts, we have to incur differential costs of 15000*(28-24)=60000....so, by switching to manufacture , we can incur $ 60000 cost increase.

So, the answer is c) $ 60,000 cost increase.

Hope it helps,

Thank you.

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