Question 1

Life-cycle costing

Options :

A : Is sometimes used as a basis for cost planning and product pricing.

B : Includes only manufacturing costs incurred over the life of the product.

C : Includes only manufacturing cost, selling expense, and distribution expense.

D : Emphasizes cost savings opportunities during the manufacturing cycle.

Answer: A

Question 2

Contribution margin focuses on which one of the following?

Options :

A : The amount of revenue available to cover fixed costs.

B : The total variable manufacturing costs.

C : How competitive a company is compared to other companies.

D : The total revenue expected during the year.

Answer: A

Question 3

A budget developed by using budgeted prices and budgeted costs based on the actual output in the budget period is a(n)

Options :

A : continuous budget.

B : flexible budget.

C : life-cycle budget.

D : operating budget.

Answer: B

Question 4

Which one of the following is the best reason for using variable costing?

Options :

A : Variable costing is acceptable for income tax reporting purposes.

B : All costs are variable in the long term.

C : Fixed factory overhead is more closely related to the capacity to produce than to the production of specific units.

D : Variable costing usually results in higher operating income than if a company uses absorption costing.

Answer: C

Question 5

A company has net sales of $4,000,000, operating income of $1,200,000, and net income of $1,000,000. Average total assets are $9,000,000 and average total equity is $7,000,000. What is the company’s return on equity (ROE) and return on assets (ROA)?

Options :

A : ROE is greater than 12%, and ROA is less than 12%.

B : ROE is less than 12%, and ROA is greater than 12%.

C : ROE and ROA are both greater than 12%.

D : ROE and ROA are both less than 12%.

Answer: A

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