BEC CPA 4

Question 1

The quality technique commonly used to determine zero defects and goalpost conformance

Answer 1

Control Chart

Question 2

Net cash flows after taxes

Answer 2

Cash inflow from sales
Less: Cash outflows for materials & labor
Less: Taxes paid
Plus: salvage value less taxes paid on salvage

Question 3

To allocate joint costs to join products, the sales price at the point of sale, less cost to complete after split-off, is assumed to be equal to…?

Answer 3

relative sales value at split-off

Question 4

Which are basic approaches to allocation costs for costing inventory in joint-cost situations

Answer 4

• constant gross margin % NRV method
  ‘physical measures such as weights or column
• sales value at split-off

Question 5

The essence of responsibility accounting

Answer 5

Developing performance reports emphasizing costs and revenues that managers can control

Question 6

Underlying assumptions of cost-volume-profit include

Answer 6

• Selling prices are to be unchanged
• volume is the only factor affecting cost
• All costs can be divided into fixed and variable elements

Question 7

Economic order quantity

Answer 7

inventory order at the point where carrying costs equate nearest to restocking costs in order to minimize total inventory cost

Question 8

Expected value with probabilities

Answer 8

(Any cost paid from award - out-of-pocket costs) x probability
do same thing for other probabilities and add them together

Question 9

Economic value-added

Answer 9

residual income that remains after the cost of all capital, including equity capital, has been deducted

Question 10

Supply Chain Operations Reference (SCOR) Model would include what in its planning

Answer 10

• Assessing capacity concerns and capabilities
• determining demand requirements
• making make/buy decisions

Question 11

What is the underlying assumption of the Black-Scholes model?

Answer 11

there are no transaction costs for buying or selling the stock option

Question 12

Common document found in the revenue process

Answer 12

Packing slip

Question 13

Which factor is inherent in a firms operations if it utilizes only equity financing

Answer 13

Business risk

Question 14

Net after-tax cost of debt

Answer 14

(Base points x .01% (150 = 1.5%) + RFR) - (1 - tax rate)

Question 15

net cash flows for a year of a project

Answer 15

CM x units sold x (1-tax rate) + (salvage value x (1-tax rate)

Question 16

Controllable margin used as a refined measure of SBU reporting is described as

Answer 16

CM net of controllable fixed costs (those costs that managers can impact in less then a year)

Question 17

Units sold at a given profit

Answer 17

CM per unit x units = (Fixed costs + income)
Product A = 4 times B
(CM of A time x 4 + CM of B)
divided by (fixed costs + income) = units for B
plus ( units of B x 4)

Question 18

Which cost is deducted from revenue of a manufacturing company in order to determine gross margin, but Not deducted from revenue to determine CM?

Answer 18

Fixed manufacturing

Question 19

Activity-based costing refines product cost info because the cost system:

Answer 19

emphasizes long-term product analysis (when fixed costs become variable costs)

Question 20

Weighted average cost per unit

Answer 20

(Beg. costs + current costs) / (units completed + units competed in ending Inv.)
same equation for material and conversion cost

Question 21

benefits of debt financing over equity financing are likely to be highest when?

Answer 21

There is high marginal tax rates (interest on debt is deductible for tax purposes) and few noninterest tax benefits

Question 22

cash discounts vs a bank loan

Answer 22

the cost of not taking a cash discount is higher than the cost of a bank loan

Question 23

Cost of using a lock box

Answer 23

lock-box cost
Less: Investment income ((collection time days reduction / days in a year) x sales x interest rate)

Question 24

The following are considered in the selection of appropriate cost drivers for ABC system

Answer 24

• behavioral effects
• Degree of correlation
• Cost of measurement

Question 25

Contribution margin ratio

Answer 25

Contribution margin (sales price - variable price) / Sales price

Question 26

Impact on total variable costs if desired pretax profit increases

Answer 26

more units will need to be sold; more units equal more total variable costs

Question 27

Breakeven point in dollars

Answer 27

breakeven units x sales price
or
fixed costs / contribution margin ratio (CM / sales price)

Question 28

Variable vs absorption costing methods

Answer 28

Variable = only DM, DL, and variable OH are included in the COGS calc and ending inventory; Fixed Factory OH is a period cost - expensed immediately
Absorption = DM, DL, Variable OH, and Fixed Factory OH are included in COSG and ending Inventory calc.; Fixed Factory OH is a product cost.

If Units produced > units sold, then net income is higher under absorption

Question 29

The equation for sensitivity analysis (probability)

Answer 29

I.e sales
sales x increase or decrease % x probability
do for all probability scenarios and add together

Question 30

Appropriate “end-of-life” cash flows on a piece of equipment

Answer 30

net of tax investment
Less: net of tax cost to remove
Plus: net of tax salvage value

Question 31

Regression analysis

Answer 31

Estimates the dependent cost variable

Question 32

Minimum sales price on a special order

Answer 32

Per-unit cost plus the profit margin

Question 33

Which method most effectively minimizes risk when there is a surge in an exporting business

Answer 33

Hold AP and AR due in the same currency and amount

Question 34

Economic value added equation

Answer 34

NOPAT - required return (investment x WACC)

Question 35

What is considered of a cost driver for ABC system

Answer 35

• Behavioral effects
• Cost of measurements
• Degree of correlation

Question 36

3 primary motives for holding cash

Answer 36

1. Transactions demand
2. Precautionary demand
3. Speculative demand

Question 37

relevance of a particular cost to a decision is determined by:

Answer 37

Potential effect on the decision