PTD14 Flashcards
Which one of the following is least likely an advantage associated with a wholly owned foreign subsidiary?
Protection of proprietary information.
Ability to coordinate activities of the subsidiary with other activities.
Ability to maintain quality control.
Minimizes capital investment required.
Minimizes capital investment required.
This Answer is Correct
Minimizing capital investment required is not likely to be an advantage associated with a wholly owned foreign subsidiary. Acquiring or establishing a wholly owned foreign subsidiary typically is a costly and time consuming undertaking. Other forms of international business are likely to require less capital investment than a wholly owned foreign subsidiary.
The Federal Reserve System’s reserve ratio is
(This question is CMA adapted)
The specified percentage of a commercial bank’s deposit liabilities that must be deposited in the central bank.
The rate that the central bank charges for loans granted to commercial banks or held as cash in the bank’s vault.
The ratio of excess reserves to legal reserves that are deposited in the central bank.
The specified percentage of a commercial bank’s demand deposits to total liabilities.
The specified percentage of a commercial bank’s deposit liabilities that must be deposited in the central bank.
The reserve ratio is the percentage of total checking deposits that a financial institution must hold on reserve in the central bank.
Which of the following transaction processing modes provides the most accurate and complete information for decision making Batch. Distributed. Online. Application.
Online processing provides the most up-to-date and complete information for decision making. Therefore, this is the best answer to this question.
A marketing manager at Hubert Humbert Fashion Designers is using a component of its organization-wide ERP system to determine which accounts generate the most profitable returns to the company. The manager is most likely using the \_\_\_\_\_\_\_\_\_ component of the system. CRM OLAP OLTP Supply chain management
This Answer is Correct
Correct! This is an application of a CRM (customer relationship management) system.
Birk Co. uses a job order cost system. The following debits (credits) appeared in Birk’s work in process account for the month of April Year 1:
April Description Amount 1 Balance $4,000 30 Direct materials 24,000 30 Direct labor 16,000 30 Factory overhead 12,800 30 To finished goods (48,000) Birk applies overhead to production at a predetermined rate of 80% of the direct labor cost. Job No. 5, the only job still in process on April 30, Year 1, was charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5?
$3,000.
$5,200.
$8,800.
$24,000.
This Answer is Correct
Ending balance in work in process:
$4,000 + $24,000 + $16,000 + $12,800 - $48,000 (all attributable to Job No. 5, the only remaining job) = $8,800
Less direct labor charged to Job No. 5: (2,000)
Less overhead charged to Job No. 5: .80($2,000) (1,600)
Equals materials charged to Job No. 5: $5,200
A company manufactures a product that has the direct material standard cost presented below. Budgeted and actual information for the current month for the manufacture of the finished product and the purchase and use of the direct material are also presented.
Standard cost for direct material
1.60 lb. @ $2.50 per lb. = $4.00
Budget Actual
Finished goods (in units) 30,000 32,000
Direct material usage (in pounds) 48,000 51,000
Direct material purchases (in pounds) 48,000 50,000
Total cost of direct material purchases $120,000 $120,000
The direct material price variance for the current month is
$7,500 unfavorable.
Zero.
$5,000 favorable.
$5,100 favorable.
This Answer is Correct
This answer is correct. This alternative correctly calculates the direct material price variance as the difference between the standard ($2.50) and actual cost ($120,000 ÷ 50,000 = $2.40) of direct materials per pound ($2.50 – $2.40 = $0.10) times the actual pounds purchased (50,000).
Which of the following is a defining characteristic of supply chain management?
Focuses on the sharing of information with suppliers and customers.
Focuses on redesigning processes.
Focuses on improving quality.
Focuses on strategic alliances.
Focuses on the sharing of information with suppliers and customers.
A key aspect of supply chain management is the sharing of key information from the point of sale to the consumer back to the manufacturer, the manufacturer’s suppliers, and the supplier’s suppliers.
A lender and a borrower signed a contract for a $1,000 loan for one year. The lender asked the borrower to pay 3% interest. Inflation occurred and prices rose by 2% over the next year. At the end of the year, the borrower repaid $1,030 (principal + interest). What is the amount worth in real terms (i.e., after inflation)? $1,060.90. $1,050.60. $1,029.41. $1,009.80.
(Correct!) The real value of the $1,030 is $1,009.80. It is calculated by reducing the principal and interest for the rate of inflation, or $1,030/1.02 = $1,009.80.
Rose and McMullin, a regional public accounting firm, has recently accepted a contract to audit On-the-Spot, Inc., a mobile vending service that provides vending machines for large events. On-the-Spot uses a computerized accounting system, portions of which were developed internally to integrate with a standard financial reporting system that was purchased from a consultant. What type of documentation will be most useful to Rose and McMullin in determining how the system as a whole is constructed? Operator documentation. Program documentation. Systems documentation. User documentation.
Systems documentation provides an overview of the program and data files, processing logic, and interactions with each of the other programs and systems and is appropriate for the auditor to use as a means of gaining familiarity with the system.
The following is financial data for Traber Corp. for the last two years.
Balance Sheet 20X1 20X2
Current assets $ 200,000 $ 230,000
Property, plant, & equipment (net) 800,000 1,000,000
Total assets $1,000,000 $1,230,000
Current liabilities 150,000 250,000
Long-term liabilities 450,000 500,000
Stockholders’ equity $ 400,000 $480,000
$1,000,000 $1,230,000
Income Statement 20X2 Sales $700,000 Cost of goods sold (500,000) General and administrative expenses (80,000) Interest expense (30,000) Income taxes (10,000) Net income $ 80,000
Other Information
Depreciation expense $ 15,000
Number of shares of stock outstanding 100,000
Calculate the debt to equity ratio for Traber at the end of 20X2.
- 4
- 04
- 13
- 56
1.56
This Answer is Correct
This answer is correct. The debt to equity ratio is calculated by dividing total debt by total equity. In this case, the debt to equity ratio is equal to 1.56 [($250,000 + 500,000) / 480,000].
A company sells 10,000 skateboards a year at $66 each. All sales are on credit, with terms of 3/10, net 30, which means 3% discount if payment is made within 10 days; otherwise full payment is due at the end of 30 days. One half of the customers are expected to take advantage of the discount and pay on day 10. The other half are expected to pay on day 30. Sales are expected to be uniform throughout the year for both types of customers.
Assume that the average collection period is 25 days. After the credit policy is well established, what is the expected average accounts receivable balance for the company at any point in time, assuming a 365-day year?
$684.93
$1,808.22
$27,123.30
$45,205.48
$45,205.48
This Answer is Correct
This answer is correct. The average accounts receivable balance is calculated as: Credit sales per day x Average collection period = (10,000 units × $66 unit price) / 365 × 25 days = $45,205.48.
Which of the following is not a factor included in the control environment?
Board of directors or audit committee participation.
Commitment to competence.
Monitoring.
Organizational structure.
Monitoring
This Answer is Correct
This answer is correct. Monitoring is one of the five interrelated components of internal control, not a factor of the control environment. The seven control environment factors are as follows: (1) integrity and ethical values, (2) commitment to competence, (3) human resource policies and practices, (4) assignment of authority and responsibility, (5) management’s philosophy and operating style, (6) board of directors or audit committee participation, and (7) organizational structure.
nformation pertaining to Arp Co.’s manufacturing operations:
Inventories 3/1/12 3/31/12 Direct materials $36,000 $30,000 Work in process 18,000 12,000 Finished goods 54,000 72,000 Additional information for the month of March 2012:
Direct materials purchased $84,000
Direct manufacturing labor payroll 60,000
Direct manufacturing labor rate per hour 7.50
Factory overhead rate per direct labor hour 10.00
For the month of March 2012, cost of goods manufactured was
$218,000
$224,000
$230,000
$236,000
Cost of goods manufactured (CGM) is the cost of goods completed and transferred to finished goods. It is the sum of direct materials used, direct manufacturing labor used, applied factory overhead, and any adjustment for work in process inventories. Direct manufacturing labor used ($60,000) is given. Direct materials used ($90,000) and applied factory overhead ($80,000) were computed previously. Direct materials used is computed by taking the sum of the beginning balance $36,000 + direct materials purchased $84,000 minus ending balance $30,000 = $90,000. Applied factory overhead: The factory overhead rate per direct manufacturing labor hour is $10.00. To compute the number of direct manufacturing labor hours worked, the direct manufacturing labor payroll ($60,000) is divided by the direct manufacturing labor rate per hour ($7.50), resulting in 8,000 direct manufacturing labor hours. Factory overhead applied is 8,000 hours at $10 per hour, or $80,000.Beginning work in process ($18,000) and ending work in process ($12,000) are given. Using this data, CGM can be computed as follows:
BWIP $ 18,000 DM used 90,000 DML 60,000 OH applied 80,000 Costs to account for $248,000 EWIP (12,000) CGM $ 236,000
