Question 1) A well-designed activity-based costing system starts with _________

1) A well-designed activity-based costing system starts with __________.

2) “Generally accepted” in the phrase generally accepted accounting principles means that the principles __________.
3) The income statement and balance sheet columns of Pine Company’s worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
4) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Inventory 300,000
Equipment 675,000
Office Furniture 150,000
5) The first step in activity-based costing is to __________.
6) 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?
7) 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 cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is

still on hand. What is Sam’s gross profit for March?
8) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
9) The income statement and balance sheet columns of Pine Company’s worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000

Closing entries are necessary for __________.
10) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to

achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the

following items would be classified as manufacturing overhead?
11) The cost of an asset and its fair market value are __________.

12) 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 the machine setup cost pool should be assigned to sparklers?
13) The cost principle is the basis for preparing financial statements because it is __________.
14) Which one of the following items is not generally used in preparing a statement of cash flows?
15) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to

__________.
16) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms’ production levels as given. Then in

equilibrium the output effect __________.
17) The price of a good that prevails in a world market is called the
18) A country’s consumption possibilities frontier can be outside its production possibilities frontier if __________.
19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that

market causes quantity demanded to be __________.
20) If a binding price ceiling were imposed in the computer market, __________.
21) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________.
22) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents

the quantity of dollars __________.

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