Management of the assembly division thinks that it

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division plans to purchase 4,500 circuit boards. Management of the assembly division thinks that it can purchase from the manufacturing division at a lower price since both divisions are under common control of the corporation. What is the minimum transfer price between the manufacturing division and the assembly division? a. $50. b. $65. c. $70. d. $80.
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447 52. Which of the following costs are generally included in a calculation of operating income when using absorption costing? I. Fixed direct manufacturing costs II. Variable direct manufacturing costs III. Variable manufacturing overhead costs IV. Fixed manufacturing overhead costs a. II and III, only. b. I and IV, only. c. I, II and III, only. d. I, II, III, and IV. 53. All of the following are limitations of the balance sheet except that a. the balance sheet is prepared using management judgments and estimates. b. assets and liabilities are usually recorded at historical cost, which might differ significantly from current market value. c. the balance sheet provides information on the liquidity and solvency of the company. d. the balance sheet omits many items that cannot be recorded objectively but which have financial value to the company. 54. For a manufacturing firm, which of the following would be included in cash outflows from financing activities on the Statement of Cash Flows? a. Payment of salaries and wages. b. Repayment of the principal portion of firm debt. c. Issuance of new stock. d. Interest payments on firm debt. 55. A company produces a wide variety of hand-crafted rocking chairs. The most appropriate allocation base for allocating production supervisor salaries to the products is a. direct labor hours. b. machine hours. c. number of products. d. sales dollars.
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448 56. The internal auditors of a company are assessing controls over network access. The best source of evidence to determine that terminated employees do not continue to have access to the company’s network is to a. discuss password removal procedures with the database administrator. b. review access control software to determine whether the most current version is implemented. c. review computer logs for access attempts. d. reconcile current payroll lists with database access lists. 57. A company established its annual direct material budget to produce 300,000 units as follows. 150,000 pounds of material @ $0.75 per pound = $112,500 Throughout the year, the company produced 310,000 units of finished goods using 0.48 pounds per unit at a cost of $0.76 per pound. The direct material efficiency variance is a. $588 unfavorable. b. $900 favorable. c. $1,488 unfavorable. d. $4,650 favorable. 58. A company uses the IFRS lower-of-cost-or-market (LCM) rule to value its inventory of frozen foods. The company applies this LCM method on a total inventory basis, not directly to each item of frozen food. Information on the frozen food inventory at December 31 of the year just ended is provided below.
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