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NEW QUESTION 36 After a recent earthquake in a nearby city the board of directors of a company has requested a review of the company s disaster recovery plan Which of the following would be classified as a weakness in the company's disaster recovery plan?

• A. Members of the company's disaster recovery team maintain current copies of the disaster recovery plan m their homes.
• B. A cold site with backup data and documents is maintained on the basement level of the company s headquarters.
• C. The details of the disaster recovery plan stipulate that internal audit should review the plan every other year rather than annually.
• D. Management has decided not to maintain a hot site because it was determined that the costs outweigh the benefits.

Answer: B   NEW QUESTION 37 Playtime inc. manufactures playground equipment and uses 60 board feet of lumber in each model no 643 produced The company, which anticipates selling 350 units of this model during April, plans to boost its finished goods inventory in April by 80 units in preparation for the peak summer season Playtime expects to manufacture 450 units in May Playtime has only 500 board feet of lumber on hand as of April 1 because of a temporary shortage, and typically maintains a lumber Inventory equal to 20% of the following month's production needs. On the basis of this information, how many board feet of lumber should the company plan to purchase in April?

• A. $31,200
• B. $31,700
• C. $30,700
• D. $31,900

Answer: C   NEW QUESTION 38 A company has two service departments Security and Human Resources and two operating departments Assembly and Finishing Cost data for these departments are shown below To determine the full costs of conducting Business m the operating departments the company allocates service department costs to the operating departments Security costs are allocated based on the number of employees and Human Resources costs are allocated based on the number of Human Resources hours used using the step-down method, what amount of Security costs would be allocated to the Assembly department?

• A. $12,727.
• B. $20,000.
• C. $18,773.
• D. $13,333.

Answer: C   NEW QUESTION 39 Sportsman inc. manufactures ceramic sports-related figurines. The company's oldest lines are mass produced in a standard variety of colors and designs. A few years ago in an effort to increase sales, the company began accepting special orders with modified designs in school colors. The minimum order for these special designs is 100 units. The special orders have become very popular and now represent one quarter of the units produced. Estimates for the year follow. Design costs manufacturing overhead and materials handling costs are budgeted at $700.000 for the year Sportsman has always used a traditional cost allocation system using aired labor hours as the allocation base but is considering an activity based costing system. The most likely result of changing to an activity-based system is that

• A. the overhead costs allocated to the special designs will likely decrease Because demand for them has grown
• B. the costs allocated to each product should not change but management will be able to control various components of the cost more effectively.
• C. the overhead costs allocated to the special designs will likely increase because the special design requires proportionally more overhead activity
• D. total production costs are likely to decline as department are held responsible for their costs

Answer: C   NEW QUESTION 40 MJC Co. is considering adopting a variable costing system using variable costing rather than absorption costing will be more advantageous to MJC because the variable costing system

• A. focuses on gross profit as the best indicator of a company's ability to cover its expenses
• B. allows the financial statements released to internal users to agree with the GAAP financial statements issued for external use
• C. assigns all costs of manufacturing to products in order to properly match cost of production with revenues
• D. more readily provides data needed for cost/volume/profit analyses done by management

Answer: D   NEW QUESTION 41 ......