Managerial Accounting - Test 1
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- 1.The goal of managerial accounting is to provide the information that managers need for all of the following EXCEPT:
- A.
Planning
- B.
Control
- C.
Decision Making
- D.
Review
- 2.Managerial accounting is designed for use by:
- A.
Internal users
- B.
Stockbrokers
- C.
External users
- D.
Clients
- 3.
- A.
Specifies the resources needed to achieve the company goals
- B.
Communicate's a company's goals to employees
- C.
Evaluating managers to determine how their performance should be rewarded or punished
- D.
Evaluating operations to provide information as to whether they should be changed or not
- 4.
- A.
Specifies the resources needed to achieve the company goals
- B.
Communicate's a company's goals to employees
- C.
Evaluating managers to determine how their performance should be rewarded or punished
- D.
Evaluating operations to provide information as to whether they should be changed or not
- 5.Budgets for Planning: Which is Profit Budget?
- A.
Indicates planned income
- B.
Indicates planned cash inflows and outflows
- C.
Indicates the planned quantity of production and expected costs
- 6.Budgets for Planning: Which is Cash Flow Budget?
- A.
Indicates planned income
- B.
Indicates planned cash inflows and outflows
- C.
Indicates the planned quantity of production and expected costs
- 7.
- A.
Indicates planned income
- B.
Indicates planned cash inflows and outflows
- C.
Indicates the planned quantity of production and expected costs
- 8.
- A.
Is directed at internal users
- B.
Must comply with GAAP standards
- C.
Presents very detailed information
- D.
Presents only monetary information
- E.
Places emphasis on future
- 9.Which is Variable Cost?
- A.
Changes in proportion to changes in volume or activity (no change per unit)
- B.
Changes per unit (no changes in proportion to changes in volume or activity)
- 10.Which is Fixed Cost?
- A.
Changes in proportion to changes in volume or activity (no change per unit)
- B.
Changes per unit (no changes in proportion to changes in volume or activity)
- 11.Which of the following is most likely to be a variable cost?
- A.
Depreciation
- B.
Cost of Materials
- C.
Rent
- D.
Advertising
- 12.
- A.
Cost of Materials
- B.
Rent
- C.
Assembly Labor Cost
- D.
Commissions
- 13.Sunks Costs are costs to be incurred in near future that are impossible to avoid.
- A.
True
- B.
False
- 14.Opportunity Costs are the values of benefits foregone when selecting one alternative over another.
- A.
True
- B.
False
- 15.Costs incurred in the past are:
- A.
Opportunity Costs
- B.
Sunk Costs
- C.
Direct Costs
- D.
Variable Costs
- 16.Decision making relies on incremental analysis - an analysis of the revenues that increase (decrease) and the costs that increase (decrease) if a decision alternative is selected.
- A.
True
- B.
False
- 17.Incremental Analysis: -Differences in revenues and costs between alternatives are incremental. -Incremental revenue minus incremental cost equals incremental profit.
- A.
True
- B.
False
- 18.What is the order of the Value Chain?
- A. 1
- A.
- B. 2
- B.
- C. 3
- C.
- D. 4
- D.
- E. 5
- E.
- 19.Which of the following is NOT a goal of managerial accounting?
- A.
Provide information needed for decision making
- B.
Provide information needed for creditors
- C.
Provide information needed for planning
- D.
Provide information needed for control
- 20.Which of the following is part of planning?
- A.
Departmental performance report.
- B.
Incremental analysis
- C.
Cash-flow budget.
- D.
Management by exception.
- 21.Comparing actual results to expected results is an example of:
- A.
Decision making.
- B.
Planning
- C.
Incremental analysis.
- D.
Control.
- 22.Which of the following is not part of the planning and control process?
- A.
Preparing financial statements.
- B.
Deciding whether to reward or punish managers.
- C.
Implementing the plan.
- D.
Comparing actual results to planned results.
- 23.Management by exception is an example of:
- A.
Decision making.
- B.
Incremental analysis.
- C.
Planning
- D.
Control.
- 24.Which of the following is a characteristic of managerial accounting?
- A.
Must comply with GAAP
- B.
Generates reports primarily for internal users
- C.
Contains monetary information only
- D.
Emphasizes historical transactions
- 25.Which of the following is not a reason that current period performance results may differ from the company’s budget for that period?
- A.
The plan may not have been followed properly.
- B.
The plan may not have been well thought-out.
- C.
Changing circumstances may have made the plan out of date.
- D.
All of the above are reasons that actual results may differ from the company’s plan.
- 26.Which of the following is an example of a variable cost?
- A.
Direct labor (labor cost that are directly traceable to a product)
- B.
Depreciation
- C.
Rent
- D.
Salaries
- 27.Which of the following is an example of a fixed cost?
- A.
Materials
- B.
Commissions
- C.
Depreciation
- D.
Direct Labor
- 28.The wages lost when you give up your job to attend school full-time is an example of a(n):
- A.
Fixed costs.
- B.
Opportunity cost.
- C.
Direct cost.
- D.
Sunk cost.
- 29.The cost of a machine purchased last year is an example of a(n):
- A.
Opportunity cost.
- B.
Variable cost.
- C.
Fixed cost.
- D.
Sunk cost.
- 30.
- A.
$270,000
- B.
$300,000
- C.
$250,000
- D.
$280,000
- 31.Direct costs are directly traceable to a product, activity, or department, while indirect costs are not.
- A.
True
- B.
False
- 32.Manufacturing overhead is the cost of manufacturing activities other than direct materials and direct labor (all indirect costs).
- A.
True
- B.
False
- 33.Which are nonmanufacturing costs?
- A.
Selling Costs
- B.
General and Administrative Costs
- C.
Product Costs
- D.
Period Costs
- 34.Which are production of goods costs?
- A.
Selling Costs
- B.
General and Administrative Costs
- C.
Product Costs
- D.
Period Costs
- 35.
- A.
Costs associated with securing and filling customer orders ex. advertising, sales salaries, depreciation of sales equipment
- B.
Costs associated with the firm's general management ex. HR, accounting, corporate headquarters, and other support costs
- C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing overhead
- D.
Costs expensed in period incurred identified with accounting periods ex. selling and administrative expenses
- 36.
- A.
Costs associated with securing and filling customer orders ex. advertising, sales salaries, depreciation of sales equipment
- B.
Costs associated with the firm's general management ex. HR, accounting, corporate headquarters, and other support costs
- C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing overhead
- D.
Costs expensed in period incurred identified with accounting periods ex. selling and administrative expenses
- 37.
- A.
Costs associated with securing and filling customer orders ex. advertising, sales salaries, depreciation of sales equipment
- B.
Costs associated with the firm's general management ex. HR, accounting, corporate headquarters, and other support costs
- C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing overhead
- D.
Costs expensed in period incurred identified with accounting periods ex. selling and administrative expenses
- 38.Which is Period Costs?
- A.
Costs associated with securing and filling customer orders ex. advertising, sales salaries, depreciation of sales equipment
- B.
Costs associated with the firm's general management ex. HR, accounting, corporate headquarters, and other support costs
- C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing overhead
- D.
Costs expensed in period incurred identified with accounting periods ex. selling and administrative expenses
- 39.Which costs are only variable?
- A.
Direct Material
- B.
Direct Labor
- C.
Manufacturing Overhead
- D.
Selling Cost
- E.
General and Administrative Cost
- 40.Which costs are only fixed?
- A.
Direct Material
- B.
Direct Labor
- C.
Manufacturing Overhead
- D.
Selling Cost
- E.
General and Administrative Cost
- 41.Which costs can be variable or fixed?
- A.
Direct Material
- B.
Direct Labor
- C.
Manufacturing Overhead
- D.
Selling Cost
- E.
General and Administrative Cost
- 42.Cost of Goods Manufactured = Beginning Work In Progress + Current Manufacturing Cost - Ending Work In Progress
- A.
True
- B.
False
- 43.Cost of Goods Sold = Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods
- A.
True
- B.
False
- 44.Cost of Goods Available for Sale = Beginning Finished Goods + Cost of Goods Manufactured
- A.
True
- B.
False
- 45.Cost of Goods Manufactured is $200,000, beginning Finished Goods is $50,000, ending Finished Goods is $100,000, and ending Work In Process is $10,000. What is the Cost of Goods Sold?
- A.
$100,000
- B.
$250,000
- C.
$50,000
- D.
$150,000
- 46.
- A.
Companies produce goods to a customer's unique specifications
- B.
Cost of job accumulated on job cost sheet
- C.
Companies produce large quantities of identical items
- D.
Cost accumulate by each operation
- E.
Unit cost of items determined dividing costs of production by number of units produced
- 47.Which are associated with Process Costing?
- A.
Companies produce goods to a customer's unique specifications
- B.
Cost of job accumulated on job cost sheet
- C.
Companies produce large quantities of identical items
- D.
Cost accumulate by each operation
- E.
Unit cost of items determined dividing costs of production by number of units produced
- 48.
- A.
Estimated overhead divided by estimated quantity of the allocation base
- B.
Actual overhead multiplied by estimated overhead
- C.
Estimated overhead divided by actual overhead
- D.
None of the above
- 49.What is overapplied overhead and how is it eliminated?
- A.
Applied overhead>actual overhead; if small amount=debit manufacturing overhead and credit cost of goods sold; if large amount=apportion and close work in process, finished goods, and cost of goods sold
- B.
Applied overhead
- C.
Applied overhead>estimated overhead;if small amount=debit manufacturing overhead and credit cost of goods sold; if large amount=apportion cost of goods sold
- D.
Applied overhead
- 50.What is underapplied overhead?
- A.
Actual overhead>applied overhead
- B.
Applied overhead>actual overhead
- C.
Applied overhead
- D.
Actual overhead>estimated overhead
- 51.How is underapplied overhead eliminated?
- A.
If small amount=debit cost of goods sold and credit manufacturing overhead if large amount=apportion and close work in process, finished goods and cost of goods sold
- B.
If small amount=credit manufacturing overhead if large amount=apportion and close finished goods and cost of goods sold
- C.
If small amount=credit cost of goods sold and credit manufacturing overhead if large amount=apportion and close work in process, finished goods and cost of goods sold
- D.
If small amount=debit cost of goods sold and credit manufacturing overhead if large amount=apportion and close work in process
- 52.
- A.
Minimize raw materials and work in process inventories
- B.
Develop flexible, balanced production that is flexible and allows for smooth, rapid flow of materials
- C.
Concentrate on improving quality
- D.
Implications for over- and underapplied overhead
- E.
Focus on cost of goods sold
- F.
Maximize work in process inventories
- 53.Which are modern manufacturing practices?
- A.
Computer-controlled manufacturing
- B.
Lean manufacturing
- C.
Total quality management
- D.
Just in time production
- 54.Which of the following is not a product cost?
- A.
Direct materials
- B.
Depreciation on finished goods warehouse
- C.
Insurance on factory building
- D.
Indirect labor
- 55.Which of the following is not a period cost?
- A.
Overtime premium
- B.
Commissions
- C.
Advertising costs
- D.
General office salaries
- 56.GAAP requires that inventories and cost of goods sold be reported at full cost. Which of the following is defined as full cost?
- A.
Direct materials, direct labor, and variable overhead
- B.
Direct materials, direct labor, and fixed overhead
- C.
Direct materials, direct labor, and other variable costs
- D.
Direct materials, direct labor, and total overhead
- 57.Which of the following is a selling cost?
- A.
Property taxes on factory
- B.
Janitorial costs for administrative offices
- C.
Indirect labor costs
- D.
Depreciation on finished goods warehouse
- 58.Which of the following costs is expensed as incurred?
- A.
Direct materials
- B.
Sales salaries
- C.
Indirect labor
- D.
Factory depreciation
- 59.The schedule of cost of goods manufactured is an analysis of which account?
- A.
Finished goods
- B.
Cost of goods sold
- C.
Work in process
- D.
Direct materials
- 60.Which of the following companies would use a job-order costing system?
- A.
Construction
- B.
Metal producer
- C.
Chemical producer
- D.
Plastic producer
- 61.Which of the following documents would serve as a subsidiary ledger to the work in process account?
- A.
Materials requisition
- B.
Times sheets
- C.
Job cost sheet
- D.
Overhead budget
- 62.Which of the following is added directly to work in process?
- A.
Indirect labor
- B.
Indirect materials
- C.
Factory depreciation
- D.
Direct labor
- 63.The cost of goods manufactured is credited to which of the following accounts?
- A.
Cost of goods sold
- B.
Finished goods
- C.
Work in process
- D.
Raw materials
- 64.Applied overhead is debited to which account?
- A.
Manufacturing overhead
- B.
Work in process
- C.
Cost of goods sold
- D.
Finished goods
- 65.An immaterial amount of underapplied overhead is debited to which of the following accounts?
- A.
Manufacturing overhead
- B.
Cost of goods sold
- C.
Work in process
- D.
Finished goods
- 66.A material amount of overapplied overhead is debited to which of the following accounts?
- A.
Manufacturing overhead
- B.
Work in process
- C.
Finished goods
- D.
Cost of goods sold
- 67.What type of cost is rent?
- A.
Variable
- B.
Fixed
- C.
Mixed
- D.
Step-variable
- 68.What type of cost is indirect materials?
- A.
Sunk
- B.
Variable
- C.
Mixed cost (semivariable)
- D.
Fixed
- 69.What type of cost is utilities?
- A.
Variable
- B.
Semivariable
- C.
Fixed
- D.
Mixed
- 70.
- A.
Cost functions outside the relevant range are usually linear
- B.
The relevant range is the normal length of time in company's accounting period
- C.
Estimates outside the relevant range are useful
- D.
Cost functions within the relevant range are assumed to be linear
- 71.
- A.
Account analysis
- B.
Regression analysis
- 72.If variable costs are 60% of sales and fixed costs are $612,000, the break-even point in dollars is:
- A.
$ 367,200
- B.
$ 1,530,000
- C.
$ 244,800
- D.
$ 1,020,000
- 73.A factor that limits the level of production is called a:
- A.
Constraint
- B.
Restraint
- C.
Limitation
- D.
Restriction
- 74.Which of the following will decrease the break-even point?
- A.
Increasing fixed costs
- B.
Decreasing unit variable costs
- C.
Decreasing unit sales price
- D.
Decreasing unit contribution margin
- 75.What are mixed costs?
- A.
Costs that have both variable and fixed elements
- B.
Do not change
- C.
Vary depending on units
- D.
Fixed for a certain range
- 76.
- A.
Fixed for a range of output, but increase when upper bound of range is exceeded
- B.
Variable for a certain range
- C.
Both fixed and variable
- 77.
- A.
Management can easily change them (research and development); cannot easily be changed (rent, insurance)
- B.
Management can't easily change them (research and development); can easily be changed (rent, insurance)
- C.
Management can't easily change them (research and development); cannot easily be changed
- 78.What is the relevant range?
- A.
Range of activity for which assumptions as to how costs behave are reasonably valid
- B.
Range of money available
- C.
Range of units available to be shipped
- 79.
- A. account analysis
- A.
- B. scattergraph
- B.
- C. high-low method
- C.
- D. regression analysis
- D.
- 80.
- A.
Profit=SP(selling price)x-VC(variable cost)x-TFC(total fixed cost)
- B.
Profit=SP(selling price)x+VC(variable cost)x-TFC(total fixed cost)
- C.
Profit=SP(selling price)x+VC(variable cost)x+TFC(total fixed cost)
- 81.What is the break even point?
- A.
Number of units sold that allow the company to neither earn a profit nor incur a loss
- B.
The point where company's lose money
- 82.
- A.
The difference between the expected level of sales and break-even sales
- B.
The difference between the actual level of sales and break-even sales
- C.
The number of break-even sales
- 83.What is the margin of safety ratio?
- A.
(margin of safety)/(expected sales)
- B.
(expected sales)/(margin of safety)
- C.
(margin of safety)/(actual sales)
- 84.What is the contribution margin?
- A.
Total revenue-total variable costs
- B.
Total revenue-total fixed costs
- C.
Total revenue-finished goods
- 85.What are the two ways to calculate contribution margin ratio?
- A.
(sales-TVC)/sales or (SP-VC)/SP
- B.
(sales+TVC)/sales or (SP+VC)/SP
- C.
(sales+TVC)/sales or (SP-VC)/SP
- 86."What If" Analysis examines what will happen if an action is foregone
- A.
True
- B.
False
- 87.Multiproduct Analysis: Contribution Margin Approach vs. Contribution Margin Ratio Approach Which are associated with Contribution Margin Approach?
- A.
Used if items sold are similar
- B.
Calculate a weighted average contribution margin per unit
- C.
Use the weighted average contribution margin in the profit formula to calculate breakeven point and target sales
- D.
The relative product mix is then used to calculate the required sales of individual items
- E.
Products are substantially different
- F.
Calculate total company contribution margin ratio
- G.
Use total company contribution margin ratio to compute required sales in dollars
- H.
Total company fixed costs (common costs) are included
- 88.Multiproduct Analysis Break-Even Sales in units: (Profit+Total Fixed Costs)/(Weighted average contribution margin per unit)
- A.
True
- B.
False
- 89.
- A.
Used if items sold are similar
- B.
Calculate a weighted average contribution margin per unit
- C.
Use the weighted average contribution margin in the profit formula to calculate breakeven point and target sales
- D.
The relative product mix is then used to calculate the required sales of individual items
- E.
Products are substantially different
- F.
Calculate total company contribution margin ratio
- G.
Use total company contribution margin ratio to compute required sales in dollars
- H.
Total company fixed costs (common costs) are included
- 90.Assumptions in CVP Analysis: Which are true?
- A.
Assumptions can affect the validity of the analysis
- B.
Costs can be separated into fixed and variable components
- C.
Total fixed cost and total variable cost do not change over the levels of interest
- D.
Multiproduct analysis assumes the product mix does not change
- 91.Operating Leverage: §Level of fixed versus variable costs in a company § A company with a high level of fixed costs has a high operating leverage § Companies with high operating leverage have large fluctuations in profit when sales increase or decrease §These companies are seen as more risky §High operating leverage is better when sales are expected to increase
- A.
True
- B.
False
- 92.Constraints §Due to shortages of space, equipment or labor there can be constraints on how many items can be produced §Utilize contribution margin per unit to analyze situations §Calculate contribution margin per unit of constraint §Produce product with highest contribution margin per unit of constraint §Linear programming can solve multiple constraints
- A.
True
- B.
False
- 93.Wilson Company’s managers investigate departures from the budget that appear to be significant. What principle is being followed?
- A.
Small amounts do not matter
- B.
Incremental analysis
- C.
You get what you measure
- D.
Management by exception
- 94.Kevin’s Candies produced and sold 600 boxes of chocolate covered popcorn last month and had total variable costs of $2,100 that reflected the costs of chocolate and popcorn (ingredients). Each box of popcorn sells for $12.00. If production and sales are expected to increase by 15% next month, which of the following statements is true?
- A.
Total variable costs are expected to be $ 2,415
- B.
Variable cost per unit is expected to be $4.025
- C.
The incremental cost per unit is costs expected to be $0.35
- D.
Unit variable costs are expected to be $3.05
- 95.A company purchases machinery costing $60,000 in October of 2014. Five years later, management discovers better, more efficient machine that could be purchased for $80,000 to replace the existing machine. Management has determined that they are able to sell the original machine for $15,000. In making the decision about buying the new machine, how much are total sunk costs?
- A.
$60,000
- B.
$80,000
- C.
$15,000
- D.
$20,000
- 96.A cost which is directly traceable to a product, activity, or department is a(n)
- A.
The cost of the paper that is given as handouts in the class
- B.
The cost of the electricity to light the classroom
- C.
The cost of the registration system
- D.
The cost of the financial aid department of the college
- 97.Which of the following is a direct cost in relation to the cost of teaching the managerial accounting course in a college?
- A.
The cost of the paper that is given as handouts in the class
- B.
The cost of the electricity to light the classroom
- C.
The cost of the registration system
- D.
The cost of the financial aid department of the college
- 98.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold.
Each wing sells for $0.80 each. How much is the budgeted variable cost per unit?Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 - A.
$0.35
- B.
$0.45
- C.
$0.80
- D.
$10,800
- 99.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold.
Each wing sells for $0.80 each. What is the budgeted total fixed cost?Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 - A.
$7,300
- B.
$2,400
- C.
$8,400
- D.
$10,800
- 100.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold.
Each wing sells for $0.80 each. What is the budgeted fixed cost per unit?Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 - A.
$0.35
- B.
$0.80
- C.
$0.10
- D.
$0.17
- 101.
- A.
$52,000
- B.
$60,800
- C.
$66,300
- D.
$40,800
- 102.Which of the following is a manufacturing cost?
- A.
Indirect materials
- B.
Advertising expense
- C.
Depreciation of the office equipment used by the sales staff
- D.
Salary of clerical workers
- 103.
- A.
Supplies used by the factory janitor
- B.
Gasoline costs for trucks used to deliver products to customers
- C.
Glass shelves for the refrigerators
- D.
Refrigerator motors
- 104.Product costs
- A.
Are also called period costs.
- B.
Are considered an asset until the finished goods are sold.
- C.
Become an expense in the period the costs are incurred.
- D.
All of these answer choices are correct.
- 105.Which of the following accounts does not appear on the balance sheet?
- A.
Raw Materials Inventory
- B.
Finished Goods Inventory
- C.
Work in Process Inventory
- D.
Cost of Goods Manufactured
- 106.
- A.
Goods which are only partially completed.
- B.
All goods sold during the period.
- C.
All materials purchased during the last period.
- D.
All goods which are completed and ready to sell.
- 107.A form used to accumulate the cost of producing products is called a(n)
- A.
A. job cost sheet.
- B.
B. material requisition.
- C.
C. time sheet.
- D.
D. purchase order.
- 108.
- A.
$2.00
- B.
$1.90
- C.
$30.00
- D.
$1.93
- 109.When a job is completed, the transaction is recorded with a
- A.
A. debit to Work in Process Inventory and a credit to Cost of Goods Sold.
- B.
B. debit to Finished Goods Inventory and a credit to Work in Process Inventory.
- C.
C. debit to Cost of Goods Sold and a credit to Finished Goods Inventory.
- D.
D. debit to Work in Process Inventory and a credit to Finished Goods Inventory.
- 110.A job-order costing system is most likely to be used by a
- A.
A. soft-drink bottler.
- B.
B. breakfast cereal manufacturer.
- C.
C. paint manufacturer.
- D.
D. caterer.
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