Accounting Midterm

Which of the following is typically a process-costing firm?

paint manufacturer

Setting objectives and identifying methods to achieve those objectives is called

planning

The management activity called _____ is detailed formulation of action to achieve a particular end.

planning

When materials are requisitioned for use in production in a job-order costing firm, the cost of materials is added to the

work-in-process account

If a company's total fixed cost decreases by $10,000, which of the following will be true?

The variable cost ratio will be unchanged.

The ending balance of which of the following accounts is calculated by summing the totals of the open (unfinished) job-order cost sheets?

Work in Process

The job-order cost sheet is a subsidiary account to

Work in Process

An important assumption of cost-volume-profit analysis is that

a. both costs and revenues are linear functions. b. all cost and revenue relationships are analyzed within the relevant range. c. there is no change in inventories. d. the sales mix remains constant. e. all of these are assumptions of cost-volume-profit analysis. E

An example of a support department is

a. data processing. b. personnel. c. a materials storeroom. d. payroll. e. All of these. E

The use and importance of managerial accounting is growing in each of the following areas except for

a. enterprise risk management. b. nanotechnology advancements. c. corporate sustainability reporting. d. quality accounting. e. lean accounting. B

If the variable cost per unit goes down,

Contribution margin increases and Break-even point decreases.

In terms of strategic positioning, which two general strategies may be chosen by a company?

Cost leadership and product differentiation

Which of the following is a difference between financial accounting and managerial accounting?

Financial accounting has a historical orientation, while managerial accounting emphasizes on the future.

Which of the following is true of financial accounting?

It focuses on overall firm performance, providing a more aggregated viewpoint.

Which of the following is true of lean accounting?

It organizes costs according to the value chain and collects both financial and nonfinancial information.

Which of the following is true of line positions?

Line positions have direct responsibility for the basic objectives of an organization.

Which of the following is an indirect cost?

The cost of restriping the parking lot at a perfume factory

Which of the following statements is true?

The job cost sheet is subsidiary to the work-in-process account

Platanus Inc. was one of the largest manufacturers of automobile engines and fixtures. Platanus Inc.'s management created an automated process of improving efficiency and minimizing human error in its production process so that the company produced zero-defect engines. Employees were monetarily rewarded when their units were free from defects. It also maintained relevant managerial accounting information regarding the cost of existing poor quality and efforts to improve future quality. Based on the information, which of the following is the most likely conclusion?

The management of Platanus Inc. has adopted the philosophy of total quality management.

Which of the following is referred to as controlling?

The managerial activity of monitoring a plan's implementation and taking corrective action as needed.

Which of the following would probably be a fixed cost in an automobile insurance company?

a. Application forms b. The salary of customer service representatives c. Time spent by adjusters to evaluate accidents d. All of these choices are correct. e. None of these. B

Which of the following is not a common form of certification for managerial accountants?

a. Certificate in Internal Auditing b. Certificate in External Auditing c. Certificate in Public Accounting d. Certificate in Management Accounting B

An effective managerial accounting system should track information about an organization's activities in which of the following areas?

a. Development b. Marketing c. Production d. Design e. All of these. E

Which of the following would probably be a variable cost in a soda bottling plant?

a. Direct labor b. Bottles c. Carbonated water d. Power to run the bottling machine e. All of these.

Which of the following is a period expense?

a. Factory insurance b. CEO salary c. Direct labor d. Factory maintenance e. All of these. B

Which of the following statements is true?

a. Job-order costing is used only in manufacturing firms. b. Process costing is used only for services. c. Job-order costing is simpler to use than process costing because the recordkeeping requirements are less. d. The job cost sheet is subsidiary to the work-in-process account. e. All of these D

Which of the following is typically a job-order costing firm?

a. Paint manufacturer b. Pharmaceutical manufacturer c. Cleaning products manufacturer d. Cement manufacturer e. Large regional medical center E

The accountant in a factory that produces biscuits for fast-food restaurants wants to assign costs to boxes of biscuits. Which of the following costs can be traced directly to boxes of biscuits?

a. The cost of flour and baking soda b. The wages of the mixing labor c. The cost of the boxes d. The cost of packing labor e. All of these. E

Which of the following is a characteristic of managerial accounting?

a. There is an internal focus. b. Subjective information may be used. c. There is an emphasis on the future. d. It is broad-based and multidisciplinary. e. All of these E

In a normal costing system, the cost of a job include

actual direct materials, actual direct labor, and estimated (applied) overhead.

The overhead variance is overapplied if

actual overhead is less than applied overhead

When a job is completed, the total cost of the job is

added to the finished goods account.

Applied overhead is

an important part of normal costing.

An example of a producing department is

assembly

Break-even revenue for the multiple-product firm can

be calculated by dividing total fixed cost by the overall contribution margin ratio.

Accumulating costs means that

costs must be measured and tracked.

The process of choosing among competing alternatives is called

decision making

The contribution margin is the

difference between sales and total variable cost.

A factor that causes or leads to a change in a cost or activity is a(n)

driver

The predetermined overhead rate equals

estimated overhead divided by estimated activity level for a period.

An advantage of the high-low method is that it

is objective

The total cost for monthly supervisory cost in a factory is $4,500 regardless of how many hours the supervisor works or the quantity of output achieved. This cost

is strictly fixed

The following cost formula was developed by using monthly data for a hospital. Total Cost = $128,000,000 + ($12,000 x Number of Patient Days) In the cost formula, the term "Total cost"

is the dependent variable

The following cost formula was developed by using monthly data for a hospital. Total Cost = $128,000,000 + ($12,000 x Number of Patient Days) In the cost formula, the term "Number of patient days"

is the independent variable

The following cost formula was developed by using monthly data for a hospital. Total Cost = $128,000,000 + ($12,000 x Number of Patient Days) In the cost formula, the term $128,000,000

is the total fixed cost

The following cost formula was developed by using monthly data for a hospital. Total Cost = $128,000,000 + ($12,000 x Number of Patient Days) In the cost formula, the term $12,000

is the variable rate

The costs of a job are accounted for on the

job-order cost sheet

The provision of accounting information for internal users is known as

managerial accounting

Product (or manufacturing) costs consist of

prime costs and manufacturing overhead.

Those departments responsible for creating products or services that are sold to customers are referred to as

producing departments

Those departments that provide essential services to producing departments are referred to as

support departments

If the margin of safety is 0, then

the company is precisely breaking even.

The method that assigns support department costs only to producing departments in proportion to each department's usage of the service is known as

the direct method

The amount of revenue required to earn a targeted profit is equal to

total fixed cost plus targeted profit divided by contribution margin ratio.

The set of activities required to design, develop, produce, market, and deliver products and services, as well as provide support services to customers is termed as a:

value chain