Accounting Tests Multiple Choice

The cost of goods manufactured includes: actual manufacturing overhead, but not applied manufacturing overhead. applied direct and indirect materials, but not actual direct and indirect materials. actual direct and indirect materials, but not applied direct and indirect materials. applied manufacturing overhead, but not actual manufacturing overhead.

applied manufacturing overhead, but not actual manufacturing overhead.

Overapplied or underapplied overhead is computed: at the beginning of the period and then again at the end of the period. all throughout the period. at the end of the period. at the beginning of the period.

at the end of the period.

Which of the following statements is false when considering cost behavior within the relevant range? A fixed cost remains constant, in total, regardless of changes in the level of activity. A variable cost is constant if expressed on a per unit basis. The average fixed cost per unit varies inversely with changes in the level of activity. A variable cost remains constant, in total, as the activity level changes.

A variable cost remains constant, in total, as the activity level changes.

Which of the following statements is false regarding the Manufacturing Overhead T-account? It accumulates actual variable and fixed overhead expenses. At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet. Actual overhead expenses are recorded on the debit side of the account. Applied overhead is recorded on the credit side of the account.

At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet.

Which of the following statements is true with respect to a budgeted balance sheet? Beginning retained earnings + net income + dividends = ending retained earnings. Beginning retained earnings − net income − dividends = ending retained earnings. Beginning retained earnings + net income − dividends = ending retained earnings. Beginning retained earnings − net income + dividends = ending retained earnings.

Beginning retained earnings + net income − dividends = ending retained earnings.

Overhead application refers to applying: Manufacturing overhead costs to jobs. Direct material costs to jobs. Direct labor costs to jobs. Nonmanufacturing overhead costs to jobs.

Manufacturing overhead costs to jobs.

Are fixed and variable costs distinguished in this income statement format? Traditional Contribution a. yes no b. no yes c. yes yes d. no no

b.

The contribution margin ratio equals: Contribution margin ÷ variable expenses. Contribution margin ÷ sales. Sales ÷ contribution margin. Sales ÷ variable expenses.

Contribution margin ÷ sales.

Which of the following is not one of the three inventory accounts reported on the balance sheet? Finished goods Work in process Raw materials Cost of goods sold

Cost of goods sold

Which of the following are manufacturing costs? Manufacturing Overhead, Direct Labor, Advertising costs Direct Materials, Direct Labor, Manufacturing Overhead and Selling Costs Direct Materials, Direct Labor, Advertising costs Direct Labor, Direct Materials, Administrative costs Direct Materials, Direct Labor, Manufacturing Overhead

Direct Materials, Direct Labor, Manufacturing Overhead

Which of the following statements is false with respect to the selling and administrative expense budget? It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. It includes depreciation expense even though it is not a cash flow. It impacts the budgeted cost of goods sold reported on the income statement. It includes estimated variable and fixed selling and administrative expenses.

It impacts the budgeted cost of goods sold reported on the income statement.

Which of the following statements is true with respect to the labor rate variance? It is computed using the standard hours allowed for the actual output. It is computed using the actual hours worked. It is computed based solely on the standard hourly rate. It is computed using the difference between the actual hours worked and the standard hours allowed for the actual output.

It is computed using the actual hours worked.

Which of the following statements is true with respect to the materials price variance? It is computed using the standard quantity of materials purchased. It is computed using the actual quantity of materials used in production. It is computed using the actual quantity of materials purchased. It is computed using the standard quantity of materials used in production.

It is computed using the actual quantity of materials purchased.

Which of the following statements is true? Planning is usually done independent from the budgeting process. Planning involves gathering feedback that enables organizations to make modifications as circumstances change. Planning involves developing goals and preparing various budgets to achieve those goals. The definition of planning states that managers should be held responsible for those items—and only those items—that the manager can actually control.

Planning involves developing goals and preparing various budgets to achieve those goals.

Which of the following statements is false? The break-even point is the level of sales at which the total contribution margin equals the total fixed costs. Operating leverage is a measure of how sensitive net operating income is to a given percentage change in dollar sales. Margin of safety is the excess of budgeted or actual dollar sales over the break-even dollar sales. Sales mix refers to the relative selling prices of a company's various products.

Sales mix refers to the relative selling prices of a company's various products.

A cost that has already been incurred and cannot be changed now or in the future is a ____? Incremental cost Sunk cost Opportunity cost Fixed cost

Sunk cost

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? The cost of the glue in a chair. The workman's compensation insurance of the supervisor who oversees production. The amount paid to the individual who stains a chair. The factory utilities of the department in which production takes place.

The amount paid to the individual who stains a chair.

Which of the following is not an underlying assumption of cost-volume-profit analysis? In multiproduct companies, the mix of products sold remains constant. The average fixed cost per unit increases as the level of activity increases. Selling price is constant. Variable cost per unit is constant within the relevant range.

The average fixed cost per unit increases as the level of activity increases.

A direct cost is a cost that can be easily and conveniently traced to a specified cost object.

True

Activity Based Costing is a method that assigns all manufacturing overhead costs to products based on the activities performed to make those products.

True

Common fixed expenses should not be allocated to business segments when performing break-even calculations and making decisions.

True

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year? Contribution Margin Ratio Break-even Point a. Increase decrease b. decrease decrease c. increase no effect d. decrease no effect

a.

All the XYZ company workers earn the same rate per hour. Poorly trained workers could have an unfavorable effect on which of the following variances? Labor Rate Variance Materials Quantity Variance a. yes yes b. yes no c. no yes d. no no

c.

A predetermined overhead rate includes: the fixed portion of the actual manufacturing overhead cost in the denominator. the fixed portion of the estimated manufacturing overhead cost in the denominator. the estimated total amount of the allocation base in the denominator. the actual total amount of the allocation base in the denominator.

the estimated total amount of the allocation base in the denominator.

Assuming that direct labor is a variable cost, the primary difference between the absorption and variable costing is that: variable costing treats only direct materials, direct labor, the variable portion of manufacturing overhead, and the variable portion of selling and administrative expenses as product cost while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs. variable costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs while absorption costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs. variable costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs. variable costing treats only direct materials and direct labor as product cost while absorption costing treats direct materials, direct labor, and the variable portion of manufacturing overhead as product costs.

variable costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs.