ACCT 2301 Final Exam Concepts

all of the following are product mix considerations except

"which product has the most sunk costs?"

Which of the following is a sunk cost? A.) Purchase price of vehicle to be traded in B.) Trade in value of old vehicle C.) Purchase price of new vehicle D.) Operating costs for a new vehicle

A.) Purchase price of vehicle to be traded in

Which of the following does activity-based costing consider to be the fundamental cost object? A.) Activities B.) Direct labor hours C.) Finished goods D.) Direct materials

Activities

In which of the following company types does the manager use a capital expenditures budget? A.) Manufacturing B.) Service C.) Merchandising D.) All of the above

All of the above

in which of the following company does a manager use an operating expenses budget? A.) Manufacturing B.) Merchandising C.) Service D.) all of the above

All of the above

With regard to flexible budgets, which of the following statements is true? A.) They are designed to estimate revenues only B.) Managers use them to help plan for uncertainties C.) They are prepared by the accounting department on an annual basis D.) They are prepared for one level of sales volume

B.) Managers use the to plan for uncertainties

If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant, which of the following statements is true? A.) Breakeven point in units remains the same. B.) Breakeven point in units decreases. C.) Contribution margin ratio increases. D.) Breakeven point in units increases.

Breakeven point in units increases.

Which of the following is NOT a benefit of budgeting? A.) Budgeting forces managers to consider relations across the value chain B.) budgeting provides a benchmark to help managers evaluate performance C.) Budgeting forces managers to work in a silo, promoting only the goals of their department D.) Budgeting provides a benchmark that motivates their empoloyees

Budgeting forces managers to work in a silo, promoting only the goals of their department

To find the number of units that need to be sold in order to breakeven or generate a target profit, the formula used is

(fixed expenses + operating income) / contribution margin per unit

Which of the following is used as the equation's numerator when computing the accounting rate of return for a capital asset? A.) Average amount invested in the aset B.) Average net cash flows from the asset C.) Average annual operating income from the asset D.) Total amount invested in the asset

C.) Average annual operating income from the asset

Which of the following statements is false about financial accounting? A.) Financial accounting provides external reports B.) Financial accounting helps investors make decisions C.) Financial accounting provides sufficient information for managers to effectively plan and control operations D.) Financial accounting reports help creditors make decisions

C.) Financial accounting provides sufficient information for managers to effectively plan and control operations

the format of the income statement most useful in decision making is which of the following?

Contribution margin format

Which statement is true? A.) Management uses financial information to plan internal operations. B.) Management uses financial information to analyze costs. C.)Management uses reports created for internal parties. D.) All of the above are true.

D.) All of the above are true.

Methods for a company to meet target total cost and the profit goals if the current product is higher than the target cost include which of the following? A.) cut fixed costs B.) Accept a lower profit C.) Cut fixed costs, cut variable costs D.) Any of the above

D.) Any of the above

As managers use less and different types of direct materials, which of the following standards do managers focus on to enhance sustainability in the workplace? A.) Quantity/Efficiency standard B.) Price standard C.) Flexible standard D.) Both A and B

D.) Both A and B

Overseeing the day-to-day operations of a company is an example of which of the following management functions?

Directing

Which of the following is used as the equation's denominator when computing the payback period for a capital asset with equal annual net cash inflows?

Expected annual net cash inflow

Using account analysis, what type of cost is the monthly cost of a storage locker used for holding old records?

Fixed

what is not considered a direct cost of a mattress

GLUE

All else being equal, a company would choose to invest in a capital asset if which of the following is true? A.) if the average amount invested is equal to the net cash inflows B.) if the expected accounting rate of return is greater than the required rate of return C.) If the expected accounting rate of return is less than the required rate of return D.) If the payback period equals the amount invested

If the expected accounting rate of return is greater than the required rate of return

Which of the following statements is true? A.) Management accounting focuses on relevant data. B.) Financial accounting focuses on future data C.) Managerial accounting uses the cash basis for recording transactions D.) Management accounting focuses on relevant data

Management accounting focuses on relevant data

In which of the following company types does the manager use a "cost of goods sold, inventory, and purchases" budget? A.) Manufacturing B.) Service C.) Merchandising D.) All of the above

Merchandising

What will happen to the net present value (NPV) of a project if the discount rate is increased from 8% to 10%?

NPV will always decrease.

what will happen to the NPV of a project if the discount rate is increased from 8% to 10%

NVP will always decrease

Which of the following is most likely to be the cost driver for the packaging and shipping activity? A.) Number of orders shipped B.) Number of units produced C.) Number of setups D.) Hours of testing

Number of orders shipped

The income statements for both a merchandiser and manufacturer would indicate which of the following? A.) Operating expenses B.) Direct Labor Incurred C.) Cost of goods manufactured D.) Direct materials used

Operating expenses

When management analyzes whether to move production to another country or to keep the production located where it currently is, which of the following management responsibilities is being performed? A.) Controlling B.) Planning C.) Adjusting D.) Directing

Planning

On a regression analysis output generated with Excel, a regression equation's "goodness of fit" is represented by the

R-square.

If selling and administrative expenses decrease while other expenses remain constant, what will happen to return on investment (ROI)?

ROI will increase

The following are all methods of analyzing capital investments except A.) Net Present Value (NPV). B.) Payback Period. C.) Regression Analysis. D.) Accounting Rate of Return (ARR).

Regression Analysis.

A performance report of a ___ will only include revenues generated by the center. A.) Investment center B.) Cost center C.) Revenue center D.) All of the above

Revenue center

How would you describe the standard hours allowed?

Standard Hours Allowed is the number of hours it should have taken given the standard hours and the actual number of units produced

On a cost of quality report, which of the following cost items should be classified as a prevention cost

Technical support provided to suppliers

if the fixed costs increase while the sales price per unit and variable costs per unit remain constant, which is true?

The contribution margin stays the same and the breakeven point increases

All else being equal, when using the payback period method to compare the capital investment between several options, a company would choose to invest in the capital asset if which of the following is true? A.) If the payback period equals the amount invested. B.) The payback period is the longest of all of the options. C.) The payback period is the shortest of all of the options. D.) If the expected accounting rate of return is less than the required rate of return.

The payback period is the shortest of all of the options.

The present value of an investment is affected by all of the following except? A.) The number of time periods (length of the investment) B.) The interest rate C.) The value of a past investment D.) The type of investment (annuity versus lump sum)

The value of a past investment

In what ways are the Net Present Value and Internal Rate of Return methods of capital budgeting alike?

They both factor in the time value of money

a measure of profitability computed by dividing the average annual operating income by the amount of the investment is best described by which of the following terms

accounting rate of return

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to complie indirect costs of goods and services is

activity-based costing

Manufacturing overhead is overallocated if the amount

allocated during the period is greater than the actual amount incurred

manufacturing overhead is overallocated if the amount

allocated during the period is greater than the actual amount incurred

which of the following is used as the equations numerator when computing the payback period for a capital asset with equal annual net cash inflows

amount invested

The formula for calculating the accounting rate of return for a capital asset is

average annual operating income from asset/amount invested in asset.

Machine set-up would most likely be classified as a ____ cost.

batch-level

Managers should consider which of the following when predicting costs at different volumes? A.) the relevant range of the cost B.) the type of cost behavior C.) both of the above should be considered D.) neither of the above should be considered

both of the above should be considered

Fixed costs divided by weighted average contribution margin per unit equals

breakeven sales in units.

which of the following is an example of a financial budget?

budgeted balance sheet

The term ________ is described as a "formal means of analyzing long-range investment alternatives."

capital budgeting

the term ___ is described as a "formal means of analyzing long-range investment alternatives"

capital budgeting

The process of choosing among different alternative investments due to limited resources is referred to as

capital rationing

The process of choosing among different alternative investments due to limited resources is referred to as

capital rationing.

the factor that restricts production or sale of a product is which of the following

constraint

the contribution margin ratio explains the percentage of each sales dollar that

contributes towards generating a profit

The security department that is evaluated on its ability to control costs when the company compares actual costs to budgeted costs at a department store chain may be classified as a

cost center

if manufacturing overhead has been underallocated during the period and most of the jobs produced have been sold, then

cost of goods sold on the income statement should be increased

the primary goal of financial accounting is to provide information to

creditors, potential investors, government regulators

a product support hotline would be considered

customer service

if a company were to increase its appraisal costs by inspecting more units as the units are in production, the companys external failure cost would most likely

decrease

all of the following are functions of the budget committee except

determine the bonuses the organization awards to employees that achieve the target budget

overseeing day to day operations of a company is an example of which management function?

directing

contribution margin ratio is computed by

dividing contribution margin by sales revenue

allocating manufacturing overhead cost is done

during the period

Manufacturers follow four steps to implement a manufacturing overhead system. What is the first step?

estimate total manufacturing overhead costs for the upcoming year.

when deciding whether or not to adopt standard costs and perform variance analysis management should

examine costs and benefits of a standard costing system

when deciding whether or not to adopt standard costs and perform variance analysis management should do what?

examine the costs and benefit of a standard costing system

the representation for fixed cost per unit of activity is

f divided by x

using factory utilitites would most likely be classified as a ___ cost

facility level

which of the following budgets project cash inflows cash outflows and the budgeted balance sheet

financial budget

how do fixed costs react in total and on a per unit basis

fixed costs remain constant in total and decrease per unit as production increases

the ___ is the optimum budget to managers the plan revenues and expenses at different sales volumes

flexible budget

which of the following would not use process costing

furniture maker

The type of standard that expects no waste and no inefficiencies in the production process is referred to as a(n)

ideal standard.

all else being equal a company would choose to invest in a capital asset in which of the following is true

if the expected accounting rate of return is greater than the required rate of return

Classify each of the following costs as direct or indirect as it relates to one Best Buy retail location: CFO salary, that Best Buy's sales associates, that Best Buy's property insurance, and the legal department for Best Buy.

indirect, direct, direct, and indirect

the rate of return that makes the NVP of a capital project equal to zero is best described by which of the following items

internal rate of return

If the accounting rate of return exceeds the required accounting rate of return,

invest in the capital asset.

the time value of money is explained by

invested money earns income over time

which of the following can be used in conjunction with activity based costing?

job costing and process costing

which product costing system would better account for a unique product

job costing system

an unfavorable variance causes operating income to be ___ the budgeted operating income

less than

with ___ managers look at the size of the variances between actual results and budgeted amounts to determine which variances a manager should investigate

management by exception

a companys budget information is most likely to be used by which of the following groups

managers

which of the following is a potential disadvantage of participative budgeting?

managers may build slack into the budget

All of the following budgets are prepared by merchandising companies except A.) budgeted income statements B.) capital expenditures C.) manufacturing overhead D.) cash

manufacturing overhead

all of the following budgets are prepared by merchandising companies except A.) capital expenditures B.) budgeted income statement C.) cash D.) manufacturing overhead

manufacturing overhead

Payroll-related costs for factory employees who do not work directly on the product are considered

manufacturing overhead.

Total predicted sales (in units) minus total breakeven sales in units divided by total predicted sales (in units) yields

margin of safety percentage

using account analysis what type of cost is a community activity pass that costs plus $15 per event

mixed

An unfavorable volume variance for variable expenses would indicate that:

more units were actually sold than the company had originally budgeted to sell.

The ___ capital budgeting methods are based on cash flows, profitability, and the time value of money

net present value and internal rate of return

period costs are generally also known as

operating expenses

the difference between sales dollars and total costs after breakeven point on a CVP graph is the representation of

operating income

manufacturers consider selling and administrative costs to be

period costs

when management analyzes whether to move production to another country or to keep the prod. based where it currently is, what is being performed?

planning

Budgets are a way for managers to communicate their

plans

after a company invests in capital assets, it will perform a ___ in order to compare the actual to the projected net cash inflows

post audit

the cost of testing incoming raw materials from a supplier would be classified as a ___ cost

prevention

compound interest means that interest is calculated on

principal and all interest earned to date

sales above the breakeven point indicate a ___ whereas sales below the breakeven point indicate a ___.

profit; loss

the assignment of direct and indirect materials to a cost object reduces the

raw materials inventory account

Target total cost is defined as

revenue at market price less desired profit.

the performance evaluation of a profit center is typically based on its

segment margin

The performance evaluation of a profit center is typically based on its

segment margin.

An accounting firm would be classified as a

service company.

a ___ is a carefully predetermined cost that is usually expressed on a per unit basis

standard cost

a ___is a carfully predetermined cost that is usually expressed on a per unit basis

standard cost

which of the following cost behaviors cannot be accurately represented by a single straight line

step costs

which of the following is a fixed cost

straight-line depreciation expense

gross profit is calculated by

subtracting cost of goods sold from sales

by multiplying the operating leverage factor by the anticipated percentage change in volume one can find

the anticipated change in operating income

if a company's overhead equation is y = 8.80x+ 120020 the x is?

the cost driver in units

how is the fixed overhead budget variance calculated

the difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs

How is the variable manufacturing overhead efficiency variance calculated

the difference between the standard hours allowed and the actual hours used multplied by the standard overhead rate

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

the extend to which the activities are used AND the types of activities used by the product

If manufacturing overhead has been overallocated during the period, then

the jobs produced during the period have been overcosted.

all of the following factors affect the amount a customer is willing to pay for a product except

the selling company's costs

a drug store decided to discontinue its health and beauty section of products because it has been unprofitable. this strategy could backfire because

the stores sales may suffer by not having this convenience category of products

Big-box retailers such as Lowe's are considered price takers because

their products are not unique

in what ways are NPV and internal rate of return methods of capital budgeting alike

they both factor in the time value of money

disadvantages of using standard costs and variances include all of the following except

those manufacturing costs that enter work in process inventory are recorded at standard cost rather than actual cost

The term ________ is best described as a relationship among principal, interest rate, and time.

time value of money

the term ___ is best described as a relationship among principal interest rate and time

time value of money

the term ___ is best described as a relationship among principal, interest rate, and time

time value of money

Fixed costs that continue to exist even after a product line is discontinued are called

unavoidable fixed costs

A ____ cost is one whose total amount changes in direct proportion to a change in volume?

variable

What term represents the total variable cost component in the equation: y = vx + f?

vx

Total mixed cost is represented by which of the following equations

y = vx + f