ACCT 520 - Exam 1 pt. 1
The following information appeared in the accounting records of a retail store for the previous year: Sales$300,000 Purchases140,000 Inventories: -January 170,000 -December 31100,000 Sales commissions 10,000 The gross margin was A.$190,000 B.$180,000 C.$160,000 D.$150,000
A.$190,000
The following information pertains to the manufacturing activities of Griss Co. during the month just ended: Beginning work-in-process (BWIP)$12,000 Ending work-in-process (EWIP)10,000 Cost of goods manufactured (COGM)97,000 Direct materials issued to production20,000 Factory overhead is assigned at 150% of direct labor cost. What was the direct labor cost incurred? A.$30,000 B.$30,800 C.$45,000 D.$50,000
A.$30,000
Madtack Company's prime cost for November is A.$370,000 B.$363,000 C.$170,000 D.$368,000
A.$370,000
Which of the following are usually considered period costs? A.A. B.B. C.C. D.D.
A.A. (sales materials, advertising costs, sales commissions, admin supplies exp, admin labor, depr of admin building, research costs of customer demographics)
The variable costs of support departments most likely should be allocated to production departments by using A.Actual short-run output based on predetermined rates. B.Actual short-run output based on actual rates. C.The support department's expected costs of long-run capacity. D.The support department's actual costs based on actual use of services.
A.Actual short-run output based on predetermined rates.
Period costs A.Are always expensed in the same period in which they are incurred. B.Vary from one period to the next. C.Remain unchanged over a given period of time. D.Are associated with the periodic inventory method.
A.Are always expensed in the same period in which they are incurred.
Costs that increase as the volume of activity decreases within the relevant range are A.Average costs per unit. B.Average variable costs per unit. C.Total fixed costs. D.Total variable costs.
A.Average costs per unit.
According to the IMA Statement of Ethical Professional Practice, a member has a responsibility to recognize and help manage risk. Under which standard of ethical conduct would this responsibility be included? A.Competence. B.Confidentiality. C.Integrity. D.Credibility.
A.Competence.
In accordance with the IMA Statement of Ethical Professional Practice, a member who fails to perform professional duties in accordance with relevant standards is acting contrary to which one of the following standards? A.Competence. B.Confidentiality. C.Integrity. D.Credibility.
A.Competence.
The salary of the line supervisor in the assembly division of an automobile company should be included in A.Conversion costs. B.Opportunity costs. C.General and administrative costs. D.Prime costs.
A.Conversion costs.
A company will produce 20,000 units of product A at a unit variable cost of $7 and a unit selling price of $13. Fixed costs are $40,000. However, the company will still have 40% idle capacity. The company can use this idle capacity to produce 6,000 units of a different product B, which it can sell for $7 per unit. The incremental variable cost of producing a unit of B is $6. Present fixed costs that will be allocated to B amount to $10,000. To decide whether to produce B, the company should use A.Differential cost analysis. B.Information economics. C.Regression analysis. D.Markov chain analysis.
A.Differential cost analysis.
The advertising and promotion costs for the product selected by Huron will be A.Discretionary costs. B.Opportunity costs. C.Prime costs. D.Incremental costs.
A.Discretionary costs.
Cost and managerial accounting systems are goods in the economic sense and, as such, their benefits must exceed their costs. When managerial accounting systems change, the cost that is frequently ignored is the cost of A.Educating users. B.Gathering and analyzing data. C.Training accounting staff. D.Preparing reports.
A.Educating users.
A computer company charges indirect manufacturing costs to a project at a fixed percentage of a cost pool. This project is covered by a cost-plus government contract. Which of the following is an appropriate guideline for determining how costs are assigned to the pool? A.Establish separate pools for variable and fixed costs. B.Assign prime costs and variable administrative costs to the same pool. C.Establish a separate pool for each assembly line worker to account for wages. D.Assign all manufacturing costs related to the project to the same pool.
A.Establish separate pools for variable and fixed costs.
The treasury function usually is not responsible for A.Financial reporting. B.Short-term financing. C.Cash custody and banking. D.Credit extension and collection of bad debts.
A.Financial reporting.
The primary reason for adopting total quality management is to achieve A.Greater customer satisfaction. B.Reduced delivery time. C.Reduced delivery charges. D.Greater employee participation.
A.Greater customer satisfaction.
Quo Co. rented a building to Hava Fast Food. Each month Quo receives a fixed rental amount plus a variable rental amount based on Hava's sales for that month. As sales increase, so does the variable rental amount but at a reduced rate. Which of the following curves reflects the monthly rentals under the agreement? A.I B.II C.III D.IV
A.I
Which one of the following costs would be relevant in short-term decision making? A.Incremental fixed costs. B.All costs of inventory. C.Total variable costs that are the same in the considered alternatives. D.Costs of fixed assets to be used in the alternatives.
A.Incremental fixed costs.
For product costing purposes, the cost of production overtime caused by equipment failure that represents idle time plus the overtime premium should be classified as a(n) A.Indirect cost. B.Direct cost. C.Controllable cost. D.Discretionary cost.
A.Indirect cost.
What is the nature of work-in-process? A.Inventory. B.Cost of goods sold. C.Productivity. D.Nominal.
A.Inventory.
Life-cycle costing A.Is sometimes used as a basis for cost planning and product pricing. B.Includes only manufacturing costs incurred over the life of the product. C.Includes only manufacturing cost, selling expense, and distribution expense. D.Emphasizes cost savings opportunities during the manufacturing cycle.
A.Is sometimes used as a basis for cost planning and product pricing.
The wages of the factory janitorial staff should be classified as A.Manufacturing overhead cost. B.Direct labor cost. C.Period cost. D.Prime cost.
A.Manufacturing overhead cost.
The IMA Statement of Ethical Professional Practice includes an integrity standard. It requires an IMA member to A.Refrain from conduct that prejudices the ability to perform duties ethically. B.Report any relevant information that could influence users of financial statements. C.Disclose confidential information when authorized by his or her firm or required under the law. D.Refuse gifts from anyone.
A.Refrain from conduct that prejudices the ability to perform duties ethically.
One of the purposes of standard costs is to A.Simplify costing procedures and expedite cost reports. B.Replace budgets and budgeting. C.Serve as a basis for product costing for external reporting purposes. D.Eliminate accounting for under- or overapplied manufacturing overhead at the end of the period.
A.Simplify costing procedures and expedite cost reports.
Incremental cost is A.The difference in total costs that results from selecting one choice instead of another. B.The profit forgone by selecting one choice instead of another. C.A cost that continues to be incurred in the absence of activity. D.A cost common to all choices in question and not clearly or feasibly allocable to any of them.
A.The difference in total costs that results from selecting one choice instead of another.
Which one of the following costs is classified as a period cost? A.The wages of the workers on the shipping docks who load completed products onto outgoing trucks. B.The wages of a worker paid for idle time resulting from a machine breakdown in the molding operation. C.The payments for employee (fringe) benefits paid on behalf of the workers in the manufacturing plant. D.The wages paid to workers for rework on defective products.
A.The wages of the workers on the shipping docks who load completed products onto outgoing trucks.
The following data were collected from the records of the shipping department of a company: The cost of shipping supplies is most likely to be a A.Variable cost. B.Fixed cost. C.Step cost. D.Semi-fixed cost.
A.Variable cost.
Following are Mill Co.'s production costs for the month just ended: Direct materials$100,000 Direct labor90,000 Factory overhead4,000 What amount of costs should be traced to specific products in the production process? A.$194,000 B.$190,000 C.$100,000 D.$90,000
B.$190,000
Glen Company has the following data pertaining to the year ended December 31: Purchases$450,000 Beginning inventory170,000 Ending inventory210,000 Freight-in50,000 Freight-out75,000 How much is the cost of goods sold for the year? A.$385,000 B.$460,000 C.$485,000 D.$535,000
B.$460,000
The following cost data were taken from the records of a manufacturing company: Depreciation on factory equipment$ 1,000 Depreciation on sales office500 Advertising7,000 Freight-out (shipping)3,000 Wages of production workers28,000 Raw materials used47,000 Sales salaries and commissions10,000 Factory rent2,000 Factory insurance500 Materials handling1,500 Administrative salaries2,000 Based upon this information, the manufacturing cost incurred during the year was A.$78,500 B.$80,000 C.$80,500 D.$83,000
B.$80,000
An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is A.Direct costing. B.Activity-based costing. C.Cycle-time costing. D.Variable costing.
B.Activity-based costing.
Unit fixed costs A.Are constant per unit regardless of units produced or sold. B.Are determined by dividing total fixed costs by a denominator such as production or sales volume. C.Vary directly with the activity level when stated on a per-unit basis. D.Include both fixed and variable elements.
B.Are determined by dividing total fixed costs by a denominator such as production or sales volume.
Controllable costs A.Arise from periodic appropriation decisions and have no well-specified function relating inputs to outputs. B.Are primarily subject to the influence of a given manager of a given responsibility center for a given time span. C.Arise from having property, plant, and equipment, and a functioning organization. D.Result specifically from a clear-cut measured relationship between inputs and outputs.
B.Are primarily subject to the influence of a given manager of a given responsibility center for a given time span.
Integrity is an ethical requirement for all IMA members. One aspect of integrity requires A.Performance of professional duties in accordance with relevant laws. B.Avoidance of apparent conflicts of interest. C.Refraining from using confidential information for unethical or illegal advantage. D.Maintenance of an appropriate level of professional leadership and expertise.
B.Avoidance of apparent conflicts of interest.
The costs included in Huron's fixed overhead are A.Joint costs. B.Committed costs. C.Opportunity costs. D.Prime costs.
B.Committed costs.
For a retailer, the income statement includes cost of goods sold. Cost of goods sold is, in effect, purchases adjusted for changes in inventory. For a manufacturer, purchases is replaced by A.Inventory. B.Cost of goods manufactured. C.Finished goods. D.Cost of goods sold.
B.Cost of goods manufactured.
The allocation of general overhead costs to operating departments can be least justified in determining A.Income of a product or functional unit. B.Costs for short-term decisions. C.Costs of products sold and remaining in inventory. D.Costs for the federal government's cost-plus contracts.
B.Costs for short-term decisions.
Conversion cost pricing A.Places minimal emphasis on the cost of materials used in manufacturing a product. B.Could be used when the customer furnishes the material used in manufacturing a product. C.Places heavy emphasis on indirect costs and disregards consideration of direct costs. D.Places heavy emphasis on direct costs and disregards consideration of indirect costs.
B.Could be used when the customer furnishes the material used in manufacturing a product.
Allocation of support department costs to the production departments is necessary to A.Control costs. B.Determine overhead rates. C.Maximize efficiency. D.Measure use of plant capacity.
B.Determine overhead rates.
Conversion costs do not include A.Depreciation. B.Direct materials. C.Indirect labor. D.Indirect materials.
B.Direct materials.
If an IMA member has a problem in identifying unethical behavior or resolving an ethical conflict, the first action (s)he should normally take is to A.Consult the board of directors. B.Discuss the problem with his or her immediate superior. C.Notify the appropriate law enforcement agency. D.Resign from the company.
B.Discuss the problem with his or her immediate superior.
The IMA Statement of Ethical Professional Practice includes a competence standard. It requires an IMA member to A.Report information, whether favorable or unfavorable. B.Enhance his or her skills. C.Call the IMA's helpline to ask about application of the Statement to an ethical issue. D.Discuss, with subordinates, their responsibilities regarding the disclosure and use of confidential information about the firm.
B.Enhance his or her skills.
The difference between the $99.98 suggested selling price for Huron's Product B and its total unit cost of $88.00 represents the unit's A.Contribution margin ratio. B.Gross profit. C.Contribution. D.Gross profit margin ratio.
B.Gross profit.
Companies characterized by the production of heterogeneous products will most likely use which of the following methods for the purpose of averaging costs and providing management with unit cost data? A.Process costing. B.Job-order costing. C.Direct costing. D.Absorption costing.
B.Job-order costing.
Costs are allocated to cost objects in many ways and for many reasons. Which one of the following is a purpose of cost allocation? A.Evaluating revenue center performance. B.Measuring income and assets for external reporting. C.Budgeting cash and controlling expenditures. D.Aiding in variable costing for internal reporting.
B.Measuring income and assets for external reporting.
Which of the following would be a reasonable basis for allocating the materials handling costs to the units produced in an activity-based costing system? A.Number of production runs per year. B.Number of components per completed unit. C.Amount of time required to produce one unit. D.Amount of overhead applied to each completed unit.
B.Number of components per completed unit.
Management accounting differs from financial accounting in that financial accounting is A.More oriented toward the future. B.Primarily concerned with external financial reporting. C.Primarily concerned with non-quantitative information. D.Heavily involved with decision analysis and implementation of decisions.
B.Primarily concerned with external financial reporting.
Internal auditors must often distinguish between product costs and period costs. Product costs are properly assigned to inventory when incurred. Period costs are always expensed in the same period in which they are incurred. Which of the following items is a product cost for a manufacturing company? A.Insurance on the corporate headquarters building. B.Property taxes on a factory. C.Depreciation on salespersons' automobiles. D.Salary of a sales manager.
B.Property taxes on a factory.
The step-down method of support department cost allocation often begins with allocation of the costs of the support department that A.Provides the greatest percentage of its support to the production departments. B.Provides the greatest percentage of its support to other support departments. C.Provides the greatest total output of support. D.Has the highest total costs among the support departments.
B.Provides the greatest percentage of its support to other support departments.
Research and development costs for Huron's two new products are A.Conversion costs. B.Sunk costs. C.Relevant costs. D.Avoidable costs.
B.Sunk costs.
Which is the best description of traditional cost accounting? A.The entire general ledger and subsidiary ledgers and related journals, etc., of a manufacturer. B.The general ledger and subsidiary accounts and related records, etc., used to accumulate the costs of goods or services provided by an entity. C.The accounts used to determine the costs of goods sold by an entity. D.All of the journals, ledgers, records, and financial statements used by an entity to record, classify, summarize, and report economic activity.
B.The general ledger and subsidiary accounts and related records, etc., used to accumulate the costs of goods or services provided by an entity.
Which one of the following is true regarding a relevant range? A.Total variable costs will not change. B.Total fixed costs will not change. C.Actual fixed costs usually fall outside the relevant range. D.The relevant range cannot be changed after being established.
B.Total fixed costs will not change.
The difference between variable costs and fixed costs is A.Variable costs per unit fluctuate and fixed costs per unit remain constant. B.Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable. C.Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change. D.Variable costs per unit change in varying increments, while fixed costs per unit change in equal increments.
B.Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable.
The allocation of costs to particular cost objects allows a firm to analyze all of the following except A.Whether a particular department should be expanded. B.Why the sales of a particular product have increased. C.Whether a product line should be discontinued. D.Why a particular product should be purchased rather than manufactured in-house.
B.Why the sales of a particular product have increased.
Indirect materials are a Conversion Cost Manufacturing Cost Prime Cost A.YesYesYes B.YesYesNo C.NoYesYes D.NoNoNo
B.YesYesNo
A manufacturing firm planned to manufacture and sell 100,000 units of product during the year at a variable cost per unit of $4.00 and a fixed cost per unit of $2.00. The firm fell short of its goal and only manufactured 80,000 units at a total incurred cost of $515,000. The firm's manufacturing cost variance was A.$85,000 favorable. B.$35,000 unfavorable. C.$5,000 favorable. D.$5,000 unfavorable.
C.$5,000 favorable.
Madtack Company's net charge to overhead control for the month of November is A.$8,000 debit, overapplied. B.$8,000 debit, underapplied. C.$8,000 credit, overapplied. D.$8,000 credit, underapplied.
C.$8,000 credit, overapplied.
Which of the following statements best describes cost allocation? A.A company can maximize or minimize total company income by selecting different bases on which to allocate indirect costs. B.A company should select an allocation base to raise or lower reported income on given products. C.A company's total income will remain unchanged no matter how indirect costs are allocated. D.A company should ordinarily allocate indirect costs randomly or based on an ability-to-bear criterion.
C.A company's total income will remain unchanged no matter how indirect costs are allocated.
When the number of units manufactured increases, the most significant change in average unit cost will be reflected as A.An increase in the nonvariable element. B.A decrease in the variable element. C.A decrease in the nonvariable element. D.An increase in the semivariable element.
C.A decrease in the nonvariable element.
A fixed cost that would be considered a direct cost isA. A cost accountant's salary when the cost object is a unit of product. B.The rental cost of a warehouse to store inventory when the cost object is the Purchasing Department. C.A production supervisor's salary when the cost object is the Production Department. D.Board of directors' fees when the cost object is the Marketing Department.
C.A production supervisor's salary when the cost object is the Production Department.
Which ethical standard is most clearly violated if an IMA member knows of information that could mislead users but does not report the deficiency? A.Competence. B.Legality. C.Credibility. D.Confidentiality.
C.Credibility.
Theoretically, cash discounts permitted on purchased raw materials should be A.Added to other income, whether taken or not. B.Added to other income, only if taken. C.Deducted from inventory, whether taken or not. D.Deducted from inventory, only if taken.
C.Deducted from inventory, whether taken or not.
Which overhead allocation methods do not charge support department costs to a support department after its costs have been allocated? A.Reciprocal and direct methods. B.Step-down and reciprocal methods. C.Direct and step-down methods. D.Simultaneous solution and reciprocal methods.
C.Direct and step-down methods
A company has always used the full cost of its product as the starting point in the pricing of that product. The price set by competitors and the demand for the company's only product, the Widget, have never been predictable. Lately, the company's market share has been increasing as it continues to lower its price, but total revenues have not changed significantly relative to the gain in sales volume. The likely reason for the stability of total revenues is the A.Variable cost component of the full cost. B.Unstable contribution margin. C.Fixed cost component of the full cost. D.Drop in the incremental cost of the units in the increased sales volume.
C.Fixed cost component of the full cost.
Just-in-time manufacturing practices are based in part on the belief that A.High inventory levels provide greater flexibility in production scheduling. B.Attempting to reduce inventory to a consistently low level can lead to "panic" situations. C.Goods should be "pulled" through the production process, not "pushed." D.Beefed-up internal control in the central warehouse can greatly enhance productivity in the production areas.
C.Goods should be "pulled" through the production process, not "pushed."
The controller is responsible for directing the budgeting process. In this role, the controller has significant influence with executive management as individual department budgets are modified and approved. For the current year, the controller was instrumental in the approval of a particular line manager's budget without modification, even though significant reductions were made to the budgets submitted by other line managers. As a token of appreciation, the line manager in question has given the controller a gift certificate for a popular local restaurant. In considering whether or not to accept the certificate, the controller should refer to which section of IMA Statement of Ethical Professional Practice? A.Competence. B.Confidentiality. C.Integrity. D.Credibility.
C.Integrity.
The perpetual inventory method A.Includes only variable manufacturing costs in the product cost calculation. B.Requires a physical inventory count to determine amounts of inventories used or remaining. C.Maintains a continuous record of transactions affecting the inventory balances. D.Includes manufacturing and nonmanufacturing costs in inventory.
C.Maintains a continuous record of transactions affecting the inventory balances.
The total overhead cost of $27.00 for Huron's Product B is a A.Carrying cost. B.Sunk cost. C.Mixed cost. D.Committed cost.
C.Mixed cost.
When a decision is made in an organization, it is selected from a group of alternative courses of action. The loss associated with choosing the alternative that does not maximize the benefit is the A.Net realizable value. B.Expected value. C.Opportunity cost. D.Incremental cost.
C.Opportunity cost.
For Huron's Product A, the unit costs for raw materials, machining, and assembly represent A.Conversion costs. B.Separable costs. C.Prime costs. D.Common costs.
C.Prime costs.
All costs related to the manufacturing function in a company are A.Prime costs. B.Direct costs. C.Product costs. D.Conversion costs.
C.Product costs.
The fixed costs of support departments should be allocated to production departments based on A.Actual short-run use based on predetermined rates. B.Actual short-run units based on actual rates. C.The support department's expected costs of long-run capacity. D.The support department's actual costs based on actual use of services.
C.The support department's expected costs of long-run capacity.
In allocating factory service department costs to producing departments, which one of the following items would most likely be used as an activity base? A.Units of product sold. B.Salary of service department employees. C.Units of electric power consumed. D.Direct materials usage.
C.Units of electric power consumed.
Depreciation based on the number of units produced is classified as what type of cost? A.Out-of-pocket. B.Marginal. C.Variable. D.Fixed.
C.Variable.
In a traditional manufacturing operation, direct costs would normally include A.Machine repairs in an automobile factory. B.Electricity in an electronics plant. C.Wood in a furniture factory. D.Commissions paid to sales personnel.
C.Wood in a furniture factory.
The fixed portion of the semivariable cost of electricity for a manufacturing plant is a Conversion Cost Product Cost A.NoNo B.NoYes C.YesYes D.YesNo
C.YesYes
If the company uses the direct method for allocating support department costs to production departments, what dollar amount of Power Department cost will be allocated to the Maintenance Department for September? A.$12,500 B.$15,625 C.$8,000 D.$0
D.$0
If the company uses the direct method for allocating support department costs to production departments, what dollar amount of Power Department cost will be allocated to the Machining Department for September? A.$37,500 B.$15,625 C.$39,062.50 D.$46,875
D.$46,875
Madtack Company's cost of goods transferred to finished goods inventory for November is A.$469,000 B.$477,000 C.$495,000 D.$484,000
D.$484,000
Madtack Company's total manufacturing cost for November is A.$502,000 B.$503,000 C.$363,000 D.$510,000
D.$510,000
West Co.'s manufacturing costs for the month just ended were as follows: Direct materials and direct labor$700,000 Other variable manufacturing costs100,000 Depreciation of factory building andmanufacturing equipment80,000 Other fixed manufacturing overhead18,000 What amount should be considered product cost for external reporting purposes? A.$700,000 B.$800,000 C.$880,000 D.$898,000
D.$898,000
Cost objects A.May be intermediate if the costs charged are later reallocated to another cost object. B.May be final if the cost object is the job, product, or process itself. C.Should be logically linked with the cost pool. D.All of the answers are correct.
D.All of the answers are correct.
Inventoriable costs A.Include only the prime costs of manufacturing a product. B.Include only the conversion costs of manufacturing a product. C.Are expensed when products become part of finished goods inventory. D.Are regarded as assets before the products are sold.
D.Are regarded as assets before the products are sold.
Which one of the following best describes direct labor? A.A prime cost. B.A period cost. C.A product cost. D.Both a product cost and a prime cost.
D.Both a product cost and a prime cost.
The professional certification program most suited for one interested in a career in management accounting leads to which of the following designations? A.CCP .B.CIA. C.CISA. D.CMA.
D.CMA.
IMA Statement of Ethical Professional Practice requires an IMA member to follow the established policies of the organization when faced with an ethical conflict. If these policies do not resolve the conflict, the member should A.Consult the board of directors immediately. B.Discuss the problem with the immediate superior if (s)he is involved in the conflict. C.Communicate the problem to authorities outside the organization. D.Contact the next higher managerial level if initial presentation to the immediate superior does not resolve the conflict.
D.Contact the next higher managerial level if initial presentation to the immediate superior does not resolve the conflict.
Depreciation based on the straight-line method is classified as what type of cost? A.Out-of-pocket. B.Marginal. C.Variable. D.Fixed.
D.Fixed.
Jago Co. has two products that use the same manufacturing facilities and cannot be subcontracted. Each product has sufficient orders to utilize the entire manufacturing capacity. For short-run profit maximization, Jago should manufacture the product with the A.Lower total manufacturing costs for the manufacturing capacity. B.Lower total variable manufacturing costs for the manufacturing capacity. C.Greater gross profit per hour of manufacturing capacity. D.Greater contribution margin per hour of manufacturing capacity.
D.Greater contribution margin per hour of manufacturing capacity.
Controllers ordinarily are not responsible for A.Preparation of tax returns. B.Reporting to government. C.Protection of assets. D.Investor relations.
D.Investor relations.
The relevance of a particular cost to a decision is determined by A.Riskiness of the decision. B.Number of decision variables. C.Amount of the cost. D.Potential effect on the decision.
D.Potential effect on the decision.
Which one of the following categories of cost is most likely not considered a component of fixed factory overhead? A.Rent. B.Property taxes. C.Depreciation. D.Power.
D.Power.
Companies characterized by the production of basically homogeneous products will most likely use which of the following methods for the purpose of averaging costs and providing management with unit-cost data? A.Job-order costing. B.Direct costing. C.Absorption costing. D.Process costing.
D.Process costing.
Which one of the following is least likely to be an objective of a cost accounting system? A.Product costing. B.Department efficiency. C.Inventory valuation. D.Sales commission determination.
D.Sales commission determination.
The method for allocating service department costs that best recognizes the mutual services rendered to other service departments is the A.Dual-rate allocation method. B.Direct allocation method. C.Step-down allocation method. D.Simultaneous-equations method.
D.Simultaneous-equations method.
Several methods are used to allocate support department costs to the production departments. The method that recognizes support provided by one department to another but does not allow for two-way allocation of costs among support departments is the A.Direct method. B.Linear method. C.Reciprocal method. D.Step-down method.
D.Step-down method.
Which professional organization represents management accountants in the United States? A.The American Institute of Certified Public Accountants (AICPA). B.The Institute of Internal Auditors (IIA). C.The Institute of Certified Management Accountants (ICMA). D.The Institute of Management Accountants (IMA).
D.The Institute of Management Accountants (IMA).
Management should implement a different or more expensive accounting system only when A.The cost of the system exceeds the benefits. B.Management thinks it appropriate. C.The board of directors dictates a change. D.The benefits of the system exceed the cost.
D.The benefits of the system exceed the cost.
The difference between the sales price and total variable costs is A.Gross operating profit. B.Net profit. C.The breakeven point. D.The contribution margin.
D.The contribution margin.
Assuming all manufacturing costs for finished goods are known, which of the following statements explains why the accountant's unit cost used in inventory valuation for the annual financial statements would differ from the economist's marginal unit cost? A.The company used LIFO or FIFO assumptions to compute inventory cost. B.Accounting information that is based on historical manufacturing costs ignores current cost trends. C.The economist's definition of marginal cost excludes a provision for profit per unit. D.The manufacturing cost per unit reflected in financial statements includes fixed costs.
D.The manufacturing cost per unit reflected in financial statements includes fixed costs.
Joint costs are costs of A.Products requiring the services of two or more processing departments. B.A product from a common process that has relatively little sales value and only a small effect on profit. C.Production that are combined in the overhead account. D.Two or more products produced from a common process.
D.Two or more products produced from a common process.