Final Exam MC (In-Class Quizzes) Conceptual

Place the four business functions in the order they appear along the value chain: Customer service Design Marketing Production A) Customer Service, Design, Production, Marketing B) Customer Service, Marketing, Production, Design C) Design, Production, Marketing, Customer Service D) Design, Customer Service, Production, Marketing

-Design, Production, Marketing, Customer Service

Jack's Jax has total fixed costs of $25,000. If the company's contribution margin is 60%, the income tax rate is 25% and the selling price of a box of Jax is $20, how many boxes of Jax would the company need to sell to produce a net income of $15,000? a. 5,625 b. 4,445 c. 3,750 d. 3,333

3,750

Which of the following statements is true about overhead cost variance analysis using activity-based costing? a. Overhead cost variances are calculated only for output-unit level costs. b. Overhead cost variances are calculated only for variable manufacturing overhead costs. c. A 4-variance analysis can be conducted. d. Activity-based costing uses input measures for all activities, resulting in the inability to do flexible budgets needed for variance analysis.

A 4-variance analysis can be conducted.

In selecting a cost-allocation base for variable overhead, what criteria for the base is preferred? a. Ease of acquiring reliable information for accurate allocations b. A cause-and-effect relationship between the cost and the activity level c. A single base that will simplify the allocation process d. One that has been used in the past

A cause-and-effect relationship between the cost and the activity level

Manufacturing Overhead Control a. represents actual overhead costs incurred. b. has a normal debit balance. c. is a control account with a subsidiary ledger detailing the components of manufacturing overhead. d. All of the above

All of the above

Evaluating customer reaction of the tradeoff of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? a. Pricing and product-mix decisions b. Cost reduction decisions c. Design decisions d. Discretionary decisions

Design decisions

Which item is an indication of credibility under the Standards of Ethical Conduct? A) Maintain an appropriate level of professional expertise by continually developing knowledge and skills. B) Refrain from using confidential information for unethical or illegal advantage. C) Abstain from engaging in or supporting any activity that might discredit the profession. D) Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.

Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.

Which of the following is not a major benefit of budgets? a. Compels planning b. Eliminates innovation c. Provides performance criteria d. Promotes coordination and communication

Eliminates innovation

Which of the following does not pertain to financial planning models in software form? a. Reduces computational burden and time required to prepare budgets b. Eliminates need to update budgets as uncertainty resolved c. Assists managers with sensitivity analysis d. Performs calculations that are mathematical representations of relationships in master budget

Eliminates need to update budgets as uncertainty resolved

Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has: a. Full capacity, the company will be profitable at $4 per unit. b. Excess capacity, the company will be profitable at $6 per unit. c. Full capacity, the selling price must be greater than $5 per unit. d. Excess capacity, the selling price must be greater than $9 per unit.

Excess capacity, the selling price must be greater than $9 per unit.

King Tooling has produced and sold the following number of units of their only product during their first two years in business: Produced Sold Year ended December 31, Year 1 50,000 40,000 Year ended December 31, Year 2 50,000 55,000 Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of sales relative to the cost of sales shown on the GAAP income statement of the company? Year 1 Year 2 a. Higher Higher b. Higher Lower c. Lower Higher d. Lower Lower

Higher Lower

Which of the following should not be considered for every option in the decision process? a. Relevant revenues b. Relevant costs c. Historical costs d. Opportunity costs

Historical costs

Mary Jacobs, the controller of the Jenks Company is working on Jenks' cash budget for year 2. She has information on each of the following items: I. Wages due to workers accrued as of December 31, year 1. II. Limits on a line of credit that may be used to fund Jenks' operations in year 2. III. The balance in accounts payable as of December 31, year 1, from credit purchases made in year 1. Which of the items above should Jacobs take into account when building the cash budget for year 2? a. I, II b. I, III c. II, III d. I, II, III

I, II, III

Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system. I. In a cost center, managers are responsible for controlling costs but not revenue. II. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent. III. To be effective, a good responsibility accounting system must help managers to plan and to control. IV. Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager 1. I and II only are correct. 2. II and III only are correct. 3. I, II, and III are correct. 4. I, II and IV are correct.

I, II, and III are correct

All of the following statements regarding standards are accurate except: a. Standards allow management to budget at a per-unit level. b. Ideal standards account for a minimal amount of normal spoilage. c. Participative standards usually take longer to implement than authoritative standards. d. Currently attainable standards take into account the level of training available to employees.

Ideal standards account for a minimal amount of normal spoilage.

Which of the following is true of a budgeting system? A) It compels managers to plan ahead. B) It increases agency costs. C) It is easy to measure the exact benefits of a budgeting system. D) It leads to operational inefficiency.

It compels managers to plan ahead.

Which of the following statements does not describe responsibility accounting? a. It measures the plans and actions of each responsibility center. b. It budgets to emphasize that for which each responsibility center is accountable. c. It calculates variances between budgeted and actual accountability for each responsibility center. d. It identifies managers at fault for operating problems by reports for each responsibility center.

It identifies managers at fault for operating problems by reports for each responsibility center.

Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment includes: Contribution margin: 35,000 Avoidable fixed costs: 30,000 Unavoidable fixed costs: 25,000 Given the information above, Lees should: a. Drop the segment because the contribution margin is less than total fixed costs. b. Drop the segment because avoidable fixed costs exceed unavoidable fixed costs. c. Keep the segment because the contribution margin exceeds avoidable fixed costs. d. Keep the segment because the contribution margin exceeds unavoidable fixed costs.

Keep the segment because the contribution margin exceeds avoidable fixed costs.

Which of the following pertains primarily to the planning of fixed overhead costs? a. A standard rate per output unit is developed. b. Only essential activities are to be undertaken. c. Activities are to be undertaken in the most efficient method. d. Key decisions are made at the start of the budget period determining the level of costs.

Key decisions are made at the start of the budget period determining the level of costs.

Which of the following is not a common problem encountered in collecting data for cost estimation? a. Lack of observing extreme values b. Missing data c. Changes in technology d. Distortions resulting from inflation

Lack of observing extreme values

Under the contribution income statement, a company's contribution margin will be: a. Higher if fixed SG&A costs decrease. b. Higher if variable SG&A costs increase. c. Lower if fixed manufacturing overhead costs decrease. d. Lower if variable manufacturing overhead costs increase.

Lower if variable manufacturing overhead costs increase.

Which of the following accounts is not classified as an asset? a. Manufacturing Overhead Control b. Materials Control c. Work-in-Process Control d. Finished Goods Control

Manufacturing Overhead Control

Ace Cleaning Service is considering expanding into one or more new market areas. Which costs are relevant to Ace's decision on whether to expand? Sunk Costs Variable Costs Opportunity Costs A. No Yes Yes B. Yes Yes Yes C. No Yes No D. Yes No Yes

No Yes Yes

Which of the following statements is correct regarding the components of the master budget? a. The cash budget is used to create the capital budget. b. Operating budgets are used to create cash budgets. c. The manufacturing overhead budget is used to create the production budget. d. The cost of goods sold budget is used to create the selling and administrative expense budget.

Operating budgets are used to create cash budgets.

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ's: a. Contribution margin and gross margin will be lower. b. Contribution margin will be higher, while its gross margin will remain the same. c. Operating income will be the same under both the financial accounting income statement and contribution income statement. d. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.

Operating income will be the same under both the financial accounting income statement and contribution income statement.

Which of the following differentiates job costing from process costing? A) Job costing is used when each unit of output is identical, and process costing deals with unique products. B) Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale. C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches. D) Job costing is used by manufacturing industries, and process costing is used by service industries.

Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.

Which of the following is an example of a nonmanufacturing cost that may be analyzed using variances? a. Factory rent b. Product distribution costs c. Indirect labor d. Factory supplies

Product distribution costs

Nicholas, Inc. has provided the following unit data for review: Simple Product Advanced Product Selling price $22.75 $55.00 Variable cost 10.00 34.50 Pounds of scarce raw material per unit 3 5 Which product, Simple or Advanced, is most profitable for Nicholas, Inc. to manufacture? a. Both in ratio of 3:5 b Both in ratio of 5:8 c. Simple d. Advanced

Simple

As part of her annual review of her company's budgets versus actuals, Mary Gerard isolates unfavorable variances with the hope of getting a better understanding of what caused them and how to avoid them next year. The variable overhead efficiency variance was the most unfavorable over the previous year, which Gerard will specifically be able to trace to: a. Actual overhead costs below applied overhead costs. b. Actual production units below budgeted production units. c. Standard direct labor hours below actual direct labor hours. d. The standard variable overhead rate below the actual variable overhead rate.

Standard direct labor hours below actual direct labor hours.

Which of the following is not an advantage for using standard costs for variance analysis? a. Standards simplify product costing. b. Standards are developed using past costs and are available at a relatively low cost. c. Standards are usually expressed on a per-unit basis. d. Standards can take into account expected changes planned to occur in the budgeted period.

Standards are developed using past costs and are available at a relatively low cost.

Which of the following statements is not true regarding the use of variable and absorption costing for performance measurement? a. The net income reported under the absorption method is less reliable for use in performance evaluations because the cost of the product includes fixed costs, which means the level of inventory affects net income. b. The net income reported under the contribution income statement is more reliable for use in performance evaluations because the product cost does not include fixed costs. c. Variable costing isolates contribution margins to aid in decision making. d. The Internal Revenue Service allows either absorption or variable costing as long as the method is not changed from year to year, while U.S. GAAP only allows absorption costing.

The Internal Revenue Service allows either absorption or variable costing as long as the method is not changed from year to year, while U.S. GAAP only allows absorption costing.

Which of the following is not a reason for the performance evaluation model to differ from the decision model? a. The use of different time frames: one being an annual basis, the other a period of several years. b. The accounting systems enable each decision to be tracked separately. c. The accrual accounting method incorporates irrelevant costs. d. Top management is rarely aware of particular desirable alternatives that were not chosen by subordinate managers.

The accounting systems enable each decision to be tracked separately.

Once a company exceeds its breakeven level, operating income can be calculated by multiplying: a. The sales price by unit sales in excess of breakeven units. b. Unit sales by the difference between the sales price and fixed cost per unit. c. The contribution margin ratio by the difference between unit sales and breakeven sales. d. The contribution margin per unit by the difference between unit sales and breakeven sales.

The contribution margin per unit by the difference between unit sales and breakeven sales.

Each of the following statements is correct regarding overhead variances except: a. Actual overhead greater than applied overhead is unfavorable. b. The efficiency overhead variance ignores the standard variable overhead rate. c. Variable overhead rates are not a factor in the production-volume variance calculation. d. Favorable spending and efficiency variances imply that the flexible budget variance must be favorable.

The efficiency overhead variance ignores the standard variable overhead rate.

Which of the following is not a correct use of the term opportunity cost? a. Opportunity costs are considered period costs rather than inventoriable costs for accounting purposes. b. Opportunity costs must be considered by managers when making decisions. c. Opportunity cost plus the incremental future revenues and costs equal the relevant revenues and costs of any alternative when capacity is constrained. d. The opportunity cost of holding inventory is the income forgone by tying up money in inventory and not investing it elsewhere.

The opportunity cost of holding inventory is the income forgone by tying up money in inventory and not investing it elsewhere.

Basix Inc. calculates direct manufacturing labor variances and has the following information: Actual hours worked: 200 Standard hours: 250 Actual rate per hour: $12 Standard rate per hour: $10 Given the information above, which of the following is correct regarding direct manufacturing labor variances? a. The price and efficiency variances are favorable. b. The price and efficiency variances are unfavorable. c. The price variance is favorable, while the efficiency variance is unfavorable. d. The price variance is unfavorable, while the efficiency variance is favorable.

The price variance is unfavorable, while the efficiency variance is favorable.

Metal Shelf Company's standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year 2, 25,000 pounds of materials are purchased from a new supplier for $97,000 and 13,000 shelves are produced using 27,000 pounds of materials. Which statement is a possible explanation concerning the direct materials variances? a. The production department had to use more materials since the quality of the materials was inferior. b. The purchasing manager paid more than expected for materials. c. Production workers were more efficient than anticipated. d. The overall materials variance is positive; no further analysis is necessary.

The production department had to use more materials since the quality of the materials was inferior.

Absorption costing enables managers to increase operating income in the short run by changing production schedules. Which statement is true regarding such action? a. The reason for increased operating income is the deferral of fixed manufacturing overhead contained in unsold inventory. b. A desirable effect of these changes in production is "cherry picking" the production line. c. This is done through decreases in the production schedule as customer demand for product falls. d. None of the above statements are true regarding the manager's action to increase operating income through changes in the production schedule.

The reason for increased operating income is the deferral of fixed manufacturing overhead contained in unsold inventory.

Which of the following statements is correct regarding the drivers of operating and financial budgets? a. The sales budget will drive the cost of goods sold budget. b. The cost of goods sold budget will drive the units of production budget. c. The production budget will drive the selling and administrative expense budget. d. The cash budget will drive the production and selling and administrative expense budgets.

The sales budget will drive the cost of goods sold budget.

Which of the following is not an assumption of cost-volume-profit analysis? a. The time value of money is incorporated in the analysis. b. Costs can be classified into variable and fixed components. c. The behavior of revenues and expenses is accurately portrayed as linear over the relevant range. d. The number of output units is the only driver.

The time value of money is incorporated in the analysis

Which of the following statements is more representative of activity-based costing in comparison to a department costing system? a. The use of multiple cost-allocation bases b. The use of indirect-cost rates for significant resource use c. The use of activities having a cause-and-effect relationship d. The use of multiple cost pools

The use of indirect-cost rates for significant resource use

The average cost data are for In-Sync Fixtures Company's (a retailer) only two product lines, Marblette and Italian Marble. Marblette Italian Marble Purchase volume 20,000 1,000 Purchase cost per unit $50 $50 Shipments received 12 12 Hours used per shipment * 5 3 *These data were accumulated after a careful activity analysis. Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of their receiving costs of $40,000. They realize that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume. Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures? a. The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because a more appropriate cost driver will be used as the allocation base. b. The traditional allocation method currently being used is causing product-cost cross-subsidization with the product line Marblette being undercosted. c. The cost allocated to the Italian Marble product line under the current traditional system is more than the activity-based costing allocated cost. d. The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because it probably will cost less to trace the costs to the product lines.

The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because a more appropriate cost driver will be used as the allocation base.

The absolute minimum absorption-inventory cost that would be reported under the best conceivable operating conditions is a description of which type of denominator-level concept cost? a. Master-budget utilization b. Practical capacity c. Theoretical capacity d. Normal utilization

Theoretical capacity

Which of the following statements refers to management accounting information? A) There are no regulations governing the reports. B) The reports are generally delayed and historical. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures manager's compensation on reported financial results.

There are no regulations governing the reports.

Which of the following is not a factor in cost-volume-profit analysis? a. Units sold b. Selling price c. Total variable costs d. Fixed costs of a product

Total variable costs

In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: a. Contribution margin of the special order. b. Variable cost and contribution margin of the special order. c. Variable cost and contribution margin of the next best alternative. d. Variable cost of current production and the contribution margin of the next best alternative.

Variable cost of current production and the contribution margin of the next best alternative.

Which of the following is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their product? a. Quality of the outside producer's product. b. Potential loss of trade secrets. c. Manufacturing deadlines and special orders. d. Variable cost per unit of the product.

Variable cost per unit of the product.

What is always the question to ask to determine if revenues or costs are relevant? a. What is the time frame for achieving results? b. What difference will a particular action make? c. Who will be responsible? d. How much will it cost?

What difference will a particular action make?

In comparing the absorption and variable cost methods, each of the following statements is true except: a. SG&A fixed expenses are not included in inventory in either method. b. Only the absorption method may be used for external financial reporting. c. Variable costing charges fixed overhead costs to the period they are incurred. d. When inventory increases over the period, variable net income will exceed absorption net income.

When inventory increases over the period, variable net income will exceed absorption net income.

RCG Services is investigating its profitability relationship with each of its customers. What is the one question RCG should ask in deciding whether to keep or drop a particular customer? a. Will the customer meet a specific designated gross margin percentage? b. Will the customer be willing to pay a higher price to insure RCG's profitability? c. Will enough customers be found to replace any customers dropped for lack of profitability? d. Will expected total corporate office costs decrease if a decision is made to drop the customer?

Will expected total corporate office costs decrease if a decision is made to drop the customer?

The costs incurred on jobs that are currently in production but are not yet complete would appear in the a. Materials Control account. b. Finished Goods Control account. c. Manufacturing Overhead Control account. d. Work-in-Process Control account.

Work-in-Process Control account.

The manner in which a company deals with end-of-period variances will determine the effect production-volume variances have on the company's end-of-period operating income. When the chosen capacity level exceeds the actual production level, which approach to end-of-period variances results in an unfavorable production-volume variance affect on that period's operating income? a. Proration approach b. Adjusted allocation-rate approach c. Theoretical approach d. Write-off to cost-of-goods-sold approach

Write-off to cost-of-goods-sold approach

If each professional in a service company is paid on an annual salary basis, why might the firm want to use a predetermined or budgeted rate for direct or professional labor? a. A predetermined or budgeted rate is easier to justify to a client who might question a billing rate. b. Professional staff persons do not keep accurate records of the jobs on which they work. c. Professional staff incurs more client costs, such as travel, lodging, and out-of-town meals, while working on a job. d. Year-end bonuses paid to the professional staff are difficult to trace to individual jobs.

Year-end bonuses paid to the professional staff are difficult to trace to individual jobs.

In a costing system, ________. A) cost tracing allocates indirect costs B) cost allocation assigns direct costs C) a cost-allocation base can be either financial or nonfinancial D) a cost object should be a product and not a department or a geographic territory

a cost-allocation base can be either financial or nonfinancial

[CMA Adapted] Flexible budgets a. accommodate changes in the inflation rate. b. accommodate changes in activity levels. c. are used to evaluate capacity utilization. d. are static budgets that have been revised for changes in price(s).

accommodate changes in activity levels.

Production-cost cross-subsidization results from a. allocating indirect costs to multiple products. b. assigning traced costs to each product. c. assigning costs to different products using varied costing systems within the same organization. d. assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products.

assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products

When a normal costing system is used, clients using proportionately more full-time employees than trainees will ________. A) be overbilled for actual resources used B) be underbilled for actual resources used C) be billed accurately for actual resources used D) result in an underallocation of direct costs

be underbilled for actual resources used

One reason indirect costs may be overapplied is because ________. A) the actual allocation base quantity exceeds the budgeted quantity B) budgeted indirect costs exceed actual indirect costs C) requisitioned direct materials exceed budgeted material costs D) Both A and B are correct.

budgeted indirect costs exceed actual indirect costs

The basic principles and concepts of variance analysis can be applied to activity-based costing a. by application as to the levels of cost hierarchy. b. through careful classification of costs as direct and indirect as applied to the product or job. c. with use of standard costing systems only. d. only through those activities related to individual units of product or service.

by application as to the levels of cost hierarchy

Strategy is formulated ________. A) by identifying the most important customers B) by forecasting the composition of adequate fixed assets C) based on the qualified opinion of external auditors D) by eliminating sunk costs

by identifying the most important customers

Using normal costing rather than actual costing requires that the allocating of indirect manufacturing costs to work-in-process be a. done on a more timely basis, such as every two weeks rather than every month. b. journalized only at year end when adjusting entries are normally made. c. calculated by using the budgeted rate times actual quantity of allocation base. d. calculated by using the budgeted rate times the budgeted quantity of allocation base

calculated by using the budgeted rate times actual quantity of allocation base.

The major cost management concept used in Kaizen budgeting is that of a. eliminating inventories of every type but materials. b. refinements in the indirect-cost categories for costing systems. c. continuous improvement. d. sensitivity analysis using computer-based financial planning models.

continuous improvement

A cost-allocation base may be any of the following except a a. cost driver. b. cost pool. c. way to link indirect costs to a cost object. d. nonfinancial quantity.

cost pool.

[CPA Adapted] The sale of scrap from a manufacturing process usually would be recorded as a(n) a. increase in manufacturing overhead control. b. decrease in manufacturing overhead control. c. increase in finished goods control. d. decrease in finished goods control.

decrease in manufacturing overhead control.

When the high-low method is used to estimate a cost function, the variable cost per unit is found by a. performing regression analysis on the associated cost and cost driver database. b. subtracting the fixed cost per unit from the total cost per unit based on either the highest or lowest observation of the cost driver. c. dividing the difference between the highest and lowest observations of the cost driver by the difference between costs associated with the highest and lowest observations of the cost driver. d. dividing the difference between costs associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver.

dividing the difference between costs associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver.

Three criteria to use in identifying cost drivers from the potentially large set of independent variables that can be included in a regression model are a. goodness of fit, size of the intercept term, and specification analysis. b. independence between independent variables, economic plausibility, and specification analysis. c. economic plausibility, goodness of fit, and significance of independent variable. d. spurious correlation, expense of gathering data, and multicollinearity.

economic plausibility, goodness of fit, and significance of independent variable.

Performance evaluation using variance analysis should guard against a. emphasis on a single performance measure. b. emphasis on total company objectives. c. basing effect of a manager's action on total costs of the company as a whole. d. highlighting individual aspects of performance.

emphasis on a single performance measure.

Use of capacity levels based on demand a. hides the amount of unused capacity. b. highlights the cost of capacity acquired but not used. c. yields a cost rate that does not include a charge for unused capacity. d. results in a price that covers the cost of capacity customers expect to pay.

hides the amount of unused capacity.

An example of a denominator reason for calculating annual indirect-cost rates includes ________. A) higher heating bills in the winter B) semi-annual insurance payments in March and September C) higher levels of output demanded during the fall months D) All of these answers are correct.

higher levels of output demanded during the fall months

The first step in the seven-step approach to job costing is to a. select the cost-allocation base to use in assigning indirect costs to the job. b. identify the direct costs of the job. c. identify the job that is the chosen cost object. d. identify the indirect-cost pools associated with the job.

identify the job that is the chosen cost object.

The concept of outsourcing services to countries with lower labor costs is known as a. opportunity cost. b. offshoring. c. insourcing. d. international outsourcing.

international outsourcing.

Controllability a. is always clear cut as to who has responsibility for a cost. b. is another term for responsibility. c. is the responsibility of the corporate controller. d. is the degree of influence a specific manager has over costs, revenues, and other items.

is the degree of influence a specific manager has over costs, revenues, and other items

A company that manufactures dentures for use by local dentists would use a. process costing. b. personal costing. c. operations costing. d. job costing.

job costing.

[CMA Adapted] Of the following methods, the one that would not be appropriate for analyzing how a specific cost behaves is a. the scattergraph method. b. the industrial engineering approach. c. linear programming. d. statistical regression analysis.

linear programming.

Benchmarking is a. relatively easy to do with the amount of available financial information about companies. b. best done with the best in their field regardless of type of company. c. simply reporting the magnitude of differences in costs or revenues across companies. d. making comparisons to direct attention to why differences in costs exist across companies.

making comparisons to direct attention to why differences in costs exist across companies.

The allocation of indirect costs in an activity-based costing system a. may require other costs to be allocated to activities before the costs of the activities can be allocated to the products. b. is simplified because more costs are identified as direct costs. c. requires the use of heterogeneous cost pools. d. is simplified because a limited number of activities are identified as cost objects.

may require other costs to be allocated to activities before the costs of the activities can be allocated to the products.

Companies that take advantage of quantity discounts in purchasing their materials have a. decreasing cost functions. b. linear cost functions. c. nonlinear cost functions. d. stationary cost functions.

nonlinear cost functions.

A significant limitation of activity-based costing is the a. attention given to indirect cost allocation. b. many necessary calculations. c. operations staff's attitude toward the accounting staff. d. use it makes of technology.

operations staff's attitude toward the accounting staff.

A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a ________. A) strategic plan B) management forecast C) performance report D) revised plan

performance report

Advertising of a specific product is an example of a. unit-level costs. b. batch-level costs. c. product-sustaining costs. d. facility-sustaining costs.

product-sustaining costs.

10. Budgetary slack a. is going to be included in budget estimates, so it should just be ignored. b. provides managers with a hedge against unexpected circumstances. c. should be totally eliminated from the budget. d. is not found in governmental budgets.

provides managers with a hedge against unexpected circumstances

Budgeting is the common accounting tool companies' use for planning and controlling. Budgets a. provide a measure of planned financial results. b. are prepared independent of the company's long-term strategies. c. do not usually reflect actual results, so they are a useless exercise. d. serve as the financial expression of management's plans for the upcoming period.

serve as the financial expression of management's plans for the upcoming period.

A company may experience the downward demand spiral when a. the use of theoretical capacity as a denominator level has contributed to budgets that project sales to be higher than actually attainable. b. spreading capacity costs over a small number of units and setting selling prices even higher to recover those costs. c. engaged in a cyclical business and after experiencing an upturn. d. the production-volume variance is unfavorable each time period during a year.

spreading capacity costs over a small number of units and setting selling prices even higher to recover those costs.

The main difference between variable costing and absorption costing is a. the treatment of nonmanufacturing costs. b. the accounting for variable manufacturing costs. c. the accounting for fixed manufacturing costs. d. their value for decision makers.

the accounting for fixed manufacturing costs

In refining a cost system a. total direct costs are unchanged because they can be traced in an economically feasible way to the product and traced costs are more accurate. b. the costs are grouped in homogeneous pools of the same or similar amounts. c. the criterion of cause-and-effect is used to relate indirect costs to a factor that systematically links to a cost object. d. the organization looks for cost-allocation bases that will provide a uniform spreading of indirect costs to each product.

the criterion of cause-and-effect is used to relate indirect costs to a factor that systematically links to a cost object.

With the cumulative average-time learning model a. the cumulative time per unit declines by a constant percentage when production doubles. b. the time needed to produce the last unit declines by a constant percentage when production doubles. c. costs increase in total by a constant percentage as production increases. d. the total cumulative time increases in proportion to production increases.

the cumulative time per unit declines by a constant percentage when production doubles.

When using the incremental unit-time learning model a. the cumulative time per unit declines by a constant percentage when production doubles. b. the time needed to produce the last unit declines by a constant percentage when production doubles. c. the time to produce one additional unit decreases by a constant percentage. d. costs increase incrementally in an undetermined pattern.

the time needed to produce the last unit declines by a constant percentage when production doubles.

Contribution margin is calculated as a. total revenue - total fixed costs. b. total revenue - total manufacturing costs (CGS). c. total revenue - total variable costs. d. operating income + total variable costs.

total revenue - total variable costs.

The proponents of throughput costing a. maintain that variable costing undervalues inventories. b. maintain that it provides more incentive to produce for inventory than do either variable or absorption costing. c. argue that only direct materials and direct labor are "truly variable" and all indirect manufacturing costs be written off in the period in which they are incurred. d. treat all costs except those related to variable direct materials as costs of the period in which they are incurred.

treat all costs except those related to variable direct materials as costs of the period in which they are incurred

One way for managers to cope with uncertainty in profit planning is to a. use CVP analysis because it assumes certainty. b. recommend management hire a futurist whose work is to predict business trends. c. wait to see what does happen and prepare a report based on actual amounts. d. use sensitivity analysis to explore various what-if scenarios in order to analyze changes in revenues or costs or quantities.

use sensitivity analysis to explore various what-if scenarios in order to analyze changes in revenues or costs or quantities

[CPA Adapted] Operating income using variable costing as compared to absorption costing would be higher a. when the quantity of beginning inventory equals the quantity of ending inventory. b. when the quantity of beginning inventory is more than the quantity of ending inventory. c. when the quantity of beginning inventory is less than the quantity of ending inventory. d. under no circumstances.

when the quantity of beginning inventory is more than the quantity of ending inventory.

Ethical challenges for management accountants include ________. A) whether to accept gifts from suppliers, knowing it is an effort to indirectly influence decisions B) adhering to the principles of accounting C) whether to file a tax return this year D) whether to accept higher incentives from the company for their performance

whether to accept gifts from suppliers, knowing it is an effort to indirectly influence decisions