Acc Final Chap 12-24: test banks

Cost-volume-profit analysis is based on three basic assumptions. Which of the following is not one of these assumptions?

Curvilinear costs change proportionately with changes in volume throughout the relevant range.

The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

Overapplied overhead

Which of the following is true?

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor

Costs that flow directly to the current income statement are called:

Period costs.

Which of the following would not be considered a cost center

Pharmacy in a grocery store

A method of assigning overhead costs to a product using a single overhead rate is:

Plantwide overhead rate method.

The cost object(s) of the departmental overhead rate method is:

The production departments in the first stage and the unit of product in the second stage.

Which of the following statements is true with regard to the plantwide overhead rate method

The rate is determined using volume-related measures

The cost object of the plantwide overhead rate method is:

The unit of product

Which of the following is an objective of capital budgeting

To earn a satisfactory return on investment

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

Underapplied overhead

If overhead applied is less than actual overhead, it is:

Underapplied.

The comparison of a company's financial condition and performance to a base amount is known as

Vertical analysis

Curvilinear costs always increase

When volume increases but not at a constant rate

A cost that changes with volume, but not at a constant rate, is called a

Curvilinear cost

Period costs for a manufacturing company would flow directly to:

The current income statement

A fixed cost

. Does not change with changes in the volume of activity within the relevant range

Which of the following companies would be best served by a plantwide overhead rate?

A company that manufactures few products and whose operations are labor intensive

Which of the following statements is true?

A per unit cost that is constant at all production levels is a variable cost per unit

From an ABC perspective, what causes costs to be incurred?

Activities.

A department that incurs costs without directly generating revenues is a:

Cost center

Which of the following is not a product cost?

Advertising costs.

Product costs:

Are expenditures necessary and integral to finished products

External users of financial information:

Are not directly involved in operating the company

Internal users of financial information

Are those individuals involved in managing and operating the company

A special case of cost-volume-profit analysis is:

Break-even point

The sales level at which a company neither earns a profit nor incurs a loss is the

Break-even point

A formal statement of future plans, usually expressed in monetary terms, is a:

Budget

The process of analyzing alternative investments and deciding which assets to acquire or sell is known as

Capital budgeting

Operating budgets include all the following budgets except the:

Cash budget

The statement of cash flows reports:

Cash infows and outflows for an accounting period

The difference between sales price per unit and variable cost per unit is the:

Contribution margin per unit.

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Contribution margin ratio

The purchase of raw materials on account in a process costing system is recorded with a:

Debit to Raw Materials Inventory and a credit to Accounts Payable

Total contribution margin in dollars divided by pretax income is the:

Degree of operating leverage

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period

Departmental overhead rate method and activity-based costing.

The following are all examples of product costs:

Direct material, direct labor and indirect labor

A job cost sheet includes:

Direct material, direct labor, overhead

Direct material costs are recorded:

Directly to a Goods in Process account

For purposes of applying the net present value and the internal rate of return methods, the rate chosen to measure the time adjusted value of money is known as the:

Discount rate.

An expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period is called:

Equivalent units of production

Which of the following characteristics applies to process cost accounting and not to job order cost accounting?

Equivalent units of production

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:

Factory overhead

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:

Financing activities

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

Financing activities.

Under absorption costing, which of the following statements is not true?

Fixed inventory costs are treated in the same manner as they are under variable costing

Which one of the following items is normally not a manufacturing cost?

General and administrative expenses

Direct labor and indirect labor are recorded, respectively, to

Goods in Process and Factory Overhead.

The three most common tools of financial analysis are:

Horizontal analysis, vertical analysis, ratio analysis.

The comparison of a company's financial condition and performance across time is known as:

Horizontal analysis.

Classifying costs by behavior involves

Identifying fixed cost and variable cost

An additional cost that is incurred only if a particular action is taken is a(n):

Incremental cost

A profit center

Incurs costs and directly generates revenues

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Investing activities.

Managerial accounting information:

Involves gathering information about costs for planning and control decisions

Horizontal analysis:

Is a method used to evaluate changes in financial data across time.

An opportunity cost:

Is the lost benefit of choosing an alternative course of action.

Which of the following statements is true regarding absorption costing

It assigns all manufacturing costs to products

Which of the following statements is true with regard to the departmental overhead rate method?

It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called

Just-in-time manufacturing.

The ability to meet short-term obligations and to generate revenues using the least amount of resources is called

Liquidity and efficiency

Capital budgeting decisions usually involve analysis of

Long-term investments only

Managerial accounting is different from financial accounting in that:

Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions

The ability to generate positive market expectations is called:

Market prospects

The time value of money concept

Means that a dollar today is worth more than a dollar tomorrow

What are three advantages of activity-based costing over traditional volume-based allocation

More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making

Which of the following statements is true regarding variable costing?

Only manufacturing costs that change in total with changes in production level are included in product costs.

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

Operating activities

Cash flows from interest received are reported in the statement of cash flows as part of:

Operating activities

Cash flows from selling trading securities are reported in the statement of cash flows as part of:

Operating activities

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Operating activities

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Operating activities

The potential benefit of one alternative that is lost by choosing another is known as a(n):

Opportunity cost

The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and that is used to assign overhead cost to jobs is the:

Predetermined overhead allocation rate

Standard costs are

Preset costs for delivering a product or service under normal conditions

Standard costs are used to measure:

Price and quantity variances

The difference between actual and standard cost caused by the difference between the actual price and the standard price is called the

Price variance

Costs that are first assigned to inventory are called:

Product costs

A unit of a business that not only incurs costs but also generates revenues is called a:

Profit center

The ability to provide financial rewards sufficient to attract and retain financing is called

Profitability.

The difference between actual and standard cost caused by the difference between the actual quantity and the standard quantity is called the:

Quantity variance

Which one of the following is representative of typical cash flows from operating activities?

Receipts of cash sales

Which of the following is an example of a financial performance measure that would be found in a balanced scorecard

Return on investment

Which of the following is a financial budget?

Sales budget

The ability to generate future revenues and meet long-term obligations is referred to as:

Solvency.

The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are:

Standard costs.

A cost that remains constant over a limited range of volume but increases by a lump sum when volume increases beyond a maximum amount is a(n):

Step-wise cost

In horizontal analysis the percent change is computed by:

Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100.

A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n):

Sunk cost

Capital budgeting decisions are generally based on

Tentative predictions of future outcomes

Which of the following is a disadvantage of the departmental overhead rate method

The departmental overhead rate method assigns overhead on the basis of volume-related measures

Which of the following is not true?

The departmental overhead rate method does not assign overhead on the basis of volume-related measures.

Flexibility of practice when applied to managerial accounting means that:

The design of a company's managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company

Which of the following is most likely to be considered a profit center

The grocery department of a Walmart Supercenter or Target Superstore

Which of the following are advantages of using the plantwide overhead rate method?

The necessary information is readily available

Equivalent units of production are equal to

The number of units that could have been completed if all effort had been applied to units that were started and completed that period

To compute an equivalent unit of production, one must be able to reasonably estimate:

The percentage of completion

Which of the following statements is true with regard to activity-based costing rates?

The premise of ABC is that activities are what cause costs to be incurred

The cost object(s) of the activity-based costing method is(are):

The production activities in the first stage and the unit of product in the second stage

Current assets minus current liabilities is equal to:

Working capital

A manufacturing statement is also known as a schedule or listing of the:

cost of goods manufactured