Managerial Accounting Exam #1

Which of the following is allowed to serve as an external auditor? a.A Certified Public Accountant b.A Certified Management Accountant c.A Certified Fraud Examiner d.A Certified Internal Auditor

A. A Certified Public Accountant

Which of the following is true of a treasurer in a large corporation? a.A treasurer raises capital and manages cash and investments. b.A treasurer is responsible for SEC reports and financial statements. c.A treasurer is responsible for the internal auditing function of an organization. d.A treasurer has authority over the managers in the production area.

A. A treasurer raises capital and manages cash and investments.

Which of the following certifications do managerial accountants obtain? a.The Certificate in Management Accounting b.The Certificate in Public Accounting c.The Certificate in Internal Auditing d.All of these answer choices are correct

d.All of these answer choices are correct

Continuous improvement is fundamental to establish excellence is a philosophy related to: a.a cross-functional perspective. b.the cost leadership strategy. c.total quality management. d.the value chain analysis

c.total quality management.

The following data relates to Mandarin Company.Units in beginning inventory—Units produced14,000Units sold ($350 per unit)12,000Variable costs per unit:Direct materials$80Direct labor150Variable overhead60Fixed costs:Fixed overhead per unit produced$30Fixed selling and administrative expenses150,000 Determine the value of ending inventory under absorption costing. a.$580,000 b.$460,000 c.$520,000 d.$640,000

d.$640,000 (Units Ending Inventory = Units Beginning Inventory + Units Produced − Units Sold = 0 + 14,000 − 12,000 = 2,000 unitsAbsorption-costing unit cost = $80 + $150 + $60 + $30 = $320Value of Ending Inventory = Units Ending Inventory × Absorption Unit Product Cost = 2,000 units × $320 = $640,000)

The following data relates to Alpha Company. Units in beginning inventory—Units produced 25,000 Units sold ($350 per unit)19,000Variable costs per unit :Direct materials$40 Direct labor70 Variable overhead30 Fixed costs:Fixed overhead per unit produced$50 Fixed selling and administrative expenses140,000 Determine the value of ending inventory under variable costing. a.$720,000 b.$1,140,000 c.$660,000 d.$840,000

d.$840,000 Units Ending Inventory = Units Beginning Inventory + Units Produced − Units Sold = 0 + 25,000 − 19,000 = 6,000 units Variable-costing unit cost = $40 + $70 + $30 = $140Value of Ending Inventory = Units Ending Inventory × Variable Unit Product Cost = 6,000 units × $140 = $840,000

Which of the following is true of a treasurer in a large corporation? a.A treasurer has authority over the managers in the production area. b.A treasurer is responsible for the internal auditing function of an organization. c.A treasurer is responsible for SEC reports and financial statements. d.A treasurer raises capital and manages cash and investments

d.A treasurer raises capital and manages cash and investments

Beta Information Systems designs and installs accounting software. Last month, Beta had software licensing costs of $11,000, software technicians' costs of $43,000, and research and development costs of $70,000. Selling expenses totaled $8,200, and administrative expenses amounted to $9,000. Sales totaled $190,000. Determine the operating profit of Beta Information Systems. a.$57,800 b.$48,800 c.$66,000 d.$57,000

(Operating profit = $190,000 - $11,000 - $43,000 - $70,000 - $8,200 - $9,000 = $48,800)

Which of the following is true of decision making in managerial accounting? a.It is followed by the planning activity. b.It is the process of choosing among competing alternatives. c.It is followed by the controlling activity. d.It is the process of monitoring a plan's implementation.

B. It is the process of choosing among competing alternatives.

The benefit sacrificed when one alternative is chosen over another is known as a(n): a.indirect cost. b.opportunity cost. c.fixed cost. d.sunk cost.

B. opportunity cost.

The value chain is a: a.set of parameters used by managers for decision making. b.set of activities required to design, develop, produce, market, and deliver products and services to customers. c.set of activities required to achieve quality control within the accounting function. d.code of ethical conduct established for management accountants.

B. set of activities required to design, develop, produce, market, and deliver products and services to customers.

Which of the following is a feature of financial accounting? a.It produces broad information that is subjective in nature. b.It focuses on the internal evaluation of the various departments of an entity. c.It produces information by following well defined, externally imposed rules. d.It focuses on providing information as needed by the management of a company.

C. It produces information by following well defined, externally imposed rules.

Identify a true statement about the controller of an organization. a.The controller is a member of the middle-level management. b.The controller has only indirect responsibility for an organization's basic objectives. c.The controller participates in the decision-making activity of managerial accounting. d.The controller has full authority over the managers in the production areas of an organization.

C. The controller participates in the decision-making activity of managerial accounting.

_____ must pass a national examination and be licensed by the state in which they practice. a.Certified Fraud Examiners b.Certified Management Accountants c.Certified Internal Auditors d.Certified Public Accountants

D. Certified Public Accountants

The IMA's Statement of Ethical Professional Practice: a.has not been revised since the Sarbanes-Oxley Act of 2002 was enacted. b.applies to all accountants with accounting degrees. c.is different depending on the state where the accountant is practicing. d.lists overarching ethical principles for IMA members which include honesty, fairness, objectivity, and responsibility.

D. lists overarching ethical principles for IMA members which include honesty, fairness, objectivity, and responsibility.

Organizations establish standards of conduct referred to as Company Codes of Conduct to promote ethical behavior by: a.suppliers and distributors. b.trade creditors. c.trade debtors. d.managers and employees.

D. managers and employees.

Managerial accounting is focused: a.on following externally imposed rules. b.on providing objective financial information about the firm as a whole. c.on providing only the externally focused financial information about a firm. d.on providing information to internal management only.

D. on providing information to internal management only.

The detailed formulation of action to achieve a particular end is the management activity called: a.controlling. b.decision making. c.monitoring. d.planning.

D. planning

Continuous improvement includes efforts to: a.improve profitability without considering quality implications. b.reduce quality by decreasing the cost of raw materials. c.increase an organization's overall level of activity with little attention to the impact on quality. d.reduce costs while improving overall quality.

D. reduce costs while improving overall quality.

If the cost equation yields a coefficient of determination of 82%, it means that the: a.independent variable explains 82% of the variability in cost. b.independent variable explains 18% of the variability in cost. c.dependent variable explains 82% of the variability in cost. d.dependent variable explains 18% of the variability in cost.

a.independent variable explains 82% of the variability in cost.

Which of the following costs forms a part of prime cost as well as conversion cost? a.The cost of direct labor b.The cost of direct materials c.The cost of direct materials and direct labor d.Manufacturing overhead

a. The cost of direct labor

Mahogany Company manufactures computer keyboards. The total cost of producing 14,000 keyboards is $450,000. The total fixed cost amounts to $170,000. Determine the total cost of manufacturing 27,000 keyboards. a.$710,000 b.$730,000 c.$540,000 d.$800,000

a.$710,000 Total Variable Cost = Variable Rate × Units of OutputVariable Rate = Total Variable Cost ÷ Units of Output = ($450,000 - $170,000) ÷ 14,000 = $20 per keyboardTotal cost of manufacturing 27,000 keyboards = Fixed Cost + Variable Cost= $170,000 + ($20 × 27,000) = $710,000

A characteristic of total quality management (TQM) is that it: a.emphasizes the need for a managerial accounting system that provides information about quality. b.measures the quality cost and reports for only the service industry. c.empowers employees to manufacture "acceptable quality" products instead of "zero-defect". d.follows traditional quality measures.

a.emphasizes the need for a managerial accounting system that provides information about quality.

Mahogany Company manufactures computer keyboards. The total cost of producing 17,000 keyboards is $544,000. The total fixed cost amounts to $170,000. Determine the total cost of manufacturing 26,000 keyboards. a.$742,000 b.$572,000 c.$770,000 d.$918,000

a.$742,000 (Total Variable Cost = Variable Rate × Units of OutputVariable Rate = Total Variable Cost ÷ Units of Output = ($544,000 - $170,000) ÷ 17,000 = $22 per keyboardTotal cost of manufacturing 26,000 keyboards = Fixed Cost + Variable Cost= $170,000 + ($22 × 26,000) = $742,000)

The value of coefficient of determination always lies between _____. a.0 and 1 b.1 and 100 c.1 and 10 d.0 and 10

a.0 and 1

Which of the following costs is classified as a period cost under absorption costing? a.Administrative expenses b.The cost of direct materials c.The cost of direct labor d.Fixed manufacturing overhead

a.Administrative expenses

Which of the following groups of terms describes the essential characteristics of managerial accounting? a.Internally focused, oriented towards the future, and functioning without mandatory rules b.Externally focused, oriented towards the future, and following externally imposed rules c.Internally focused, historically oriented, and functioning without mandatory rules d.Externally focused, historically based, and following externally imposed rules

a.Internally focused, oriented towards the future, and functioning without mandatory rules

Identify a true statement about the method of least squares for separating a mixed cost into its fixed and variable components. a.It generates the smallest possible cost prediction errors. b.It follows a subjective criterion for choosing the best-fitting line through a set of data points. c.It is simple and easily communicated to other individuals. d.It allows a manager to get a cost formula using just two data points.

a.It generates the smallest possible cost prediction errors.

Which of the following items appear on the income statement of a service firm? a.Operating expenses b.Gross margin c.Manufacturing overhead d.Cost of goods sold

a.Operating expenses

Which of the following is a certification designed to meet the specific needs of managerial accountants? a.The Certificate in Management Accounting b.The Certificate in Public Auditing c.The Certificate in Public Accounting d.The Certificate in Managerial Auditing

a.The Certificate in Management Accounting

Which of the following costs forms a part of prime cost as well as conversion cost? a.The cost of direct labor b.Manufacturing overhead c.The cost of direct materials and direct labor d.The cost of direct materials

a.The cost of direct labor

Food Service Corp. offers a meal service for commuting college students. In the month of January, 2,000 meals were served at a total cost of $5,400. In February, 1,450 meals were served at a total cost of $4,200, and the total number of meals served for March were 1,100 at a total cost of $3,600. Using the high-low method, the variable cost per unit is $2.00. What is the total fixed cost and the total variable cost for January? a.The total fixed cost is $1,400, and the variable cost is $4,000. b.The total fixed cost is $2,800, and the variable cost is $2,600. c.The total fixed cost is $4,000, and the variable cost is $1,400. d.The total fixed cost is $2,600, and the variable cost is $2,800

a.The total fixed cost is $1,400, and the variable cost is $4,000. (Total Variable Cost = Variable Rate × Units of Output = $2.00 × 2,000 = $4,000Total Fixed Cost = Total Cost - Total Variable Cost = $5,400 - $4,000 = $1,400)

Food Service Corp. offers a meal service for commuting college students. In the month of January, 2,000 meals were served at a total cost of $7,600. In February, 1,450 meals were served at a total cost of $5,800, and the total number of meals served for March were 1,100 at a total cost of $4,900. Using the high-low method, the variable cost per unit is $3.00. What is the total fixed cost and the total variable cost for January? a.The total fixed cost is $1,600, and the variable cost is $6,000. b.The total fixed cost is $6,000, and the variable cost is $1,600. c.The total fixed cost is $4,200, and the variable cost is $3,400. d.The total fixed cost is $3,400, and the variable cost is $4,200.

a.The total fixed cost is $1,600, and the variable cost is $6,000. Total Variable Cost = Variable Rate × Units of Output = $3.00 × 2,000 = $6,000 Total Fixed Cost = Total Cost - Total Variable Cost = $7,600 - $6,000 = $1,600

Which of the following is the expression for the total cost equation? a.Total Cost = Total Fixed Cost + (Variable Rate × Units of Output) b.Total Cost = Total Fixed Cost + (Total Variable Cost ÷ Units of Output) c.Total Cost = Total Fixed Cost + (Fixed Rate × Units of Output) d.Total Cost = (Total Fixed Cost ÷ Units of Output) + Total Variable Cost

a.Total Cost = Total Fixed Cost + (Variable Rate × Units of Output)

The cost of delivering a product to a customer is an example of: a.a period cost. b.a prime cost. c.manufacturing overhead. d.a conversion cost.

a.a period cost.

The purpose of creating a cost formula is to provide: a.a quantitative estimate of both total fixed costs and the variable cost per unit of the cost drivers. b.a qualitative estimate of both total fixed costs and the variable cost per unit of the cost drivers. c.a quantitative estimate of only the total fixed costs of the cost drivers. d.a qualitative estimate of only the variable cost per unit of the cost drivers.

a.a quantitative estimate of both total fixed costs and the variable cost per unit of the cost drivers.

The managerial activity of monitoring a plan's implementation and taking corrective action as needed is referred to as: a.controlling. b.scheduling. c.decision making. d.planning.

a.controlling.

If the cost equation yields a coefficient of determination of 84%, it means that the: a.independent variable explains 84% of the variability in cost. b.independent variable explains 16% of the variability in cost. c.dependent variable explains 16% of the variability in cost. d.dependent variable explains 84% of the variability in cost.

a.independent variable explains 84% of the variability in cost.

The IMA's Statement of Ethical Professional Practice: a.lists overarching ethical principles for IMA members which include honesty, fairness, objectivity, and responsibility. b.is different depending on the state where the accountant is practicing. c.applies to all accountants with accounting degrees. d.has not been revised since the Sarbanes-Oxley Act of 2002 was enacted.

a.lists overarching ethical principles for IMA members which include honesty, fairness, objectivity, and responsibility.

The cost of goods sold is: a.the cost of producing the units that were sold during a time period. b.the total of direct materials, direct labor, and selling overhead. c.the cost of selling the units that were sold during a time period. d.the sum of cost of goods manufactured and administrative expenses.

a.the cost of producing the units that were sold during a time period.

The following costs were incurred by ABC Company in January: Direct materials $105,000 Direct labor 80,000 Manufacturing overhead 66,000 Selling expense 25,000 Administrative salaries. 7,000 Determine ABC's total product cost. a.$301,000 b.$251,000 c.$269,000 d.$283,000

b.$251,000 (Product Cost = Direct Material + Direct Labor + Manufacturing Overhead = $105,000 + $80,000 + $66,000 = $251,000)

Impact Corporation reported $460,000 of revenue for the year. Selling expenses amounted to $52,000, and administrative expenses were $75,000. Cost of goods sold was 44% of revenue. Impact's gross margin is: a.$333,000. b.$257,600. c.$202,400. d.$385,000.

b.$257,600. (Gross margin is calculated using sales revenue and cost of goods sold.)

Alpha Company manufactures computers. On July 1, Alpha had $73,000 of materials in inventory. During the month of July, the company purchased $330,000 of materials. On July 31, materials inventory equaled $42,000. Determine the cost of direct materials used in production for the month of July. a.$288,000 b.$361,000 c.$403,000 d.$299,000

b.$361,000 (Cost of Direct Materials Used in Production = Beginning Inventory of Materials + Materials Purchased During the Period - Ending Inventory of Materials = $73,000 + $330,000 - $42,000 = $361,000)

Olivine Refrigerators has 9 sales representatives, each earning a salary of $44,000 per year plus a commission of $18 per refrigerator sold. If 32,000 refrigerators are sold, then the total cost associated with the sales representatives is: a.$576,000. b.$972,000. c.$396,000. d.$1,188,000

b.$972,000. Total cost associated with the sales representatives = (9 × $44,000) + ($18 × 32,000) = $396,000 + $576,000 = $972,000

Which of the following costs is classified as a period cost under absorption costing? a.Fixed manufacturing overhead b.Administrative expenses c.The cost of direct labor d.The cost of direct materials

b.Administrative expenses

Which of the following is true of a fixed cost? a.Fixed costs in total vary in direct proportion to changes in output within the relevant range. b.Fixed costs in total are constant within the relevant range as the level of output changes. c.The per unit fixed cost increases with an increase in the level of output. d.The per-unit fixed cost is always constant irrespective of the number of units produced.

b.Fixed costs in total are constant within the relevant range as the level of output changes.

Which of the following is true of a fixed cost? a.The per-unit fixed cost is always constant irrespective of the number of units produced. b.Fixed costs in total are constant within the relevant range as the level of output changes. c.Fixed costs in total vary in direct proportion to changes in output within the relevant range. d.The per unit fixed cost increases with an increase in the level of output.

b.Fixed costs in total are constant within the relevant range as the level of output changes.

Which of the following is true about the scattergraph method of separating a mixed cost into its fixed and variable components? a.It generates the smallest possible cost prediction errors. b.The quality of the cost formula depends on the quality of the subjective judgment of the analyst. c.It is a statistical way to find the best-fitting line through a set of data points. d.The occurrence of outliners is the biggest disadvantage of this method.

b.The quality of the cost formula depends on the quality of the subjective judgment of the analyst.

Which of the following is true of opportunity costs? a.They are equal to the sum of the prime cost and conversion cost. b.They are never included in the accounting records because they are costs of something that did not occur. c.They are costs that can be easily and accurately traced to their cost objects. d.They are costs that vary in total as output increases or decreases

b.They are never included in the accounting records because they are costs of something that did not occur.

The cost of research and development activities is classified as: a.prime cost. b.administrative cost. c.manufacturing cost. d.conversion cost.

b.administrative cost.

The ending inventories of materials, work-in-process, and finished goods appear: a.as non-current assets on the balance sheet. b.as current assets on the balance sheet. c.as operating expenses on the income statement. d.as non-operating expenses on the income statement.

b.as current assets on the balance sheet.

The property tax paid for a factory building is an example of a(n): a.variable cost. b.fixed cost. c.direct cost. d.opportunity cost.

b.fixed cost.

For planning and control purposes, _____. a.mixed costs should be ignored b.mixed costs should be separated into variable and fixed components c.only the fixed component of mixed costs should be considered d.mixed costs should be considered sunk costs

b.mixed costs should be separated into variable and fixed components

Step costs are also called: a.discretionary fixed costs. b.semi-fixed costs. c.committed fixed costs. d.scattered costs.

b.semi-fixed costs.

Cost allocation is: a.done only for variable costs. b.the process of assigning indirect costs to cost objects. c.is same as cost accumulation. d.the tracking of direct costs to cost objects.

b.the process of assigning indirect costs to cost objects.

Super Co. manufactured 10,000 units and reported the following information for December:Direct materials$41,000Direct labor20,000Manufacturing overhead40,000Beginning work in process inventory23,000Ending work in process inventory24,000The prime cost per unit is: a.$4.00. b.$6.00. c.$6.10. d.$4.10.

c. $6.10 (Prime Cost = Direct Materials + Direct Labor = ($41,000 + $20,000) ÷ 10,000 units = $6.10)

Turquoise Company manufactures travel bags. The high output occurred in May, with 1,200 units produced at a total cost of $8,800. The low output was in January, with 400 units produced at a total cost of $2,400. Determine the variable rate by using the high and low points. a.$7.33 b.$6.00 c.$8.00 d.$5.33

c. $8.00 Variable Rate = (High Point Cost - Low Point Cost) ÷ (High Point Output - Low Point Output)Variable Rate = ($8,800 − $2,400) ÷ (1,200 - 400) = $6,400 ÷ 800 = $8.00

Which of the following is true of cost of goods sold? a.The balance in this account is transferred to finished goods inventory. b.It represents the total conversion cost of the goods manufactured. c.It is an expense that appears on the income statement. d.It includes all selling and administrative expenses.

c. It is an expense that appears on the income statement.

Wages paid to a factory supervisor are treated as: a.a direct labor cost but not as a period cost. b.both a direct labor cost and a product cost. c.a product cost but not as a direct labor cost. d.a period cost but not as a direct labor cost.

c. a product cost but not as a direct labor cost.

Gross margin is computed as: a.cost of goods manufactured plus beginning finished goods inventory, minus ending finished goods inventory. b.operating income minus operating expenses. c.sales revenue minus cost of goods sold. d.direct materials plus direct labor plus manufacturing overhead.

c. sales revenue minus cost of goods sold.

The following costs were incurred by ABC Company in January: Direct materials. $100,000 Direct labor. 84,000 Manufacturing overhead. 66,000 Selling expense. 22,000 Administrative salaries. 5,000 Determine ABC's total product cost. a.$267,000 b.$294,000 c.$250,000 d.$277,000

c.$250,000 (Product Cost = Direct Material + Direct Labor + Manufacturing Overhead = $100,000 + $84,000 + $66,000 = $250,000)

The following information relates to Diamond Inc.Units sold ($400 per unit)2,000Variable costs per unit: Direct materials$80 Direct labor 50 Variable overhead 20 Fixed costs:Fixed overhead per unit produced$30Fixed selling and administrative expenses 200,000 Determine the cost of goods sold under absorption costing. a.$400,000 b.$540,000 c.$360,000 d.$500,000

c.$360,000 Absorption-costing unit cost = $80 + $50 +$20 + $30 = $180Cost of Goods Sold = Units Sold × Absorption Unit Product Cost = 2,000 units × $180 = $360,000

Mahogany Company manufactures computer keyboards. The total cost of producing 14,000 keyboards is $410,000. The total fixed cost amounts to $130,000. Determine the total cost of manufacturing 27,000 keyboards. a.$690,000 b.$540,000 c.$670,000 d.$800,000

c.$670,000 (Total cost of manufacturing includes total fixed cost and total variable cost.)

The value of coefficient of determination always lies between _____. a.1 and 100 b.0 and 10 c.0 and 1 d.1 and 10

c.0 and 1

Which of the following costs is always expensed on the income statement under absorption costing as well as variable costing? a.Fixed factory overhead b.The cost of direct labor c.Administrative expenses d.The cost of direct materials

c.Administrative expenses

Which of the following is an example of a discretionary fixed cost? a.Depreciation on an office building b.Property tax c.Advertising cost d.Lease installment

c.Advertising cost

Identify a true statement about the method of least squares for separating a mixed cost into its fixed and variable components. a.It is simple and easily communicated to other individuals. b.It follows a subjective criterion for choosing the best-fitting line through a set of data points. c.It generates the smallest possible cost prediction errors. d.It allows a manager to get a cost formula using just two data points.

c.It generates the smallest possible cost prediction errors.

Which of the following is true of managerial accounting? a.It provides only nonfinancial information to its users. b.It is bound by formal criteria such as generally accepted accounting principles (GAAP). c.It represents a company's internal accounting system. d.It is the provision of accounting information for a company's external users only.

c.It represents a company's internal accounting system.

Identify a difference between managerial accounting and financial accounting. a.Managerial accounting focuses on external users; financial accounting focuses on internal users. b.Managerial accounting is self-contained in nature; financial accounting is multidisciplinary in nature. c.Managerial accounting provides internal evaluation of a firm; financial accounting provides information about a firm as a whole. d.Managerial accounting has a historical orientation; financial accounting emphasizes the future.

c.Managerial accounting provides internal evaluation of a firm; financial accounting provides information about a firm as a whole.

Which of the following is the formula to calculate prime cost? a.Prime Cost = Conversion Cost + Direct Labor b.Prime Cost = Direct Labor + Manufacturing Overhead c.Prime Cost = Direct Materials + Direct Labor d.Prime Cost = Direct Materials + Manufacturing Overhead

c.Prime Cost = Direct Materials + Direct Labor

Which of the following statements is true of the controller of a large company having a separate treasury department? a.The controller manages cash and investments. b.The controller is responsible for the finance function. c.The controller is responsible for SEC reports. d.The controller is responsible for raising capital.

c.The controller is responsible for SEC reports.

A step cost with narrow steps means that the cost: a.is a discretionary variable cost. b.is a committed variable cost. c.changes in response to small changes in output. d.changes only if output changes in large quantities.

c.changes in response to small changes in output.

The cost of purchase of plant and equipment is an example of a(n): a.discretionary variable cost. b.unavoidable variable cost. c.committed fixed cost. d.discretionary fixed cost.

c.committed fixed cost.

The AICPA and IMA codes of ethics stress the importance of: a.responsible citizenship, accountability, and fairness. b.caring for others, accountability, and fidelity. c.competence, confidentiality, integrity, and objectivity. d.promise keeping, fidelity, and fairness.

c.competence, confidentiality, integrity, and objectivity.

If the cost equation yields a coefficient of determination of 81%, it means that the: a.independent variable explains 19% of the variability in cost. b.dependent variable explains 81% of the variability in cost. c.independent variable explains 81% of the variability in cost. d.dependent variable explains 19% of the variability in cost.

c.independent variable explains 81% of the variability in cost.

Gamma Company manufactures power transmission grids. It has sales representatives 6 each earning a salary of $38,000 plus a commission of $220 per grid sold. The total cost associated with the sales representatives is an example of a: a.variable cost. b.fixed cost. c.mixed cost. d.step cost.

c.mixed cost.

Gamma Company manufactures power transmission grids. It has 4 sales representatives, each earning a salary of $44,000 plus a commission of $210 per grid sold. The total cost associated with the sales representatives is an example of a: a.fixed cost. b.step cost. c.mixed cost. d.variable cost.

c.mixed cost.

The higher the percentage of cost variability explained by the coefficient of determination, _____. a.the lesser is the accuracy with which the dependent variable explains the independent variable b.the lesser is the accuracy with which the independent variable explains the dependent variable c.the better job the independent variable does of explaining the dependent variable d.the better job the dependent variable does of explaining the independent variable

c.the better job the independent variable does of explaining the dependent variable

Which of the following statements is true of absorption costing? a.It is used only for internal reporting purposes. b.It treats fixed manufacturing overhead as a period cost. c.It treats fixed selling overhead as a product cost. d.It assigns all manufacturing costs to the product.

d.It assigns all manufacturing costs to the product.

Which of the following is true of cost of goods sold? a.It represents the total conversion cost of the goods manufactured. b.It includes all selling and administrative expenses. c.The balance in this account is transferred to finished goods inventory. d.It is an expense that appears on the income statement.

d.It is an expense that appears on the income statement.

Identify the true statement about variable costing. a.It treats fixed selling overhead as a product cost. b.It is the most acceptable product-costing method for external reporting. c.It assigns all manufacturing costs to the product. d.It treats fixed manufacturing overhead as a period cost.

d.It treats fixed manufacturing overhead as a period cost.

Which of the following is true of mixed costs? a.Mixed costs are variable costs whose rate of change is not constant. b.Mixed costs are costs that have both a discretionary fixed cost and a committed fixed cost component. c.Mixed costs are variable costs that can be changed or avoided easily in the short run. d.Mixed costs are costs that have both a fixed cost and a variable cost component

d.Mixed costs are costs that have both a fixed cost and a variable cost component

In the high-low method, the high and low points are identified by looking at the: a.opportunity cost levels. b.associated costs. c.revenue drivers. d.activity levels.

d.activity levels.

The percentage of variability in the dependent variable explained by an independent variable is called the: a.coefficient of regression. b.coefficient of correlation. c.coefficient of gradation. d.coefficient of determination

d.coefficient of determination

The cost of purchase of plant and equipment is an example of a(n): a.unavoidable variable cost. b.discretionary fixed cost. c.discretionary variable cost. d.committed fixed cost

d.committed fixed cost

Direct costs are: a.assigned to a cost object using a reasonable and convenient method. b.costs that do not increase in total as output increases. c.also referred to as opportunity costs. d.easily traceable to a cost object

d.easily traceable to a cost object

The property tax paid for a factory building is an example of a(n): a.variable cost. b.opportunity cost. c.direct cost. d.fixed cost

d.fixed cost

When the level of output increases within the relevant range, _____. a.both fixed cost per unit and variable cost per unit do not change b.both fixed cost per unit and variable cost per unit decrease c.fixed cost per unit does not change, but the variable cost per unit decreases d.fixed cost per unit decreases, but the variable cost per unit does not change

d.fixed cost per unit decreases, but the variable cost per unit does not change

For planning and control purposes, _____. a.only the fixed component of mixed costs should be considered b.mixed costs should be ignored c.mixed costs should be considered sunk costs d.mixed costs should be separated into variable and fixed components

d.mixed costs should be separated into variable and fixed components

Step costs are also called: a.discretionary fixed costs. b.scattered costs. c.committed fixed costs. d.semi-fixed costs.

d.semi-fixed costs.

The higher the percentage of cost variability explained by the coefficient of determination, _____. a.the lesser is the accuracy with which the independent variable explains the dependent variable b.the better job the dependent variable does of explaining the independent variable c.the lesser is the accuracy with which the dependent variable explains the independent variable d.the better job the independent variable does of explaining the dependent variable

d.the better job the independent variable does of explaining the dependent variable