Managerial Accounting - Exam One

Which of the following is true?

ABM refers to using activity - based cost information to make decisions.

Ethical Standards are critical for management accountants. Which one best relates to Integrity?

Abstain from engaging in or supporting and activity that might discredit the profession.

Activity-based costing (ABC) focuses on __________, rather than departments, as the fundamental cost objects, which results is less cost distortion.

Activities

Which of the following is not an activity in the value chain?

Administration

What is the difference between a service firm and a manufacturer?

All of the above are differences between a service firm and a manufacturer

Which of the following ethical standards are required of management accountants by the IMA's Statement of Ethical Professional Practice?

All of the above: Competence, Confidentiality and Integrity

Of the following skills, which are needed by today's management accountants?

All of the above: Decision analysis, cost management, strategic thinking

The value chain describes the costs associated with making a product. What box(es) are expense immediately when incurred on the income statement as operating expenses / SGA ("period costs")?

All of them, except production or purchases

For service firms, how are indirect period costs allocated?

Allocate to each job based on the indirect cost allocation rate.

Underallocated / Undercosted overhead occurs when:

Allocated overhead all year long is less than the actual manufacturing overhead at year end.

The amount of manufacturing overhead recorded on a job cost record for a particular job is found by

Allocating manufacturing to the job

Due to many organizations reporting financial statements, companies on certain stock exchanges are required to form an audit committee. An audit committee is / does all of the following except:

Are employees of the company (But does do: 'internal audit' reports to the audit committee, sub-set of the Board of Directors, hire the external auditors)

When is the predetermined manufacturing overhead rate calculated and what is it used for?

Beginning of the year, to allocate manufacturing overhead to a job during the year.

Which of the following documents specifies the materials needed to produce a job?

Bill of materials

Which of the following is true when using job costing at a service firm?

Both direct and indirect costs are assigned to client jobs

Ethical Standards are critical for management accountants. Which one best relates to credibility?

Communicate information fairly and objectively

Which of the following professional standards requires management accountants to continually develop their knowledge and skills?

Competence

Which of the following professional standards requires management accountants to not disclose private information about their organizations?

Confidentiality

Which of the following corporate positions is responsible for general financial accounting, managerial accounting and tax reporting?

Controller

Which of the following management responsibilities often involves evaluating the results of operations against the budget?

Controlling

Assuming the amount of manufacturing overhead overallocation or underallocation is not material, which account is adjusted at the end of the period?

Cost of Goods Sold

Which of the following is a calculated amount, rather than a general ledger account?

Cost of goods manufactured

Which of the following is NOT an example of an indirect cost incurred in manufacturing automobiles?

Cost of the automobile engines

Costs of Goods Sold of a manufacturing represents the costs related to building a product that are expense when it is sold. To determine Costs of Goods Sold, three formulas where used representing the three different categories of inventory. Which schedule is based on work in process inventory?

Costs of Goods Manufactured

In the future, after graduation, you will end up working with various individuals across the organization, not just employees in your own department. What term is best associated with this?

Cross-Functional Teams

Management accountants works with many different groups within a company. This concept is best described as:

Cross-functional Teams

Which element of the value chain would a technical support hotline for customers be considered?

Customer Service

Cost distribution is more likely to occur when:

Departments incur different types of overhead and the products or jobs us the departments to a different extent.

An assembly line worker in the factory would be considered?

Direct Labor

A cost that can be traced to a cost object is known as a(n)

Direct cost

In job costing, what is included in the cost of a job?

Direct materials, direct labor and manufacturing overhead

Managerial accounting differs from financial accounting in that managerial accounting

Emphasizes data relevance over data objectivity

Which statement is FALSE regarding manufacturing overhead?

Examples to manufacturing overhead include costs of raw materials, assembly line workers, and other costs to produce the product

Activities incurred regardless of how many units, batches, or products are produced are called _________ activities.

Facility - Level

Traditional costing systems are generally more accurate than ABC costings.

False

Concerning lean operations, which of the following is false?

Focus on internal and external waste

Which of the following is an example of direct materials for a wedding?

Food and beverage expense

Chapter 3, discusses job costing. Which type of company listed below would most likely use job costing?

Home building

Which of the following organizations is the professional association specifically for management accountants?

IMA

The first step in computing and using ABC is which of the following?

Identifying the company's primary activities

Lean operations are generally characterized by

JIT inventory systems, productions in self - contained cells, employee empowerment

What form is used to accumulate the all costs associated with making the product?

Job cost record

Which of the following documents is used to accumulate all of the manufacturing costs assigned to a job?

Job cost record

Which of the following is false?

Job costing information is not useful for assessing the profitability of different products

The balance sheet of a service company has:

Little or no inventory

This course is dealing with managerial accounting versus financial accounting. One of the biggest differences between the two is:

Managers and other internal organization users will receive various reports to help them achieve their goals and objectives, whereas financial accounting deals with a set of financial statements that are provided to external users

For which of the following would job costing not be appropriate?

Manufacturer of mass- produced carbonated beverages

Which of the following types of companies would have work in process inventory?

Manufacturing

Rent paid for the plant factory would be considered:

Manufacturing Overhead

Utilities and property taxes for the plant factory would be considered?

Manufacturing Overhead

Which of the following types of companies will always have the Cost of Goods Sold account on their income statements?

Merchandising and manufacturing companies

Which of the following is not one of the "eight wastes" included in the acronym DOWNTIME?

Neglect

Which of the following is true?

None of the statement is true.

Period costs are often referred to as

Operating expenses

Ethical Standards are critical for management accountants. Which one best relates to competence?

Perform professional duties in accordance with laws, regulations and technical standards

Which of the following is not part of manufacturing overhead

Period costs, such as depreciation on office computers

The potential benefits of ABC / ABM are generally higher for companies that:

Produce high volumes of some products and low volumes of other products.

Which of the following authorizes the purchase of specific raw materials from a specific supplier?

Purchase order

Kohl's Department Store, a clothing and home goods store, is primarily what type of company?

Retailer

Which of the following is an example of a cost item that should be classified as an internal failure cost?

Rework costs

Which of the following requires the company's CEO and CFO to assume responsibility for the company's financial statements and disclosures?

Sarbanes - Oxley Act of 2002 (SOX)

Progressive Insurance Company sells insurance policies and related products. Progressive Insurance Company sis primarily what type of company?

Service

Which of the following would you expect to see at a company that espouses lean thinking?

Smaller batch sizes, Pull system, more organized workstations and Lower-level small team problem solving

Which of the following is false?

The triple bottom line focuses on three items: net income, net assets, and return on investment

Which of the following is not one of the costs of quality categories?

Transportation costs

ABC can be used in routine planning and control decisions as well as pricing, product mix and cost cutting decisions.

True

As compared to traditional volume - based costing using a single plantwide overhead rate, activity - based costing (ABC) is a more refined costing systems that reduces cost distortion.

True

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

True

The benefits of adopting ABC / ABM are higher for companies in more competitive markets:

True

Waste can be reduced by implementing shorter setup times

True

Which of the following is an example of a cost item that should be classified as an external failure cost?

Warranty claims

Which of the following would be considered an external failure cost?

Warranty costs