Managerial Accounting Past Test Questions for Final

Which of the following is not an underlying assumption of cost-volume-profit analysis? Multiple Choice Selling price is constant. The average fixed cost per unit increases as the level of activity increases. In multiproduct companies, the mix of products sold remains constant. Variable cost per unit is constant within the relevant range.

B

A document that records the materials, labor, and manufacturing overhead charged to a specific job is called a: Multiple Choice Normal cost sheet. Bill of materials. Unit product costing sheet. Job cost sheet.

D

Which of the following is not an advantage of using self-imposed budgets? They recognize individuals at all levels of the organization as members of the team whose views are valued by top management. They generally increase motivation by allowing people to participate in setting their own goals. They are often more accurate than estimates prepared by top managers because front-line workers have more intimate knowledge of day-to-day operations. They are often more accurate than estimates prepared by top managers because front-line workers bring a broad strategic perspective to the budgeting process.

D

Which of the following statements is true with respect to a budgeted income statement? Its net income should equal the net cash flows from the cash budget. Its net income will impact the ending retained earnings balance shown on the balance sheet. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. Its selling and administrative expenses exclude depreciation expense because it is a product cost.

B

Which of the following is an example of a duration driver? Number of machine-setups. Quantity of customer orders received. Direct labor-hours. Dollars spent on advertising.

C

Which of the following statements is true? A batch-level activity cost will decrease as the number of units in the batch increases. A batch-level activity cost will increase as the number of units in the batch increases. A batch-level activity cost is unaffected by the number of units in the batch. Batch-level activity costs are often used in traditional absorption costing systems to allocate batch-level costs.

C

n variable costing, a complete definition of unit product cost includes: Direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses Direct materials and direct labor. Direct materials, direct labor, and variable manufacturing overhead. Direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.

C

Which of the following is an example of an organization-sustaining activity? Assembling products Setting up machines Advertising products Heating a manufacturing facility

D

Contribution margin and gross margin mean the same thing. True or False

False

In the equation, y = a + bX, the X represents: Multiple Choice The total mixed cost. The variable cost per unit of activity. The level of activity. The total fixed cost.

The Level of Activity

A planning budget is usually prepared: Before the period begins. After the period ends. During the period. After the flexible budget is prepared.

A

A spending variance is calculated by comparing the: Flexible budget to the actual results. Planning budget to the flexible budget. Planning budget to the actual results. Static budget to the actual results.

A

The cost of goods manufactured includes: applied manufacturing overhead, but not actual manufacturing overhead. actual direct and indirect materials, but not applied direct and indirect materials. applied direct and indirect materials, but not actual direct and indirect materials. actual manufacturing overhead, but not applied manufacturing overhead.

A

When the units produced are less than the units sold, which of the following equations explains the difference between absorption costing and variable costing net operating income? Number of units released from ending inventory × fixed manufacturing overhead cost per unit Number of units released from ending inventory × variable manufacturing overhead cost per unit Number of units deferred in ending inventory × fixed manufacturing overhead cost per unit Number of units deferred in ending inventory × variable manufacturing overhead cost per unit

A

Which of the following equations can be used to compute a labor efficiency variance (where AH = actual hours; SH = standard hours allowed; AR = actual rate; SR = standard rate)? [SR × (AH − SH)] [AR × (AH − SH)] [AR ÷ (AH − SH)] [SR ÷ (AH − SH)]

A

Which of the following equations can be used to compute a variable overhead efficiency variance (where AH = actual hours; SH = standard hours allowed; AR = actual rate; SR = standard rate)? [SR × (AH − SH)] [AR × (AH − SH)] [AR ÷ (AH − SH)] [SR ÷ (AH − SH)]

A

Which of the following is an example of a unit-level activity? Assembling products Setting up machines Advertising products Heating a manufacturing facility

A

Which of the following statements is false regarding absorption costing? Multiple Choice It relies on a predetermined overhead rate to apply direct material cost to units of product. It treats all nonmanufacturing costs as period costs. It assigns all manufacturing costs, both fixed and variable, to units of product. It is typically used for external financial reporting.

A

Which of the following statements is false with respect to a budgeted income statement? Its net income should equal the net cash flows from the cash budget. Its net income will impact the ending retained earnings balance shown on the balance sheet. Its interest expense flows from the financing section of the cash budget. Its selling and administrative expenses may include depreciation expense.

A

Which of the following statements is false? The sum of the segment margins earned by all of a company's business segments will equal the company's overall net operating income. A segment's traceable fixed costs will disappear over time if the segment is eliminated. Contribution margin − Traceable fixed expenses = segment margin. Traceable fixed costs can become common fixed costs depending on how the segments are defined.

A

Which of the following statements is true with respect to self-imposed budgets? They may enable lower level managers to create too much budgetary slack. They involve people in setting their own goals which, in turn, can lower their motivation levels. They are often less accurate than estimates prepared by top managers who have better knowledge of day-to-day operations. They enable front-line managers to bring a broad strategic perspective to the budgeting process that enhances the accuracy of the estimates.

A

Which of the following statements is true with respect to the labor efficiency variance? It is computed using the standard hourly rate. It is computed using the difference between the actual and standard hourly rates. It is computed using the actual hourly rate. It is computed based solely on the actual hours worked.

A

Assume that the amount of one of a company's fixed expenses in its flexible budget is $46,000. The actual amount of the expense is $47,000 and the amount in the company's planning budget is $46,000. The activity variance for this expense is: Multiple Choice $0.Correct $1,000 U $1,000 F. $2,000 U.

A (activity variance for a fixed expense is always zero)

An activity variance is calculated by comparing the: planning budget to the actual results. planning budget to the flexible budget. flexible budget to the actual results. static budget to the actual results.

B

Cost classifications used for decision making include: Multiple Choice Variable cost and fixed cost. Relevant and irrelevant cost. Correct Product cost and period cost. Direct cost and indirect cost.

B

If a company has overapplied overhead, then the journal entry to dispose of it could possibly include: a debit to Sales. a credit to Cost of Goods Sold. a debit to Cost of Goods Sold .a credit to Manufacturing Overhead.

B

Which of the following is an example of a transaction driver? Machine-setup hours. Number of customer orders received. Direct labor-hours needed to assemble a product. Engineering hours spent per product.

B

In a cost-volume-profit (CVP) graph, the vertical distance between the total sales line and the total expense line represents which of the following? Multiple Choice The total variable expenses The total contribution margin The profit or loss The total fixed expenses

C

Which of the following equations can be used to compute a materials price variance (where AQ = actual quantity; SQ = standard quantity allowed; AP = actual price; SP = standard price)? [SQ ÷ (AP − SP)] [AQ ÷ (AP − SP)] [AQ × (AP − SP)] [SQ × (AP − SP)]

C

Which of the following equations can be used to compute a variable overhead rate variance (where AH = actual hours; SH = standard hours allowed; AR = actual rate; SR = standard rate)? [SH ÷ (AR − SR)] [AH ÷ (AR − SR)] [AH × (AR − SR)] [SH × (AR − SR)]

C

Which of the following explains how to prepare a profit graph? Multiple Choice Compute the total variable expenses at two different sales volumes, plot the points, and then connect them with a straight line. Compute the contribution margin at two different sales volumes, plot the points, and then connect them with a straight line. Compute the profit at two different sales volumes, plot the points, and then connect them with a straight line. Compute the contribution margin ratio at two different sales volumes, plot the points, and then connect them with a straight line.

C

Which of the following is an example of a product-level activity? Assembling products Setting up machines Advertising products Heating a manufacturing facility

C

Which of the following is not one of the three inventory accounts reported on the balance sheet? Finished goods Work in process Raw materials Cost of goods sold

C

Which of the following statements is false? Multiple Choice Prime costs include direct labor. Conversion costs include manufacturing overhead. Prime costs include manufacturing overhead. Conversion costs include direct labor.

C

Which of the following statements is true with respect to the labor rate variance? It is computed using the standard hours allowed for the actual output. It is computed using the difference between the actual hours worked and the standard hours allowed for the actual output. It is computed using the actual hours worked. It is computed based solely on the standard hourly rate.

C

Which of the following statements is true? The activity variance for revenue will usually equal zero. The activity variance for revenue will be unfavorable if the actual level of activity is greater than the planned level of activity. The activity variance for revenue will be unfavorable if the actual level of activity is less than the planned level of activity. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue.

C

Which of the following statements is true with respect to a budgeted balance sheet? The accounts receivable balance includes the uncollected credit sales from the most recently completed month plus the expected cash collections from credit sales that were made two months ago. The ending cash balance on the balance sheet equals the net income on the income statement. The accounts payable balance includes the expected cash payments for material purchases that were made during the most recently completed month. The ending cash balance on the balance sheet equals the ending cash balance on the cash budget.

D

Which of the following statements is true? A flexible budget is a comparison of actual revenues and costs at the actual level of activity to the actual revenues and costs incurred at the planned level of activity. A flexible budget is a comparison of actual revenues and costs to what they should have been given the planned level of activity. A flexible budget is an estimate of what revenues and costs should have been given the planned level of activity for the period. A flexible budget is an estimate of what revenues and costs should have been given the actual level of activity for the period.

D