Quiz 3 (1H, 2H, 7H)

The cost to manufacture one unit of a product is likely to be:

A reasonable approximation

The management accounting technique that spreads indirect manufacturing costs fairly across the range of products is called:

Absorption costing

The salary of the manager of the factory maintenance department will be a direct cost to that department, and will be ___________ product cost

An indirect

The lubricants used to operate a factory's production equipment is ____________________ cost

An indirect material

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is more likely to:

Be tailored to the specific needs of an individual decision maker

The role of management accounting does not normally include the function of:

Cash management

Changing cost structures in the business environment have led to management accounting systems:

Collecting and reporting more information on cost savings

Sunk costs are:

Committed costs that have already been incurred and are therefore irrelevant in future decisions

The role of financial management does not usually include this responsibility:

Compliance with accounting standards

The ___________________ is defined as revenues minus variable costs

Contribution Margin

The head of the accounting department in a very large manufacturing firm usually has the title of __________

Controller

The process of ensuring that results agree with plans is referred to as:

Controlling

Term which refers to the combination of direct labor costs and manufacturing overhead costs

Conversion

Cost accounting is concerned with:

Cost accumulation for inventory valuation to meet external financial reporting requirements

Cost allocation is the charging of:

Cost center with the overhead costs resulting solely from the existence of the cost center

An example of manufacturing overhead would be:

Cost of templates and molds used in production

Fixed, mixed, and variable are terms used to describe how _____ behave within a reasonable or relevant range of volume of activities

Costs

Strategic decisions are:

Decisions that affect the firms long run possibilities and will affect the choices that the business can make in the future

The relevant costs for a business decision are the ____________ costs

Differential

Costs that are traceable to a product without allocation are described as ______ product costs

Direct

Activity-based costing utilizes more than one of these in the assigning of costs

Drivers

Devoted to providing information for external users

Financial accounting

If the cost of goods manufactured is greater than the cost of goods sold, then:

Finished goods inventory has increased during the period

These costs do not change in total within a relevant range of volume or activity

Fixed

Advertising, insurance, and managers' salaries are all examples of:

Fixed costs

The budget that changes for increases or decreases in volume or activity is a ________ budget

Flexible

To be useful to management, accounting information must:

Have the potential to affect decisions and influence behavior

The professional organization with its primary focus on management accounting is:

IMA

The wages of materials handling personnel in a factory would usually be considered: Indirect Labor: yes/no Manufacturing overhead: yes/no

Indirect Labor: Yes Manufacturing Overhead: Yes

Manufacturing overhead is which type of cost?

Indirect product

Management accounting is usually associated with ________ reporting

Internal

Raw materials, work-in-process, and finished good are the three _________ accounts usually used by manufacturers

Inventory

Financial reporting is primarily directed towards the information needs of:

Investors and creditors

The Japanese term for continuous improvement is ______

Kaizen

Management accounting information is sometimes used for:

Legitimizing and rationalizing organizational activities

Management by exception refers to:

Management focusing on the areas that need to be controlled most to achieve the business objectives

What is the current role of the managerial accountant?

Managerial accountants facilitate the decision-making process within an organization

Burden is used when referring to which of the following costs?

Manufacturing overhead

The accountants' term "incremental cost" is related to the economists' term ________ cost

Marginal

The "law of diminishing marginal returns" refers to the general tendency for ________________ to eventually diminish as more of the variable input is employed, given the quantity of fixed inputs

Marginal product

Prime costs are comprised of:

Material costs plus direct labor costs

The basic purpose of an accounting system is to:

Meet an organization's need for accounting information as efficiently as possible

A mixed cost would be:

More than zero if no products were made and would then increase in direct proportion to output

The annual depreciation of the factory building is a ________________ cost for the plant manager

Non-controllable

Freight-out is best classified as a:

Non-manufacturing expense

Selling and delivery expenses are examples of ________________ costs

Noninventoriable

A product, department, service, customers, etc. to which a cost is assigned is a ______ cost

Object

The cost defined as a benefit forgone by having selected and taken an alternative action

Opportunity

A manufacturer's indirect product costs are also referred to as manufacturing ________ costs

Overhead

A variable cost is likely to remain the same ________ as volume changes

Per unit

A cost that is not a product cost is likely to be a ______ cost

Period

Interest on a loan for operations is classified as a ______ cost

Period

How often is management accounting prepared?

Periodically only

Generally, managerial accounting is focused on ________, control, and internal decision making

Planning

An example of a mixed cost would be:

Power and lighting costs

As a company's management accountant you would:

Prepare plans and forecasts for the future activities of the business

Financial statements are prepared for:

Primarily for the benefit of persons outside of the business organization

Term which refers to the combination of direct materials and direct labor costs

Prime

_______ cost consists of direct materials, direct labor, and manufacturing overhead

Product

Total Quality Management:

Relies heavily on information generated by the financial accounting information system

Within the relevant range of production, average variable cost per unit tends to:

Remain relatively constant

For decision making, ___________ costs are likely to be more useful

Replacement

The salary of the vice president of finance would be considered a(n):

Selling, General, and Administrative cost

Another name for step cost:

Semi-fixed cost

The term for a past, irrelevant cost

Sunk

Conversion cost can be defined as:

The cost of the direct labor plus manufacturing overhead

In absorption costing, what are the allocated costs?

The costs that can be directly associated with a department

What is a description of an opportunity cost in a course of action?

The expected benefit of the next best alternative course of action not undertaken

Information is cost effective when:

The value of the information exceeds the cost of producing it

Why are sunk costs not considered relevant when choosing among alternatives?

They remain the same among alternatives and do not add useful information for selecting an alternative

The theory of constraints focuses on __________

Throughput

Primary objective of management accounting:

To provide management with information useful for planning and control of operations

Which costs are charged to a product using the method absorption costing?

Total production costs

What would happen to unit cost if production volumes were increased?

Unit cost of a product would decrease

What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

Value of buildings and equipment

The total of these costs will change in proportion to the change in activity or volume

Variable

You are given the cost and volume information below: Volume Cost 1 unit $15 10 units $150 100 units $1500 What type of cost is given?

Variable Cost

Using the marginal costing method, contribution is equal to total sales revenue less:

Variable Costs

The cost of direct material would most likely be a:

Variable cost

What is true regarding graphs of fixed and variable costs

Variable costs are zero when production is equal to zero

Within the relevant range:

Variable costs per unit will remain constant and fixed costs per unit will fluctuate

As production increases within the relevant range,

Variable costs will vary in total

Total costs are comprised of:

Variable costs, fixed costs, and mixed costs

For purposes of decision making, avoidable costs are costs that:

Will be incurred in the future

Which of the following best describes a fixed cost? a. Represents a fixed proportion of total costs b. Has a direct relationship with output c. Its average remains at the same level as output increases d. Remains at the same level up to a particular level of output

a. Represents a fixed proportion of total costs

Which of the following statements is false? a. There is no overlap between financial and managerial accounting b. Managerial accounting sometimes relies on past information c. Managerial accounting does not need to conform to GAAP d. Financial accounting must conform to GAAP

a. There is no overlap between financial and managerial accounting

Which of the following examples of bases of cost apportionment may relate to rent, heating, and lighting? a. area b. number of employees c. number of products d. weight

a. area

Factory overhead includes:

all manufacturing costs, except direct materials and labor

Which definition best describes indirect costs? a. Indirect costs are those costs which are not controlled directly by a manager b. Indirect costs are those costs which cannot be directly associated with a product or service c. Indirect costs are always fixed d. Indirect costs are always manufacturing overhead costs

b. Indirect costs are those costs which cannot be directly associated with a product or service

Which of the following functions would not be classed as cost accounting? a. To provide information to managers on the best type of machine to buy b. Providing details to management of the cost of running a department c. Providing accurate valuations for units of stock d. Ascertaining the price to charge for output based on the resources used to make it

b. Providing details to management of the cost of running a department

Which of the following is not a function of management accounting? a. To provide information to help in the planning of future operations b. To aid shareholders in making wise investment decisions c. To provide control reports that highlight differences between actual and plan d. To provide information with which management can make better decisions

b. To aid shareholders in making wise investment decisions

Which of the following actions is most likely to result in the maximization of future net cash flows? a. Charging as high a price as possible for our products b. Cutting back on expenditure that will generate maximum revenue for the business c. Charging a price that will generate maximum revenue for the business d. Ensuring that employees are paid more than the average salary for their type of work

c. Charging a price that will generate maximum revenue for the business

Which of the following is an example of a sunk cost? a. Direct material for products b. Variable overhead for the current year c. Equipment depreciation for last year d. Future costs that might be saved

c. Equipment depreciation for last year

Which of the following is not classed as a planning or decision making role of management accounting? a. Searching for alternative courses of action b. Responding to divergences from plan c. Identifying objectives d. Gathering data about options that are available

c. Identifying objectives

All of the following are characteristics of managerial accounting, except: a. Reports are primarily used by insiders rather than by persons outside of the business entity b. Its purpose is to assist managers in planning and controlling business operations c. Information must be developed in conformity with generally accepted accounting principles or with income tax regulations d. Information may be tailored to assist in specific managerial decisions

c. Information must be developed in conformity with generally accepted accounting principles or with income tax regulations

A complete set of financial statements for Hartman Company, at December 31, 1999, would include each of the following, except: a. Balance sheet b. Income statement c. Statement of projected cash flows d. Notes containing additional information

c. Statement of projected cash flows

Which of the following costs should not be considered an indirect cost of serving a particular customer at a restaurant franchise? a. The salary of the franchise's manager b. The cost of the tables and chairs used to furnish the restaurant c. The cost of the dough used to make the pizza that is ordered d. The cost of lighting and heating the restaurant

c. The cost of the dough used to make the pizza that is ordered

Which of the following best describes a stepped fixed cost? a. A cost which is difficult to estimate b. A cost which only has a fixed and a variable element c. A cost which only varies sometimes d. A cost which will be fixed for specific levels of production

d. A cost which will be fixed for specific levels of production

Which one of the following is irrelevant when deciding whether or not to drop a product line? a. Variable production costs b. Variable selling costs c. Direct fixed costs d. Allocated fixed costs

d. Allocated fixed costs

In evaluating the differences between two printers, which of the following would be a qualitative aspect (not differential) of making the decision? a. The number of copies produced per minute is different b. The dimensions of one of the printers require purchasing a new table c. The printers will collate output at different rates d. The color of one of the printers matches the color of the computer it will be attached to

d. The color of one of the printers matches the color of the computer it will be attached to

Which of the following is NOT a current theme of management accounting? a. determination of cost of stock b. continuous improvement c. value chain analysis d. all of the above

d. all of the above

Which of the following would most likely be a variable cost? a. direct materials b. direct labor c. metered utilities d. all of the above

d. all of the above

In comparison to the traditional manufacturing environment, overhead costs in a JIT environment all the following are true except: a. are more easily tracked to products b. are frequently direct in nature c. include rent, insurance, and utilities d. most of the costs are likely to be indirect in nature e. labor need not be tracked to the product

d. most of the costs are likely to be indirect in nature

Which of the following would NOT usually be considered a fixed cost? a. insurance b. managers' salaries c. plant depreciated d. syringes used in a hospital

d. syringes used in a hospital

Which of the following statements is false? a. Average total cost is total cost per unit of output b. Average fixed cost plus average variable cost equals average total cost c. Marginal cost is the increase in total cost resulting from a unit increase in output d. Marginal cost depends on the amount of labor hired e. Total cost equals total fixed cost plus total average cost

e. Total cost equals total fixed cost plus total average cost

Product and service costing information is prepared for: a. manufacturing companies with inventory b. merchandising companies c. service providers d. manufacturing companies without inventory e. all of the above

e. all of the above