Acc final ch. 10-11

Property taxes on a manufacturing plant are an element of a Product Cost Period Cost a. Yes No b. Yes Yes c. No Yes d. No No

Product Cost Period Cost a. Yes No

Because of automation, which component of product cost is declining? a. Direct labor b. Direct materials c. Manufacturing overhead d. Advertising

a. Direct labor

Which of the following statements is true about managerial accounting? a. It provides more detailed information than financial accounting does. b. It is primarily for internal users such as stockholders and managers. c. It pertains to a business as a whole. d. It must be prepared using generally accepting accounting principles.

a. It provides more detailed information than financial accounting does.

Which of the following is considered part of the controlling process? a. Keeping the company's activities on track b. Implementing planned objectives c. Coordinating activities and human resources to produce a smooth running operation d. Looking ahead and establishing objectives

a. Keeping the company's activities on track

Which one of the following characteristics would likely be associated with a just-in-time inventory method? a. Minimal finished goods inventory on hand b. An understanding with customers that they may come to the showroom and select from inventory on hand c. A backlog of inventory orders not yet shipped d. Ending inventory of work in process that would allow several production runs

a. Minimal finished goods inventory on hand

A mixed cost contains a. a variable element and a fixed element. b. both selling and administrative costs. c. both retailing and manufacturing costs. d. both operating and non-operating costs.

a. a variable element and a fixed element.

Which of the following is not a management function? a. Constraining b. Planning c. Directing d. Controlling

a. constraining

Which of the following is not an internal user? a. Creditor b. Controller c. Department manager d. Treasurer

a. creditor

Manufacturing overhead includes all of the following except a. direct materials. b. maintenance. c. indirect labor. d. depreciation.

a. direct materials

Required sales in dollars to meet a target net income is computed by dividing a. fixed costs plus target net income by contribution margin ratio. b. variable costs plus target net income by contribution margin per unit. c. total costs plus target net income by contribution margin ratio. d. fixed costs plus target net income by contribution margin per unit.

a. fixed costs plus target net income by contribution margin ratio.

A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n) a. indirect material. b. miscellaneous expense. c. direct material. d. period cost.

a. indirect material.

Managerial accounting... a. is limited to cost data. b. is governed by generally accepted accounting principles. c. places emphasis on special-purpose information. d. pertains to the entity as a whole and is highly aggregated.

a. is limited to cost data.

Managerial accounting information is generally prepared for a. managers. b. regulatory agencies. c. stockholders. d. creditors.

a. managers

A fixed cost is a cost which a. remains constant in total with changes in the level of activity. b. varies in total with changes in the level of activity. c. remains constant per unit with changes in the level of activity. d. varies inversely in total with changes in the level of activity.

a. remains constant in total with changes in the level of activity.

Simmons Company has required sales of $1,500,000 to meet its target net income. It has fixed costs of $200,000 and the contribution margin ratio is 40%. The company's target net income is a. $600,000. b. $400,000. c. $1,300,000. d. $500,000.

b. $400,000.

Marshall Company had actual sales of $600,000 when break-even sales were $420,000. What is the margin of safety ratio? a. 25%. b. 30%. c. 33 1/3%. d. 45%.

b. 30%.

On average, studies have shown that the smallest component of total manufacturing cost is a. factory overhead. b. direct labor. c. manufacturing overhead. d. direct materials.

b. Direct labor

Which one of the following is not a direct material? a. Steel used in the manufacturing of steel-radial tires. b. Lubricant for a ball-bearing joint for a large crane. c. A tire used for a lawn mower. d. Plastic used in the covered case for a home PC.

b. Lubricant for a ball-bearing joint for a large crane.

Which of the following are period costs? a. Raw materials. b. Selling expenses. c. Direct materials and direct labor. d. Direct labor and manufacturing overhead.

b. Selling expenses.

Which of the following is not classified as direct labor? a. Copy machine operators at a copy shop. b. Wages of supervisors. c. Bakers in a bakery. d. Bottlers of beer in a brewery.

b. Wages of supervisors.

Internal reports must be communicated a. annually. b. as needed. c. daily. d. monthly.

b. as needed

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to a. cost of goods purchased. b. cost of goods manufactured. c. net purchases. d. total manufacturing costs.

b. cost of goods manufactured.

The principal difference between a merchandising and a manufacturing income statement is the a. revenue section. b. cost of goods sold section. c. operating expense section. d. non-operating section

b. cost of goods sold section.

Contribution margin a. is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. b. equals sales revenue minus variable costs. c. is always the same as gross profit margin. d. excludes variable selling costs from its calculation.

b. equals sales revenue minus variable costs.

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in a. both variable and fixed costs. b. fixed costs and a decrease in variable costs. c. variable costs and a decrease in fixed costs. d. variable costs and no change in fixed costs.

b. fixed costs and a decrease in variable costs.

The break-even point in dollars is computed by dividing a. variable costs by contribution margin per unit. b. fixed costs by contribution margin ratio. c. variable costs by contribution margin ratio. d. fixed costs by contribution margin per unit.

b. fixed costs by contribution margin ratio.

Each of the following is a period cost except a. administrative expenses. b. indirect labor. c. non-manufacturing costs. d. selling expenses.

b. indirect labor

The wages of a timekeeper in the factory would be classified as a. compliance costs. b. indirect labor. c. a period cost. d. direct labor.

b. indirect labor.

Many companies have significantly lowered inventory levels and costs using a. activity-based costing. b. just-in-time inventory methods. c. the value chain. d. total quality management systems.

b. just-in-time inventory methods.

As current technology changes manufacturing processes, it is likely that direct a. materials will decrease. b. labor will decrease. c. labor will increase. d. materials will increase.

b. labor will decrease.

The relevant range of activity refers to the a. activity level where all costs are curvilinear. b. levels of activity over which the company expects to operate. c. level of activity where all costs are constant. d. geographical areas where the company plans to operate.

b. levels of activity over which the company expects to operate.

Sales commissions are classified as a. indirect labor. b. period costs. c. overhead costs. d. product costs.

b. period costs.

Management accountants would not a. determine cost behavior. b. prepare reports primarily for external users. c. assist in budget planning. d. be concerned with the impact of cost and volume on profits.

b. prepare reports primarily for external users.

A cost of goods manufactured schedule shows beginning and ending inventories for a. raw materials, work in process, and finished goods. b. raw materials and work in process only. c. raw materials only. d. work in process only.

b. raw materials and work in process only.

Bergman Company has total fixed costs of $350,000 and a contribution margin ratio of 20%. Hampton's target net income is $250,000. Sales in dollars to meet the target net income would be a. $1,750,000. b. $1,250,000. c. $3,000,000. d. $600,000.

c. $3,000,000.

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost(UVC) ------Unit Fixed Cost (UFC) a. Decreases Remains constant b. Increases Decreases c. Remains constant Decreases d. Remains constant Remains constant

c. (UVC) Remains constant (UFC) Decreases

Redman Company had actual sales $800,000 and its break-even sales were $600,000. Morgan's margin of safety ratio is a. 33%. b. 75%. c. 25%. d. 80%.

c. 25%.

Which one of the following is an example of a period cost? a. Workers' compensation insurance on factory workers' wages allocated to the factory. b. A box cost associated with computers. c. A manager's salary for work that is done in the corporate head office. d. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer.

c. A manager's salary for work that is done in the corporate head office.

Why is identification of a relevant range important? a. It is a cost that is incurred by a company that must be accounted for. b. It is required under GAAP. c. Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. d. It directly impacts the number of units of product a customer buys.

c. Cost behavior outside of the relevant range is not linear, which distorts CVP analysis.

Which one of the following would not be classified as manufacturing overhead? a. Indirect materials b. Indirect labor c. Direct materials d. Insurance on factory building

c. Direct materials

Which of the following answer choices lists the three manufacturing costs? a. Work in process, finished goods, and cost of goods sold b. Indirect materials, indirect labor, and factory-related costs c. Direct materials, direct labor, and manufacturing overhead d. Raw materials, work in process, and finished goods

c. Direct materials, direct labor, and manufacturing overhead

Which of the following statements is NOT true about managerial accounting? a. It is primarily for internal users such as officers and managers. b. It does not require an audit by a CPA. c. It is highly aggregated. d. Reports are generated as needed.

c. It is highly aggregated.

Which one of the following is not a cost element in manufacturing a product? a. Direct materials b. Manufacturing overhead c. Office salaries d. Direct labor

c. Office salaries

Which one of the following is a name for the range over which a company expects to operate? a. Fixed range b. Variable range c. Relevant range d. Mixed range

c. Relevant range

The equation which reflects a CVP income statement is a. Sales = Cost of goods sold + Operating expenses + Net income. b. Sales - Variable costs + Fixed costs = Net income. c. Sales - Variable costs - Fixed costs = Net income. d. Sales + Fixed costs = Variable costs + Net income.

c. Sales - Variable costs - Fixed costs = Net income.

Which of the following would not be an acceptable way to express contribution margin? a. Sales minus variable costs. b. Unit selling price minus unit variable costs. c. Sales minus unit costs. d. Unit contribution margin divided by unit selling price.

c. Sales minus unit costs.

For a manufacturing company, which of the following is an example of a period cost rather than a product cost? a. Depreciation on factory equipment b. Insurance on factory equipment c. Wages of salespersons d. Wages of machine operators

c. Wages of salespersons

Cost of goods available for sale is reported on the income statement of a. neither a manufacturing company nor a merchandising company. b. a merchandising company but not a manufacturing company. c. a merchandising company and a manufacturing company. d. a manufacturing company but not a merchandising company.

c. a merchandising company and a manufacturing company.

The process of keeping the company's activities on track is a. evaluating. b. planning. c. controlling. d. directing.

c. controlling

Fixed costs normally will not include a. property taxes. b. supervisory salaries. c. direct labor. d. depreciation on buildings and equipment.

c. direct labor.

If the activity level increases 10%, total variable costs will a. increase by more than 10%. b. decrease by less than 10%. c. increase 10%. d. remain the same.

c. increase 10%

All of the following are distinguishing features of managerial accounting except a. to provide special-purpose information. b. internal users. c. independent audits. d. reports pertaining to subunits of the entity.

c. independent audits.

Manufacturing costs that cannot be classified as either direct materials or direct labor are known as a. selling and administrative expenses. b. nonmanufacturing costs. c. manufacturing overhead. d. period costs.

c. manufacturing overhead.

A manager that is establishing objectives is performing which management function? a. Directing b. Controlling c. Planning d. Constraining

c. planning

The management function that requires management to look ahead and establish objectives is a. evaluating. b. directing. c. planning. d. controlling.

c. planning.

The major reporting standard for presenting managerial accounting information is a. the cost principle. b. the current tax law. c. relevance. d. generally accepted accounting principles.

c. relevance

Planning is a function that involves a. analyzing financial statements. b. coordinating the accounting information system. c. setting goals and objectives for an entity. d. hiring the right people for a particular job.

c. setting goals and objectives for an entity

On the cost of goods manufactured schedule, the item raw materials inventory (ending) appears as a(n) a. subtraction from raw materials purchases. b. addition to raw materials purchases. c. subtraction from raw materials available for use. d. addition to raw materials available for use.

c. subtraction from raw materials available for use.

For inventoriable costs to become expenses under the matching principle, a. the product must be finished and in stock. b. all accounts payable must be settled. c. the product to which they attach must be sold. d. the product must be expensed based on its percentage-of-completion.

c. the product to which they attach must be sold.

A cost which remains constant per unit at various levels of activity is a a. mixed cost. b. manufacturing cost. c. variable cost. d. fixed cost.

c. variable cost.

The mathematical equation for computing required sales to obtain target net income is: Required sales = a. no correct answer is given. b. fixed costs + target net income. c. variable costs + fixed costs + target net income. d. variable costs + target net income.

c. variable costs + fixed costs + target net income.

What activities and responsibilities are not associated with management's functions? a. Directing b. Controlling c. Planning d. Accountability

d. Accountability

Which of the following is not a fixed cost? a. Depreciation b. Property taxes c. Lease charge d. Direct materials

d. Direct materials

Which of the following are considered to be management's three broad functions? a. Planning, calculating, and controlling b. Controlling, directing, manufacturing c. Conducting, directing, manufacturing d. Planning, directing, and controlling

d. Planning, directing, and controlling

Which of the following would be the least controllable fixed costs? a. Rent b. Research and development c. Management training programs d. Property taxes

d. Property taxes

Managerial accounting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. d. all of these.

d. all of these

The formula to determine the cost of goods manufactured is a. beginning work in process inventory + total manufacturing costs - ending finished goods inventory. b. beginning finished goods inventory + total manufacturing costs - ending finished goods inventory. c. beginning raw materials inventory + total manufacturing costs - ending work in process inventory. d. beginning work in process inventory + total manufacturing costs - ending work in process inventory.

d. beginning work in process inventory + total manufacturing costs - ending work in process inventory.

The break-even point is where a. total sales equal total fixed costs. b. total variable costs equal total fixed costs. c. total sales equal total variable costs. d. contribution margin equals total fixed costs.

d. contribution margin equals total fixed costs.

Internal reports are generally a. regulated. b. unreliable. c. aggregated. d. detailed.

d. detailed

Manufacturing costs include a. direct materials and direct labor only. b. direct materials and manufacturing overhead only. c. direct labor and manufacturing overhead only. d. direct materials, direct labor, and manufacturing overhead.

d. direct materials, direct labor, and manufacturing overhead.

The reporting standard for external financial reports is a. company-specific. b. industry-specific. c. department-specific. d. generally accepted accounting principles.

d. generally accepted accounting principles.

The managerial function of controlling a. is performed only by the controller of a company. b. is concerned mainly with operating a manufacturing segment. c. is only applicable when the company sustains a loss. d. includes performance evaluation by management.

d. includes performance evaluation by management.

Changes in activity have a(n) _________ effect on fixed costs per unit. a. neutral b. positive c. negative d. inverse

d. inverse

Managerial accounting is also called a. analytical accounting. b. inside reporting. c. controlling. d. management accounting.

d. management accounting.

Managerial accounting applies to each of the following types of businesses except a. service firms. b. merchandising firms. c. manufacturing firms. d. managerial accounting applies to all types of firms.

d. managerial accounting applies to all types of firms

The product cost that is most difficult to associate with a product is a. direct materials. b. advertising. c. direct labor. d. manufacturing overhead.

d. manufacturing overhead.

The margin of safety ratio is computed by dividing a. margin of safety in dollars by break-even sales. b. break-even sales by margin of safety in dollars. c. actual sales by break-even sales. d. margin of safety in dollars by actual sales.

d. margin of safety in dollars by actual sales.

In using the high-low method, the fixed cost a. is determined by adding the total variable cost to the total cost at the low activity level. b. is determined before the total variable cost. c. is determined by subtracting the total cost at the high level of activity from the total cost at the low activity level. d. may be determined by subtracting the total variable cost from either the total cost at the low or high activity level.

d. may be determined by subtracting the total variable cost from either the total cost at the low or high activity level.

In an analogous sense, external user is to internal user as generally accepted accounting principles are to a. timely. b. SEC. c. special-purpose. d. relevance to decision.

d. relevance to decision.

Product costs include each of the following except a. direct labor. b. direct materials. c. manufacturing overhead. d. selling and administrative expenses.

d. selling and administrative expenses.

All activities associated with providing a product or service is referred to as a. total quality management systems. b. just-in-time inventory methods. c. activity-based costing. d. the value chain.

d. the value chain.

Indirect labor is a: a. non-manufacturing cost. b. period cost. c. raw material cost. d. product cost.

product cost