Accounting Final Exam

Purchase of a new delivery truck to replace an old delivery truck is an example of:

Capital Investment Analysis

The _____ estimates the expected receipts and payments of cash for a period of time.

Cash Budget

_____ costs are direct labor and factory overhead.

Conversion

Inventory that is completed and sold are called:

Cost of Goods Sold

In a cost center, the manager has responsibility and authority for making decisions that affect:

Costs

The manager of a profit center has the responsibility for making decisions that affect the center's _____.

Costs & Revenues, but NOT the investment in fixed assets.

Materials directly involved in the manufacturing process is called:

Direct Materials

Predetermined Factory Overhead Rate is calculated as:

Estimated Total Factory Overhead Costs ÷ Estimated Activity Base

Indirect materials and indirect labor incurred in the manufacturing process is called:

Factory Overhead

Inventory that are completed, but not sold are called:

Finished Goods

Costs that remain constant on a per-unit level as the level of activity changes are called:

Fixed Costs

The three most common cost behavior classifications are

Fixed, Variable, and Mixed Costs

The _____ shows the expected results of a responsibility center for several activity levels.

Flexible Budget

The profit margin is the ratio of:

Income from operations to sales

The ratio of sales to invested assets is called:

Investment Turnover

The primary goal of ______ accounting is to provide information to management.

Managerial

The difference between the current sales revenue and the sales at the break-even point is called

Margin of Safety

A cost that has characteristics of both a variable cost and a fixed cost is called:

Mixed Cost

Partially completed inventory in the manufacturing process are called:

Work in Process

All of the following are advantages of decentralization EXCEPT a.) managers make better decisions when closer to the operations of the company b.) expertise in all areas of the business is difficult; decentralization makes it better to delegate certain responsibilities c.) each decentralized operation purchases its own assets and pays for operating costs d.) decentralized managers can respond quickly to customer needs

c.) each decentralized operation purchases its own assets and pays for operating costs

Which of the following is true of the cash payback period? a.) the longer the payback, the longer the estimated life of the asset b.) the longer the payback, the sooner the cash spent on the investment is recovered c.) the shorter the payback, the less likely the possibility of obsolescence d.) All of these choices

c.) the shorter the payback, the less likely the possibility of obsolescence

A ______ cost is the revenue that is forgone from an alternative use of an asset.

Opportunity

As production increases, the fixed cost per unit

decreases

The relationship of a company's contribution margin to operating income is measured by

operating leverage

As production increases, variable costs per unit

stay the same

The payback period is determined using which of the following formulas?

Amount to be invested/Annual net cash flows

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be:

Decentralized

Wages paid to the employees directly involved in the manufacturing process is called:

Direct Labor

_____ costs are reported on the Income Statement.

Period

_____ costs are direct materials and direct labor.

Prime

_____ costs are direct labor, direct materials, and factory overhead.

Product

The _____ estimates the number of units to be manufactured to meet budgeted sales and desired inventory levels.

Production Budget

Operating Income divided by Invested Assets is:

Return on Investment

The first budget customarily prepared as part of an entity's master budget is the:

Sales Budget

For purposed of analysis. mixed costs are

Separated into their variable and fixed cost components

A _____ shows the expected results of a responsibility center for only one activity level.

Static Budget

A _____ cost is a cost that has been incurred in the past and is irrelevant.

Sunk

Contribution Margin

The excess of sales revenue over variable cost

The two methods that consider the time value of money concept to analyze capital investment proposals are:

The net present value method & the internal rate of return method

Costs that vary in total indirect proportion to changes in an activity level are called:

Variable Costs

Cost behavior refers to the manner in which a cost

changes as the related activity changes

A series of equal cash flows at fixed intervals is termed an:

Annuity

Which of the following is a disadvantage of decentralization? a.) Decisions made by one manager may negatively affect the profitability of the entire company. b.) Decentralization helps retain quality managers. c.) Managers closest to the operations make decisions. d.) Managers are able to acquire expertise in their areas of responsibility.

a.) Decisions made by one manager may negatively affect the profitability of the entire company.

Which of the following is the best example of a decentralized operation? a.) one owner who prepares, plans, and makes decisions for the entire company b.) each unit is responsible for its own operations and decision making c.) in a major company, operating decisions are made by top management d.) None of these choices

b.) each unit is responsible for its own operations and decision making

All of the following are common types of responsibility centers EXCEPT: a.) cost center b.) profit center c.) investment center d.) revenue center

d.) revenue center

Which of the following is NOT a disadvantage of a decentralized operation? a.) competition among managers b.) duplication of operations c.) price cutting by departments that are competing in the same product market d.) top management freed from everyday tasks to do strategic planning

d.) top management freed from everyday tasks to do strategic planning