managerial accounting

In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include: A.a credit to the Manufacturing Overhead account. B.a credit to the Work in Process inventory account. C.a debit to Cost of Goods Sold. D.a debit to the Manufacturing Overhead account.

a.

Manufacturing Overhead: a. can be either variable or fixed b. includes the cost of shipping finished goods c. includes all factory labor costs d. includes all fixed costs

a. can either be variable or fixed

Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $41,000. Budgeted cash receipts total $114,000 and budgeted cash disbursements total $113,000. The desired ending cash balance is $60,000. The excess (deficiency) of cash available over disbursements for January will be: A.$155,000. B.$42,000. C.$40,000. D.$1,000. E.none of the above

b

If company A has a higher degree of operating leverage than company B, then: A.company A has higher variable expenses. B.company A's profits are more sensitive to percentage changes in sales. C.company A is more profitable. D.company A is less risky

b

In a make-or-buy decision, relevant costs include: A. common allocated fixed costs. B. avoidable fixed costs. C. fixed factory overhead costs applied to products. D. fixed selling and administrative expenses

b

Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if: A.production equals sales for that period. B.production exceeds sales for that period. C.sales exceed production for that period. D.the variable manufacturing overhead exceeds the fixed manufacturing overhead

b

Residual income is a better measure for performance evaluation of an investment center manager than return on investment because: A. the problems associated with measuring the asset base are eliminated. B. It better aligns investment center management incentives with corporate incentives. C. only the gross book value of assets needs to be calculated. D. returns do not increase as assets are depreciated

b

Setting up equipment is an example of a: A.Unit-level activity. B.Batch-level activity. C.Product-level activity. D.Facility-level activity

b

The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of: A.80% B.125% C.300% D.240%

b

The _______________ approach to the income statement organizes costs by function. A.contribution B.traditional C.comparable D.None of the above is true.

b

Which of the following characteristics applies to process costing, but does not apply to job order costing? A.the need for averaging. B. the use of equivalent units of production. C. separate, identifiable jobs. D.the use of predetermined overhead rates. E. two of the above.

b

Which of the following would not cause the break-even point to change? A.Sales price increases. B.Sales volume decreases. C. Fixed cost decreases. D. Variable costs per unit increases. E.Product mix shifts towards the cheaper products

b

overhead allocation based on volume alone: a. is a key aspect of activity-based costing model b. will systematically overcost high-volume products and undercost low-volume products c. will systematically overcost low-volume and undercost high-volume d. must be used for external financial reporting

b.

The amount by which a company's sales can decline before losses are incurred is called the A.contribution margin. B.degree of operating leverage. C.margin of safety. D.contribution margin ratio.

c

Which of the following is NOT an objective of the budgeting process? A.To communicate management's plans throughout the entire organization. B.To provide a means of allocating resources to those parts of the organization where they can be used most effectively. C.To ensure that the company continues to grow. D.It provides benchmarks for evaluating subsequent performance

c

In a job-order costing system, the use of indirect materials would usually be recorded as a debit to: A.Raw Materials. B.Work in Process. C.Manufacturing Overhead. D.Finished Goods

c.

A company increased the selling price for its product from $5 to $6 per unit when total fixed expenses increased from $100,000 to $200,000 and variable expense per unit remained unchanged. How would these changes affect the break-even point? A.The break-even point in units would increase. B.The break-even point in units would decrease. C.The break-even point in units would remain unchanged. D.The effect cannot be determined from the information given.

d

A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from: A.labor efficiency problems .B.machine efficiency problems. C.the purchase and use of higher than standard quality material. D.the purchase and use of lower than standard quality mate

d

A flexible budget: A.classifies budget requests by activity and estimates the benefits arising from eachactivity. B.presents a statement of expectations for a period of time but does not present a firm commitment. C.presents the plan for only one level of activity and does not adjust to changes in the level of activity. D.presents the plan for a range ofactivity so that the plan can be adjusted for changes in activity levels

d

An example of a period cost is: A.fire insurance on a factory building .B.salary of a factory supervisor .C.direct materials. D.rent on a headquarters building.

d

In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be: A.classified as a traceable fixed expense and not allocated. B.allocated to the product lines on the basis of sales dollars. C.allocated to the product lines on the basis of segment margin D.classified as a common fixed expense and not allocated.

d

Inventoriable costs: A.include only the prime costs of manufacturing a product. B.include only the conversion costs of providing a service. C.exclude fixed manufacturing costs. D.are regarded as assets until the units are sold. E. are regarded as expenses when the costs are incurred

d

Which of the following is not an operating asset? A. Cash B. Inventory C. Plant equipment D. Accounts payable E. Accounts receivable

d

Which of the following would a manufacturing company expect to experience as it automates and shifts from variable expenses to fixed expenses? A.A lower margin of safety percentage. B.A higher contribution margin ratio. C.A lower breakeven level of sales. D.Both A and B above

d

A lawnmower manufacturer computed a cost per unit of $53 by adding together last month's direct labor, direct materials, and manufacturing overhead and dividing that total by the 10,000 units produced last month. (There were no beginning or ending inventories.) If 9,000 units are going to be manufactured this month, we would expect that the: A.cost per unit will remain the same. B.cost per unit will decrease. C.direction of change in unit costs cannot be determined. D.cost per unit will increase

d.

Choice of allocation base should be made based on: A.the relative size of the base. B.the base's relation to direct labor. C.the base's activity. D.whether the base actually drives the cost being allocated

d.

In a job-order costing system, the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period: A.is deducted on the Income Statement as overapplied overhead. B.is closed to Cost of Goods Sold. C.is transferred to Finished Goods at the end of the period. D.is part of the ending balance of the Work in Process inventory account

d.

Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce. A.low, little B.low, considerable C.high, little D.high, considerable

d.

A self-imposed budget or ________________ budget is a budget that is prepared with the full cooperation of managers at all levels. A.perpetual B.master C.cost center D.responsibility E. none of the above

e

For which of the following decisions are sunk costs relevant? A.the decision to keep an old machine or buy a new one. B.the decision to sell a product at the split-off point or after further processing. C.the decision to accept or reject a special order offer. D.all of the above. E.none of the above

e

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared? A.Sales budget, cash budget, direct materials budget, direct labor budget. B.Production budget, sales budget, direct materials budget, direct labor budget. C.Sales budget, cash budget, production budget, direct materials budget. D.Sales budget, budgeted income statement, cash budget budgeted balance sheet. E.none of the above.

e

All other things the same, which of the following would decrease residual income? A. Increase in average operating assets .B. Decrease in average operating assets. C. Decreasein minimum required return. D. Increase in net operating income

a

An unfavorable materials quantity variance indicates that: A.actual usage of material exceeds the standard material allowed for output. B.standard material allowed for output exceeds the actual usage of material. C.actual material price exceeds standard price. D.standard material price exceeds actual price

a

Milano Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.50 direct labor-hours. The direct labor rate is $9.80 per direct labor-hour. The production budget calls for producing 6,400 units in October and 6,300 units in November. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months: A.$62,230 B.$31,360 C.$31,115 D.$30,870

a

Prime cost consists of direct materials combined with: A.direct labor. B.manufacturing overhead. C.indirect materials. D.cost of goods manufactured.

a

Reed Company's sales last year totaled $160,000 and its return on investment (ROI) was 5%. If the company's turnover was 4, then its net operating income for the year must have been: A.$2,000 B. $6,000 C. $8,000 D. it is impossible to determine from the data given

a

Which of the following are considered to be product costs under variable costing? I. Variable manufacturing overhead. II. Fixed manufacturing overhead. III. Selling and administrative expenses .A.I. B.I and II. C.I and III. D.II and III .E. I, II, and III

a