A306 Chapter One

A company incurred $12,000 of maintenance cost for 6,500 machine hours in June and $14,250 of maintenance costs for 8,000 hours in August. Assuming these are the high and low months of activity, the estimated fixed maintenance costs using the high-low method is $

$2,250

To be traced to a cost object such as a particular product, the cost must be incurred to make the product. True false question.True False

False

Which of the following statements is true? Financial accounting data is based on the business transactions of the business. Managerial accounting is based solely on estimated activity. There is no significant difference between financial and managerial accounting. Managerial accounting data is provided to stockholders and lenders to support decisions about lending and investing in the business. Managerial accounting provides financial data for internal use and financial accounting provides data to external users.

Managerial accounting provides financial data for internal use and financial accounting provides data to external users.

Which type of cost changes in total, in direct proportion to changes in activity level? Multiple choice question. Opportunity Differential Variable Fixed

Variable

Indirect labor costs include: Multiple select question. assembly-line supervisor salary. administrative assistant salary. assembly-line worker wages. factory security guard wages.

assembly-line supervisor salary. factory security guard wages.

When using the high-low method, if the high or low levels of cost do not match the high or low levels of activity, Blank______. Multiple choice question. choose the periods with the highest and lowest levels of activity and their associated costs choose the periods with the highest and lowest levels of cost and their associated activities skip that period and move to the next highest or lowest level where costs and activity match

choose the periods with the highest and lowest levels of activity and their associated costs

Nonmanufacturing costs include Blank______. Multiple select question. company president's salary sales commissions insurance on plant equipment assembly-line worker wages

company president's salary sales commissions

Gathering feedback needed to ensure that expectations are being met is part of

controlling

A manager selecting a course of action is performing a Blank______ activity. decision making controlling budgeting planning

decision making

Selecting a course of action from competing alternatives is part of

decision making

Planning involves Blank______. performing reviews of the internal control system motivating employees to perform routine activities ensuring that operations are on track establishing goals and specifying how to achieve them

establishing goals and specifying how to achieve them

Costs that remain constant in total are Blank______ costs. Multiple choice question. mixed fixed both fixed and variable variable

fixed

Controlling involves Blank______. establishing goals for the company determining where to focus marketing efforts for the next year gathering feedback to ensure plans are being properly executed or modified as needed preparing annual budgets

gathering feedback to ensure plans are being properly executed or modified as needed

A factory manager's salary is an example of a(n) Blank______ cost. Multiple choice question. indirect traceable direct period

indirect

Salaries of factory supervisors and factory maintenance personnel are examples of Blank______ labor costs. Multiple choice question. administrative indirect direct

indirect

The best fitting line minimizes the sum of the squared errors when using Blank______. Multiple choice question. the high-low method least-square regression scattergraph analysis

least-square regression

A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called Blank______. Multiple choice question. least-squares regression high-low the contribution approach the engineering approach

least-squares regression

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of Blank______. Multiple select question. manufacturing overhead administrative costs direct materials indirect materials

manufacturing overhead indirect materials

The management activity of _ includes specifying how to achieve established goals

planning

Managerial accounting helps managers perform three vital activities: _ _ and decision making.

planning, controlling

Three activities vital to the role of managerial accounting are Blank______. planning, recording and summarizing planning, reporting and analysis recording, analysis, and reporting planning, controlling and decision making

planning, controlling and decision making

Direct materials, direct labor, and manufacturing overhead are all Blank______ costs. Multiple choice question. conversion direct product period variable

product

Managerial Accounting- reports to managers inside the organization emphasizes the future emphasizes company-wide reports emphasizes relevance must follow GAAP/IFRS is not mandatory

reports to managers inside the organization emphasizes the future emphasizes relevance is not mandatory

Parties more interested in managerial accounting data than in financial accounting data include _____. Multiple select question. stockholders sales managers creditors production managers

sales managers & production managers

Selling costs include Blank______. Multiple select questions. administrative salaries sales salaries advertising sales commissions

sales salaries advertising sales commissions

Period costs are always expensed on the income statement in the period in which Blank______. Multiple choice question. the related goods are sold the cash for the expense changes hands they are incurred

they are incurred