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
