ACCT 210 Final MBC Quizzes and Exam T/F
CoolBreeze Manufacturing produces a single product, a tabletop fan. They reported the following information from their operations last period: Cost of Direct Materials used in production: $50,000 Cost of Direct Labor wages: $37,500 Variable Manufacturing Overhead: $25,000 Fixed Manufacturing Overhead: $125,000 Total units produced: 10,000 Under absorption costing what was the per-unit cost of the units produced? Select one: a. $8.75 b. $12.50 c. None of the above d. $11.25 e. $23.75
e. $23.75
Which of the following is not a factor to consider when deciding whether to accept a special order? Select one: a. Whether this order will hurt the brand name of the company b. Whether other potential orders would be more profitable c. Whether additional fixed costs would need to be incurred d. Whether there is sufficient excess productive capacity e. None of the above, all are factors that should be considered
e. None of the above, all are factors that should be considered
Of the following four cost categories, the sum of which pairs should be equal? 1. Beginning Inventory 2. Costs added this period 3. Ending Inventory 4. Cost of Goods Manufactured Select one: A. 1 + 2 = 3 + 4 B. 2 + 3 = 4 + 1 C. 3 + 1 = 2 + 4 D. All of the above are correct. E. None of the above are correct.
1 + 2 = 3 + 4
Total Manufacturing Costs for the period include: Select one: A. Total Direct Labor B. Total Materials Purchased C. Total Cost of Goods Sold D. Administrative and Selling Expenses E. All of the above
A. Total Direct Labor
Which of the following is a disadvantage of using variable costing? Select one: A. Two sets of accounting records must be maintained. B. Inventory values tend to be overstated. C. CVP relationships are more difficult to determine than under absorption costing. D. Per-customer or per-product contribution margin is obscured. E. All of the above
A. Two sets of accounting records must be maintained.
Just-in-time (JIT) inventory systems are designed to reduce which of the following: Select one: A. Possibility of delayed shipments B. Costs of carrying inventory C. Threat of lost sales due to unexpected demand D. All of the above
B. Costs of carrying inventory
When materials are purchased, which of the following accounts could be affected? Select one: A. Direct materials efficiency variance B. Direct materials price variance C. Work in Process Inventory D. Variable Overhead efficiency variance E. Two of the above
B. Direct materials price variance
A period cost is an A. Asset B. Expense
B. Expense
Managerial Accounting provides information which is primarily useful for: Select one: A. Determining how much a company owes to the IRS in taxes B. Helping managers plan, manage, and make strategic decisions regarding the growth and profitability of the company C. Helping banks know whether to loan money to a company D. Setting a company's stock price on the stock exchanges
B. Helping managers plan, manage, and make strategic decisions regarding the growth and profitability of the company
Which of the following is never an element of a product cost? A. Insurance B. Utilities C. Advertising D. Supplies
C. Advertising
Profit Margin (Return on Sales) is calculated as: Select one: A. Contribution Margin / Sales B. Sales / Operating Income C. Operating Income / Sales D. Sales / Contribution Margin E. None of the above
C. Operating Income / Sales
When a company uses a process costing system and has more than one department, which of the following types of accounts will result in multiple accounts in the general ledger? Select one: A. Materials B. Wages Payable C. Work in Process D. Finished Goods
C. Work in Process
Accumulating cost information on a per-unit basis is useful for making management decisions in companies such as: Select one: A. Manufacturers B. Hospitals C. Insurance companies D. A, B, and C E. None of the above
D. A, B, and C
Which of the following statements is true regarding current manufacturing companies? Select one: A. Most production labor time is spent running production equipment rather than actually physically working on a product. B. Production processes are highly automated and complex. C. Manufacturing Overhead constitutes a significant portion of per-unit costs. D. All of the above
D. All of the above
Which of the following are not included in the Work in Process Inventory? Select one: A. Direct Materials that have been put into production B. Direct Labor incurred in production C. Manufacturing Overhead allocated to units of production D. All of the above are included in Work in Process Inventory
D. All of the above are included in Work in Process Inventory
Which of the following is not a source of information used by Management Accountants? A. Upper management B. Line employees C. Financial results of the company's operations D. All of these are sources of managerial accounting information
D. All of these are sources of managerial accounting information
Which of the following statements regarding Activity-Based Costing is correct? Select one: A. Overhead costs are allocated based on actual costs incurred in a period. B. Direct costs (materials and labor) are accumulated in cost pools and assigned based on driver usage. C. Increases in information technology have made Activity-Based Costing less useful. D. Cost drivers and cost objects are essential parts of Activity-Based Costing. E. All of the above are correct.
D. Cost drivers and cost objects are essential parts of Activity-Based Costing.
Which of the following costs would be applied to manufactured inventory under variable costing? Select one: A. Salary of factory manager B. Rental payments on factory C. Commissions to sales persons D. Cost of raw materials E. Rental payments on administrative offices
D. Cost of raw materials
Which of the following best describes the weighted average cost flow assumption? Select one: A. Direct materials are added evenly throughout the process B. Equivalent units of production for conversion costs do not match the physical flow of units C. Inventory cost layers are kept separate based on the period of production D. Cost per equivalent unit is calculated by combining costs from both the current and previous periods E. None of the above
D. Cost per equivalent unit is calculated by combining costs from both the current and previous periods
Which of the following best describes the concept of "sunk costs"? Select one: A. Costs that will be incurred regardless of what decision is made B. Costs that are the same between competing alternatives C. Costs that are relevant to the decision process D. Costs that have already been incurred and cannot be avoided E. None of the above
D. Costs that have already been incurred and cannot be avoided
When are variances normally closed to Cost of Goods Sold? Select one: A. At the end of each month B. As products are sold C. When the variance occurs D. During year-end closing E. None of the above
D. During year-end closing
What is the original metric that determines the levels of all budgets? Select one: A. Planned production levels B. Approved capital expenditures C. Yearly cash flows D. Forecasted sales levels E. None of these
D. Forecasted sales levels
Which of the following is not an element of manufacturing overhead? A. Factory Office Salaries B. Plant Manager's Salaries C. Product Inspector's Salary D. President's Salary
D. President's Salary
The Asset Turnover (Asset Utilization) ratio is equal to: Select one: A. Investment / Sales B. Sales x Return on Sales C. ROI x ROA D. Sales / Investment E. None of the above
D. Sales / Investment
The standard direct material cost is equal to: Select one: A. Standard quantity × Actual price B. Actual quantity × Standard price C. Actual quantity × Actual price D. Standard quantity × Standard price E. None of the above
D. Standard quantity × Standard price
Which of the following types of firms normally carry inventory? Select one: A. Manufacturing firms B. Service firms C. Merchandising firms D. All of the above E. A and C only
E. A and C only
In segmenting the reporting of a company, it would be appropriate to create divisions organized by: Select one: A. Product type B. Geographical area C. Manufacturing process D. Target customers E. All of the above
E. All of the above
Management Accountants provide information that is: Select one: A. Timely B. Relevant C. Useful for making decisions D. Easily accessible to management E. All of the above
E. All of the above
Reasons for using standard costing include their usefulness in: Select one: A. Preparing flexible budgets B. Preparing master budgets C. Establishing selling prices D. Preparing performance reports E. All of the above
E. All of the above
Reasons for using standard costing include: Select one: A. Comparing projected costs against actual costs B. Planning and budgeting purposes C. Setting prices in advance D. Identifying specific areas for process improvement E. All of the above
E. All of the above
Using a cost accounting system to track product costs is needed for Select one: A. Managerial decision making B. Financial statements C. Setting product prices D. Both A and C E. All of the above
E. All of the above
Which of the following are advantages of budgeting? Select one: A. It helps management to get out of just doing things the same way and notice what can be improved. B. It helps a company achieve their long-range goals. C. It can be used for performance evaluation. D. It unifies the efforts of various departments in pursuit of company objectives. E. All of the above
E. All of the above
Which of the following costs would be considered relevant when deciding between two products to produce? Select one: A. Level of direct materials required B. Additional investment in factory equipment for one product C. Amount of additional direct and indirect labor D. The opportunity cost associated with one or the other product E. All of the above
E. All of the above
The Schedule of Cost of Goods Manufactured includes all of the following except: Select one: A. Total Manufacturing Costs for the period B. Beginning Work in Process Inventory C. Cost of Goods Manufactured D. Manufacturing Overhead for the period E. All of these are included in the Schedule of Cost of Goods Manufactured
E. All of these are included in the Schedule of Cost of Goods Manufactured
Which of the following factors would lead a company to buy a component rather than make it? Select one: A. Greater control over production quality B. Employee concerns about outsourcing C. Excess productive capacity D. An unpredictable supplier of the component E. None of the above
E. None of the above
Activity-Based Costing assumes that most overhead costs can be easily allocated based on one or two drivers. Select one: True False
False
If production is greater than sales, Cost of Goods Sold will be higher under absorption costing than under variable costing. Select one: True False
False
T/F An Activity-Based costing system results in a different total amount of overhead allocated than that allocated under traditional costing models
False
T/F Most companies will initially switch all their financial reports to an Activity-Based costing method, because it facilitates auditing and tax preparation
False
T/F The semi averages method of cost data analysis involves approximating a linear cost relationship based on the extremes of production volume
False
T/F Using Activity-Based Costing results in a different total amount of overhead allocated than that allocated under traditional costing models
False
T/F Activity-Based Costing assumes that most overhead costs can be easily allocated based on one or two drivers
False
The ROI is found by dividing Net Sales by Total Assets. Select one: True False
False
Using Activity-Based Costing results in a different total amount of overhead allocated than that allocated under traditional costing models. Select one: True False
False
Management Accountants are required to report financial results in accordance with legally set guidelines. Select one: True False
False Management Accountants use whatever management needs for decision making
A variable cost is one that varies both in total (with respect to the amount of items produced) and per unit. Select one: True False
False a variable cost is a cost that varies in total, but is fixed per unit for a certain period of time and range of activity
Process costing is ideal for business situations that involve the production of a relatively standardized product, using a continuous-flow operation. Select one: True False
True
Service department costs are considered product costs. They are accumulated in the service departments, and then allocated to the production departments as overhead, where they are then applied to the manufactured goods or provided services. Select one: True False
True
Standard costing can be used for both job order and process costing systems. Select one: True False
True
T/F It is better to base a predetermined overhead rate on the practical capacity of production rather than actual production
True
T/F The least-squares regression method is generally considered to be the most accurate of cost relationships.
True
The Budgeted Balance Sheet is simply the balance sheet from the prior year, adjusted for budgeted changes. Select one: True False
True
The balanced scorecard tracks both financial and non-financial metrics in a company. Select one: True False
True
The budgeted level of activity often differs from the actual level of activity. Select one: True False
True
The first budget prepared is generally the Sales Budget. Select one: True False
True
The sum of costs added this period and those in beginning inventory should equal the sum of the costs in ending inventory and the cost of goods transferred out. Select one: True False
True
Total Manufacturing costs for a period include all direct materials used, all direct labor, and all manufacturing overhead. Select one: True False
True
Under a FIFO process costing system, the costs associated with inventory produced this period are kept separate from the costs of inventory produced in other periods. Select one: True False
True
Under absorption costing, a change in the level of production will affect the amount of fixed costs reported on the income statement for the period. Select one: True False
True
Under standard costing, the inventory account balance may not actually reflect the true costs incurred to acquire the inventory. Select one: True False
True
Under variable costing, a company expenses all fixed overhead costs in the same period that it incurs them. Select one: True False
True
Managerial Accounting utilizes both financial and non-financial data of a company. Select one: True False
True
Predetermined overhead rates are calculated by dividing estimates of total factory overhead cost in the upcoming accounting period (usually a year) by an estimated usage or capacity of some unit of related activity (such as direct labor hours). Select one: True False
True
The difference between the budgeted amounts of Sales and Cash Received for sales is equal to the budgeted change in: Select one: A. Accounts Receivable B. Accounts Payable C. Cash D. Retained Earnings E. None of the Above
A. Accounts Receivable
Which of the following are not relevant to the decision of whether to drop a business segment or not? Select one: A. Fixed overhead applied to the segment B. Revenues of the segment C. Variable costs of goods sold of the segment D. Variable operating expenses of the segment E. B and C only
A. Fixed overhead applied to the segment
Which of the following is not an example of a type of company that would likely prefer a process costing system? Select one: A. Home building B. Electricity generation C. Oil refining D. Packaged food production
A. Home building
A product cost is an A. Asset B. Expense
Asset
Activity-Based Costing is best explained by which of the following statements? Select one: A. Ordering all costs alphabetically for easier cataloging in a database. B. Accumulating and allocating overhead costs based on a variety of activity drivers. C. Calculating costs sequentially by the order that they affect the production process. D. More accurately tracking materials and labor costs for each product.
B. Accumulating and allocating overhead costs based on a variety of activity drivers.
The sum of direct materials used, direct labor and manufacturing overhead plus beginning work in process inventory minus ending work in process inventory computes: A. Total manufacturing costs B. Cost of Goods Manufactured C. Cost of goods sold D. total cost of work in process
B. Cost of goods manufactured
Which of the following is a drawback to absorption costing as opposed to variable costing? Select one: A. Management cannot accurately price products because non-manufacturing overhead is not applied to inventory B. Managers can manipulate earnings by simply producing more than is sold in a period C. Fixed overhead is simply expensed as a period cost without being properly considered as a cost of inventory D. Absorption costing is not allowed for GAAP purposes E. There is no drawback: absorption costing is always preferable to variable costing
B. Managers can manipulate earnings by simply producing more than is sold in a period
Future benefits foregone when one option is chosen over another are called: Select one: A. Decision Costs B. Opportunity Costs C. Relevant Costs D. Sunk Costs E. None of the above
B. Opportunity Costs
Which of the following types of costs are not allocated to production departments? Select one: A. Manufacturing overhead costs directly identifiable with the production departments B. Selling department costs C. Service department costs D. Manufacturing overhead costs requiring allocation to production departments
B. Selling department costs
It is better to base a predetermined overhead rate on the practical capacity of production rather than actual production. Select one: True False
True
Which of the following correctly explains what should be done with any under- or over-applied overhead? Select one: A. At the end of a project, any insignificant under- or over-applied overhead should be closed to Work in Process prior to transferring the costs to Finished Goods. B. At year end, if there is a significant amount of under- or over-applied overhead, it should all be closed to Cost of Goods Sold. C. At year end, if there is a significant amount of under- or over-applied overhead, it should be allocated proportionally to Work in Process, Finished Goods, and Cost of Goods sold. D. Monthly, any significant amount of under- or over-applied overhead should be closed to Cost of Goods Sold. E. It is not normal for a company to have under- or over-applied overhead, because overhead is allocated based on actual costs incurred.
C. At year end, if there is a significant amount of under- or over-applied overhead, it should be allocated proportionally to Work in Process, Finished Goods, and Cost of Goods sold.
Which of the following statements most accurately describes Activity-Based Costing? Select one: A. Costs are accumulated in departments and allocated based on a single driver for each department. B. Costs are accumulated in departments and allocated based a variety of drivers for each department. C. Costs are accumulated in cost pools and allocated based on a single driver for each pool. D. Costs are accumulated in cost pools and allocated based on a variety of drivers for each pool. E. None of the above
C. Costs are accumulated in cost pools and allocated based on a single driver for each pool.
If production increases within a given range, fixed costs per unit will: Select one: A. Increase B. Stay constant C. Decrease D. Vary depending on the source of the fixed costs E. None of the above
C. Decrease
Which of the following would not appear on a job order cost sheet? Select one: A. Direct Labor costs incurred B. Direct Materials requisitioned for the job C. General administrative expense D. Total cost of the job E. All of the above would appear on the job order cost sheet.
C. General administrative expense
Which budgeted financial statement is generally prepared first? Select one: A. Balance Sheet B. Statement of Cash Flows C. Income Statement D. Statement of Retained Earnings E. None of the above
C. Income Statement
Which of the following are not advantages of budgeting? Select one: A. It helps a company achieve their long-range goals. B. It can be used for performance evaluation. C. It gives greater control to lower management and lets each department define their own objectives. D. It helps management to get out of just doing things the same way and notice what can be improved. E. None of the above are advantages of budgeting.
C. It gives greater control to lower management and lets each department define their own objectives.
Which of the following combinations of products would be considered joint products? Select one: A. Chairs and tables B. Corn and alfalfa C. Machine oil and gasoline D. Hamburgers and hot dogs E. None of the above
C. Machine oil and gasoline
Large businesses tend to segment themselves according to divisions or departments for accountability purposes. Select one: True False
True
Cost of Goods Manufactured is the cost of items transferred from Work in Process Inventory to Finished Goods Inventory. Select one: True False
True