ACCT 410 Final

The break even point is that level of activity where: 1. variable cost=fixed cost 2. contribution margin = fixed cost 4. total cm = v cost+ f.cost 5. sales revenue = total v. cost 5. sales revenue = fixed cost

2. Contribution margin = fixed cost

Which of the following occurs if a company experiences a decrease in its f. cost? 1. income would decrease 2. break even point would decrease 3. the contribution margin would decrease 4. more than one of the answers would occur

2. break even point would decrease (if fixed cost decreases) the lower the f. costs, the less sales have to be made to pay for overhead

The extent to which an organization uses f. costs in its cost structure is measured by: 1. financial leverage 2. operating leverage 3. fixed cost leverage 4. contribution leverage 5. efficiency leverage

2. operating leverage

Which of the following is NOT a function of the treasurer? 1. safeguarding assets 2. managing investments 3. preparing financial statements 4. being responsible for an entity's credit policy 5. raising capital

3. preparing financial statement

The following tasks are associated with an activity based costing system: Proper order of the tasks? 1. assignment of cost to products 2. calculation of pool rates 3. identification of cost drivers 4. identification of cost pools

4. identification of cost pools 3. identification of cost drivers 2. calculation of pool rates 1. assignment of cost to products

A company has fixed costs of $900 and per unit contribution margin of $3. Which of the following statements is true? 1. Each unit "contributes" $3 toward covering the fixed costs of $900 2. The situation described is not possible and there must be an error 3. Once the break even point is reached; the company will increase income at the rate of $3 per unit. 4. The firm will definitely lose money in this situation 5. each unit "contributes" $3 toward covering the fixed costs of $900 and once the break even point is reached, the company will increase income at the rate of $3 per unit

5. each unit "contributes" $3 toward covering the fixed costs of $900 and once the break even point is reached, the company will increase income at the rate of $3 per unit break even: cm = fixed cost bc net income is negative until the sales reaches break even level. Once the break even level is achieved, there are neither any loss nor income. As no. of units cross the break even level, the net income increases by cm per unit as the f. cost remains the same

Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting? 1. A focus on reporting to personnel within an organization. 2. A focus on reporting to external parties. 3. An area of accounting that is heavily regulated. 4. A focus on providing information that is relevant for planning, decision making, directing, and control. 5. A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, decision making, directing, and control.

A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, decision making, directing, and control.

Which of the following would produce the largest increase in the contribution margin per unit? A.7% increase in selling price B. 15% decrease in selling price C. 14% increase in total variable cost D. 17% decrease in fixed cost E: 23% increase in the number of units sold

A: 7% increase in selling price

Which of the following occurs if a company was able to reduce its variable cost per unit? CM, Break even point A. Increase, increase B. Increase, Decrease C. Decrease, Increase D. Decrease, Decrease E. Increase, No effect

B: Increase, Decrease If a company reduces it v. cost per unit, the CM increases and its BE decreases CM: total sales rev- total v. expenses

Which of the following statements represents a similarity between financial and managerial accounting? 1. Both are useful in providing information for external users. 2. Both are governed by GAAP. 3. Both draw upon data from an organization's accounting system. 4. Both rely heavily on published financial statements. 5. Both are solely concerned with historical transactions.

Both draw upon data from an organization's accounting system.

Which of the following employees at Clear Flights would not be considered as holding a line position? 1. pilot 2. CFO 3. flight attendant 4. ticket agent 5. baggage handler

CFO staff position

Wembley Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process? Decision making Planning Directing operational activities Controlling Organizing

Controlling

Which of the following functions is best described as choosing among available alternatives? Decision making Planning Directing operational activities Controlling Budgeting

Decision making

Which of the following involves the coordination of daily business functions within an organization? Decision making Planning Directing operational activities Controlling Motivating

Directing operational activities

Measuring the performance of managers and subunits is not an objective of managerial accounting T or F

F

Line positions are indirectly involved in operational activities T or F

F Manager in line positions are directly involved in the provision of goods or services

The upper limit on the production of goods and services if everything works perfectly is known as practical capacity T or F

F Theoretical capacity: upper limit on production

Total Contribution Margin is defined as total sales revenue plus total variable expenses T or F

False Difference between total sales revenue and variable expenses (t. sales revenue-v. expenses)

Traditional product costing systems are structured on multiple, volume-based cost drivers T or F

False Traditional product costing systems are structured on single, volume based cost drivers such as direct labor or machine hours. Overhead is applied to production jobs using a predetermined overhead rate, which is based on using a predetermined overhead rate, which is based on estimates of manufacturing Over head (numerator( and the level of some cost driver (denominator)

Line positions are indirectly involved in operational activities T or F

False managers in line positions are DIRECTLY involved in the provision of goods or services

Managerial accounting activity comprises a set of tools, systems and perspectives that add value to an organization by supporting five major objectives. Which one of these is not a supporting objective? 1. providing information for decision making and planning 2. Assist managers in directing and controlling operational activities 3. motivate managers and other employees towards organization's goals 4. Assess an organization's competitive position and long term managerial efforts 5. focus on activities that occur at the top level the organization

Focus on activities that occur at the top level the organization

Which of the following is not an action performed in combination with information to pursue the goals of managerial accounting? Identify Measure Invent Interpret Analyze

Invent

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations? Decision making Planning Directing operational activities Controlling Measuring

Planning

Tired cost incurred by Ford Motor Company

Product cost, variable, direct material

If a company has poor data governance practices, managers would have to worry that the managerial accounting data they receive is not what they need for their decisions, or that it would arrive too late or be inaccurate T or F

T

The position of chief financial officer (CFO) is typically a staff position T or F

T

The treasurer typically is responsible for raising capital and safeguarding the organization's assets T or F

T

A controller is normally involved with preparing financial statements T or F

T A controller is typically involved in the process to prepare financial statements

Which of the following employees would be considered as holding a line position? 1. Townhouse Corporation's vice-president for government relations. 2. The controller of Margin Motors. 3. A secretary employed by Signal Communications. 4. The manager of food and beverage services at a theme park. 5. None of the answers is correct.

The manager of food and beverage services at a theme park.

The upper limit on the production of goods and services if everything works perfectly is known as: 1. practical capacity 2. theoretical capacity 3. utilized capacity 4. management capacity 5. capacity maximization

Theoretical capacity upper limit of production if everything works perfectly

All financial professionals, including managerial accountants have an obligation to themselves, their colleagues, and their organizations to adhere to high standards of ethical conduct T or F

True

For any organization selling multiple products, the relative proportion of each type of product sold is called the sales mix. T or F

True

The break even point is that level of activity where total revenue equals total cost (total revenue=total cost) T or F

True

The position of chief financial officer (CFO) is typically a staff position

True

The contribution margin ratio is calculated as unit contribution margin divided by the selling price per unit. unit CM/ sell price per unit = T. CM ratio T or F

True unit CM/ sell price per unit = T. CM ratio

A product's cost is the sum of its direct-material cost, its direct-labor cost, and its overhead cost, which is the accumulation of all the resource costs driven to the product by the various cost drivers selected for the ABC system.

True First stage identifies significant activities in the production of the three products and assigns overhead costs to each activity in accordance with the cost of the organizations resources used by the activity . The overhead costs assigned to each activity = activity cost pool.

When using ABC, overhead costs assigned to each activity comprise an activity cost pool T or F

True two stage procedure to assign overhead costs to products. First stage identifies significant activities in the production of the three products and assigns overhead costs to each activity in accordance with the cost of the organizations resources used by the activity . The overhead costs assigned to each activity = activity cost pool. Stage 2: cost drivers appropriate for each cost pool are identified. Overhead costs are allocated from each activity cost pool to each product line in proportion to the amount the cost driver consumed by the product line

A 25% increase in production volume will result in: a 25% increase in the variable cost per unit. b. 25% increase in total mixed costs. c. 25% increase in total variable costs. d. 25% increase in total administration costs. None of these answer choices is correct.

c. 25% increase in total variable costs

The day to day work of management teams will typically comprise of all the following activities EXCEPT: 1. decision making 2. planning 3. cost minimizing 4. directing operational activities 5. controlling

cost minimizing

Managerial accounting: 1. focuses only on historical data 2. is governed by GAAP 3. focuses primarily on the needs of personnel within the organization. 4. provides information for parties external to the organization. 5. focuses on financial statements and other financial reports.

focuses primarily on the needs of personnel within the organization.

Which of the following is not a broad, cost classification category typically used in activity based costing? unit level batch level product sustaining level facility level management level

management level

Which of the following is not an objective of managerial accounting? 1. providing information for decision making and planning 2. Assisting in directing and controlling operations 3. maximize profits and minimizing costs 4. measuring the performance of managers and subunits 5. motivating managers toward the organization's goals

maximize profits and minimizing costs

Which of the following would likely be considered an internal user of accounting information rather than an external user? 1. stockholders 2. consumer groups 3. lenders 4. middle level managers 5. government agencies

middle level managers

Suppose you paid $150 for a ticket to see your university's football team compete in a bowl game. Someone offered to buy your ticket for $400, but you decided to go to the game. What type of cost is this?

opportunity cost

The salary of a financial vice president of Hewlett Packard

period cost, fixed, NA

advertising costs of Coca Cola

period cost, fixed, NA

Delivery costs incurred by Ben and Jerry's for a shipment of their ice cream to a grocery store

period cost, variable, NA

Sales commission paid to the sales force of Dell Inc.

period cost, variable, NA (neither d. labor, d, material, or MO)

The capacity concept that allows for normal occurrences such as machine downtime and employee fatigue is known as: 1. practical capacity 2. theoretical capacity 3. utilized capacity 4. management capacity 5. capacity maximization

practical capacity

Hourly wages of refinery security guards employed by ExxonMobil

product cost, fixed, manufacturing overhead

Plant insurance cost of Texas Instruments

product cost, fixed, manufacturing overhead

straight line depreciation on factory machinery of Boeing Corporation

product cost, fixed, manufacturing overhead

Wages of assembly line personnel of Whirlpool corp.

product cost, variable, direct labor

LED costs incurred in light bulb manufacturing of GE lighting

product cost, variable, direct material

Newsprint consumed in printing at The New York Times

product cost, variable, direct materials

Wood Glue consumed in the manufacture of furniture (cost of glue is insignificant)

product cost, variable, manufacturing overhead