ACCT FINAL

A budget serves as a benchmark against which: A. actual results can be compared. B. allocated results can be compared. C. actual results become inconsequential. D. allocated results become inconsequential. E. cash balances can be compared to expense totals.

a

A cost pool is: A. a collection of homogeneous costs to be assigned. B. the combined result of decisions made by different responsibility center managers. C. the primary function of a responsibility accounting system. D. the amount of cost that has been allocated, say, 10%, to a user department. E. the tool used to allocate cost dollars to user departments.

a

A manufacturer's raw-material purchasing department would likely be classified as a: A. cost center. B. revenue center. C. profit center. D. investment center. E. contribution center.

a

A manufacturing firm produces goods in accordance with customer specifications, commencing production upon receipt of a purchase order. To accumulate the cost of each order, the company would use a: A. job-cost record. B. cost allocation matrix. C. production log. D. overhead sheet. E. manufacturing cost record.

a

A manufacturing firm would begin preparation of its master budget by constructing a: A. sales budget. B. production budget. C. cash budget. D. capital budget. E. set of pro-forma financial statements.

a

An opportunity cost may be described as: A. a forgone benefit. B. an historical cost. C. a specialized type of variable cost. D. a specialized type of fixed cost. E. a specialized type of semivariable cost.

a

Factors in a decision problem that cannot be expressed in numerical terms are: A. qualitative in nature. B. quantitative in nature. C. predictive in nature. D. sensitive in nature. E. uncertain in nature.

a

Managerial accounting: A. is unregulated. B. produces information that is useful only for manufacturing organizations. C. is based exclusively on historical data. D. is regulated by the Securities and Exchange Commission (SEC). E. generally focuses on reporting information about the enterprise in its entirety rather than by subunits.

a

Process costing is used to account for: A. large numbers of identical products that are produced in a continuous manufacturing environment. B. small numbers of products that are produced in batches. C. raw materials that are converted directly to finished goods. D. finished goods that are refined and processed further. E. large numbers of products that are produced in a non-repetitive process.

a

The break-even point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total contribution margin equals the sum of variable cost plus fixed cost. D. sales revenue equals total variable cost. E. profit is greater than zero.

a

The comparison of a company's practices and performance levels against those of other organizations is most commonly known as: A. benchmarking. B. continuous improvement. C. re-engineering. D. comparative analysis. E. kaizen business analysis (KBA).

a

Under variable costing, fixed manufacturing overhead is: A. expensed immediately when incurred. B. never expensed. C. applied directly to Finished-Goods Inventory. D. applied directly to Work-in-Process Inventory. E. treated in the same manner as variable manufacturing overhead.

a

When managers of subunits throughout an organization strive to achieve the goals set by top management, the result is: A. goal congruence. B. planning and control. C. responsibility accounting. D. delegation of decision making. E. strategic control.

a

Which of the following costs changes in direct proportion to a change in the activity level? A. Variable cost. B. Fixed cost. C. Semivariable cost. D. Step-variable cost. E. Step-fixed cost.

a

Which of the following employees of a commercial printer/publisher would be classified as direct labor? A. Book binder. B. Plant security guard. C. Sales representative. D. Plant supervisor. E. Payroll supervisor.

a

Which of the following is a key document in a typical process-costing system? A. Departmental production report. B. Master schedule. C. Production budget. D. Sequential product report. E. Materials requirement report.

a

Which of the following is the correct mathematical expression to derive a company's capital turnover? A. Sales revenue ÷ invested capital. B. Contribution margin ÷ invested capital. C. Income ÷ invested capital. D. Invested capital ÷ sales revenue E. Invested capital ÷ income

a

A company that desires to lower its break-even point should strive to: A. decrease selling prices. B. reduce variable costs. C. increase fixed costs. D. sell more units. E. pursue more than one of the above actions.

b

A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction? A. Debits: Accounts Receivable, Finished-Goods Inventory; credits: Sales Revenue, Cost of Goods Sold. B. Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods Inventory. C. Debits: Sales Revenue, Cost of Goods Sold; credits: Accounts Receivable, Finished-Goods Inventory. D. Debits: Sales Revenue, Finished-Goods Inventory; credits: Accounts Receivable, Cost of Goods Sold.

b

A cost object is: A. a collection of costs to be assigned. B. a responsibility center, product, or service to which cost is to be assigned. C. the tool used to charge cost dollars to user departments. D. the primary function of a responsibility accounting system. E. a common cost.

b

A perfection standard: A. tends to motivate employees over a long period of time. B. is attainable in an ideal operating environment. C. would make allowances for normal amounts of scrap and waste. D. is generally preferred by behavioral scientists. E. will result in a number of favorable variances on a performance report.

b

A special order generally should be accepted if: A. its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order. B. excess capacity exists and the revenue exceeds all variable costs associated with the order. C. excess capacity exists and the revenue exceeds allocated fixed costs. D. the revenue exceeds total costs, regardless of available capacity. E. the revenue exceeds variable costs, regardless of available capacity.

b

A standard cost: A. is the "true" cost of a unit of production. B. is a budget for the production of one unit of a product or service. C. can be useful in calculating equivalent units. D. is the average cost within an industry. E. is the actual cost from previous years.

b

Customer profitability analysis is tied closely to: A. just-in-time systems. B. activity-based costing. C. job costing. D. process costing. E. operation costing.

b

Gerber Corporation has computed the following unit costs for the year just ended: Direct material used $15 Direct labor 23 Variable manufacturing overhead 20 Fixed manufacturing overhead 30 Variable selling and administrative cost 12 Fixed selling and administrative cost 19 Under absorption costing, each unit of the company's inventory would be carried at: A. $58. B. $88. C. $100. D. $119. E. some other amount.

b

Hampton manufactures products X and Y, applying overhead on the basis of labor hours. X requires a variety of complex manufacturing procedures and consumes significant productive resources. Y, on the other hand, is relatively simplistic in nature. What would an activity-based costing system likely disclose about products X and Y as a result of Hampton's current accounting procedures? X Y A. Undercosted Undercosted B. Undercosted Overcosted C. Overcosted Undercosted D. Overcosted Overcosted E. Costed correctly Costed correctly

b

In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has: A. a large proportion of nonunit-level activities. B. product diversity or a large proportion of nonunit-level activities. C. minimal product diversity and a small proportion of nonunit-level activities. D. existing variances from budgeted amounts. E. a situation other than those noted above.

b

Lone Star has computed the following unit costs for the year just ended: Direct material used $12 Direct labor 18 Variable manufacturing overhead 25 Fixed manufacturing overhead 29 Variable selling and administrative cost 10 Fixed selling and administrative cost 17 Under variable costing, each unit of the company's inventory would be carried at: A. $35. B. $55. C. $65. D. $84. E. some other amount.

b

Montgomery Company has a variable selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit behave? Total Variable Cost Variable Cost Per Unit A. Increase Increase B. Increase Remain constant C. Increase Decrease D. Remain constant Decrease E. Decrease Increase

b

Product costs are: A. expensed when incurred. B. inventoried. C. treated in the same manner as period costs. D. treated in the same manner as advertising costs. E. subtracted from cost of goods sold.

b

The unit contribution margin is calculated as the difference between: A. selling price and fixed cost per unit. B. selling price and variable cost per unit. C. selling price and product cost per unit. D. fixed cost per unit and variable cost per unit. E. fixed cost per unit and product cost per unit.

b

What type of cost exhibits the behavior that follows? Manufacturing Volume (Units) Total Cost Cost Per Unit 50,000 $150,000 $3.00 80,000 150,000 1.88 A. Variable cost. B. Fixed cost. C. Semivariable cost. D. Step-variable cost. E. Mixed cost.

b

Which of the following data are needed to calculate total equivalent units under the weighted-average method? A. Work-to-date on ending work in process, units started during the period. B. Units completed during the period, work-to-date on ending work in process. C. Work to complete beginning work in process, work-to-date on ending work in process. D. Work to complete beginning work in process, units completed, work done on ending work in process. E. Units completed, work to complete beginning work in process.

b

Which of the following does not typically appear on a contribution income statement? A. Net income. B. Gross margin. C. Contribution margin. D. Total variable costs. E. Total fixed costs.

b

Which of the following is not considered in the calculation of divisional ROI? A. Divisional income. B. Earnings velocity. C. Capital turnover. D. Sales margin. E. Sales revenue.

b

Which of the following is the correct method to calculate a predetermined overhead rate? A. Budgeted total manufacturing cost ÷ budgeted amount of cost driver. B. Budgeted overhead cost ÷ budgeted amount of cost driver. C. Budgeted amount of cost driver ÷ budgeted overhead cost. D. Actual overhead cost ÷ budgeted amount of cost driver. E. Actual overhead cost ÷ actual amount of cost driver.

b

Which of the following would take place if a company were able to reduce its variable cost per unit? Contribution Margin Break-even Point A. Increase Increase B. Increase Decrease C. Decrease Increase D. Decrease Decrease E. Increase No effect

b

A company that adopts a just-in-time production system would attempt to reduce and/or eliminate: A. raw-material inventory. B. raw-material inventory and work-in-process inventory. C. raw-material inventory, work-in-process inventory, and finished-goods inventory. D. work-in-process inventory. E. finished-goods inventory.

c

Activity-based costing systems: A. use a single, volume-based cost driver. B. assign overhead to products based on the products' relative usage of direct labor. C. often reveal products that were under- or overcosted by traditional costing systems. D. typically use fewer cost drivers than more traditional costing systems. E. have a tendency to distort product costs.

c

Airstream builds recreational motor homes. All of these activities add value to the finished product except: A. installation of carpet. B. assembly of the frame to the chassis. C. storage of the vehicle in the sales area. D. addition of exterior lights. E. final painting and polishing

c

As activity decreases, unit variable cost: A. increases proportionately with activity. B. decreases proportionately with activity. C. remains constant. D. increases by a fixed amount. E. decreases by a fixed amount.

c

Controllable costs, as used in a responsibility accounting system, consist of: A. only fixed costs. B. only direct materials and direct labor. C. those costs that a manager can influence in the time period under review. D. those costs about which a manager has some knowledge. E. those costs that are influenced by parties external to the organization.

c

Conversion costs are: A. direct material, direct labor, and manufacturing overhead. B. direct material and direct labor. C. direct labor and manufacturing overhead. D. prime costs. E. period costs.

c

Depreciation of factory equipment would be classified as: A. operating cost. B. "other" cost. C. manufacturing overhead. D. depreciation expense. E. administrative cost.

c

If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a(n): A. cost center. B. revenue center. C. profit center. D. investment center. E. contribution center.

c

Managerial accounting: A. focuses only on historical data. B. is governed by GAAP. C. focuses primarily on the needs of personnel within the organization. D. provides information for parties external to the organization. E. focuses on financial statements and other financial reports.

c

Many traditional costing systems: A. trace MOH to individual activities and require the development of numerous activity-costing rates. B. write off manufacturing overhead as an expense of the current period. C. combine widely varying elements of overhead into a single cost pool. D. use a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing. E. produce results far superior to those achieved with activity-based costing.

c

Stanley Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Stanley's non-value-added cost would be: A. $0. B. $150. C. $300. D. $900. E. $1,200

c

Straight-line depreciation is a typical example of a: A. variable cost. B. step-variable cost. C. fixed cost. D. mixed cost. E. curvilinear cost.

c

The day-to-day work of management teams will typically comprise all of the following activities except: A. decision making. B. planning. C. cost minimizing. D. directing operational activities. E. controlling.

c

The individual generally responsible for the direct-material price variance is the: A. sales manager. B. production supervisor. C. purchasing manager. D. finance manager. E. head of the human resources department.

c

The relevant range is that range of activity: A. where a company achieves its maximum efficiency. B. where units produced equal units sold. C. where management expects the firm to operate. D. where the firm will earn a profit. E. where expected results are abnormally high.

c

The underlying difference between absorption costing and variable costing lies in the treatment of: A. direct labor. B. variable manufacturing overhead. C. fixed manufacturing overhead. D. variable selling and administrative expenses. E. fixed selling and administrative expenses.

c

Which of the following costs is not a component of manufacturing overhead? A. Indirect materials. B. Factory utilities. C. Factory equipment. D. Indirect labor. E. Property taxes on the manufacturing plant.

c

Which of the following expressions can be used to calculate the break-even point with the contributionmargin ratio (CMR)? A. CMR ÷ fixed costs. B. CMR x fixed costs. C. Fixed costs ÷ CMR. D. (Fixed costs + variable costs) x CMR. E. (Sales revenue - variable costs) ÷ CMR.

c

Which of the following is not an objective of managerial accounting? A. Providing information for decision making and planning. B. Assisting in directing and controlling operations. C. Maximizing profits and minimizing costs. D. Measuring the performance of managers and subunits. E. Motivating managers toward the organization's goals.

c

Which of the following manufacturers would most likely use job-order costing? A. Chemical manufacturers. B. Microchip processors. C. Custom-furniture manufacturers. D. Gasoline refiners. E. Fertilizer manufacturers.

c

Which of the following statements about managerial accountants is false? A. Managerial accountants more and more are considered "business partners." B. Managerial accountants often are part of cross-functional teams. C. An increasing number of organizations are segregating managerial accountants in separate managerialaccounting departments. D. In a number of companies, managerial accountants make significant business decisions and resolve operating problems. E. The role of managerial accountants has changed considerably over the past decade.

c

Which of the following statements is true? A. The word "cost" has the same meaning in all situations in which it is used. B. Cost data, once classified and recorded for a specific application, are appropriate for use in any application. C. Different cost concepts and classifications are used for different purposes. D. All organizations incur the same types of costs. E. Costs incurred in one year are always meaningful in the following year.

c

Yellow Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Yellow Dot have to achieve to earn a target profit of $240,000? A. $400,000. B. $500,000. C. $600,000. D. $750,000. E. $900,000

c

A division's return on investment may be improved by increasing: A. cost of goods sold and expenses. B. sales margin and cost of capital. C. sales revenue and cost of capital. D. capital turnover or sales margin. E. capital turnover or cost of capital.

d

All of the following are inventoried under variable costing except: A. direct materials. B. direct labor. C. variable manufacturing overhead. D. fixed manufacturing overhead. E. items "C" and "D" above.

d

An allocation base for a cost pool should ideally be: A. machine hours. B. a cost object. C. a common cost. D. a cost driver. E. direct labor, either cost or hours.

d

Costs that are expensed when incurred are called: A. product costs. B. direct costs. C. inventoriable costs. D. period costs. E. indirect costs.

d

Generally speaking, companies prefer doing business with customers who: A. order small quantities rather than large quantities. B. often change their orders. C. require special packaging or handling. D. request normal delivery times. E. need specialized engineering design changes

d

In which department would an investigation normally begin regarding an unfavorable materials quantity variance? A. Quality control. B. Purchasing. C. Engineering. D. Production. E. Receiving.

d

Product costing in a manufacturing firm is the process of: A. accumulating the company's period costs. B. allocating costs among the organization's departments. C. placing a value on the company's fixed assets. D. assigning costs to the organization's inventory. E. assigning costs to the company's managers.

d

The biggest challenge in making a decentralized organization function effectively is: A. earning maximum profits through fair practices. B. minimizing losses. C. taking advantage of the specialized knowledge and skills of highly talented managers. D. obtaining goal congruence among division managers. E. developing an adequate budgetary control system.

d

The total production cost of a job is composed of: A. direct material and direct labor. B. direct material, direct labor, manufacturing overhead, and outlays for selling costs. C. direct material, direct labor, manufacturing overhead, and outlays for selling and administrative costs. D. direct material, direct labor, and applied manufacturing overhead. E. direct material, direct labor, and actual manufacturing overhead.

d

Unit costs in a process-costing system are derived by using: A. in-process units. B. completed units. C. physical units. D. equivalent units. E. a measure of activity other than those listed above.

d

Variances are computed by taking the difference between which of the following? A. Product cost and period cost. B. Actual cost and differential cost. C. Price factors and rate factors. D. Actual cost and standard cost. E. Product cost and standard cost.

d

Which of the following best defines the concept of a relevant cost? A. A past cost that is the same among alternatives. B. A past cost that differs among alternatives. C. A future cost that is the same among alternatives. D. A future cost that differs among alternatives. E. A cost that is based on past experience.

d

Which of the following companies would likely use a process-costing system? Custom Furniture Manufacturer Chemical Producer Soft Drink Bottler A. Yes Yes Yes B. Yes Yes No C. No Yes No D. No Yes Yes E. No No Yes

d

Which of the following costs should be used when choosing between two decision alternatives? Relevant Cost Sunk Cost Opportunity Cost A. No Yes No B. No Yes Yes C. Yes No No D. Yes No Yes E. Yes Yes Yes 90. A special order generally should be accepted if: A. its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order. B. excess capacity exists and the revenue exceeds all variable costs associated with the order. C. excess capacity exists and the revenue exceeds allocated fixed costs. D. the revenue exceeds total costs, regardless of available capacity. E. the revenue exceeds variable costs, regardless of available capacity.

d

Which of the following equations is used to calculate the cost of goods sold during the period? A. Beginning finished goods + cost of goods manufactured + ending finished goods. B. Beginning finished goods - ending finished goods. C. Beginning finished goods + cost of goods manufactured. D. Beginning finished goods + cost of goods manufactured - ending finished goods. E. Beginning finished goods + ending finished goods - cost of goods manufactured

d

Which of the following is the correct mathematical expression for return on investment? A. Sales margin ÷ capital turnover. B. Sales margin + capital turnover. C. Sales margin - capital turnover. D. Sales margin x capital turnover. E. Capital turnover ÷ sales margin.

d

A formal budget program will almost always result in: A. higher sales. B. more cash inflows than cash outflows. C. decreased expenses. D. improved profits. E. a detailed plan against which actual results can be compared.

e

All of the following costs are inventoried under absorption costing except: A. direct materials. B. direct labor. C. variable manufacturing overhead. D. fixed manufacturing overhead. E. fixed administrative salaries.

e

CVP annalysis can be used to study the effect of: A. changes in selling prices on a company's profitability. B. changes in variable costs on a company's profitability. C. changes in fixed costs on a company's profitability. D. changes in product sales mix on a company's profitability. E. all of the above.

e

Consider the following statements about performance reports: I. Performance reports provide feedback to managers and allow them to better control operations. II. Many performance reports have budget, actual, and variance data. III. Performance reports are often structured around a firm's organizational hierarchy—that is, data relating to lower-level units (e.g., departments) are combined and flow into higher-level units (e.g., stores). Which of the above statements is (are) true? A. I only. B. I and II. C. I and III. D. II and III. E. I, II, and III.

e

James Company uses absorption costing and Barry Company uses variable costing. Which of the following choices correctly denotes costs that would be treated differently by James and Barry? Direct Labor Variable Manufacturing Overhead Fixed Administrative Expenses A. Yes No Yes B. Yes Yes Yes C. No Yes No D. No No Yes E. No No No

e

Manufacturing overhead: A. includes direct materials, indirect materials, indirect labor, and factory depreciation. B. is easily traced to jobs. C. includes all selling costs. D. should not be assigned to individual jobs because it bears no obvious relationship to them. E. is a pool of indirect production costs that must somehow be attached to each unit made.

e

Selto Manufacturing recently sold goods that cost $35,000 for $45,000 cash. The journal entries to record this transaction would include: A. a credit to Work-in-Process Inventory for $35,000. B. a debit to Sales Revenue for $45,000. C. a credit to Profit on Sale for $10,000. D. a debit to Finished-Goods Inventory for $35,000. E. a credit to Sales Revenue for $45,000.

e

When graphed, a typical variable cost appears as: A. a horizontal line. B. a vertical line. C. a u-shaped line. D. a diagonal line that slopes downward to the right. E. a diagonal line that slopes upward to the right.

e

Which of the following can have a negative impact on a sale's profitability? A. Number of required sales contacts (phone calls, visits, etc.). B. Special shipping instructions. C. Accounts receivable collection time. D. Purchase-order changes. E. All of the above.

e

Which of the following correctly lists all the information needed to calculate a labor rate variance? A. Standard labor rate and actual hours worked. B. Actual hours worked and actual units produced. C. Standard labor rate, actual labor rate, and actual units produced. D. Actual labor rate and actual hours worked. E. Actual labor rate, standard labor rate, and actual hours worked.

e

Which of the following is a product cost? A. Glass in an automobile. B. Advertising. C. The salary of the vice president-finance. D. Rent on a factory. E. Both "A" and "D."

e

Which of the following is not an example of a responsibility center? A. Cost center. B. Revenue center. C. Profit center. D. Investment center. E. Contribution center.

e

Which of the following situations cannot occur together during the same accounting period? A. Unfavorable labor rate variance and favorable labor efficiency variance. B. Unfavorable labor efficiency variance and favorable materials quantity variance. C. Favorable labor rate variance and unfavorable total labor variance. D. Favorable labor efficiency variance and favorable materials quantity variance. E. None of the above, as all of these situations are possible.

e

Which of the following would not be classified as a product cost? A. Direct materials. B. Direct labor. C. Indirect materials. D. Insurance on the manufacturing plant. E. Sales commissions.

e

Work-in-process inventory is composed of: A. direct material and direct labor. B. direct labor and manufacturing overhead. C. direct material and manufacturing overhead. D. direct material only. E. direct material, direct labor, and manufacturing overhead.

e