Managerial Accounting

When deciding to lease a new cutting machine or continue using the old machine, the irrelevant cost is A) $50,000, cost of the old machine B) $20,000, cost of the new machine C) $10,000, selling price of the old machine D) $3,000, annual savings in operating costs if the new machine is purchased

A) $50,000, cost of the old machine

Which of the following is not an inventoriable cost of a manufacturer? A) Sales commissions paid to sales representatives who sell the products made by the manufacturer B) Wages paid to assembly-line workers C) Plant depreciation incurred D) Property taxes on plant

A) Sales commissions paid to sales representatives who sell the products made by the manufacturer

Which of the following is a fixed cost for an automobile manufacturing plant? A) administrative salaries B) electricity used by assembly-line machines C) sales commissions D) tires

A) administrative salaries

Which of the following is a period cost? A) costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties B) the cost of materials used to make a product when those materials are an insignificant part of the finished product C) the cost of direct labor D) the amount of depreciation expense recognized because of the use of plant assets such as building and equipment

A) costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties

A relevant cost is a cost that is a(n). A) future cost B) past cost C) sunk cost D) non-cash expense

A) future cost

The cost function y = 13,000 + 9X A) represents a mixed cost B) will intersect the y-axis at 9 C) has a slope coefficient of 13,000 D) is a curved line

A) represents a mixed cost

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. During June, Heavy Products produced and sold 25,000 containers using 23,000 pounds of direct materials at an average cost per pound of $75 and 17,500 direct manufacturing labor-hours at an average wage of $31.25 per hour. The direct material price variance during June is ________. A.) $115,000 unfavorable B.) $500,000 favorable C.) $500,000 unfavorable D.) $13,125 favorable

A.) $115,000 unfavorable

Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1300. His fixed costs are $24,000 per month and his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 400 procedures this month. What is the breakeven point for the month assuming that Dr. Hunter plans to perform the procedure 400 times? A.) 30 times B.) 19 times C.) 28 times D.) 10 times

A.) 30 times

Which of the following is true of planning in decision making? A.) It helps an organization to select goals and strategies. B.) It improves the quality of products. C.) It helps in evaluating performance. D.) It helps in the analysis of actual performance.

A.) It helps an organization to select goals and strategies.

Which of the following statements refers to management accounting information? A.) There are no regulations governing the reports. B.) The reports are generally delayed and historical. C.) The audience tends to be stockholders, creditors, and tax authorities. D.) It primarily measures manager's compensation on reported financial results.

A.) There are no regulations governing the reports.

John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $10,000 to make it roadworthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep Grand Cherokee instead for $10,000 cash. Sherry estimated the following costs for the two cars: Trail Blazer Grand Cherokee Acquisition $25,000 $10,000 Repairs $10,000 --- Annual operating costs (Gas, maintenance, insurance) $2,780 $1,800 The cost NOT relevant for this decision is the: A.) acquisition cost of the Trail Blazer B.) acquisition cost of the Grand Cherokee C.) repairs to the Trail Blazer D.) annual operating costs of the Grand Cherokee

A.) acquisition cost of the Trail Blazer

Which of the following is true if the production volume decreases? A.) fixed cost per unit increases B.) average cost per unit decreases C.) variable cost per unit increases D.) variable cost per unit decreases

A.) fixed cost per unit increases

The order to follow when preparing the operating budget is ________. A.) revenues budget, production budget, direct manufacturing labor costs budget, and cost of goods sold B.) revenues costs of goods sold budget, production budget, and cash budget C.) revenues budget, manufacturing overhead costs budget, and production budget D.) cash expenditures budget, revenues budget, and production budget

A.) revenues budget, production budget, direct manufacturing labor costs budget, and cost of goods sold

Over the past year Johnson Company has experienced favorable direct labor price variance and unfavorable direct labor efficiency variance. Which is the most plausible reason for those variances? A) The company's primary supplier had a disruption in their supply chain and was unable to deliver materials on time. B) An unusually large number of the company's experienced employees retired and was replaced by recent college graduates. C) The company made significant investments in employee training this past year. D) Customer demand greatly exceeded expectations.

B) An unusually large number of the company's experienced employees retired and was replaced by recent college graduates.

Work-in-process inventory would normally include A) direct materials in stock and awaiting use in the manufacturing process B) goods partially worked on but not yet fully completed C) goods fully completed but not yet sold D) goods returned after being sold to be re-worked on further improvements and...

B) goods partially worked on but not yet fully completed

The most likely cost driver of distribution costs is the A) number of parts within the product B) number of miles driven C) number of products manufactured D) number of production hours

B) number of miles driven

What is the primary reason that companies analyze direct cost variances A) It is required by Generally Accepted Accounting Principles. B) In order to accurately measure and report ending inventory balances. C) To evaluate past performance and try to improve future performance. D) All of the above.

C) To evaluate past performance and try to improve future performance.

Which one of the following is a variable cost for an insurance company? A) rent of the building B) CEO's salary C) electricity expenses D) property taxes

C) electricity expenses

Mangers are examining a possible replacement of a machine decision and generate the following numbers: Book value of old machine $1,000,000 Current disposal value of old machine $50,000 Loss on disposal of old machine $300,000 Cost of new machine $600,000 In performing an analysis and in attempt to answer the question, "should we replace the old machine", which of the following statements would be true A) the book value of the old machine is relevant B) the book value of the old machine and the current disposal value of the old machine are both relevant C) the cost of the new machine and the current disposal value of the old machine are relevant D) the book value of the old machine and the current disposal value of the old machine are the only relevant items

C) the cost of the new machine and the current disposal value of the old machine are relevant

Sparkle Jewelry sells 800 units resulting in $9,000 of sales revenue, $3,000 of variable costs and $1,500 of fixed costs. Contribution margin per unit is______. (Round the final answer to the nearest cent.) A.) $13.75 B.) $11.25 C.) $7.50 D.) $5.00

C.) $7.50

For next year, Roberts, Inc., has budgeted sales of 20,000 units, targeted ending finished goods inventory of 1,650 units, and beginning finished goods inventory of 750 units. All other inventories are zero. How many units should be produced next year? A.) 19,100 units B.) 20,000 units C.) 20,900 units D.) 22,400 units

C.) 20,900 units

Firebird Ltd. sells packaged birdseed for $6.00 per package. Variable product costs are $3.00 per package. Fixed costs are $12,000 per period. How many packages must Firebird sell to earn a target operating income of $7,900? A.) 4,000 packages B.) 2,633 packages C.) 6,633 packages D.) 3,317 packages

C.) 6,633 packages

Giant Company is thinking of dropping Product C because it is reporting a loss. Assuming Giant Company drops Product C and does NOT replace it, operating income will______. A.) increase by $3,400 B.) increase by $2,000 C.) decrease by $6,000 decrease by $11,400

C.) decrease by $6,000

When deciding to accept a one-time-only special order from a wholesaler, management should_______. A.) consider the sunk costs and opportunity costs B.) not consider the special order's impact on future prices of their products C.) determine whether excess capacity is available D.) verify past design costs for the product

C.) determine whether excess capacity is available

Which of the following is a direct manufacturing cost? A.) plant maintenance B.) plant rent C.) fringe benefits paid to assemblers D.) property taxes on plant

C.) fringe benefits paid to assemblers

Which of the following is true if the volume of sales increases (within a relevant range) A.) total fixed cost increases B.) total variable cost decreases C.) total variable cost increases D.) total fixed cost decreases

C.) total variable cost increases

Which of the following is the basic formula for the direct materials purchase budget? A.) Ending inventory of direct materials + direct materials purchased and used during the period = direct materials to be used this period B.) Beginning inventory of direct materials + direct materials purchased and used during the period = direct materials to be used this period C.) units used in production + target ending inventory - beginning inventory = purchases to be made for the budget period D.) units used in production + target beginning inventory - ending inventory = purchases to be made for the budget period

C.) units used in production + target ending inventory - beginning inventory = purchases to be made for the budget period

Which of the tools shown below would be the most effective planning tool? A) performance evaluation report B) fishbone diagram C) control chart D) budget

D) budget

Indirect manufacturing costs A) can be traced to the product that created the costs B) can be easily identified with the cost object C) generally include the cost of material and the cost of labor D) may include both variable and fixed costs

D) may include both variable and fixed costs

Tally Corp. sells software during the recruiting seasons. During the current year, 10,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $48,000 of fixed costs. If sales increase by $80,000, operating income will increase by ________. (Round interim calculations to two decimal places and the final answer to the nearest whole dollar.) A.) $30,588 B.) $32,000 C.) $48,000

D.) $57,872

Control measures should_______. A.) be set and not changed until the next budget cycle so as to provide an effective bench B.) be set by excluding nonfinancial information C.) be kept confidential from employees so that competitors don't have an opportunity to gain a competitive advantage D.) be linked by feedback to help learning and future planning

D.) be linked by feedback to help learning and future planning

McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows: Direct materials $86,000 Direct labor 126,000 Variable factory overhead 58,000 Fixed factory overhead 138,000 Total costs $408,000 Of the fixed factory overhead costs, $55,000 is avoidable. Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit. Assuming there is no other use for the facilities, Schmidt should A.) make the part, as this would save $16 per unit B.) buy the part, as this would save $16 per unit C.) buy the part, as this would save the company $192,000 D.) make the part, as this would save $14 per unit

D.) make the part, as this would save $14 per unit

The contribution income statement highlights________. A.) gross margin B.) the segregation of costs into period costs and inventoriable costs C.) different product lines D.) variable and fixed costs

D.) variable and fixed costs