Random Questions for Accounting Final

Value-added activities increase the perceived worth of a product or service to customers. involve those activities that are essential to a company's operations. include engineering design, machining, and assembly. all of the above.

all of the above

Companies that switch to ABC often find they have been overpricing some products. possibly losing market share to competitors. been sacrificing profitability by underpricing some products. all of the these answers are correct.

all of these answers are correct

A process cost system would most likely be used by a company that makes motion pictures. breakfast cereal. college graduation announcements. repairs to automobiles.

breakfast cereal

Any activity that causes resources to be consumed is called a facility-level activity. just-in-time activity. cost driver. non-value-added activity.

cost driver

If the activity level increases 10%, total variable costs will increase 10%. decrease by less than 10%. remain the same. increase by more than 10%.

increase 10%

Assigning overhead using ABC will usually provide less accurate cost per unit for low volume products than will traditional costing. decrease the cost per unit for low volume products as compared to a traditional overhead allocation. increase the cost per unit for low volume products as compared to a traditional overhead allocation. result in the same cost per unit for low volume products as does traditional costing.

increase the cost per unit for low volume products as compared to traditional overhead allocation

A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n) period cost. miscellaneous expense. indirect material. direct material.

miscellaneous expense

Which of the following will always be a relevant cost? Sunk cost Variable cost Opportunity cost Fixed cost

opportunity cost

Budgeting is usually most closely associated with which management function? Planning Motivating Directing Controlling

planning

Reducing reliance on human workers and instead investing heavily in computers and online technology will make the company less susceptible to economic swings. reduce fixed costs and increase variable costs. reduce variable costs and increase fixed costs. have no effect on the relative proportion of fixed and variable costs.

reduce variable costs and increase fixed costs

A cost that cannot be changed by any present or future decision is a(n) incremental cost. sunk cost. variable cost. opportunity cost.

sunk cost

Which one of the following would be the best cost driver for the activity of purchasing? The number of employees in the purchasing department. Total number of items ordered. Total dollar value of items orders. The number of purchase orders issued.

the number of purchase orders issued

Which one of the following is an example of a period cost? A box cost associated with computers. Workers' compensation insurance on factory workers' wages allocated to the factory. A manager's salary for work that is done in the corporate head office. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer.

A manager's salary for work that is done in the corporate head office

Which of the following is not an internal user? Treasurer Creditor Controller Department manager

Creditor

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is Raw Materials Inventory Work In Process Inventory Finished Goods Inventory Work In Process Inventory Finished Goods Inventory Direct Materials Direct Labor Manufacturing Overhead Work In Process Inventory Direct Materials Direct Labor Manufacturing Overhead

Finished Goods Inventory Work in Process Inventory

Which one of the following is a source document that impacts the job cost sheet? Materials purchase orders. Finished goods shipping documents. Labor time tickets. Raw materials receiving slips.

Labor time tickets

All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except: raw materials are used. the purchase of raw materials. overhead is applied. factory labor is used.

The purchase of raw materials

A materials requisition slip showed that direct materials requested were $66000 and indirect materials requested were $15000. The entry to record the transfer of materials from the storeroom is Manufacturing Overhead 81000 Raw Materials Inventory 81000 Work In Process Inventory 66000 Raw Materials Inventory 66000 Work In Process Inventory 66000 Manufacturing Overhead 15000 Raw Materials Inventory 81000 Direct Materials 66000 Indirect Materials 15000 Work in Process Inventory 81000

Work in Process Inventory 66000 Manufacturing Overhead 15000 Raw Materials Inventory 81000

n general, a company should sell more units of products with a higher contribution margin. a lower contribution margin. a higher selling price. None of the above is correct

a higher contribution margin

Which one of the following is an example of a period cost? Workers' compensation insurance on factory workers' wages allocated to the factory. A manager's salary for work that is done in the corporate head office. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer. A box cost associated with computers.

a manager's salary for work that is done in the corporate head office

If Company A has a higher proportion of fixed costs relative to variable costs than Company B: Company A has a higher break-even point than Company B. Company A is more sensitive to changes in sales than Company B. Company A has greater risk compared to Company B. All of the above are true.

all of the above are true

Which of the following is not a batch-level activity? Inspection Purchase ordering Equipment setups Assembling

assembling

Which of the following would be accounted for using a job order cost system? The refining of petroleum. The production of automobiles. The construction of a new campus building. The production of personal computers.

construction of a new campus building

The degree of operating leverage is computed by dividing variable costs by contribution margin per unit. fixed costs by contribution margin per unit. contribution margin by net income. variable costs by contribution margin ratio.

contribution margin by net income

If manufacturing overhead has been underapplied during the year, the adjusting entry at the end of the year will show a debit to Cost of Goods Sold. debit to Manufacturing Overhead. credit to Cost of Goods Sold. debit to Work in Process Inventory.

debit to cost of goods sold

Which of the following is not a facility-level activity? Utilities Property taxes Engineering changes Plant depreciation

engineering changes

A job order cost system is most appropriate when a large volume of uniform products are produced. True False

false

Why does the unit selling price increase when expected volume is lower than budgeted volume? Fixed costs and desired ROI have to be spread over fewer units. Variable costs and fixed costs have to be spread over fewer units. Variable costs and desired ROI have to be spread over fewer units. Fixed costs only have to be spread over fewer units.

fixed costs and desired ROI have to be spread over fewer units

If annual overhead costs are expected to be $990000 and direct labor costs are expected to be $1000000, then if the activity base is direct labor costs: for every dollar of direct labor, 99.0 cents of manufacturing overhead will be assigned. a predetermined overhead rate cannot be determined. for every dollar of manufacturing overhead, 1.01 cents of direct labor will be assigned. $1.01 is the predetermined overhead rate.

for every dollar of direct labor, 99 cents of manufacturing overhead will be assigned

An important feature of a job order cost system is that each job has its own distinguishing characteristics. consists of one unit of output. must be similar to previous jobs completed. must be completed before a new job is accepted.

has its own distinguishing characteristics

The high-low method is criticized because it doesn't provide reasonable estimates. is not a graphical method. ignores much of the available data by concentrating on only the extreme points. is a mathematical method.

ignores much of the available data by concentrating on only the extreme points

The managerial function of controlling is concerned mainly with operating a manufacturing segment. is performed only by the controller of a company. is only applicable when the company sustains a loss. includes performance evaluation by management.

includes performance evaluation by management

Which of the following is a non-value-added activity? Machining Inspection Packaging Engineering design

inspection

Which one of the following is not a benefit of budgeting? It provides assurance that the company will achieve its objectives. It requires all levels of management to plan ahead on a recurring basis. It facilitates the coordination of activities. It provides definite objectives for evaluating performance.

it prodies assurance that the company will achieve its objectives

Which of the following is not a benefit of activity-based costing? More accurate product costing Enhanced control over overhead costs Better management decisions Less costly to use

less costly to use

Which one of the following is not a direct material? A tire used for a lawn mower Lubricant for a ball-bearing joint for a large crane Steel used in the manufacturing of steel-radial tires Plastic used in the covered case for a home PC

lubricant for a ball bearing joint for a large crane

When comparing a traditional income statement to a CVP income statement net income will always be greater on the traditional statement. net income will always be less on the traditional statement. net income will always by identical on both. net income will be greater or less depending on the sales volume

net income will always be identical on both

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver: number of purchase orders. machine hours. number of inspection tests. number of setups.

number of purchase orders

Managerial accounting information pertains to the entity as a whole and is highly aggregated. is prepared only once a year. is constrained by the requirements of generally accepted accounting principles. pertains to subunits of the entity and may be very detailed.

pertains to subunits of the entity and may be very detailed

The management function that requires managers to look ahead and establish objectives is directing. controlling. constraining. planning.

planning

Which is the last step in developing the master budget? Preparing the budgeted balance sheet. Preparing the budgeted income statement. Preparing the cash budget. Preparing the cost of goods manufactured budget.

preparing the budgeted balance sheet

Costs that will differ between alternatives and influence the outcome of a decision are unavoidable costs. product costs. sunk costs. relevant costs.

relevant costs

Which of the following is a limitation of activity-based costing? Some arbitrary allocations continue Poorer management decisions More cost pools Less control over overhead costs

some arbitrary allocations continue

In order to maximize profits when limited resources are available a company should concentrate on the producing products with: the highest contribution margin per unit of limited resource. the lowest unit variable costs. the lowest limited resource requirements. the highest unit contribution margins.

the highest contribution margin

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then the order will likely be accepted. the order will likely be rejected. only variable costs are relevant. fixed costs are not relevant.

the order will likely be rejected

What term describes all business processes associated with providing a product or service? The manufacturing chain The supply chain The product chain The value chain

the value chain

Activity-based costing systems rely on multiple bases for overhead cost allocation. True False

true

A cost which remains constant per unit at various levels of activity is a variable cost. manufacturing cost. fixed cost. mixed cost.

variable cost

Which statement describes a fixed cost? The unit cost varies directly to the activity level. It varies in total at every level of activity. The unit costs stay the same at every activity level. When activity declines, its cost per unit increases.

when activity declines, its cost per unit decreases

In which of the following situations would a company not set the prices of its products? When there are few or no other producers capable of making a similar product When the product is not easily differentiated from competing products When the product can be effectively differentiated from others When the product is specially made for a customer

when the product is not easily differentiated from competing products