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UFC1
Managerial Accounting 1
| Question | Answer |
|---|---|
| Managerial accounting is used in each of the following types of businesses? | Managerial accounting is used in all types of firms. |
| Managerial accounting information is generally prepared for | Managerial information is prepared for managers. |
| Managerial accounting is applicable to | Managerial accounting is applicable to service entities, manufacturing entities, not-for-profit entities. |
| While the preparation of financial statements for external users is guided by GAAP, the guideline for the preparation of managerial accounting reports for internal users is Select answer from the options below - Correct! | the guideline for the preparation of managerial accounting reports for internal users is relevance to decision. |
| A distinguishing feature of managerial accounting is that | one feature is it generally results in very detailed reports. |
| Financial and managerial accounting are similar in that | both deal with the economic events of an enterprise. |
| Management accountants would not | prepare reports primarily for external users. |
| What activities and responsibilities are not associated with managerial functions? | Accountability is not managerial functions |
| Planning is a function that involves | setting goals and objectives for an entity. |
| In determining whether planned goals are being met, a manager is performing the function of | they are performing the controlling function |
| Which of the following is not a separate management function? | Decision-making is not a separate function |
| The managerial function that pertains to keeping the activities of the enterprise on track is | controlling helps keeps the enterprise on track |
| Both direct materials and indirect materials are | raw materials are DM and ID |
| Which one of the following would not be classified as manufacturing overhead? | Direct materials is not classified as OH |
| Which one of the following is not a direct material? | Lubricant for a ball-bearing joint for a large crane is not direct material |
| A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n | the glue would be an indirect material. |
| The wages of a janitor in the factory would be classified as | indirect labor cause the janitor works in the factory but doesn't touch the product |
| Which one of the following is not considered a raw material costs? | Partially completed motor engines for a motorcycle factory would not raw material cost |
| Which of the following is not classified as direct labor? | Wages of supervisors because they don't touch the product |
| The product cost that is most difficult to associate with a product is | manufacturing overhead. |
| Which one of the following is an example of a period cost? | Payroll accountant’s salary for work that is done in the corporate head office is period cost |
| Product costs consist of | direct materials, direct labor, and manufacturing overhead. |
| Property taxes on a manufacturing facility are an element of a | Product cost YES , Period cost NO property taxes |
| For a manufacturing company, which of the following is an example of a period cost rather than a product cost? | Wages of salespersons cause they don't touch the product |
| Which of the following is not a manufacturing cost category? | Cost of goods sold is not a manufacturing cost category |
| Which of the following is not another name for the term manufacturing overhead? | Pervasive costs is not another name for the term manufacturing overhead |
| Direct materials and direct labor of a company total $8000000. If manufacturing overhead is $4000000, what is direct labor cost? | Cannot be determined from the information provided for direct materials and labor |
| Sales commissions are classified as | period costs cause they don't touch the the product |
| Product costs are also called | inventoriable costs -Product cost is an accounting term that refers to the total costs involved in making a product and getting it ready for sale. |
| When goods are sold, their inventoriable costs are transferred to | cost of goods sold. |
| Cost of goods manufactured in a manufacturing company is analogous (similar) to | cost of goods purchased in a merchandising company. |
| Cost of goods manufactured is calculated as follows: | Beginning WIP + direct materials used + direct labor + manufacturing overhead – ending WIP. is the calculation for COGM |
| Equivalent units of production are calculated by multiplying | multiplying the percentage of work done by the physical units. |
| Equivalent units of production are a measure of | the work done in a period expressed in fully completed units. |
| In traditional costing systems, overhead is generally applied based on | direct labor is the traditional costing systems |
| An activity that has a direct cause-effect relationship with the resources consumed is | a cost driver is an activity |
| Which best describes the flow of overhead costs in an activity-based costing system? | Overhead costs → activity cost pools → cost drivers → products is the activity based costing system |
| The costs associated with ordering materials, setting up machines, assembling products, and inspecting products are examples of | activity pools are the costs associated with ordering materials, setting up machines, assembling products, and inspecting products |
| Activity-based costing can be used by | accounting firms, law firms, and consulting firms use Activity-based costing |
| For an activity base to be useful in cost behavior analysis, | there should be a correlation between changes in the level of activity and changes in costs for it to be useful |
| A variable cost is a cost that | varies in total in proportion to changes in the level of activity. |
| A cost that remains constant per unit at various levels of activity is a | variable cost is a cost that remains constant per unit at various levels of activity |
| An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: | Unit Variable Cost- Remains constant Unit Fixed Cost- Decreases |
| A fixed cost is a cost which remains | remains constant in total with changes in the level of activity. |
| The increased use of automation and decreased use of labor in companies has caused a trend towards an increase in | increase in fixed costs and a decrease in variable costs |
| Cost behavior analysis is the determination of how a firm's costs | costs respond to changes in the level of business activity. |
| Cost behavior analysis applies to | applies to retailers, wholesalers, manufacturers |
| The activity that causes changes in the behavior of costs is referred to as the activity | activity index. |
| A company has a unit contribution margin of $120 and a contribution margin ratio of 40%. What is the unit selling price? | $300. $120 / 0.40 = $300 |
| A Cost-Volume-Profit(cvp) graph does not include a | variable cost line graph |
| Cost-Volume-Profit (cvp) analysis is the study of the effects of | effects of changes in costs and volume on a company’s profit. |
| The Cost-Volume-Profit( CVP) income statement classifies costs | classifies costs as variable or fixed and computes contribution margin. |
| Contribution margin is the amount of revenue remaining after deducting | deducting variable costs. |
| In a (CVP)Cost-Volume-Profit income statement, cost of goods sold is generally | sold is generally broken down into its variable and fixed cost components. |
| In a CVP income statement, selling expenses are generally | expenses are generally broken down into its variable and fixed cost components. |
| The contribution margin ratio is | ratio is contribution margin divided by sales dollars. |
| Reducing reliance on human workers and instead, investing heavily in technology will | technology will reduce variable costs and increase fixed costs. |
| A company with a higher contribution margin ratio is | margin ratio is more sensitive to changes in the volume of sales revenue. |
| A major accounting contribution to the managerial decision-making process in evaluating alternative courses of action is to | alternative courses of action is to provide relevant revenue and cost data about each course of action. |
| Internal reports that review the actual impact of decisions are prepared by | prepared by management accountants. |
| A revenue that differs between alternative courses of action and makes a difference in decision-making is called a(n) | decision-making is called a(n) incremental revenue. |
| Which of the following is an irrelevant cost? | A sunk cost irrelevant cost |
| In incremental analysis, | incremental analysis, all costs are relevant if they change between alternatives. |
| Miley, Inc. has excess capacity. Under what situations should the company accept a special order at a price that is less than the current selling price? | When incremental revenues exceed incremental costs company accept a special order |
| If a company must expand capacity to accept a special order, it is likely that there will be | that there will be an increase in fixed costs. |
| A company is operating at less than full capacity. It is contemplating whether a special order should be accepted. The order will not impact regular sales. If the company accepts the special order, which of the following will occur? | which of the following will occur?Net income will increase if the special unit selling price exceeds the unit variable costs. |
| What of the following would not be relevant in a make-or-buy decision? | Unavoidable variable costs not be relevant in a make-or-buy decision |
| In a make-or-buy decision, which costs are considered relevant? | which costs are considered relevant? Incremental variable costs, incremental fixed costs, and opportunity costs. |
| The decision rule on whether to sell or process further | sell or process further is process further if incremental revenues from such processing exceed the incremental processing costs |
| Which of the following is not relevant in a sell or process further decision? | Fixed costs is not relevant in a sell or process further decision |
| Which of the following terms are synonymous in the context of a sell or process further decision? | Joint costs and sunk costs synonymous in the context of a sell or process further decision |
| When deciding whether to replace old equipment with new equipment, the overriding consideration is the | the overriding consideration is the difference between future cost savings and the new equipment’s costs. |
| Which of the following is relevant information in a decision whether old equipment presently being used should be replaced by new equipment? | by new equipment? The salvage value of the old equipment |
| The cash disposal value of old equipment is considered to be a (an) | is considered to be a relevant cost. |
| If an unprofitable segment is eliminated, | eliminated, variable expenses of the discontinued segment will be eliminated. |
| What is budgetary control? | budgetary control -The use of budgets in controlling operations. |
| Budget reports should be prepared | prepared as frequently as needed. |
| On the basis of the budget reports, | budget reports, management analyzes differences between actual and planned results. management may take corrective action. management may modify the future plans. All of these answers are correct. |
| The purpose of the departmental overhead cost report is to | cost report is to control overhead costs. |
| The purpose of the sales budget report is to | sales budget report is to determine whether sales goals are being met. |
| A static budget | static budget -shows planned results at the original budgeted activity level. |
| The flexible budget | flexible budget-is a series of static budgets at different levels of activity. |
| A flexible budget can be prepared for which of the following budgets comprising the master budget? | flexible budget Sales, Overhead, Direct materials comprises the master budget |
| A flexible budget | A flexible budget- projects budget data for various levels of activity. |
| Within the relevant range of activity, the behavior of total costs is assumed to be | assumed to be linear and upward sloping. |
| A flexible budget depicted graphically | graphically differs from a CVP graph in that sales revenue is not shown. |
| The activity index used in preparing the flexible budget | should significantly influence the costs that are being budgeted for a flexible budget |
| A cost is considered controllable at a given level of managerial responsibility if | the manager has the power to manage the cost within a given time period. |
| Costs incurred indirectly and allocated to a responsibility level are considered to be | considered to be noncontrollable. |
| The linens department of a large department store is | department store is a profit center. |
| Of the following choices, which contain both a traceable fixed cost and a common fixed cost? | Company personnel department costs and timekeeping costs for a responsibility center’s employees. |
| Controllable margin is defined as | Controllable margin contribution margin less controllable fixed costs. |
| A standard cost is | standard cost -a predetermined cost. |
| Standard costs may be used by | universities, governmental agencies, charitable organizationsuse standard cots |
| Inventories may be reported in the financial statements at | standard costs. |
| Ideal standards | Ideal standards -reflect optimal performance under perfect operating conditions. |
| The two levels at which standards may be set are | may be set are normal and ideal. |
| An allowance for spoilage is part of the direct | direct materials quantity standard. |
| When is a variance considered to be 'material'? | When it is large compared to the standard cost |
| Reporting inventories at standard cost in external financial | external financial in accordance with generally accepted accounting principles if there are no significant differences between actual and standard costs. |
| in accordance with generally accepted accounting principles if there are no significant differences between actual and standard costs. | between actual and standard costs. incorporates financial and nonfinancial measures in an integrated system. |
| The balanced scorecard approach | normally sets the financial objectives first, and then sets the objectives in the other perspectives to accomplish the financial objectives. |
| How have many companies significantly lowered inventory levels and costs? | They have a just-in-time method |
| Which of the following terms describes the business processes | The value chain |
| Many companies now focus on reducing defects in finished products with the goal of zero defects. This is called | total quality management. |
| All activities associated with providing a product or service is r | the value chain. |
| After the passage of the Sarbanes-Oxley Act, | CEOs and CFOs must certify that financial statements give a fair presentation of the company’s operating results. |
| Because of automation, which component of product cost is declining? | Direct labor |
| Which of the following characteristics would likely be associated with a just-in-time inventory method? | Minimal finished goods inventory on hand |
| Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion? | Activity-based costing |
| Which one of the following is a trend in industry? | The U.S. economy has shifted toward an emphasis on providing services. |
| Which one of the following is a trend in managerial accounting? | Large machines have been replaced with smaller, more flexible ones. |
| Which of the following managerial accounting approaches attempts to allocate manufacturing overhead more accurately? | Activity-based costing |
| What is “balanced” in the balanced scorecard approach? | The emphasis on financial and non-financial performance measurements. |
| Parnell Company prepared its income statement for internal use. How would amounts for cost of goods sold and variances appear? | Cost of goods sold would be at standard costs, and variances would be reported separately. |
| Alex Co. prepared its income statement for management using a standard cost accounting system. Which of the following is reported at the “standard” amount? | Cost of goods sold |
| Which statement is correct concerning the costing of inventories at standard cost for external financial statements? | Generally accepted accounting principles allows standard costing only if significant differences do not exist between actual and standard costs. |
| When a company prepares financial statements using standard costing, which items are reported at standard cost? | Inventories and cost of goods sold |
Created by:
chawk69