Cornerstones of Managerial Accounting (Cornerstones Series) 5th Edition

Chapter 10Standard Costing: A Managerial Control Tool TRUE/FALSE 1. Managers develop quantity standards when they decide what amount of input should be used per unit of output. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 10-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA:

SUPPORTING CALCULATIONS: Cost to buy ($17 20,000) $340,000 Cost to make: Variable costs ($16.50 20,000) $330,000 Opportunity costs 18,000 348,000 Profit will increase by $ 8,000 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 13-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Decision Analysis | ACBSP: APC-27-Managerial Accounting Features/Costs

72. When investing in automated systems, which of the following intangible or indirect benefits may be important? a. improved customer satisfaction b. improved market share c. reduced support labor cost d. reduced lead time e. All of these. ANS: E PTS: 1 DIF: Difficulty: Easy OBJ: LO:

C. Calculate the amount of the net cash flows from financing activities. D. Calculate the net change in cash. ANS: A. Cash flows from operating activities: Net Income $365,000 Depreciation Expense 107,000 Decrease in prepaid expenses 6,000 Increase in accounts payable 27,000 Increase in accounts receivable (19,000) Increase

Net income $ 24,000 The beginning and ending balances for last year are available for the following accounts: Ending Beginning balance balance Accounts receivable $32,000 $40,000 Inventory 60,000 50,000 Prepaid expenses 12,000 8,000 Accumulated depreciation (40,000) (30,000) Accounts payable 30,000 45,000 Accrued liabilities 16,000 10,000 Income

Credit balances: Accumulated Depreciation 23,000 Accounts payable (10,000) Accrued liabilities 7,000 Taxes payable 5,000 Bonds payable 40,000 Based solely on this information, the net cash flows from operating activities under the indirect method on the statement of cash flows would be a. $79,000. b. $102,000. c. $29,000. d.

200,000 $40,000 200,000 $40,000 200,000 $40,000 300,000 $60,000 23. Refer to Figure 3-2. The cost behavior of the materials cost is a. fixed b. variable c. committed d. discretionary ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 3-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Reporting

97. Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,300 machine hours (rounded to the nearest dollar) is a. $30,940. b. $37,116. c. $25,945. d. $10,631. ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 3-4 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision

NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Decision Analysis | ACBSP: APC-33-Incremental analysis KEY: Bloom's: Application NOT: 1 min. NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Decision Analysis | ACBSP: APC-33-Incremental analysis KEY: Bloom's: Application NOT: 1 min. NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Decision Analysis

Chapter 4Cost-Volume-Profit Analysis: A Managerial Planning Tool TRUE/FALSE 1. The break-even point is where total sales revenue equals total cost. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 4-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Decision Analysis | ACBSP: APC-31-Break-even point KEY:

35. Refer to Figure 4-2. What is the variable cost ratio? a. 50% b. 40% c. 33% d. 67% e. 60% ANS: E $21/$35 = 60% PTS: 1 DIF: Difficulty: Easy OBJ: LO: 4-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Decision Analysis | ACBSP:

26. The predetermined overhead rate is usually calculated a. at the end of each month. b. at the beginning of each month. c. at the beginning of the year. d. at the end of the year. ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 5-2

H. Actual overhead $61,000 Applied overhead ($12,000 + $21,000 + $27,000) = $60,000 Underapplied overhead $ 1,000 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 5-2 | LO: 5-4 | LO: 5-5 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-34-Job Order Costing KEY: Bloom's: Application

Chapter 5Job-Order Costing TRUE/FALSE 1. Manufacturing and service firms producing unique products or services require job-order accounting systems. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 5-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Reporting | IMA: Cost Management | ACBSP: APC-34-Job Order Costing KEY: Bloom's: Knowledge

STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-06-Recording Transactions | ACBSP: APC-34-Job Order Costing KEY: Bloom's: Knowledge NOT: 1 min. STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-06-Recording Transactions | ACBSP: APC-34-Job Order Costing KEY: Bloom's: Knowledge NOT: 1 min. STA: AICPA: FN-Measurement | IMA: Cost

Chapter 6Process Costing TRUE/FALSE 1. Process costing accumulates costs by individual jobs. ANS: F Process costing accumulates costs by processing departments rather than by individual jobs. PTS: 1 DIF: Difficulty: Easy OBJ: LO: 6-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP:

Total equivalent units--conversion 18,600 PTS: 1 DIF: Difficulty: Easy OBJ: LO: 6-2 | LO: 6-4 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-35-Process Costing KEY: Bloom's: Application NOT: 2 min. Total equivalent units--conversion 18,600 PTS: 1 DIF: Difficulty: Easy OBJ: LO: 6-2 |

ANS: A. Units completed 65,000 Units in ending work in process (7,000 x 80%) 3,200 Total equivalent units 68,200 B. Costs to account for: Conversion Materials Cost Total Beginning work in process $23,000 $52,000 $75,000 Incurred during the period $115,000 $195,000 $310,000 Total costs to account for $138,000 $247,000

Maintenance ($27.50 6,000)/10,000 16.50 Setups ($2,800 32)/10,000 8.96 Purchasing ($43.50 1,500)/10,000 6.53 Unit cost of basic $111.99 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 7-1 | LO: 7-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Application NOT: 10 min.

Chapter 7Activity-Based Costing and Management TRUE/FALSE 1. Unit-level activities are performed each time a unit is produced. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 7-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge NOT:

33. Refer to Figure 8-8. What is the January ending inventory for Steele Corporation using the variable costing method? a. $260,000 b. $78,000 c. $108,000 d. $90,000 ANS: B SUPPORTING CALCULATIONS: 3,000 ($12 + $8 + $6) = $78,000 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 8-1

+ Desired ending inventory 0 0 Bottles needed 12 68 Beginning inventory 6 14 Bottles to purchase 6 54 PTS: 1 DIF: Difficulty: Easy OBJ: LO: 9-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-Budgeting and Responsibility KEY: Bloom's: Application NOT: 5 min. +