Cornerstones of Managerial Accounting 0th Edition

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Applications | ACBSP: APC-25-Managerial Characteristics/Terminology KEY: Bloom's: Knowledge NOT: 1 min. ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Applications

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:

14. Rhodes Corporation manufactures a product with the following standard costs: Direct materials (20 yards @ $1.85 per yard) $37.00 Direct labor (4 hours @ $12.00 per hour) 48.00 Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The

ANS: A The upper control limit is $550,000 ($500,000 + ($500,000 10%)). The lower control limit is $450,000 ($500,000 ($500,000 10%)). PTS: 1 DIF: Difficulty: Easy OBJ: LO: 10-3 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Performance Measurement | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Application NOT: 3 min.

81. Refer to Figure 10-9. What is James materials price variance assuming that materials purchased equals materials used? a. $750,000 F b. $700,000 F c. $700,000 U d. $750,00 U ANS: B MPV = (AP - SP) x AQ ($2.50 - $3.00) x 1,400,000 $700,000 F

Total fixed costs 185,500 Total overhead costs $1,093,000 *110,000 DLH 110% = 121,000 C. 10% lower: Overhead Budget For the Coming Year Formula 99,000 hrs* Variable costs: Maintenance $1.20 $118,800 Power 1.50 148,500 Indirect labor 4.80 475,200 Total variable costs $742,500 Fixed costs: Maintenance $ 52,000 Indirect labor 79,500

Chapter 11Flexible Budgets and Overhead Analysis TRUE/FALSE 1. A static budget compares actual cost with budgeted costs. ANS: F A performance report compares actual cost with budgeted costs. PTS: 1 DIF: Difficulty: Easy OBJ: LO: 11-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Budget

36. During the year, Hawkings produced 10,000 units, used 20,000 direct labor hours, and incurred variable overhead of $90,000. Budgeted variable overhead for the year was $88,000. The hours allowed per unit are 2.1. The standard variable overhead rate is $4.00 per direct labor hour. The variable overhead spending

Sales $185,000 Operating income $60,000 Operating assets $375,000 The manager can invest in an additional project that would require $40,000 investment in additional assets and would generate $6,000 of additional income. The company's minimum rate of return is 14%. Sales $185,000 Operating income $60,000 Operating assets $375,000 The manager can

Chapter 12Performance Evaluation and Decentralization TRUE/FALSE 1. The practice of delegating decision-making authority to lower levels of management in a company is called centralization. ANS: F The practice of delegating decision-making authority to lower levels of management in a company is called decentralization. PTS: 1 DIF:

Operating income $ 43,200 Beginning assets were $279,500 and ending assets were $296,500. A. Average operating assets were $__________________. B. Margin was __________________. C. Turnover was __________________. D. Return on investment was __________________%. ANS: A. Average operating assets = ($279,500 + $296,500)/2 = $288,000 B. Margin

7. Island Princess Pineapples purchases pineapples from area farmers and processes them into rings, juice, and skins. The cost of the pineapples is a joint cost, as is the initial processing in which the fruits are skinned, cored, and sliced into rings. At the split-off point, Island Princess

a. $40 b. $65 c. $25.50 d. $13.33 e. $15.67 ANS: D (1/3) completed x $40 CM = $13.33 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 13-3 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Decision Analysis | ACBSP: APC-30-Contribution Margin KEY: Bloom's: Application NOT: 3 min. ANS:

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

Chapter 13Short-Run Decision Making: Relevant Costing TRUE/FALSE 1. The first step in making a short-run decision is to identify alternatives as possible solutions to the problem. ANS: F The first step in making a short-run decision is to define the problem. PTS: 1 DIF: Difficulty: Easy

Chapter 14Capital Investment Decisions TRUE/FALSE 1. Projects that do not affect the cash flows of other projects are called mutually exclusive projects. ANS: F Projects that do not affect the cash flows of other projects are called independent projects. PTS: 1 DIF: Difficulty: Easy OBJ: LO:

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:

PTS: 1 DIF: Difficulty: Easy OBJ: LO: 14-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Investment Decisions | ACBSP: APC-37-Payback/ARR Methods KEY: Bloom's: Application NOT: 5 min. PTS: 1 DIF: Difficulty: Easy OBJ: LO: 14-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Investment Decisions

Chapter 15Statement of Cash Flows TRUE/FALSE 1. A statement of cash flows indicates the sources and uses of a firm's cash during a period. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 15-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Reporting | IMA: Reporting | ACBSP: APC-24-Statement

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 in inventory (44,000) Net cash flows from operating activities $442,000 B. Cash flows from investing activities: Sale of long-term investments $

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.

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 taxes payable 2,000 5,000 Required: Using the direct method, prepare the operating activities section of the statement of cash

Chapter 16Financial Statement Analysis TRUE/FALSE 1. In horizontal analysis, the base year can be the immediately preceding period, or it can be a period further in the past. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 16-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA:

41. Eagle Company has $9,000 in cash, $11,000 in marketable securities, $26,000 in current receivables, $34,000 in inventories, and $40,000 in current liabilities. The company's quick ratio is closest to a. 1.35. b. 1.15. c. 2.00. d. 1.73. ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO:

KEY: Bloom's: Application NOT: 5 min. 10. The following information is summarized from the balance sheets of Kress Inc. and Ross Corp. at December 31, 2013. Neither company has inventory. Kress Ross Current Assets: Cash and cash equivalents $ 340,800 $100,200

KEY: Bloom's: Application NOT: 1 min. 77. Refer to Figure 2-3. What was the gross margin percent? a. 52% b. 48% c. 17% d. 19% ANS: A SUPPORTING CALCULATIONS: $222,560/$428,000 = 52% PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: BUSPROG: Analytic STA: AICPA: FN-Reporting

7. Assigning costs a. involves the way that a cost is linked to some cost object. b. tells the company why the money was spent. c. to a cost object using a reasonable and convenient method is allocation. d. all of these. ANS: D PTS: 1 DIF:

Chapter 2Basic Managerial Accounting Concepts TRUE/FALSE 1. It is beneficial to assign indirect costs to cost objects. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge NOT:

B. Compute the gross margin C. Compute the operating income D. Compute the operating income if 75,000 stereos were produced and 69,000 were sold. ANS: A. 75,000 $575 = $43,125,000 B. Sales revenue $43,125,000 Cost of goods sold (75,000 $540) 40,500,000 Gross margin 2,625,000 C. Gross margin $

Chapter 3Cost Behavior TRUE/FALSE 1. A cost that changes in total as output changes is a variable cost. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 3-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-28-Variable and Fixed Costs KEY: Bloom's:

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 $385,000 C.

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 |

STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Application NOT: 1 min. STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Application NOT: 1 min. STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's:

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.

Indirect materials (variable) 30,000 Other variable overhead 90,000 Fixed manufacturing overhead 180,000 Fixed administrative expenses 150,000 Fixed selling expenses 120,000 Variable selling expenses, per unit 40 Direct labor, per unit 80 Direct materials, per unit 20 Required: Compute the dollar amount of ending inventory using: A. Absorption costing B.

Chapter 8Absorption and Variable Costing, and Inventory Management TRUE/FALSE 1. Variable costing and absorption costing income statements may differ because of their treatment of fixed factory overhead. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 8-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Performance

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

Chapter 9Profit Planning TRUE/FALSE 1. A strategic plan identifies strategies for future activities and operations, generally covering at least five years. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 9-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-Budgeting and

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. PTS: 1 DIF: Difficulty: Easy OBJ: LO: 9-2 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation

ANS: D SUPPORTING CALCULATIONS: (13,000 .25) + 14,000 (14,000 .25) = 13,750 lamps PTS: 1 DIF: Difficulty: Moderate 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: 2 min. ANS: D SUPPORTING CALCULATIONS: (13,000 .25) +

e. It fosters a sense of managerial responsibility. ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 9-4 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Budget Preparation | ACBSP: APC-36-Budgeting and Responsibility KEY: Bloom's: Knowledge NOT: 1 min. ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: