The minimum accepted divisional income from operations is set by top management by
establishing a maximum rate of return considered acceptable for invested assets.
a. True
b. False
Ford’s Expedition sport utility vehicle is its most profitable model. Therefore, Ford need
not promote its Expedition model anymore.
a. True
b. False
In a process costing system, each process will have a work in process inventory
account.
a. True
b. False
Managerial accounting reports are
a. prepared according to GAAP
b. prepared according to management needs
c. prepared periodically only
d. related to the entire business entity only
assembler’s wages
Match the costs that follow to the type of product cost (a-c) or designate as not a
product cost (d).
a. direct labor
b. direct materials
c. factory overhead
d. not a product cost
The production labor wages for the bar stool assemblers
Bartel Corporation produces bar stools for restaurants. Indicate whether the cost
would typically be considered direct or indirect cost for the cost object given.
a. Direct
b. Indirect
A company can use comparisons of its financial data to the data of other companies and
industry averages to evaluate its position.
a. True
b. False
Managerial accounting uses only past data in reports to aid management in the decision
making process.
a. True
b. False
The Thomlin Company forecasts that total overhead for the current year will be
$15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is
$16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company
uses a predetermined overhead rate based on machine hours for applying overhead, as
of this point in time (year to date), the overhead is
a. $1,000,000 over applied
b. $1,000,000 under applied
c. $500,000 over applied
d. $500,000 under applied
A company should only use nonfinancial performance measures when financial
measures cannot be calculated.
a. True
b. False
Which of the following formulas is the investment turnover factor as used in
determining the rate of return on investment?
a. Invested assets/Sales
b. Income from operations/Invested assets
c. Income from operations/Sales
d. Sales/Invested assets
Factory overhead includes all manufacturing costs except direct materials and direct
labor.
a. True
b. False
In a lean system, there are fewer transactions to record than there are in a traditional
system.
a. True
b. False
Presented below are the major categories or captions that would appear on an income
statement prepared in the variable costing format:
Contribution margin Fixed costs
Income from operations Manufacturing margin Sales
Variable cost of goods sold
Variable selling and administrative expenses
(a) Arrange the above captions in the proper order in accordance with the variable
costing concept.
(b) Which of the captions represents (1) the difference between sales and the total of all
the variable costs and expenses and (2) the remaining amount of revenue available for
fixed manufacturing costs, fixed expenses, and net income?
Job order cost accounting systems can be used only for companies that manufacture a
product.
a. True
b. False
Service companies can effectively use multiple department overhead rate costing to
compute product (service) costs.
a. True
b. False
Since the costs of producing an intermediate product do not change regardless of
whether the intermediate product is sold or processed further, these costs are not
considered in deciding whether to further process a product.
a. True
b. False
The primary goal of managerial accounting is to provide information to
a. investors
b. creditors
c. management
d. external auditors
Prime costs consist of factory overhead and direct labor.
a. True
b. False
Mason Corporation had $650,000 in invested assets, sales of $700,000, income from
operations amounting to $99,000, and a desired minimum rate of return of 15%.
The residual income for Mason is
a. $0
b. $84,150
c. $(6,000)
d. $1,500
Which of the following statements is false?
a. There is no overlap between financial and managerial accounting.
b. Managerial accounting sometimes relies on past information.
c. Managerial accounting does not need to conform to GAAP.
d. Financial accounting must conform to GAAP.
The average rate of return method of analyzing capital budgeting decisions measures
the average rate of return from using the asset over its entire life.
a. True
b. False