1) Extensive Business Reporting Language (XBRL) will be required of both public and
private companies.
2) An investment center is generally a large division of a corporation.
3) Managerial accountants must comply with Generally Accepted Accounting
Principles (GAAP) standards when they prepare managerial accounting reports.
4) Budgets communicate financial plans to employees at all levels in the company.
5) Because the number of units produced was greater than anticipated, production
capacity was used less efficiently than anticipated, resulting in an unfavorable volume
variance.
6) The management philosophy of lean production is used by many U.S. companies to
cut costs, improve quality, and speed production.
7) The direct materials price variance is the difference between the Actual Price (AP)
and the Standard Price (SP), multiplied by the Actual Quantity Purchased (AQP).
8) The financial budget that a manager prepares at a manufacturing company is
different compared to the financial budget that a manager prepares at a merchandising
and a service company.
9) The following information relates to Woolf Unlimited for the past two years.
What is the acid-test ratio for the current year?
A) 0.52
B) 0.75
C) 0.78
D) 2.30
10) Which of the following cost of quality categories represent the cost incurred to
“perform preventative maintenance on machinery?”
A) Appraisal costs
B) Prevention costs
C) Internal failure costs
D) External failure costs
11) The management accountant at Woodhaven Cycle Shoppe developed a budget to
establish the sales goals at the store in 2012. In 2013, the management accountant
evaluated the performance in the organization, reviewed the performance of the sales
staff, and compared the sales results to the actual budget that the managerial accountant
developed in 2012.
Which of the following management accounting responsibilities is the management
accountant using in this example?
A) Planning
B) Directing
C) Controlling
D) Designing
E) Implementing
12) Rubber City Cycles manufactures carbon fiber bicycle frames for professional
racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical
control) machine that will significantly reduce manufacturing waste while improving
the quality of the frames. The new CNC machine will increase annual fixed costs by
$13,750, but will decrease variable cost per unit by $150. Rubber City expects to sell
750 frames next year.
Annual data for the current system are as follows:
By what amount will Rubber City’s operating income increase (decrease) if they
purchase the new CNC machine?
A) $98,750
B) ($98,750)
C) $312,500
D) ($312,500)
13) In which of the following common types of business companies have costs of
business activities that include inventory-related freight in costs and the cost of import
duties or tariffs?
A) service company
B) manufacturing company
C) merchandising company
D) all of these companies
14) The Polish Factory manufactures natural resources in Ireland. At the beginning of
20XX, the accountant provided the following estimates associated with Department A
and Department B for the coming year:
According to the reports provided by the manager at the Polish Factory, the following
data was presented to represent a job that was completed during the year:
Assume that the Polish Factory uses departmental cost driver rates to allocate
manufacturing overhead to products. The manufacturing overhead costs are allocated
on the basis of machine-hours in Department A on the basis of direct labor-hours in
Department B. First, compute the annual manufacturing cost-allocation rate for
Department A. What are the total manufacturing costs associated with the job and what
is the amount the manager at the Polish Factory should allocate to the job?
15) If a company uses the indirect method to prepare the statement of cash flows, which
of the following items would be added to net income to determine the net cash flow
from operating activities?
A) An increase in inventory added to net income to determine the net cash flow from
operating activities in the statement of cash flows.
B) A decrease in accounts receivable would be added to net income to determine the net
cash flow from operating activities in the statement of cash flows.
C) A decrease in accounts payable would be added to net income to determine the net
cash flow from operating activities in the statement of cash flows.
D) An increase in preferred dividends payable would be added to net income to
determine the net cash flow from operating activities in the statement of cash flows.
16) The employees at Table Manufacturing perform the following tasks as indicated in
Table A and Table B.
Which of the following is the role of Employee A and Employee B?
A) CFO; CEO
B) Managerial Accountant; Financial Accountant
C) Treasurer; Controller
D) Audit Committee; Cross-Functional Team
E) Cross-Functional Teams; Treasurer
17) The managerial accountant at Coastal Edge Manufacturing reported the following
data:
The managerial accountant is required to determine the total cost per equivalent unit at
Coastal Edge Manufacturing. What were the (a) the total direct material cost per unit;
(b) the conversion cost per unit; and, (c) total per unit cost of direct material costs and
conversion costs added during January?
18) A company uses the indirect method to prepare the statement of cash flows. It
presents the following data on its financial statements:
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?
A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be added to net income.
C) The increase of $15,000 will be added to sales revenue.
D) The increase of $15,000 will be subtracted from sales revenue.
19) Which of the following cost of quality categories represent the cost incurred to
rework a product after the company detects a poor-quality product before the company
delivers the product to a consumer?
A) Lean production
B) Value added activity
C) Internal failure costs
D) External failure costs
20) The balance sheet for Blineberry Corporation follows:
Operating income during the period was $18,000, while cash dividends paid were
$17,400. The total use of cash at Blineberry Corporation during the year was
A) $28,500.
B) $48,050.
C) $8,200.
D) $39,850.
21) The manager at the Yarn Factory changed the price of spools to increase sales. The
current price per unit is $13.85 per box of 500 spools; and, the forecasted lower price
per unit to increase sales is $9.95 per box of 500 spools. If the variable expenses remain
at $9.14 and the fixed expenses remain $3,400 how many units must be sold at the new
price to breakeven?
Compute the contribution margin per unit using the old sales price. Next, compute the
contribution margin per unit using the new sales price. Use the new unit contribution
margin to compute breakeven sales in units. What is the breakeven sales in units?
A) 4,198 units
B) 4,272 units
C) 4,340 units
D) 4,440 units
22) The managerial accountant at the Export Shoppe attended a meeting with the
facilities manager to discuss the internal and external costs during the quarter. The
facilities manager provided the managerial accountant with the following cost
worksheet that highlights the internal and external costs during the period:
The managerial accountant reported that the total environmental costs are 20% of all
costs during the year. Calculate the total environmental costs at the Export Shoppe.
A) $4,000
B) $5,000
C) $6,000
D) $7,100
23) Claudia Enterprises has budgeted the following amounts for its next fiscal year:
If Claudia Enterprises can reduce fixed expenses by $12,000, how will breakeven sales
in units be affected?
A) Decrease by 400 units
B) Increase by 133 units
C) Increase by 400 units
D) Decrease by 133 units
24) Frito-Lay’s Casa Grande plant that controls expenses using lean thinking to
eliminate waste may be classified as a(n)
A) cost center.
B) investment center.
C) profit center.
D) revenue center.
25) A company reported the following amounts of net income:
Which of the following is the percentage change from Year 2 to Year 3?
A) 40.00%
B) 50.00%
C) 110.00%
D) 150.00%
26) The managerial accountant at Managerial Funding Resources reported in 2014 its
earnings per share were $6.20 and the market price per share of its common stock is
$75. In 2013, the managerial accountant reported $3.10 earnings per share and the
market price was $40 per share.
Compute the price/earnings ratio at Managerial Funding Resources and discuss why the
managerial accountant is interested in the price/earnings ratio.
27) Use the following information about The Conley Company to do a vertical analysis
of the income statement for the current year. Fill in the missing components in the table.
28) Discuss potential problems and disadvantages to an organization that decentralizes
its operations.
29) Marble Countertops and Cabinet Manufacturing produces marble inserts to
accommodate the marble countertops. The Marble Division can use the MAR1 insert
that is manufactured in the company’s Cabinet Division because there is excess
capacity. The standard market price to produce the MAR1 insert is $1,400. The
managerial accountant reported the following manufacturing cost and variable expense
information:
What is the highest price that Marble Countertops and Cabinet Manufacturing should
pay in the outside market? What is the lowest acceptable transfer price to the Cabinet
Division? What would happen if the managerial accountant produced the part below the
acceptable transfer price?
30) The managerial accountant at the Holiday Wreath Shoppe is required to determine
the relationship between net income and common stockholder’s equity. The goal of the
managerial accountant is to determine how much income is earned at the Holiday
Wreath Shoppe for each $1 invested by the common shareholders. The managerial
accountant reported that the rate of return on assets is 9.5%. The managerial accountant
reported the following information:
Calculate the rate of return on common stockholder’s equity in 2014. Discuss the
difference in the rate of return on assets at the Wreath Factory compared to the rate of
return on its rate of return on common stockholder’s equity.
31) Use the direct method of cash flows to answer the following question:
Compute the cash receivables received from customers during the year.
32) The managerial accountant at Sunny Manufacturing needs to determine how many
costs are fixed costs and how many costs are variable costs in the organization. The
managerial accountant reported the following information:
Use the high-low method to determine the cost equation and use machine hours as the
base for a cost driver in the analysis.
33) Victoria Technologies makes a part used in the manufacture of digital cameras.
Management is
considering whether to continue manufacturing the part, or to buy the part from an
outside source at a cost of $24.00 per part. Victoria Technologies needs 60,000 parts per
year. The cost of manufacturing 60,000 parts is computed as follows:
If Victoria Technologies buys the part, it would pay $.60 per unit to transport the parts
to its manufacturing plant. Purchasing the part from an outside source would enable the
company to avoid 50% of fixed manufacturing overhead costs. Victoria Technologies’
factory space freed up by purchasing the part from an outside supplier could be used to
manufacture another product with a contribution margin of $70,000.