On the cash flow statement, paying a cash dividend to stockholders is a financing
activity.
Any return a company receives over and above the original investment in a capital asset
is called return on investment.
The task of assessing how well employees have performed relative to expectations is a
controlling activity.
Zero-based budgeting is not as time consuming as incremental budgeting.
Cost behaviors and estimates are valid only within what is referred to as a precision
range.
Just-in-time inventory management is an inventory strategy that focuses on reducing
waste and inefficiency by ordering inventory items so that they arrive just when they
are needed.
Because the production managers are the ones to negotiate the purchase price, they are
typically held accountable for the direct materials price variance.
Although the total amount of allocated overhead differs between a traditional overhead
allocation method and activity-based overhead allocations, we can still compare the
percentage of overhead allocated to each product.
Inventory turnover measures how many times, on average, a company’s inventory is
sold during the year.
Which of the following would be the most appropriate cost driver for delivery of
goods?
a. Wages of the delivery drivers
b. Number of deliveries made
c. Depreciation on delivery trucks
d. Insurance on delivery trucks
Toyota, a Japanese company, has a manufacturing plant in Canton, Mississippi. If
Toyota were to contract with Ford Motor Company to manufacture its autos at a Ford
plant in the United States, this would be an example of
a. Offshoring
b. Outsourcing
c. Offshore outsourcing
d. None of these answer choices are correct.
Activities that are required to provide productive capacity and to keep the business in
operation are
a. Batch-level activities
b. Product-level activities
c. Customer-level activities
d. Organization-level activities
Which of the following is classified as a financing activity?
a. Receipt of dividend income
b. Receipt of interest on loan receivable
c. Payment of dividends
d. Investment in another company’s stock
The debt ratio measures the ratio of liabilities to
a. Net income.
b. Assets.
c. Revenue.
d. Total liabilities and stockholders’ equity.
Which of the following is not a characteristic of a participative budget?
a. It will produce a more accurate budget than an imposed budget.
b. It tends to elicit more commitment to the budget than a top-down budget.
c. It is the most efficient method of budget preparation.
d. It is a time consuming process as many people must provide input.
If the actual price of direct materials purchased is $200 per unit while the standard price
for direct materials is $180 per unit and the total direct material used is 1,000 units
while the standard direct materials allowed for actual production is 1,200 units,
a. The direct materials quantity variance will be favorable
b. The direct materials quantity variance will be unfavorable
c. The direct materials price variance will be favorable
d. The direct materials price variance will be unfavorable
A difference in quantitative indicators and qualitative indicators is
a. Quantitative indicators are the same regardless of who is doing the measuring
whereas qualitative indicators will differ among individual since each one has a unique
perspective.
b. Qualitative indicators are subjective and quantitative indicators are objective.
c. Both Quantitative indicators are the same regardless of who is doing the measuring
whereas qualitative indicators will differ among individual since each one has a unique
perspective and Qualitative indicators are subjective and quantitative indicators are
objective.
d. Neither Quantitative indicators are the same regardless of who is doing the
measuring whereas qualitative indicators will differ among individual since each one
has a unique perspective nor Qualitative indicators are subjective and quantitative
indicators are objective.
The high-low method differs from the scattergraph in that the high-low method
a.Is simple to prepare and interpret whereas the scattergraph requires the use of
statistical techniques.
b.Is less costly than the scattergraph method.
c.Uses a statistical technique to estimate the cost components.
d.Requires only two data points – the lowest point of activity and the highest point of
activity.
Birch manufacturing is considering the addition of another product line to its offerings.
Equipment needed to produce the new line will cost $200,000. Birch estimates that the
net cash inflows from the new product line will be as follows:
Required:
a. What is the payback period for the new product line?
b. If the company can establish a steady customer base before production starts and the
cash inflows will be $15,000 per year for years 1 – 15, what will be the payback period?
Which of the following formulas is used to calculate the breakeven point in sales
dollars?
a. Total fixed costs divided by contribution margin per unit.
b. Total fixed costs divided by total contribution margin.
c. Total fixed costs divided by contribution margin ratio.
d. None of these formulas calculates the breakeven point in sales dollars.
When using a standard costing system, which of the following should be recorded when
variable overhead is applied during the period?
a. Debit manufacturing overhead for the actual overhead costs and credit work in
process inventory using a predetermined variable overhead rate
b. Debit work in process inventory for the actual overhead costs and credit
manufacturing overhead using a predetermined variable overhead rate
c. Credit manufacturing overhead for actual overhead rate and debit work in process
inventory using a predetermined variable overhead rate
d. Credit work in process inventory for the actual overhead and debit manufacturing
overhead using a predetermined variable overhead rate
Which of the following is not a duty of a management accountant under the IMA
Statement of Ethical Professional Practice ‘s integrity standard?
a.Mitigate actual conflict of interest.
b.Refrain from engaging in any conduct that would prejudice carrying out duties
ethically.
c.Properly exercise authority.
d.Abstain from engaging in or supporting any activity that might discredit the
profession.
Breakeven point can be expressed in terms of
a. Units.
b. Unit sales price.
c. Unit contribution margin.
d. Unit fixed costs.
The following list includes activities that are performed in a CPA firm. . Classify each
activity as value-added or non-value added.
You are assigned to a team responsible for reviewing the financial statements with
lower-level departmental managers. Some of your team members want to use the
absorption costing income statement generally distributed by the accounting
department. You believe a variable costing income statement will be more appropriate
to use in explaining items to lower-level managers. Your team has requested more
information on the variable costing format.
Required:
Write a memo to your team members explaining why you believe the variable costing
income statement should be used.
Complete the following table by identifying the section of the statement of cash flows
for each of the following activities. Assume all transactions involve cash.
Classify the following costs incurred by Roper Dress Manufacturing Company by both
behavior and function by placing an “X” in the appropriate columns.
In calculating EVA, invested capital is the company ‘s total assets minus its total
liabilities.
The following information was gathered from Brandon Corporation’s financial records:
Required:
Using the indirect method, prepare a statement of cash flows for Brandon Corporation.
Your company is considering a capital project that will require a net initial investment
of $249,972. The project is expected to have a 7-year life and will generate an annual
cash inflow of $43,200. What is the internal rate of return?
Define managerial accounting
On October 31, 2013, Janie Mounce, manager of a department in the largest division of
the XYZ Company, was contacted by the chairman of the budget committee. Janie
needed to send her 2014 departmental budget to the committee. Instructions from the
chair of the committee to all the department managers indicated that any revenue or
expense items that deviated more than 5% from last year ‘s budget needed a written
explanation to be turned in with the budget.
Required:
Describe XYZ ‘s budget process as a top-down or bottom-up approach. What are the
advantages and disadvantages of this budget process?
Restate the following income statement in contribution format.
