76) Managerial accounting information:
A) Is used mainly by external users.
B) Involves gathering information about costs for planning and control decisions.
C) Is generally the only accounting information available to managers.
D) Can be used for control purposes but not for planning purposes.
E) Has little to do with controlling costs.
77) Managerial accounting is different from financial accounting in that:
A) Managerial accounting is more focused on the organization as a whole and financial
accounting is more focused on subdivisions of the organization.
B) Managerial accounting never includes nonmonetary information.
C) Managerial accounting includes many projections and estimates whereas financial accounting
has a minimum of predictions.
D) Managerial accounting is used extensively by investors, whereas financial accounting is used
only by creditors.
E) Managerial accounting is mainly used to set stock prices.
78) Flexibility of practice when applied to managerial accounting means that:
A) The information must be presented in electronic format so that it is easily changed.
B) Managers must be willing to accept the information as the accountants present it to them,
rather than in the format they ask for.
C) Managerial accountants must be on call twenty-four hours a day.
D) Managerial accounting systems differ across companies depending on the nature of the
business and the arrangement of its internal operations.
E) Managers must be flexible with information provided in varying forms and using inconsistent
measures.
79) Which of the following items does not represent a difference between financial and
managerial accounting?
A) Users of the information.
B) Flexibility of reporting.
C) Timeliness of information.
D) Focus of the information.
E) Managerial accounting does not use the financial information from the financial accounting
system.
80) Which of the following items is not a management concept that was created to improve
company performance?
A) Just-in-time manufacturing.
B) GAAP constraints and guidelines.
C) Total quality management.
D) Continuous improvement.
E) Customer orientation.
81) A National Quality Award that encourages an emphasis on quality was established by:
A) The United Nations.
B) The U.S. Chamber of Commerce.
C) The Malcolm Baldrige Foundation.
D) The U.S. Congress.
E) The SEC.
82) Continuous improvement:
A) Encourages employees to maintain established business practices.
B) Strives to preserve acceptable levels of performance.
C) Rejects the notion of “good enough.”
D) Is not applicable to most businesses.
E) Is possible only in service businesses.
83) An attitude of constantly seeking ways to improve company operations, including customer
service, product quality, product features, the production process, and employee interactions, is
called:
A) Continuous improvement.
B) Customer orientation.
C) Just-in-time.
D) Theory of constraints.
E) Total quality measurement.
84) A management concept based on an understanding of the changing wants and needs of
customers, and which leads to flexible product designs and production processes, is called:
A) Continuous improvement.
B) Customer orientation.
C) Just-in-time.
D) Theory of constraints.
E) Total quality management.
85) An approach to managing inventories and production operations such that units of materials
and products are obtained and provided only as they are needed is called:
A) Continuous improvement.
B) Customer orientation.
C) Just-in-time manufacturing.
D) Theory of constraints.
E) Total quality management.
86) A management concept that seeks to uncover and eliminate waste in business activities is
called:
A) Continuous operations.
B) Customer orientation.
C) Just-in-time.
D) Theory of constraints.
E) Lean business model.
87) Goals of a lean business model include all of the following except:
A) Eliminate waste.
B) Better inventory control.
C) Continuous improvement.
D) Consistent production levels.
E) Fewer product defects.
88) The model whose goal is to eliminate waste while satisfying the customer and providing a
positive return to the company is:
A) Just-in-time manufacturing model.
B) Managerial accounting model.
C) Corporate social responsibility model.
D) Continuous improvement model.
E) Lean business model.
89) Jenny, an employee of Toucan Company, used company assets for her own personal gain.
This is an example of:
A) employee advance.
B) fraud.
C) internal control.
D) ethics.
E) employment perks.
90) An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at
his place of employment. According to the Institute of Management Accountants, the employee’s
next step should be to:
A) contact the IMA.
B) contact the next level of management who is not involved in the ethical conflict.
C) make the president of the company aware of the ethical conflict.
D) report the incident to the State Board of Accountancy.
E) resign from the company.
91) A direct cost is a cost that is:
A) Identifiable as controllable.
B) Traceable to the company as a whole.
C) Does not change with the volume of activity.
D) Traceable to a single cost object.
E) Traceable to multiple cost objects.
92) Classifying costs by behavior with changes in volume of activity involves:
A) Identifying fixed costs and variable cost.
B) Identifying cost of goods sold and operating costs.
C) Identifying costs as financial or managerial.
D) Identifying costs in a physical manner.
E) Identifying both quantitative and qualitative cost factors.
93) A classification of costs that determines whether a cost is expensed to the income statement
or capitalized to inventory is:
A) Fixed versus variable.
B) Direct versus indirect.
C) Financial versus managerial.
D) Service versus manufacturing.
E) Product versus period.
94) A fixed cost:
A) Requires the future outlay of cash and is relevant for future decision making.
B) Does not change with changes in the volume of activity within the relevant range.
C) Is directly traceable to a cost object.
D) Changes with changes in the volume of activity within the relevant range.
E) Is irrelevant for managers’ decision making.
95) Wesson Company sold 10,000 units of its only product in the first half of the year. If sales
increase by 12% in the second half of the year, which cost will increase?
A) Depreciation on equipment.
B) Wages of administrative staff.
C) Office rent.
D) Direct materials.
E) Property insurance.
96) Wesson Company sold 10,000 units of its only product in the first half of the year. If sales
decrease by 15% in the second half of the year, which cost will not change?
A) Direct materials.
B) Direct labor.
C) Sales commissions.
D) Factory supplies.
E) Depreciation on equipment.
97) Gordon Company sold 2,000 more units than budgeted of its only product. How will total
fixed cost be affected?
A) Remain constant.
B) Decrease by same percentage as sales increase.
C) Increase by same percentage as sales increase.
D) Decrease $2,000.
E) Increase $2,000.
98) Which of the following is not a direct cost for a scooter manufacturer?
A) Office rent.
B) Wheels.
C) Handle bars.
D) Brakes.
E) Grip tape.
99) Which of the following is an indirect cost of manufacturing scooters?
A) Scooter assembly wages.
B) Wheels.
C) Supervisor salary.
D) Brakes
E) Assembly worker employee benefits.
100) Flash Company produces lamps. All of the following are direct costs except:
A) Wages for assembly.
B) Electrical cord.
C) Factory rent.
D) Lamp shade.
E) Switch.
101) Period costs for a manufacturing company flow directly to:
A) The income statement as an expense.
B) Factory overhead.
C) The balance sheet as inventory.
D) Cost of goods sold on the income statement.
E) The current schedule of cost of goods manufactured.
102) For product costs associated with a particular product to be reported on the income
statement:
A) The product must be transferred to Finished Goods Inventory.
B) The product must still be in Work in Process Inventory.
C) The product must be sold.
D) The product may be in any of the manufacturer’s inventory accounts.
E) The company must expect to sell the product during the next twelve months.
103) Costs that are capitalized as inventory when they are incurred are called:
A) Period costs.
B) Product costs.
C) General costs.
D) Administrative costs.
E) Fixed costs.
104) Costs that flow directly to the income statement as expenses are called:
A) Period costs.
B) Product costs.
C) General costs.
D) Balance sheet costs.
E) Capitalized costs.
105) Marshall Corporation incurred costs for materials and labor needed to manufacture its
products. These costs are examples of:
A) Period costs.
B) Product costs.
C) General costs.
D) Balance sheet costs.
E) Capitalized costs.
106) Product costs:
A) Are expenditures necessary and integral to finished products.
B) Are expenditures identified more with a time period rather than with units of product.
C) Include selling and administrative expenses.
D) Are expensed on the income statement when incurred.
E) Are moved to the income statement for any unsold inventory at the end of the year.
107) Products that have been completed and are ready to be sold by the manufacturer are called:
A) Finished goods inventory.
B) Work in process inventory.
C) Raw materials inventory.
D) Cost of goods sold.
E) Factory supplies.
108) Materials a company acquires to use in making products are called:
A) Cost of goods sold.
B) Raw materials inventory.
C) Finished goods inventory.
D) Work in process inventory.
E) Conversion costs.
109) Products that are in the process of being manufactured but are not yet complete are called:
A) Raw materials inventory.
B) Conversion costs.
C) Cost of goods sold.
D) Work in process inventory.
E) Finished goods inventory.
110) Which of the following is the correct formula for calculating raw materials inventory
turnover for a manufacturer?
A) Raw materials purchased/Average raw materials inventory.
B) Average raw materials inventory/Raw materials used.
C) Raw materials used/Average raw materials inventory.
D) Ending raw materials/Raw materials used × 365.
E) Raw materials used/Beginning raw materials inventory × 365.
111) Which of the following is the correct formula for calculating days’ sales in raw materials
inventory for a manufacturer?
A) Raw materials purchased/Average raw materials inventory.
B) Average raw materials inventory/Raw materials used.
C) Raw materials used/Average raw materials inventory.
D) Ending raw materials inventory/Raw materials used × 365.
E) Raw materials used/Beginning raw materials inventory × 365.
112) Which of the following statements is correct concerning the days’ sales in raw materials
inventory ratio?
A) It measures how long it takes raw materials to be used in production.
B) The ratio is not useful for a manufacturer.
C) Reveals how many times a company turns over its raw materials inventory in a period.
D) Most companies generally prefer a higher number of days’ sales in raw materials inventory.
E) Is calculated by taking the Raw materials used/Average raw materials inventory.
113) The cost of workers who assist in, or supervise, the manufacturing process, not linked to
specific units of product is called:
A) Unspecified labor.
B) Direct labor.
C) Indirect labor.
D) Basic labor.
E) Joint labor.
114) Factory overhead costs may include all of the following except:
A) Indirect labor costs.
B) Indirect material costs.
C) Selling costs.
D) Assembly supplies.
E) Factory rent.
115) Labor costs that are clearly associated with specific units of product because the labor is
used to convert raw materials into finished products are called:
A) Contracted labor.
B) Direct labor.
C) Indirect labor.
D) Finished labor.
E) All labor.
116) Manufacturing costs other than direct materials and direct labor, and are not readily
traceable to specific units or batches of production are called:
A) Administrative expenses.
B) Nonmanufacturing costs.
C) Prime costs.
D) Factory overhead.
E) Preproduction costs.
117) Materials that are used in manufacturing but are not clearly identified with specific product
units are called:
A) Secondary materials.
B) General materials.
C) Direct materials.
D) Indirect materials.
E) Materials inventory.
118) The salary paid to the assembly line supervisor would normally be classified as:
A) Direct labor.
B) Indirect labor.
C) A period cost.
D) A general cost.
E) An assembly cost.
119) Which of the following items appears only in a manufacturing company’s financial
statements?
A) Cost of goods sold.
B) Cost of goods manufactured.
C) Goods available for sale.
D) Gross profit.
E) Net income.