Historical or past information can have an indirect bearing on a manager’s decision
because ________.
A) the past decision resulted in a favorable outcome
B) it can help predict the future
C) the past decision resulted in a bonus for the manager
D) the manager wants to repeat the past decisions made some of the time
Under absorption costing, fixed manufacturing overhead costs appear on two places on
the income statement that include ________ and ________.
A) usage variance for fixed overhead costs; cost of goods sold
B) production volume variance; cost of goods sold
C) efficiency variance for fixed overhead costs; production volume variance
D) efficiency variance for fixed overhead costs; cost of goods sold
One of the primary purposes of an activity-based costing system is to ________.
A) focus on quality improvements in the production process
B) focus on cost reduction in the production process
C) eliminate all overhead costs for manufactured products
D) increase the accuracy of product costs so managers can make better decisions
In managerial accounting, ________ can be a reasonable approximation of marginal
cost in many situations.
A) fixed cost
B) mixed cost
C) step cost
D) variable cost
When using the net present value method, if the net present value of a project is
negative, then the ________.
A) the project should be rejected
B) the project should be accepted
C) the project should be recalculated for missing cash inflows
D) none of the above
Underapplied fixed factory overhead can be explained by ________ variance and
________ variance.
A) production volume; fixed overhead efficiency
B) fixed overhead spending; fixed overhead efficiency
C) fixed overhead spending; fixed overhead flexible budget
D) fixed overhead spending; production volume
Sue is considering leaving her current position to open a coffee shop. Sue’s current
annual salary is $83,000. Annual coffee shop revenue and costs are estimated at
$260,000 and $210,000, respectively. What is Sue’s opportunity cost of staying at her
current work position?
A) $50,000
B) $83,000
C) $210,000
D) $343,000
What type of managers is directly involved with making and selling an organization’s
products?
A) staff managers
B) line managers
C) management accountants
D) accounting managers
Bambi Company has two departments. Relevant information is presented below:
Department 1 Department 2
Budgeted total assets $1,000,000 $2,000,000
Actual total assets $1,200,000 $2,300,000
Budgeted sales $500,000 $2,000,000
Actual sales $300,000 $2,100,000
Total company-wide advertising costs are $540,000. The advertising costs are allocated
based on sales using the preferred approach. What amount of advertising costs is
allocated to Department 1?
A) $67,500
B) $108,000
C) $185,143
D) $270,000
Arizona Company has the following information available for the month of April:
Sales $100,000
Cost of goods sold $60,000
Interest expense $2,000
Income tax expense $1,000
Wages expense $12,000
Dividends declared $3,000
Equipment purchased $20,000
Rent expense $4,000
The company uses the accrual basis of accounting. What is the net income for the
month of April?
A) $21,000
B) $22,000
C) $24,000
D) $27,000
Perez Company had the following information available:
Expected Costs and Selling Price Based on 5,000 Units:
Variable manufacturing costs per unit $32
Fixed manufacturing costs per unit $20
Selling price per unit $70
Expected production level 5,000 units
In the flexible budget at 15,000 units, what is the total manufacturing cost?
A) $480,000
B) $580,000
C) $680,000
D) $780,000
Today, in most manufacturing companies, workers oversee automated production
processes that produce many different products. With respect to the products
manufactured, the labor costs are considered to be ________.
A) direct labor costs
B) indirect production costs
C) direct production costs
D) period costs
John Company purchased common stock in Garcia Company. John Company treats the
investment as available-for-sale securities. During the current year, Garcia Company
earned $4,000,000 and paid dividends of $1,000,000. Assume that John Company owns
10% of the outstanding shares of Garcia Company. Garcia Company’s net income will
affect John Company in which of the following ways?
A) increasing cash and investments by $400,000
B) increasing stockholders’ equity and investments by $400,000
C) increasing cash and stockholders’ equity by $400,000
D) no effect
An example of an explicit transaction is ________.
A) recording depreciation expense
B) paying cash for three months’ rent in advance
C) accruing wages expense at the end of the month
D) accruing interest expense at the end of the year
Mayfair Corporation has a joint process that produces three products: P, G and A. Each
product may be sold at split-off or processed further and then sold. Joint-processing
costs for a year amount to $15,000. Other data follows:
Sales Value Separable Processing Sales Value
Product at Split-Off Costs after Split-Off at Completion
P $62,000 $5,000 $88,000
G 12,500 6,500 19,500
A 9,400 5,000 12,000
Processing Product G beyond the split-off point will cause profits to ________.
A) be unchanged
B) increase by $500
C) increase by $1,000
D) increase by $7,000
Beth Company reported sales on account of $250,000, an increase in inventory of
$70,000, and a decrease in accounts receivable of $20,000. How much cash was
collected from customers?
A) $180,000
B) $230,000
C) $270,000
D) $320,000
Consider the following linear mixed-cost function:
Y = $120,000 + $2.70X
Where: Y = total annual maintenance cost
X = number of patient-days
What does the $120,000 represent?
A) variable cost per patient-day
B) total variable cost
C) fixed cost per patient-day
D) total fixed cost
Victor Company incurred actual overhead costs of $297,500 for the year. A budgeted
factory overhead rate of 150% of direct labor cost was determined at the beginning of
the year. Budgeted factory overhead was $300,000 and budgeted direct labor cost was
$200,000. Actual direct labor cost was $205,000 for the year. The factory overhead
variance for the year was ________.
A) $2,500 underapplied
B) $2,500 overapplied
C) $10,000 underapplied
D) $10,000 overapplied
________ are relevant in deciding whether to add or delete a department from a
department store.
A) Avoidable fixed expenses
B) Common costs
C) Unavoidable fixed expenses
D) None of the above
What will happen to the net present value of a project if my predictions of cash flows
change? I think the cash flows may be overestimated. What should be done to address
this?
A) net present value analysis
B) internal rate of return
C) sensitivity analysis
D) payback period
Jennifer is the management accountant in Beck Company. A supplier to Beck Company
offers Jennifer free tickets to several NASCAR races. If Jennifer accepts the supplier’s
offer, she violates the IMA’s ethical standard of ________.
A) competence
B) confidentiality
C) credibility
D) integrity
The Vaclav Company reports the following information:
Sales for the year ended December 31, 2012 $106,950
Gross profit for the year ended December 31, 2012 $45,150
Net income for the year ended December 31, 2012 $7,300
Total Current Assets, December 31, 2012 $18,700
Total Current Liabilities, December 31, 2012 $7,600
Total Assets, December 31, 2012 $48,400
Total Liabilities, December 31, 2012 $20,850
Average common shares outstanding in 2012 1,000
Market price per share, December 31, 2012 $75.00
Dividends per share, for the year ended December 31, 2012 $5.00
What is the price-earnings ratio at December 31, 2012?
A) 0.7
B) 10.3
C) 19.3
D) 75.0
Effective performance measures have all the following characteristics EXCEPT
________.
A) used consistently and regularly in evaluating and rewarding employees
B) readily understood by employees
C) balance long-term and short-term concerns
D) unaffected by the actions of managers
Naples Company acquired all of the shares of Tampa Company for $80 cash. At the
time of the acquisition, the fair values of Tampa Company’s assets were $200. At the
time of acquisition, the fair values of Tampa Company’s liabilities were $120. On the
date of acquisition, what is the amount of goodwill on the consolidated balance sheet?
A) $0
B) $20
C) $80
D) $100
Stelloh Company reported the following information about the production and sale of
its only product during the first month of operations:
Selling price per unit $65
Sales $78,000
Direct materials used $25,000
Direct labor $35,000
Variable factory overhead $15,000
Fixed factory overhead $10,000
Variable selling and administrative expenses $3,000
Fixed selling and administrative expenses $5,000
Ending inventory, Direct Materials 0
Ending inventory, Work-in-process 0
Ending inventory, Finished Goods 1,200 units
Under variable costing, what is the product cost per unit?
A) $30.00
B) $31.25
C) $35.42
D) $39.00
Courts in the United States have ruled that pricing is predatory only if companies set
prices below the ________.
A) average full cost
B) average variable cost
C) average production cost
D) average fixed cost
Which statement about service organizations is FALSE?
A) Service organizations include law firms, banks, insurance companies and hospitals.
B) Service organizations do not make or sell tangible goods.
C) The service sector accounts for the majority of the employment in the United States.
D) Managers in service organizations do not need as much accounting information as
their counterparts in other types of organizations.
Wyoming Company has 40,000 shares of its common stock outstanding. Dakota
Company owns 35,000 shares of Wyoming Company’s stock. Which of the following
methods should Dakota Company use to account for its investment in Wyoming
Company?
A) market-value
B) equity
C) consolidated financial statements
D) cost
Goller Company has the following income statement for the year ending December 31,
2016:
Sales $1,562
Cost of goods sold 806
Gross profit 756
Operating expenses:
Wage expense 160
Depreciation expense 26
Rent expense 36
Miscellaneous expense 70
Total operating expenses 292
Operating income 464
Income tax expense 100
Net income $364
If Goller Company prepares a common size income statement, what will they report for
Income tax expense?
A) 6.4%
B) 11.0%
C) 12.4%
D) 39.9%
If market prices are not available for transfer prices, most companies use ________
transfer prices.
A) negotiated
B) average
C) cost-based
D) activity-based