Costs on the income statement for both a merchandiser and a manufacturer would be
a. operating expenses
b. direct materials
c. direct labor incurred
d. cost of goods manufactured
Answer:
The level of inventory of a manufactured product has increased by 8,000 units during a
period. The following data are also available:
What would be the effect on income from operations if variable costing is used rather
than absorption costing?
a. $80,000 decrease
b. $80,000 increase
c. $104,000 decrease
d. $104,000 increase
Answer:
Which of the following is a measure of a manager’s performance working in an
investment center?
a. rate of return on investment
b. residual income
c. divisional income statements
d. all of these
Answer:
Assuming no other changes, operating income will be the same under both the variable
and absorption costing methods when the number of units manufactured equals the
number of units sold.
a. True
b. False
Answer:
A company is preparing its cash budget. Its cash balance on January 1 is $290,000 and
it has a minimum cash requirement of $340,000. The following data has been provided:
What is the amount of the deficiency or excess cash (after considering the minimum
cash balance required) for January?
a. excess of $26,700
b. deficiency of $136,700
c. excess of $356,700
d. excess of $60,000
Answer:
In most businesses, cost standards are established principally by accountants.
a. True
b. False
Answer:
In order to be useful to managers, managerial accounting reports should possess all of
the following characteristics except
a. provide objective measures of past operations and subjective estimates about future
decisions
b. be prepared in accordance with generally accepted accounting principles
c. be provided at any time management needs information
d. be prepared to report information for any unit of the business to support decision
making
Answer:
A common measure of liquidity is
a. the ratio of sales to assets
b. dividends per share of common stock
c. the accounts receivable turnover
d. the profit margin
Answer:
Break-even analysis is one type of cost-volume-profit analysis.
a. True
b. False
Answer:
The target cost approach assumes that:
a. markup is added to total cost
b. the selling price is set by the marketplace
c. markup is added to variable cost
d. markup is added to product cost
Answer:
All of the following could be considered a direct material except
a. steel
b. fabric
c. glue
d. lumber
Answer:
If the ability to sell and the amount of production facilities devoted to each of two
products is equal, it is profitable to increase the sales of that product with the lowest
contribution margin.
a. True
b. False
Answer:
Paper manufacturer
Match each business that follows to the type of costing system (a or b) it would
typically use.
a. Job order costing
b. Process costing
Answer:
On the variable costing income statement, the amounts representing the difference
between the contribution margin and income from operations is the fixed manufacturing
costs and fixed selling and administrative expenses.
a. True
b. False
Answer:
Balance sheet and income statement data indicate the following:
Based on the data presented above, what is the number of times bond interest charges
were earned (round to one decimal point)?
a. 1.5
b. 6.4
c. 6.5
d. 5.5
Answer:
In an investment center, the manager has responsibility and authority for making
decisions that affect
a. costs only
b. revenues only
c. assets only
d. costs, revenues, and assets
Answer:
If the standard to produce a given amount of product is 1,000 units of direct materials at
$11 and the actual was 800 units at $12, the direct materials quantity variance was
$2,200 unfavorable.
a. True
b. False
Answer:
Differential analysis only considers the short-term (one-year) effects of discontinuing a
product.
a. True
b. False
Answer:
Department A had 5,000 units in work in process that were 60% completed as to labor
and overhead at the beginning of the period; 34,000 units of direct materials were added
during the period; 31,000 units were completed during the period; and 2,000 units were
80% completed as to labor and overhead at the end of the period. All materials are
added at the beginning of the process. The first-in, first-out method is used to cost
inventories.
The number of equivalent units of production for conversion costs for the period was
a. 29,600
b. 32,400
c. 32,400
d. 34,000
Answer:
Which of the following are features of the lean manufacturing system?
(a) maintaining excess inventory to ensure that products will always be available
(b) cross training of employees
(c) giving employees additional authority and responsibility
(d) product-oriented layout
(e) increased set-up time
Answer: