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1) The new employee at Cork Manufacturing reported to work and the employee
reviewed the following information that was audited by the CPA:
Which of the following describes the role of the new employee?
A) Managerial Accountant
B) Financial Accountant
C) CEO
D) Receptionist
E) Secretary
2) To follow is selected information about The Boston Company for the current year
and prior year.
What is the current year's cost of goods sold percentage (as would be found on a
vertical analysis of the income statement for the current year)?
A) 69.70%
B) 64.00%
C) -2.42%
D) 97.58%
3) To follow is selected information about The Boston Company for the current year
and prior year.
What is the current year's selling and general expenses percentage (as would be found
on a vertical analysis of the income statement for the current year)?
A) 25.05%
B) 14.43%
C) 159.40%
D) 23.00%
4) Managerial accountants fulfill three primary responsibilities: planning, directing and
controlling. Review each of the following tasks that managerial accountants complete
in their role as a managerial accountant:
(a)The manager at the Pet Store holds a meeting with staff to set goals and to ask the
employees how to achieve the goals.
(b)The manager at the Home Goods Store realized that the actual sales are lower than
planned and the manager schedules a meeting to revise plans or adjust the operations.
(c) The local manager at the Halloween Store uses product sales data to determine
which costumes generate the most sales and then he or she can use that information to
establish seasonal marketing strategies.
(d)The manager at the Children's Hospital translates plans into budgets because he or
she wants to see the quantitative expression of the plan.
(e)A manager decides to increase local advertising at the Children's Toy Store.
In the space provided below, indicate whether the task is (1) planning; (2) directing; or,
(3) controlling.
Planning
Directing
Controlling
5) 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 salary payable?
A) The increase of $2,000 will be added to cost of goods sold.
B) The increase of $2,000 will be added to net income.
C) The increase of $2,000 will be subtracted from cost of goods sold.
D) The increase of $2,000 will be subtracted from net income.
6) Under the direct method of cash flow to prepare the statement of cash flows, which
of the following is not included in the statement of cash flows?
A) Changes in accounts receivable
B) Changes in depreciation
C) Changes in accounts payable
D) Changes in interest expense
7) Hill Fabricators manufactures a variety of parts that the company can use to produce
metal stud fixtures. The M2 part is a popular universal part used in the production of
several other parts at its manufacturing facility in Ohio. At a recent meeting, the
managerial accountant reported that 11% of its fixed overhead cots assigned to the M2
part will not continue if Hill Fabricators decides to outsource the production of the M2
part at $40 per unit to its competitor, Mason Manufacturing. The managerial accountant
at Hill Fabricators presented the following data that represents the cost to produce 1,100
units of the M2 part in-house:
What are the monthly avoidable costs if Hill Fabricators outsources the production of
the M2 part to Mason Manufacturing? What is the change in operating income? What is
the per unit cost to produce the M2 part?
A) $44,000; $3,720 increase; $64.65
B) $54,680; $3,720 decrease; $46.65
C) $45,320; $7,320 decrease; $64.65
D) $51,320; $7,320 increase; $56.36
8) Selected information about The Staccato Company for the current year and prior year
is given below.
The current year's cost of goods sold percentage (as would be found on a vertical
analysis of the income statement for the current year) is
A) 94.53%.
B) 67.52%.
C) -5.47%.
D) 62.00%.
9) Monroe Manufacturing produces and sells a product with a price of $100/unit. The
following data has been prepared for its estimated upper and lower levels of activity.
The fixed expenses for this company are
A) depreciation, office salaries, and advertising.
B) indirect materials, indirect labor, and depreciation.
C) direct materials, direct labor, and depreciation.
D) sales salaries, office salaries, and advertising.
10) The Bedford Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year's current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the accounts receivable turnover for the current year?
A) 27.11 times
B) 0.04 times
C) 20 times
D) 13.4631 times
11) The following information relates to Truman Unlimited for the past two years.
The current ratio for the current year is closest to
A) 2.00.
B) 13.50.
C) 1.25.
D) 1.97.
12) A ________ company's balance sheet reports just one inventory called "Inventory."
A) service
B) merchandising
C) manufacturing
D) All of these types of companies
13) Sally oversees the accounting operations at Hopewell Distributors. Recently, Sally
suspects an accounting manager commits fraud because the accounting manager in the
operations division submitted a report that had incorrect account receivable totals. Sally
checks the actual receivable totals against the forecasted totals and her assessment is
correct. The manager then reports lower total receivables and compares those totals to
the amount the company actually collects. A recent audit report indicates that the
manager wrote checks payable to cash and cashed the checks. What actions should
Sally take about the information she discovered about the accounting manager in the
operations division?
14) The manager at Clean Oceans Unlimited, in Virginia, conducted a recent meeting
with the operations manager to discuss the results of a recent waste audit conducted by
the city officials and to develop a new sustainability strategy. The manager announced
that the engineer has developed a system that filters the storm-water runoff into the
canals that flow into the Chesapeake Bay. The cost of the new system is $5,500,000.
The new system is expected to eliminate bacteria in run-off water and it is expected to
reduce the level of water pollution that flows into the Chesapeake Bay. The new system
is expected to generate taxes payable to the company of up to $2,500,000 in
storm-water fees each year. The pump is expected to have a life of 20 years.
Compute the payback period, in years. With respect to the business, should the manager
at Clean Oceans Unlimited implement this new sustainability strategy? Include a
discussion about the three factors that relate to sustainability (environmental, economic,
and social factors).
15) The new accountant at the Holiday Card Shoppe reviewed the following
information:
Is the system a financial system or a managerial system? Is the accountant at the
Holiday Card Shoppe a managerial accountant or a financial accountant? Why?
16) Use the following information to do a horizontal analysis of Carlin Corporation's
balance sheet for the end of the current and prior years. Fill in the table.
17) (Future Value Table Required) An accounting student in her first year of college
who is working on a 4-year degree receives from her parents $200 in her first year. As
an incentive to encourage her to graduate, they promise that in the second year she will
receive double the amount of the first year, and in the third year she will receive double
the amount of the second year. In her fourth year, she will receive $1,000. If she invests
her yearly gifts at a rate of 4% as she receives them, compare the value of the
investment after five years with the value of the gift (present value). What is the
investment loss if the gift is not invested?
18) The managerial accountant at New Jewelry considers an investment in a gem
cleaning piece of equipment that may increase the value of gems because it fills in the
fractures of lower-value gems. The initial cost of the equipment is $1,480,000; whereas
the annual net cash inflow is $425,000. The managerial accountant projects a useful life
of 13 years. The resale value of the equipment is forecasted at $450,000. Calculate the
annual depreciation expense. What is the expected payback period of this investment?
