Companies calculate the predetermined overhead rate at the beginning of an accounting
period using the actual values of overhead costs.
The cost per equivalent unit for transferred in units is calculated by dividing total
transferred in costs by the equivalent units of production for transferred in units.
Under a process costing system, direct labor costs are assigned to the Work-in-Process
Inventory account of the department for which they are incurred.
An accounting information system creates the structure to encourage adherence to
management policies.
Production cost reports prepared using first-in, first-out (FIFO) method determine the
average cost of equivalent units of production by combining beginning inventory costs
with current period costs.
If a business operates in an industry that experiences significant cost changes, it would
be to its benefit to use the first-in, first-out (FIFO) method.
The breakeven point is the point where the sales revenues are equal to the fixed costs.
If the variable cost per unit decreases, the total number of units required to break even
will increase.
For a merchandising company, the budgeted total sales equals the expected number of
units sold multiplied by the budgeted selling price per unit.
Net cash inflows from a capital investment arise from an increase in revenues, a
decrease in expenses, or both.
The Accounts Receivable balance in the general ledger may or may not equal the sum
of the accounts in the accounts receivable subsidiary ledger.
The process for calculating present values is often called discounting future cash flows
because future amounts are discounted to their present value.
An annuity is a series of unequal payments over equal intervals.
Developing efficiency standards based on best practices is called benchmarking.
A company uses a balanced scorecard and has established a key performance indicator
for product quality. If the actual warranty claims are higher than expected, there is an
indication that the quality standards have been met.
Managerial accounting includes the planning function. Which of the following items
would be part of the planning function of a business’s managerial accounting?
A) comparing actual performance to previously budgeted amounts
B) creating detailed budgets
C) implementing operational plans
D) evaluating results of operations
June sales were $27,000, while projected sales for July and August were $51,000 and
$69,000, respectively. Sales are 60% cash and 40% credit. All credit sales are collected
in the month following the sale. Calculate expected collections for July.
A) $36,600
B) $41,400
C) $10,800
D) $30,600
Tokyo Corp. has prepared a preliminary cash budget for the third quarter as shown
below:
Subsequently, the marketing department revised its figures for cash collections. New
data are as follows: $53,000 in July, $55,000 in August, and $46,000 in September.
Based on the new data, calculate the new projected cash balance at the end of August.
A) $20,500
B) $18,500
C) $12,000
D) $17,800
Knapp Roofing Company has estimated the following amounts for its next fiscal year:
If the company spends an additional $35,000 on advertising, sales volume would
increase by2,500 units. What effect will this decision have on the operating income of
Evans?
A) Operating income will decrease by $90,000.
B) Operating income will increase by $90,000.
C) Operating income will increase by $200,000.
D) Operating income will increase by $125,000.
The production line of a manufacturing company is most likely to be considered as a(n)
________.
A) cost center
B) profit center
C) revenue center
D) investment center
McFadden, Inc. has collected the following data. (There are no beginning inventories.)
What is the ending balance in Finished Goods Inventory using variable costing if 600
units are sold?
A) $4,000
B) $5,000
C) $2,000
D) $3,000
When comparing several investments with the same initial cost, the decision should be
made on the basis of the ________.
A) highest total cash inflows
B) longest payback period
C) highest NPV
D) highest ARR
Rica Company is a price-taker and uses a target-pricing approach. Refer to the
following information:
What is the desired profit for the year?
A) $102,000
B) $18,000,000
C) $4,100,000
D) $2,363,000
Which of the following is true of the comparison between a manual and a computerized
accounting information system?
A) In both manual and computerized systems, reports and financial statements must be
created using Word documents, Excel spreadsheets, or PowerPoint.
B) In a computerized system, the software can generate financial reports
instantaneously that can never be manipulated.
C) In a manual system, data are contained in paper documents, which are often stored in
filing cabinets and off-site document warehouses; whereas in a computerized system,
data are stored on a main computer called a server.
D) In both manual and computerized systems, processing data includes manually
journalizing transactions and posting to the accounts.
The amount of accumulated depreciation for the budgeted balance sheet can be
obtained from the ________.
A) cash budget
B) selling and administrative expense budget and the prior balance sheet
C) cash payments for selling and administrative expense budget
D) financial budget
Which of the following statements is true of the just-in-time costing system?
A) It increases the need for suppliers to deliver raw materials on time.
B) It records summary journal entries before the units are purchased.
C) It results in increased inventory storage costs.
D) It increases the risk of the inventory becoming obsolete or unsalable.
The following information relates to Carried Away Hot Air Balloons, Inc.:
How much was Carried Away’s manufacturing overhead?
A) $19,900
B) $20,720
C) $23,720
D) $62,970
