The manager at a service company does not prepare a cash budget.
Total assets is the denominator in the formula managers use to compute ROI.
Decentralized companies often struggle to achieve goal congruence in an organization.
A company sends an employee to a conference to update the employee’s job-related
skills. It is a violation of the IMA’s Statement of Ethical Professional Practice standards
if the employee decides to skip the afternoon session and decides to go sightseeing.
The direct labor efficiency variance tells managers how much of the total labor variance
is due to using a greater or lesser amount of time than anticipated.
A rolling budget is useful because the organization can continue to budget its operations
12 months into the future.
If a manufacturer finds that the amount of manufacturing overhead allocated to a job is
less than the actual amount of manufacturing overhead incurred, then the jobs are
overcosted.
Circumstances can occur that result in favorable direct materials price variances and
unfavorable direct materials quantity variances.
Extensive Business Reporting Language (XBRL) will be required of both public and
private companies.
An investment center is generally a large division of a corporation.
Management by exception directs management’s attention to a large variance between
an actual and budget amount in a performance report.
The financial budget that a manager prepares at a manufacturing company is different
compared to the financial budget that a manager prepares at a merchandising and a
service company.
The direct materials price variance is the difference between the Actual Price (AP) and
the Standard Price (SP), multiplied by the Actual Quantity Purchased (AQP).
Managerial accountants must comply with Generally Accepted Accounting Principles
(GAAP) standards when they prepare managerial accounting reports.
SOX do not allow CPA firms to provide certain non-audit services to companies during
the same period of time in which they are providing the services.
The McCumber Corporation data for the current year:
With respect to net income before income tax expense and net income, what would a
horizontal analysis report?
A) There was an increase in both net income before income tax expense and net income
of 15.00%.
B) Both net income before income tax expense and net income increased by $129,000.
C) The current ratio is 0.92.
D) Both net income before tax expense and net income were 11.17% of net sales
revenue.
The following information relates to Truman Unlimited for the past two years.
The price-earnings ratio for the current year is
A) 13.33.
B) 1.97.
C) 9.60.
D) 13.50.
Which of the following roles require publicly-traded companies to have an internal
audit function?
A) The New York Stock Exchange (NYSE)
B) The Internal Revenue Service (IRS)
C) The stockholders
D) The Board of Directors
Sydney’s Barbecue reported the following information:
What is the amount of ending finished goods inventory for the period ending December
31, 20XX?
A) $850,000
B) $860,000
C) $870,000
D) $880,000
E) $890,000
The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to net income before income tax
expense and net income?
A) Both net income before tax expense and net income were 11.26% of net sales
revenue.
B) Both net income before income tax expense and net income increased by $128,400.
C) The current ratio is 1:06.
D) There was an increase in both net income before income tax expense and net income
of 14.00%.
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.
A company uses the indirect method to prepare the statement of cash flows. The board
of directors declared $165,000 in common stock dividends during the year. At the
beginning of the year, there were $48,000 in dividends payable on common stock; and,
$44,000 dividends payable at the end of the year.
Answer the following questions:
(a) What was the amount of cash paid for dividends during the year?
(b) Where will this amount appear on the statement of cash flows?
(c) How would the amount appear if the company uses the direct method to prepare the
statement?
The managerial accountant at Boone Furriers reported the following contribution
margin statement information:
Use the data listed above to compute the following:
a.Compute the sales in units.
b.Compute the breakeven point in sales revenue.
A) 1,659 units; $338,900
B) 323 units; $512,000
C) 528 units; $448,800
D) 650 units; $525,000
Rachel’s Beach Shoppe charges tourists to use their credit cards to purchase
merchandise at the vacation store. On Monday, Rachel sold $2,500 in merchandise to
tourists that used their credit cards to purchase beachwear at the store. The bank charges
Rachel’s store 1.15% of the total credit card purchases per day to settle the credit
transactions. What is the total deposit Rachel expects the bank to deposit into her
account after the total bank fees and charges are taken out of the credit purchases on
Monday?
A) $31.15
B) $2,750.25
C) $2,472.50
D) $2,500.00
The Dogwood Technology Company managerial accountant computes the May total
variance report. The budgeted fixed overhead was $48,580 and the standard fixed
overhead cost allocated to production was $45,600. The actual fixed overhead totaled
$47,930. Compute the fixed overhead budget variance and the fixed overhead volume
variance.
A) $3,430 F; $880 U
B) $650 U; $2,980 F
C) $880 F; $3,430 U
D) $2,980 U; $650 F
The Hummel 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 $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s inventory turnover for the current year?
A) 15.75 times
B) 42.00 times
C) 25.00 times
D) 24.67 times
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 book value per share of common stock on the last day of the current year?
A) $8.37
B) $24.41
C) $27.11
D) $20.00
Maintenance costs at Wilmington Manufacturing over the past six months are listed in
the following table.
Using the high-low method, what would the monthly fixed maintenance cost be?
A) $1,200
B) $2,320
C) $13,680
D) $27,440
The Hummel 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 $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s earnings per share for the current year?
A) $6.50
B) $2.00
C) $3.50
D) $12.50
Compute the missing amounts.
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 decrease of $3,000 will be added to net income.
B) The decrease of $3,000 will be added to cost of goods sold.
C) The decrease of $3,000 will be subtracted from cost of goods sold.
D) The decrease of $3,000 will be subtracted from net income.
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
Which of the following value chain elements is associated with the costs of shipping
inventory to the retail outlet in a merchandising company?
A) Design
B) Distribution
C) Production and Purchases
D) Customer Service
A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities
category of the cash flow statement?
A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be subtracted from sales to determine cash received
from customers.
C) The increase of $15,000 will be added to sales to determine cash received from
customers.
D) The increase of $15,000 will be added to net income.
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
Miller Manufacturing Corporation has the following information regarding direct
materials:
Compute Miller’s Standard Price (SP) per pound and Actual Price (AP) per pound of
direct materials.
Explain the type of inventory that is characteristic at a service company.
Use the direct method of cash flows to answer the question.
Compute the change in accounts receivable during the year.
Grain Alternative Corporation has a predicted operating income of $80,000. The
managerial accountant reported that total variable expenses are $25,000 and its total
fixed expenses are $24,000. The company has a unit contribution margin of $20 on its
sole product. Calculate the number of units needed to reach the operating income of
$80,000.
(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?
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.
For each of the following transactions indicate the effect on the cash balance. Use + for
increase, – for decrease, and 0 for no effect.