Archives: Quiz

In order to prepare the sales budget, one needs a. The number of units expected to be produced and the prices expected to be charged. b. The number of units expected to be sold and the cost of producing each […]

Throughput contribution equals a. Sales revenue less fixed costs. b. Sales revenue less product costs. c. Sales revenue less direct materials costs. d. Sales revenues less manufacturing overhead. Which of the following is not a reason that actual direct labor […]

Once you have determined the net present value of a project, if the net present value is less than zero, the project should be a. Accepted b. Rejected c. Before making a decision, calculate the future value of the project […]

Which of the following is not a characteristic of a managerial accountant? a.Just a number cruncher b.Analyze and interpret financial data c.Analyze and interpret operating data d.Active participant in the decision making process Which of the following is not a […]

In implementing an activity-based costing system, after all the activities have been identified and the appropriate level of detail selected, the activities are combined into activity cost pools based on their a. Behavior b. Function c. Cost drivers d. Cost […]

Assume a sales price per unit of $25, variable cost per unit $15, and total fixed costs of $18,000. If no units are sold, how much cost would the company incur? a. Zero. b. The amount of variable costs at […]

In a decision to add or eliminate a product or service, which of the following is an avoidable cost? a. Common costs b. Depreciation c. Variable overhead d. Allocated overhead Since fixed overhead does not vary with volume within the […]

Which of the following statements is not True? a.A company is unlikely to be successful in the long run without adequate managerial accounting information to support decision making. b.Managerial accounting is completely optional. c.Managerial accounting reports are covered by rules […]

Which of the following terms is not used in referring to common costs? a. Allocated cost b. Unavoidable cost c. Traceable cost d. All of these answer choices are used in referring to common costs. Which of the following is […]

Which of the following is not classified as a variable period cost? a. Sales commissions b. Packaging for delivery c. Depreciation on delivery trucks d. All of these answer choices are variable period costs. A 10 percent decrease in sales […]

Cash receipts budget with discounts’ƒGarden Gnomes Company produces various types of lawn ornaments. The company ‘s sales budget for the first six months of the coming year is as follows. All sales are made on credit. Garden Gnomes is planning […]

A performance measure is specific if it a. Measures only one activity. b. Relates clearly and directly to the process it measures. c. Is either qualitative or nonfinancial, but not both. d. Is complete and accurate. Which of the following […]

Four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis are a.Variable cost, fixed cost, mixed cost, and step cost. b.Variable cost, fixed cost, selling cost, and administrative cost. c.Cost of goods sold, period cost, other cost, […]

In March, Connor’s, Inc. completed 150,000 units; 12,000 units still in process at the end of the period were 60% complete with respect to materials and conversion. Required: a. How many equivalent units were in Connor’s ending work in process […]

Which of the following is the formula for the accounting rate of return? a. Net initial investment Annual cash flow b. Project revenue – project operating expenses Initial investment – salvage of old asset c. Present value of future cash […]

Turnbull Company produces two products and their overhead consists of setups $20,000; machining $2,220,000; and packing $80,000. Data for the current year follow: The overhead allocated to Delta assuming a single overhead rate based on machine hours and assuming ABC, […]

When products are completed, which of the following accounts is increased? a. Raw Materials Inventory. b. Work in Process Inventory. c. Finished Goods Inventory. d. Cost of Goods Sold. If a company incurs a lot of different variable overhead costs […]

Breton Corporation ‘s Longboat division ‘s segment margin as a percentage of net sales is 12% for the current reporting period. The division has net sales revenue of $2,500,000. Operating assets were $800,000 at the beginning of the period and […]

Watson, Inc. applies overhead cost based on direct labor hours. In completing the 200 units in job #120, the company incurred $12,000 in direct materials and 500 direct labor hours at $18 per hour. The predetermined overhead rate is $6 […]

A helpful approach to examine changes in the relative size of account balances within a single statement is referred to as a. Common-size analysis. b. Vertical analysis. c. Trend analysis. d. Common-size analysis and Vertical analysis, but not Trend analysis. […]

Moving the delivery of services from within the organization to a provider outside the organization is referred to as a. Outcome sourcing. b. Outsourcing. c. Delivery diffusion. d. Delivery transfer Most managerial decisions are made at which of the following […]

Customer-level activities are also referred to as customer-sustaining activities. The American Institute of Certified Public Accountants is the leading organization for management accountants in the United States. Answer: False The Institute of Management Accountants (IMA) is the leading organization for […]

The Schedule of Cost of Goods Manufactured is nothing more than a restatement of the Work in Process Inventory account. A company that focuses on product differentiation does not need to monitor product costs because if the quality is sufficient […]

The high-low method of estimating the fixed and variable components of a mixed cost is a precise approach that uses a statistical technique. Earnings per share represents how much of a company’s current net income could be distributed for each […]

Like the high-low method of estimating the fixed and variable components of a mixed cost, regression analysis uses a statistical technique that identifies the line of best fit. Both the process costing and job order costing systems accumulate product costs […]

The total amount of manufacturing overhead allocated to a particular product will always be the same for both the traditional overhead allocation method based on direct labor hours and the activity-based costing overhead allocation. The objective of process costing is […]

A budget is an operating plan that may be expressed in either financial or non-financial terms. Preparers of managerial accounting information are generally not active participants in the decision making process. Answer: False Preparers of managerial accounting information are no […]

The difference between actual sales volume and budgeted sales volume has nothing to do with the price and quantity variance. Managerial accounting differs from financial accounting in that managerial accounting has no comparable set of rules governing what information must […]

An opportunity cost is the contribution margin of the next-best alternative use of the facilities. Both the top-down and bottom-up approaches to budgeting are linear, with budget information flowing in a single direction. Answer: False Both the top-down and bottom-up […]

Just-in-time implementations are simple and take little or no effort to implement and will work for most companies. When production and sales are equal, a drawback of the contribution format income statement is that is does not produce the same […]

Standard direct labor prices are also referred to as direct labor rates. The final component of the operating budget is the ending inventory and cost of goods sold budget. Answer: True The costs of acquiring inventory are reported on the […]

Like process costing, job order costing makes no attempt to track an individual product’s costs, all the products have similar costs. If the net present value of a project is greater than or equal to zero, the project has achieved […]

To prepare the sales budget, multiply the forecasted sales units by the budgeted sales price per unit. The formula for the production budget is Budgeted Sales + Budgeted Beginning Inventory – Budgeted Ending Inventory = Budgeted Production. Answer: False The […]

The costs incurred in a process costing system, direct material, direct labor and overhead, are the same as the costs incurred in a job order costing system. The terms standard price and standard cost can be used interchangeably. Answer: False […]

Even if an organization relies solely on one performance measurement, it cannot easily be misled into thinking all is well, when in reality, all is not well. Unavoidable costs are incurred under all alternatives, thus they are always relevant. Answer: […]

Dun & Bradstreet’s Industry Norms and Key Business Ratios provide financial ratios for key industries, as well as condensed common-sized balance sheets and income statements. In a bottom-up budget approach, at each higher level of management, the budget is reviewed […]

With a fixed cost, the cost per unit varies proportionately with changes in the level of activity. The payback period is used most often as a screening tool, by companies that have established a maximum acceptable payback period. Answer: True […]

The present value of a future amount may be smaller or larger than the future value. Investing activities include purchases and sales of property and equipment, loans made and collected, and purchases and sales of another company’s stock. Answer: True […]

When using a standard costing system, recording events related to variable overhead requires four separate entries. Since the purchasing agent is responsible for ordering raw materials, he or she would be the one to negotiate a volume discount. Answer: True […]

When there is no work in process inventory at the end of a period, cost accumulation and reporting is extremely easy under process costing, as the product costs are simply added up and divided evenly among the products produced. Managerial […]

When an asset is sold at a gain or loss, the book value of the assets is reported as a sale in the investing section of the statement of cash flows. Equivalent units (EU) of production is based on the […]

Sunk costs are irrelevant in deciding between two alternatives because they are incurred in the past, not the future. The most popular way to begin the budgeting process is the incremental approach. Answer: True A supply chain is a network […]

In an outsourcing decision, one important factor is the quality of the outsourced product. If a company follows a strategy of product differentiation, it will seek ways to set its products apart from competitors ‘ in terms of quality, design […]

In an environment where the there is a constrained resource, the resource should be allocated first to the product with the highest contribution margin. The percentage change, as shown in horizontal analysis, is calculated as: (current year account balance – […]

In process costing, all materials are added at the beginning of the production process, then labor and overhead is added during the production process. Operating income = Sales revenue – Variable cost per unit – Total fixed costs. Answer: False […]

Top-down budgeting is also referred to as participative budgeting. Absorption costing is used for managerial accounting, but is not allowed for reporting in accordance with generally accepted accounting principles. Answer: False Absorption costing is the cost accumulation method required by […]

A stream of equal cash flows received at set time intervals is called an annuity. Total manufacturing cost is also referred to as cost of goods manufactured. Answer: False Total manufacturing costs include direct material, direct labor and manufacturing overhead […]

In a horizontal analysis balance sheet, the percentage change columns do not add up in the same way as the dollar amounts because each of the percentages was calculated using a different denominator. The formula for return on common stockholders’ […]

The flexible budget variance is the difference between the static budgeted amounts and the flexible budgeted amounts. The time between an order’s placement and its shipment is referred to as the delivery cycle time. Answer: True The customer net profit […]

Another form of horizontal analysis is called trend analysis. One purpose of planning activities is to monitor day-to-day operations to ensure that processes are operating as expected. Answer: False One purpose of controlling activities is to monitor day-to-day operations to […]