Managerial accounting reports must be useful to the user of the information.
a. True
b. False
A bottleneck begins when demand for the company’s product exceeds the ability to
produce the product.
a. True
b. False
For a period during which the quantity of product manufactured equals the quantity
sold, income from operations reported under absorption costing will be smaller than the
income from operations reported under variable costing.
a. True
b. False
By converting dollars to be received in the future into current dollars, the present value
methods take into consideration that money
a. has an international rate of exchange
b. is the language of business
c. is the measure of assets, liabilities, and stockholders’ equity on financial statements
d. has a time value
One inherent risk to using lean philosophy is that companies are at higher risk of
inventory shortage during volatile times such as strikes, weather, etc. than when using
the traditional philosophy.
a. True
b. False
rate earned on common stockholders’ equity
Match each ratio that follows to its use (items a’“h). Items may be used more than
once.
a. assess the profitability of the assets
b. assess the effectiveness in the use of assets
c. indicate the ability to meet currently maturing obligations
d. indicate the margin of safety to creditors
e. indicate instant debt-paying ability
f. assess the profitability of the investment by common stockholders
g. indicate future earnings prospects
h. indicate the extent to which earnings are being distributed to common stockholders
In contribution margin analysis, the unit price or unit cost factor is computed as the
difference between actual quantity sold and the planned quantity sold, multiplied by the
planned unit sales price or unit cost.
a. True
b. False
summary of the activity in a processing department for a specific period
Match each phrase that follows with the term (a-h) it describes.
a. direct labor and factory overhead
b. direct labor and direct materials
c. transferred in costs
d. equivalent units
e. process costing
f. job order costing
g. first-in, first-out method
h. cost of production report
Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead
costs for the year were $650,000. Pinacle’s plantwide allocation base, machine hours,
was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000
units was budgeted to be produced and 98,000 units were actually produced. Pinacle’s
plantwide factory overhead rate for the current year is:
a. $8.13 per machine hour
b. $7.00 per machine hour
c. $6.50 per machine hour
d. $8.75 per machine hour
Operating income is impacted by changes in inventory level.
Match each phrase that follows with the term (a-c) it describes.
a. Absorption costing only
b. Variable costing only
c. Both absorption and variable costing
Which of the following is best suited to providing timely and focused performance
information?
a. nonfinancial information
b. financial accounting information
c. cost accounting information
d. variance analysis
Under the variable cost concept, only variable costs are included in the cost amount per
unit to which the markup is added.
a. True
b. False
Nonfinancial performance output measures are used to improve the input measures.
a. True
b. False
Hill Co. can further process Product O to produce Product P. Product O is currently
selling for $60 per pound and costs $42 per pound to produce. Product P would sell for
$82 per pound and would require an additional cost of $13 per pound to produce.
The differential cost of producing Product P is $55 per pound.
a. True
b. False
Product costs are not expensed until the product is sold.
a. True
b. False
begins by estimating the quantity of sales
Match the phrase that follows with the term (a-e) it describes.
a. static budget
b. flexible budget
c. master budget
d. sales budget
e. production budget
As production increases, variable costs per unit
a. stay the same
b. increase
c. decrease
d. either increase or decrease, depending on the fixed costs