QUESTION 1
Managerial accounting must conform to which of the following standards?
Generally Accepted Accounting Principles (GAAP)
International Financial Reporting Standards (IFRS)
Internal Revenue Service tax code
None of the above
2.5 points
QUESTION 2
Which of the following mathematical expressions best describes a mixed cost?
Y = bX
Y = a
Y = a + bX
Y = ai
2.5 points
QUESTION 3
The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following?
An increase in fixed cost
An increase in general and administrative expenses.
An increase in direct labor hours.
A decrease in contribution margin.
2.5 points
QUESTION 4
An increase in volume within the relevant range will cause:
Unit fixed costs to increase.
Unit variable costs to decrease.
Total fixed costs to stay the same.
Total variable costs to decrease.
2.5 points
QUESTION 5
Which of the following is one of the three major components of product costs?
Research and development expenses
Manufacturing overhead
Marketing costs related to specific products
Selling, general and administrative expenses
2.5 points
QUESTION 6
Which of the following would be classified as a fixed selling and administrative cost?
Sales Commissions
Depreciation on office equipment
Depreciation on factory equipment
Wages of production supervisor
2.5 points
QUESTION 7
In the following equation for total cost, Y = a + bX, “a” represents which of the following?
Total Cost
Fixed Cost
Variable Cost
Volume
2.5 points
QUESTION 8
Managerial accounting is primarily focused on:
Providing information for internal and external users
Providing general purpose financial statements
Providing special-purpose information and reports
Following generally accepted accounting principles
2.5 points
QUESTION 9
Examples of activity cost drivers include all of the following except:
Inspecting incoming raw materials
Machine time spent working on a product
Deciding how to arrange raw materials inventory within the warehouse
Receiving (loading) raw materials into the warehouse
2.5 points
QUESTION 10
The following information pertains to Marvolo, Inc.:
Selling price per unit
$100
Variable costs per unit
$75
Total fixed costs
$425,000
Tax rate
40%
The sales volume required to obtain a target after-tax profit of $108,000 is:
6,000 units
8,572 units
24,200 units
20,000 units
2.5 points
QUESTION 11
The scatter diagram method of cost estimation:
Uses only the high and low data points
Is superior to other methods in its ability to distinguish between discretionary and committed fixed costs
Requires the use of judgment
Provides a measure of the goodness of fit
2.5 points
QUESTION 12
What is the purpose for using predetermined overhead rates?
Delays in product costing can be avoided
Variation in cost assignment due to seasonality can be prevented
Variation in cost assignment due to short-term variations in volume can be prevented
Use of predetermined overhead rates serves all the above purposes
2.5 points
QUESTION 13
Which of the following aspects of manufacturing must be understood in order to implement activity based costing in a production setting?
The production process
The activities that occur in the production process must be known
The cost drivers that generate activities within the production process
All of the above
2.5 points
QUESTION 14
Determine the unit break-even point, assuming fixed costs are $60,000 per period, variable costs are $16.00 per unit, and the sales price is $25.00 per unit.
5,000
6,667
15,000
12,000
2.5 points
QUESTION 15
Total contribution margin is calculated by subtracting:
Cost of goods sold from total revenues
Fixed costs from total revenues
Total manufacturing costs from total revenues
Total variable costs from total revenues
2.5 points
QUESTION 16
Wesley’s income statement is as follows:
Sales (10,000 units)
$150,000
Less variable costs
-48,000
Contribution margin
$102,000
Less fixed costs
-24,000
Net income
$78,000
If sales increase by 1,000 units, profits will:
Increase by $12,000
Increase by $10,200
Increase by $4,800
Increase by $8,000
2.5 points
QUESTION 17
The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following?
A shift in costs from variable costs to fixed costs.
A shift in costs from fixed costs to variable costs.
An increase in total manufacturing costs.
An increase in employment
2.5 points
QUESTION 18
Financial accounting is primarily focused on:
Providing the Internal Revenue Service with information to determine the amount of taxes owed
Providing investors with useful information for valuing securities
Providing information for internal users
None of the above
2.5 points
QUESTION 19
When finished goods are sold, there is an increase in which of the following accounts?
Cost of Goods Sold
Cost of Goods Manufactured
Finished Goods Inventory
Work-in-Process
2.5 points
QUESTION 20
As volume increases, which of the following statements is not correct?
Variable cost per unit will remain the same.
Total fixed will remain the same.
Average cost per unit will increase.
Total variable costs will increase.
2.5 points
QUESTION 21
Peoria Corporation reported the following on their contribution format income statement:
Sales (12,000 units)
$350,000
Less: variable expenses
200,000
Contribution margin
$150,000
Less: fixed expenses
125,000
Net operating income
$25,000
What is the contribution margin ratio?
38.57%
42.86%
57.14%
4.30%
2.5 points
QUESTION 22
Chattanooga, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:
Maintenance
$800,000
Inspection 400,000
The following data have been assembled for use in developing a bid for a proposed job:
Direct materials
$6,000
Direct labor
$16,000
Machine-hours
400
Number of inspections
4
Direct labor-hours
800
The total estimate for machine-hours for all jobs during the year is 25,000, and for inspections is 800. These are the cost drivers for maintenance and inspection costs, respectively
Using the appropriate cost drivers, the total cost of the potential job is:
$22,000
$62,800
$33,600
$36,800
2.5 points
QUESTION 23
The following information pertains to Oliwander’s 2014 operations:
Selling price per unit
$50
Variable costs per unit
$20
Total fixed costs
$110,000
Oliwander’s break-even point in units is:
2,000 units
3,333 units
3,667 units
60,000 units
2.5 points
QUESTION 24
The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows:
Direct materials
$4
Direct labor
16
Variable manufacturing overhead
12
Average fixed manufacturing overhead
12
Total
$44
The Quick Assembly Company has offered to sell Chateau 4,000 telephones for $31 per unit. If Chateau accepts the offer, $20,000 of fixed overhead will be eliminated.
Chateau should:
Make the telephones; the savings is $4,000
Buy the telephones; the savings is $35,000
Buy the telephones; the savings is $24,000
Make the telephones; the savings is $24,000
2.5 points
QUESTION 25
Direct labor used in manufacturing digital cameras would best be classified as what type of cost?
Variable cost
Fixed cost
Mixed cost
Step cost
2.5 points
QUESTION 26
If a trucking company were operating at capacity, but had an opportunity to fill a one-time high volume special order, which of the following ramifications could occur?
Lost revenues from regular customers
Long-term revenue loss from customers who change service to competitors
Questions from regular customers about commitment to service
eAll of the above
2.5 points
QUESTION 27
From a managerial accounting standpoint, which of the following areas of the Sarbanes-Oxley Act of 2002 (SOX) are most pertinent?
External auditing standards
Review of internal controls
Codes of ethics for financial officers
Penalties for fraud
2.5 points
QUESTION 28
Future costs that differ among competing alternatives are:
Absorption costs
Relevant costs
Replacement costs
Variable overhead costs
2.5 points
QUESTION 29
According to Michael Porter, which of the following is an example of cost leadership as a business strategy?
A regional beer brewer that caters to local tastes.
A glass manufacturer utilizing research and development to identify new applications for glass and ceramics.
An online bookseller utilizing efficient scale facilities and overhead cost control p.9.
A manufacturer focused on designing and building corporate jet aircraft.
2.5 points
QUESTION 30
Activity-based costing’s primary benefit is that it provides:
Absolutely accurate product costing information
Data for external financial reporting purposes
More precise cost data for internal decision-making purposes
All of the above
2.5 points
QUESTION 31
The most appropriate cost driver for the activity of cleaning (bussing) tables in a restaurant is:
The number of cooks in the kitchen
The number of tables cleaned
The number of employees assigned to the job of cleaning tables
The amount of money deposited to the bank each day
2.5 points
QUESTION 32
Cari German uses gas to heat her home. She has accumulated the following information regarding her monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month.
Month
Heating Degree-Days
Gas Bill
February
1,900
$254
April
600
$101
What will be the increase in Cari’s monthly gas bill per heating degree-day using the high-low method?
$0.33
$0.12
$46.00
$153.00
2.5 points
QUESTION 33
All of the following are assumptions used in cost-volume-profit analysis, except:
All costs are classified as fixed or variable
The total cost function is linear
The total revenue function is linear
All of the above are assumptions used in cost-volume-profit analysis
2.5 points
QUESTION 34
Gross margin is calculated by subtracting:
Total variable costs from total revenues
Total manufacturing overhead costs from total revenues
Fixed costs from total revenues
Cost of goods sold from total revenues
2.5 points
QUESTION 35
The total contribution margin at the break-even point:
Equals total fixed costs
Is zero
Is greater than total variable costs
Plus total fixed costs equal total revenues
2.5 points
QUESTION 36
Partially completed goods that are in the process of being converted into a finish product are defined as:
Work-in-process inventories
Conversion inventories
Raw materials inventories
Operational inventories
2.5 points
QUESTION 37
Which of the following is not included in work-in-process inventory?
Direct materials costs
Applied manufacturing overhead
Direct manufacturing labor costs
Sales commissions
2.5 points
QUESTION 38
Which of the following procedures best describes activity-based costing?
All overhead costs are recorded as expenses as incurred.
Overhead costs are assigned directly to products.
Overhead costs are assigned to activities; then costs are assigned to products.
Overhead costs are assigned to departments; then costs are assigned to products.
2.5 points
QUESTION 39
The contribution margin ratio is:
The difference between price and variable cost per unit
The percentage difference between sales and cost of goods sold
The portion (or percent) of revenues available for covering fixed costs and providing a profit
The percentage difference between total revenues and total costs
2.5 points
QUESTION 40
Although adding more activity cost pools to an activity-based costing system may improve the precision of product costing, this increase in precision must be judged against:
The cost of the product
The price of the product
The cost of developing and maintaining the additional cost pools
All of the above
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