Multiple Choice PDF

## Chapter 1 ### Multiple Choice 1. The managers of an organization are responsible for performing several broad functions. They are * planning, controlling, and evaluating 2. Management accountants help the management of an organization in their planning function through * strategic plann...

## Chapter 1 ### Multiple Choice 1. The managers of an organization are responsible for performing several broad functions. They are * planning, controlling, and evaluating 2. Management accountants help the management of an organization in their planning function through * strategic planning 3. Which of the following is a primary aspect of the evaluating function within an organization? * comparing actual results against expected results for products, departments, divisions, or the company as a whole 4. During the control function, the measurements taken of the performance must be accurate enough to see * deviations and variances 5. Which of the following is false regarding strategic planning? * It is the sole responsibility of supervisors 6. Managerial accounting produces information: * to meet the needs of investors 7. Management accounting: * emphasizes special-purpose information 8. Internal users of accounting information would not include * creditors 9. External users of accounting information would include * investors 10. Which of the following statements is incorrect? * Reports produced using management accounting must follow GAAP 11. The stockholders of a company are: * the owners 12. The controller of corporation: * reports to the CFO and is in charge of the accounting side of the business 13. The Certified Financial Analyst (CFA) certification: * consists of three separate exams that must be taken in succession 14. The Certified Management Accountant (CMA) certification: * includes a two-part exam, education requirements, and a work experience requirement 15. Which of the following terms means the ability to work in cross-functional teams in order to complete a task? * collaboration 16. Which of the following terms means knowing how a business is run and how it is influenced by external forces, and knowing and understanding the overall industry? * commercial awareness 17. What is the law that protects investors from fraudulent financial accounting activity? * SOX 18. What year was the Sarbanes-Oxley Act enacted? * 2002 19. When a representative of an organization gives money to another business official in order to gain favor and/or manipulate a business decision, this is known as * bribery 20. The law that specifically prohibits payments to foreign officials in order to attain business is knowns as * FCPA 21. Which of the following is not a step in the outline for examining ethical issues? * Confirm decision with FASB. 22. Which of the following is not an objective used in the balanced scorecard approach? * Vendor 23. Which of the following is not true regarding continuous improvement? * It can be applied only to improve processes and products but not services and practices. 24. A company's attempts to utilize sustainable business practices with regard to its employees, the environment, and society are known as * corporate social responsibility 25. A process that is often linked to Six Sigma and is designed toward continuous improvement by eliminating waste is * kaizen 26. An inventory system that organizations use to increase efficiency and decrease waste is * just-in-time manufacturing 27. A quality control program that depends on multiple team members for removing waste and diminishing defects within products is * Lean Six Sigma ## Chapter 2 ### Multiple Choice 1. Which of the following is the primary source of revenue for a service business? * providing intangible goods and services 2. Which of the following is the primary source of revenue for a merchandising business? * the purchase and resale of finished products 3. Which of the following is the primary source of revenue for a manufacturing business? * the production of products from raw materials 4. Which of the following represents the components of the income statement for a service business? * Service Revenue - Operating Expenses = operating income 5. Which of the following represents the components of the income statement for a manufacturing business? * Sales Revenue - Cost of Goods Manufactured = gross profit 6. Which of the following represents the components of the income statement for a merchandising business? * Sales Revenue - Cost of Goods Sold = gross profit 7. Conversion costs include all of the following except: * direct materials purchased 8. Which of the following is not considered a product cost? * selling expenses 9. Fixed costs are expenses that * remain constant as activity changes 10. Variable costs are expenses that * remain constant on a per-unit basis but change in total based on activity level 11. Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs? * $200,000 12. Which of the following would not be classified as manufacturing overhead? * direct labor 13. Which of the following are prime costs? * direct labor and direct materials 14. Which of the following statements is true regarding average fixed costs? * Average fixed costs per unit fall as the level of activity rises. 15. The high-low method and least-squares regression are used by managers to * estimate costs 16. Which of the following methods of cost estimation relies on only two data points? * the high-low method 17. In the cost equation Y = a + bx, Y represents which of the following? * total costs 18. A scatter graph is used to test the assumption that the relationship between cost and activity level is * linear ## Chapter 3 ### Multiple Choice 1. The amount of a unit’s sales price that helps to cover fixed expenses is its * contribution margin 2. A company’s product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? * $90 3. A company’s product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin ratio? * 60% 4. A company’s contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase? * $3,750 5. A company sells its products for $80 per unit and has per-unit variable costs of $30. What is the contribution margin per unit? * $50 6. If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? * 200 7. Company A wants to earn $5,000 profit in the month of January. If their fixed costs are $10,000 and their product has a per-unit contribution margin of $250, how many units must they sell to reach their target income? * 60 8. A company has wants to earn an income of $60,000 after-taxes. If the tax rate is 32%, what must be the company’s pre-tax income in order to have $60,000 after-taxes? * $88,235 9. A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company’s after-tax income? * $72,000 10. When sales price increases and all other variables are held constant, the break-even point will * decrease 11. When sales price decreases and all other variables are held constant, the break-even point will * increase 12. When variable costs increase and all other variables remain unchanged, the break-even point will * increase 13. When fixed costs decrease and all other variables remain unchanged, the break-even point will * decrease 14. When fixed costs increase and all other variables remain unchanged, the contribution margin will * remain unchanged 15. If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will * decrease because the per composite unit contribution margin will increase 16. Break-even for a multiple product firm * can be calculated by dividing total fixed costs by the contribution margin of a composite unit 17. Waskowski Company sells three products (A, B, and C) with a sales mix of 3:2:1. Unit sales price are shown. What is the sales price per composite unit? * $25.00 18. Beaucheau Farms sells three products (E, F, and G) with a sale mix ratio of 3:1:2. Unit sales price are shown. What is the sales price per composite unit? * $41.00 19. A company sells two products, Model 101 and Model 202. For every one unit of Model 101, they sell they sell two units of Model 202. Sales and cost information for the two products is shown. What is the contribution margin for a composite unit based on the sales mix? * $35 20. Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries? * 2.5 and 13% 21. Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing? * 2.5 and 25% 22. If a firm has a contribution margin of $59,690 and a net income of $12,700 for the current month, what is their degree of operating leverage? * 4.7 23. If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage? * 5.7 ## Chapter 4 ### Multiple Choice 1. Which of the following product situations is better suited to job order costing than to process costing? * The costs are easily traced to a specific product. 2. A job order costing system is most likely used by which of the following? * a stereo manufacturing company 3. Which of the following is a prime cost? * direct labor 4. Which of the following is a conversion cost? * factory depreciation expenses 5. During production, to what are the costs in job order costing applied? * each individual product 6. Which document lists the inventory that will be removed from the raw materials inventory? * materials requisition form 7. Which document shows the cost of direct materials, direct labor, and overhead applied for each specific job? * job cost sheet 8. Which document lists the total direct materials used in a specific job? * materials requisition form 9. Which document lists the total direct labor used in a specific job? * employee time ticket 10. Assigning indirect costs to specific jobs is completed by which of the following? * using the predetermined overhead rate 11. In a job order cost system, which account shows the overhead used by the company? * manufacturing overhead 12. In a job order cost system, raw materials purchased are debited to which account? * raw materials inventory 13. In a job order cost system, overhead applied is debited to which account? * work in process inventory 14. In a job order cost system, factory wage expense is debited to which account? * work in process inventory 15. In a job order cost system, utility expense incurred is debited to which account? * manufacturing overhead 16. In a job order cost system, indirect labor incurred is debited to which account? * manufacturing overhead 17. The activity base for service industries is most likely to be * direct labor hours ## Chapter 5 ### Multiple Choice 1. Which of the following production characteristics is better suited for process costing and not job order costing? * Costs are accumulated by department. 2. A process costing system is most likely used by which of the following? * a paper manufacturing company 3. Which of the following is a prime cost? * direct labor 4. Which of the following is a conversion cost? * direct labor 5. During production, how are the costs in process costing accumulated? * to each individual department 6. Which is not needed to compute equivalent units of production? * the material cost per unit 7. What is the cost of direct labor if the conversion costs are $330,000 and manufacturing overhead is $275,000? * $55,000 8. What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials, $17,000; direct labor, $33,000; and manufacturing overhead, $70,000? * $103,000 9. Which of the following lists contains only conversion costs for an inflatable raft manufacturing corporation? * machine operator, electricity, depreciation, plastic for air valves 10. Direct material costs $3 per unit, direct labor costs $5 per unit, and overhead is applied at the rate of 100% of the direct labor cost. What is the value of the inventory transferred to the next department if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory? * $130,000 11. Beginning inventory and direct material cost added during the month total $55,000. What is the value of the ending work in process inventory if beginning inventory was 2,000 units; 9,000 units were started; and 1,000 units were in ending inventory? * $50,000 12. The initial processing department had a beginning inventory of 750 units and an ending inventory of 1,350 units, and it started 9,500 units into production. How many were transferred out to the next department? * 10,250 13. There were 1,000 units in ending inventory after transferring 16,000 units to finished goods inventory. If the beginning inventory was 2,000 units, how many units were started in process? * 17,000 14. The costs to be accounted for consist of which of the following? * costs in the beginning inventory and costs added during the period 15. Which of the following is the step in which materials, labor, and overhead are detailed? * determining the cost per equivalent units 16. The journal entry to record the $500 of work in process ending inventory that consists of $300 of direct materials, $50 of manufacturing overhead, and $150 od direct labor is which of the following? * Work in Process Inventory Materials Inventory Wages Payable Manufacturing Overhead (As incurred or applied) 17. Assigning indirect costs to departments is completed by * applying the predetermined overhead rate 18. In a process costing system, which account shows the overhead assigned to the department? * work in process inventory 19. In a process cost system, factory depreciation expense incurred is debited to * manufacturing overhead ## Chapter 6 ### Multiple Choice 1. Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products? * $402,500 2. TyeDye Lights makes two products: Party and Holiday. It takes 80,900 direct labor hours to manufacture the Party Line and 93,500 direct labor hours to manufacture the Holiday Line. Overhead consists of $225,000 in the machine setup cost pool and $149,960 in the packaging cost pool. The machine setup pool has 52,000 setups for the Party product and 98,000 setups for the Holiday product. The packaging cost pool has 26,000 parts in the Party product and 39,200 parts for the Holiday product. Using the traditional cost method of direct labor hours, what is the predetermined overhead rate? * $2.30 per direct labor hour 3. Which is not a step in analyzing the cost driver for manufacturing overhead? * identify the correlation between the potential driver and manufacturing overhead 4. Overhead costs are assigned to each product based on * a predetermined overhead rate for a single cost driver 5. Which of the following is a reason a company would implement activity-based costing? * They want to improve the data on which decisions are made. 6. Which is the correct formula for computing the overhead rate? * estimated overhead for the activity/estimated use of the cost driver for the activity 7. A company anticipates the cost to heat the building will be $21,000. Product A takes up 500 square feet of space, while Product B takes up 200 square feet. The activity rate per product using activity-based costing would be which of the following? * $11/square foot 8. A company calculated the predetermined overhead based on an estimated overhead of $70,000, and the activity for the cost driver was estimated as 2,500 hours. If product A utilized 1,350 hours and product B utilized 1,100 hours, what was the total amount of overhead assigned to the products? * $37,800 9. Which is not a step in activity-based costing? * assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the product 10. What is the proper order of tasks in an ABC system? * identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products 11. Which is not a task typically associated with ABC systems? * applying a single cost rate 12. Which statement is correct? * Activity-based cost systems are more accurate than traditional cost systems. 13. Activity-based costing systems: * limit the number of cost pools 14. Activity-based costing is preferable in a system: * with multiple, diverse products 15. Absorption costing is also referred to as: * full costing 16. Under variable costing, a unit of product includes which costs? * direct material, direct labor, and variable manufacturing overhead 17. Under absorption costing, a unit of product includes which costs? * direct material, direct labor, and fixed manufacturing overhead 18. A downside to absorption costing is: * that it is not really useful for managerial decisions 19. When the number of units in ending inventory increases through the year, which of the following is true? * Net income is higher for absorption costing than for variable costing. 20. Product costs under variable costing are typically: * lower than under absorption costing ## Chapter 7 ### Multiple Choice 1. Which of the following is not a part of budgeting? * preventing net operating losses 2. Which of the following is an operating budget? * production budget 3. Which of the following is a finance budget? * cash budget 4. Which approach is most likely to result in employee buy-in to the budget? * bottom-up approach 5. Which approach requires management to justify all its expenditures? * zero-based budgeting 6. Which of the following is true in a bottom-up budgeting approach? * Every expense needs to be justified. 7. The most common budget is prepared for a * year 8. Which of the operating budgets is prepared first? * sales budget 9. The direct materials budget is prepared using which budget’s information? * production budget 10. Which of the following is not an operating budget? * cash budget 11. Which of the following statements is not correct? * The sales budget is typically the first budget prepared. 12. The units required in production each period are computed by which of the following methods? * adding beginning inventory to budgeted sales and subtracting desired ending inventory 13. The cash budget is part of which category of budgets? * finance budget 14. Which is not a section of the cash budget? * allowance for uncollectible accounts 15. Which budget is the starting point in preparing financial budgets? * the budgeted income statement 16. Which of the following includes only financial budgets? * cash budget, budgeted balance sheet, capital asset budget 17. Which budget evaluates the results of operations at the actual level of activity? * flexible budget 18. What is the main difference between static and flexible budgets? * The fixed manufacturing overhead is adjusted for units sold in the flexible budget.