Managerial Accounting

1.

Which of the following companies would use a job-order costing system?

A.
Construction
B.
Metal producer
C.
Chemical producer
D.
Plastic producer
2.Which is Variable Cost?
A.
Changes in proportion to changes in volume or activity (no change per unit)
B.
Changes per unit (no changes in proportion to changes in volume or activity)
3.Assume a company incurs $100,000 for total variable costs and $150,000 for total fixed costs
to produce 10,000 units. What would the total cost be to produce 12,000 units?
A.
$270,000
B.
$300,000
C.
$250,000
D.
$280,000
4.What type of cost is rent?
A.
Variable
B.
Fixed
C.
Mixed
D.
Step-variable
5.Which is Product Costs?
A.
Costs associated with securing and filling customer orders ex. advertising, sales
salaries, depreciation of sales equipment
B.
Costs associated with the firm's general management ex. HR, accounting, corporate
headquarters, and other support costs
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing
C.
overhead
D.
Costs expensed in period incurred identified with accounting periods ex. selling and
administrative expenses
6.Which of the following statements about the relevant range is true?
A.
Cost functions outside the relevant range are usually linear
B.
The relevant range is the normal length of time in company's accounting period
C.
Estimates outside the relevant range are useful
D.
Cost functions within the relevant range are assumed to be linear
7.Which of the following is not a period cost?
A.
Overtime premium
B.
Commissions
C.
Advertising costs
D.
General office salaries
8.Sunks Costs are costs to be incurred in near future that are impossible to avoid.
A.
True
B.
False
9.Which is Fixed Cost?
A.
Changes in proportion to changes in volume or activity (no change per unit)
B.
Changes per unit (no changes in proportion to changes in volume or activity)
10.Decision making relies on incremental analysis - an analysis of the revenues that increase
(decrease) and the costs that increase (decrease) if a decision alternative is selected.
A.
True
B.
False
11.A form used to accumulate the cost of producing products is called a(n)
A.
job cost sheet.
B.
material requisition.
C.
time sheet.
D.
purchase order.
12.Budgets for Planning: Which is Production Budget?
A.
Indicates planned income
B.
Indicates planned cash inflows and outflows
C.
Indicates the planned quantity of production and expected costs
13.Costs incurred in the past are:
A.
Opportunity Costs
B.
Sunk Costs
C.
Direct Costs
D.
Variable Costs

14.Which of the following is an example of a fixed cost?

A.
Materials
B.
Commissions
C.
Depreciation
D.
Direct Labor
15.Which of the following is part of planning?
A.
Departmental performance report.
B.
Incremental analysis
C.
Cash-flow budget.
D.
Management by exception.
16.Incremental Analysis: -Differences in revenues and costs between alternatives are
incremental. -Incremental revenue minus incremental cost equals incremental profit.
A.
True
B.
False
17.Cost of Goods Sold = Beginning Finished Goods + Cost of Goods Manufactured - Ending
Finished Goods
A.
True
B.
False
18.Which are associated with Job Order Costing?
A.
Companies produce goods to a customer's unique specifications
B.
Cost of job accumulated on job cost sheet
C.
Companies produce large quantities of identical items
D.
Cost accumulate by each operation
E.
Unit cost of items determined dividing costs of production by number of units produced
19.Assumptions in CVP Analysis: Which are true?
A.
Assumptions can affect the validity of the analysis
B.
Costs can be separated into fixed and variable components
C.
Total fixed cost and total variable cost do not change over the levels of interest
D.
Multiproduct analysis assumes the product mix does not change
20.Match
can see cost relationships visually
linear estimation connects high and low volume observations
classify costs into variable and fixed pools
Linear estimation fit to observed values.
A. Account analysis
B. Scattergraph
C. High-low method
D. Regression analysis
21.What are step costs?
A.
Fixed for a range of output, but increase when upper bound of range is exceeded
B.
Variable for a certain range
C.
Both fixed and variable
22.The cost of a ume is an example of a(n):
A.
Opportunity cost.
B.
Variable cost.
C.
Fixed cost.
D.
Sunk cost.
23.The schedule of cost of goods manufactured is an analysis of which account?
A.
Finished goods
B.
Cost of goods sold
C.
Work in process
D.
Direct materials
24.National Production Company applies manufacturing overhead based on direct labor cost.
Information concerning manufacturing overhead and labor for August follows:
Estimated
Actual
Overhead cost
$174,000
$171,100
Direct labor hours
5,800
5,900
Direct labor cost
$87,000
$89,975
How much is the predetermined overhead rate?
A.
B.
C.
D.

$2.00
$1.90
$30.00
$1.93

25.Westerhouse manufactures refrigerators. Which of the following items is most likely

considered an indirect material cost for Westerhouse?
A.
Supplies used by the factory janitor
B.
Gasoline costs for trucks used to deliver products to customers
C.
Glass shelves for the refrigerators
D.
Refrigerator motors
26.Which costs are only fixed?
A.
Direct Material
B.
Direct Labor
C.
Manufacturing Overhead
D.
Selling Cost
E.
General and Administrative Cost
27.Which of the following is added directly to work in process?
A.
Indirect labor
B.
Indirect materials
C.
Factory depreciation
D.
Direct labor
28.What is the break even point?
A.
Number of units sold that allow the company to neither earn a profit nor incur a loss
B.
The point where company's lose money
29.Which of the following will decrease the break-even point?
A.
Increasing fixed costs
B.
Decreasing unit variable costs
C.
Decreasing unit sales price
D.
Decreasing unit contribution margin
30.The wages lost when you give up your job to attend school full-time is an example of a(n):
A.
Fixed costs.
B.
Opportunity cost.
Direct cost.
C.
D.
Sunk cost.
31.Which of the following is a characteristic of managerial accounting?
A.
Must comply with GAAP
B.
Generates reports primarily for internal users
C.
Contains monetary information only
D.
Emphasizes historical transactions
32.What is the margin of safety?
A.
The difference between the expected level of sales and break-even sales
B.
The difference between the actual level of sales and break-even sales
C.
The number of break-even sales
33.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be
cooked and sold.
Wings, breading, and
$4,900
sauce
Direct labor (Variable)
3,500
Rent
1,100
Depreciation
900
Other fixed costs
400
Each wing sells for $0.80 each. What is the budgeted fixed cost per unit?
A.
$0.35
B.
$0.80
C.
$0.10
D.
$0.17
34.Wilson Companys managers investigate departures from the budget that appear to be
significant. What principle is being followed?
A.
Small amounts do not matter
B.
Incremental analysis
C.
You get what you measure
D.
Management by exception
35.What is overapplied overhead and how is it eliminated?
A.
Applied overhead>actual overhead; if small amount=debit manufacturing overhead
and credit cost of goods sold; if large amount=apportion and close work in process,
finished goods, and cost of goods sold
B.
Applied overhead
C.
Applied overhead>estimated overhead;if small amount=debit manufacturing overhead
and credit cost of goods sold; if large amount=apportion cost of goods sold
D.
Applied overhead

36.What is underapplied overhead?

A.
Actual overhead>applied overhead
B.
Applied overhead>actual overhead
C.
Applied overhead<="" overhead="">
D.
Actual overhead>estimated overhead
37.If variable costs are 60% of sales and fixed costs are $612,000, the break-even point in
dollars is:
A.
$ 367,200
B.
$ 1,530,000
C.
$ 244,800
D.
$ 1,020,000
38.The goal of managerial accounting is to provide the information that managers need for all of
the following EXCEPT:
A.
Planning
B.
Control
C.
Decision Making
D.
Review
39.Which of the following is a manufacturing cost?
A.
Indirect materials
B.
Advertising expense
C.
Depreciation of the office equipment used by the sales staff
D.
Salary of clerical workers
40.What is the cost-volume-profit equation?
A.
Profit=SP(selling price)x-VC(variable cost)x-TFC(total fixed cost)
B.
Profit=SP(selling price)x+VC(variable cost)x-TFC(total fixed cost)
C.
Profit=SP(selling price)x+VC(variable cost)x+TFC(total fixed cost)
41.Which of the following is most likely to be a variable cost?
A.
Depreciation
B.
Cost of Materials
C.
Rent
D.
Advertising
42.What type of cost is indirect materials?
A.
Sunk
B.
Variable
C.
Mixed cost (semivariable)
D.
Fixed
43.Which are modern manufacturing practices?
A.
Computer-controlled manufacturing
B.
Lean manufacturing
C.
Total quality management
D.
Just in time production
44.Multiproduct Analysis: Contribution Margin Approach vs. Contribution Margin Ratio Approach
Which are associated with Contribution Margin Ratio Approach?
A.
Used if items sold are similar
B.
Calculate a weighted average contribution margin per unit
C.
Use the weighted average contribution margin in the profit formula to calculate
breakeven point and target sales
D.
The relative product mix is then used to calculate the required sales of individual items
E.
Products are substantially different
F.
Calculate total company contribution margin ratio
G.
Use total company contribution margin ratio to compute required sales in dollars
H.
Total company fixed costs (common costs) are included
45.What are mixed costs?
A.
Costs that have both variable and fixed elements
B.
Do not change
C.
Vary depending on units
D.
Fixed for a certain range
46.Which is General and Administrative Costs?
A.
Costs associated with securing and filling customer orders ex. advertising, sales
salaries, depreciation of sales equipment
B.
Costs associated with the firm's general management ex. HR, accounting, corporate
headquarters, and other support costs
C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing
overhead
D.
Costs expensed in period incurred identified with accounting periods ex. selling and
administrative expenses

47. What is the order of the Value Chain?

Inbound Logistics
Customer Service
Marketing and Sales
Operations
Outbound logistics
A.
B.
C.
D.
E.
48.Multiproduct Analysis: Contribution Margin Approach vs. Contribution Margin Ratio Approach
Which are associated with Contribution Margin Approach?
A.
Used if items sold are similar
B.
Calculate a weighted average contribution margin per unit
C.
Use the weighted average contribution margin in the profit formula to calculate
breakeven point and target sales
The relative product mix is then used to calculate the required sales of individual items
D.
E.
Products are substantially different
F.
Calculate total company contribution margin ratio
G.
Use total company contribution margin ratio to compute required sales in dollars
H.
Total company fixed costs (common costs) are included
49.Which of the following is not a product cost?
A.
Direct materials
B.
Depreciation on finished goods warehouse
C.
Insurance on factory building
D.
Indirect labor
50.Which of the following documents would serve as a subsidiary ledger to the work in process
account?
A.
Materials requisition
B.
Times sheets
C.
Job cost sheet
D.
Overhead budget
51.What are the two ways to calculate contribution margin ratio?
A.
(sales-TVC)/sales or (SP-VC)/SP
B.
(sales+TVC)/sales or (SP+VC)/SP
C.
(sales+TVC)/sales or (SP-VC)/SP
52.Which costs can be variable or fixed?
A.
Selling Cost
B.
General and Administrative Cost
C.
Direct Material
D.
Direct Labor
E.
Manufacturing Overhead
53.How do you calculate overhead allocation rate?
A.
Estimated overhead divided by estimated quantity of the allocation base
B.
Actual overhead multiplied by estimated overhead
C.
Estimated overhead divided by actual overhead
D.
None of the above
54.Opportunity Costs are the values of benefits foregone when selecting one alternative over
another.
A.
True
B.
False
55.Applied overhead is debited to which account?
A.
Manufacturing overhead
B.
Work in process
C.
Cost of goods sold
D.
Finished goods
56.What is the contribution margin?
A.
Total revenue-total variable costs
B.
Total revenue-total fixed costs
C.
Total revenue-finished goods

57.Which are practices in Just in Time production (JIT)?

A.
Minimize raw materials and work in process inventories
B.
Develop flexible, balanced production that is flexible and allows for smooth, rapid flow
of materials
C.
Concentrate on improving quality
D.
Implications for over- and underapplied overhead
E.
Focus on cost of goods sold
F.
Maximize work in process inventories
58.Which of the following is not a reason that current period performance results may differ from
the companys budget for that period?
A.
The plan may not have been followed properly.
B.
The plan may not have been well thought-out.
C.
Changing circumstances may have made the plan out of date.
D.
All of the above are reasons that actual results may differ from the companys plan.
59.Which of the following are associated with Control?
A.
Specifies the resources needed to achieve the company goals
B.
Communicate's a company's goals to employees
C.
Evaluating managers to determine how their performance should be rewarded or
punished
D.
Evaluating operations to provide information as to whether they should be changed or
not
60.Which of the following is not part of the planning and control process?
A.
Preparing financial statements.
B.
Deciding whether to reward or punish managers.
C.
Implementing the plan.
D.
Comparing actual results to planned results.
61.A company purchases machinery costing $60,000 in October of 2014. Five years later,
management discovers better, more efficient machine that could be purchased for $80,000
to replace the existing machine. Management has determined that they are able to sell the
original machine for $15,000. In making the decision about buying the new machine, how
much are total sunk costs?
A.
$60,000
B.
$80,000
C.
$15,000
D.
$20,000
62.Which of the following is a direct cost in relation to the cost of teaching the managerial
accounting course in a college?
A.
The cost of the paper that is given as handouts in the class
B.
The cost of the electricity to light the classroom
C.
The cost of the registration system
D.
The cost of the financial aid department of the college
63.Which of the following is a selling cost?
A.
Property taxes on factory
B.
Janitorial costs for administrative offices
C.
Indirect labor costs
D.
Depreciation on finished goods warehouse
64.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be
cooked and sold.
Wings, breading, and
$4,900
sauce
Direct labor (Variable)
3,500
Rent
1,100
Depreciation
900
Other fixed costs
400
Each wing sells for $0.80 each. What is the budgeted total fixed cost?
A.
$7,300
B.
$2,400
C.
$8,400
D.
$10,800
65.Comparing actual results to expected results is an example of:
A.
Decision making.
B.
Planning
C.
Incremental analysis.
D.
Control.

66.Cost of Goods Manufactured is $200,000, beginning Finished Goods is $50,000, ending

Finished Goods is $100,000, and ending Work In Process is $10,000. What is the Cost of
Goods Sold?
A.
$100,000
B.
$250,000
C.
$50,000
D.
$150,000
67.Direct costs are directly traceable to a product, activity, or department, while indirect costs
are not.
A.
True
B.
False
68.Budgets for Planning: Which is Cash Flow Budget?
A.
Indicates planned income
B.
Indicates planned cash inflows and outflows
C.
Indicates the planned quantity of production and expected costs
69.Cost of Goods Available for Sale = Beginning Finished Goods + Cost of Goods
Manufactured
A.
True
B.
False
70.Operating Leverage: Level of fixed versus variable costs in a company A company with a
high level of fixed costs has a high operating leverage Companies with high operating
leverage have large fluctuations in profit when sales increase or decrease These
companies are seen as more risky High operating leverage is better when sales are
expected to increase
A.
True
B.
False
71.Budgets for Planning: Which is Profit Budget?
A.
Indicates planned income
B.
Indicates planned cash inflows and outflows
C.
Indicates the planned quantity of production and expected costs
72.A cost which is directly traceable to a product, activity, or department is a(n)
A.
The cost of the paper that is given as handouts in the class
B.
The cost of the electricity to light the classroom
C.
The cost of the registration system
D.
The cost of the financial aid department of the college
73.Constraints Due to shortages of space, equipment or labor there can be constraints on how
many items can be produced Utilize contribution margin per unit to analyze situations
Calculate contribution margin per unit of constraint Produce product with highest
contribution margin per unit of constraint Linear programming can solve multiple constraints
A.
True
B.
False
74.Which of the following is most likely to be a fixed cost?
A.
Cost of Materials
B.
Rent
C.
Assembly Labor Cost
D.
Commissions
75.Which are true about Managerial Accounting?
A.
Is directed at internal users
B.
Must comply with GAAP standards
C.
Presents very detailed information
D.
Presents only monetary information
E.
Places emphasis on future
76.A factor that limits the level of production is called a:
A.
Constraint
B.
Restraint
C.
Limitation
D.
Restriction
77.Which is Selling Costs?
A.
Costs associated with securing and filling customer orders ex. advertising, sales
salaries, depreciation of sales equipment
B.
Costs associated with the firm's general management ex. HR, accounting, corporate
headquarters, and other support costs
C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing
overhead
D.
Costs expensed in period incurred identified with accounting periods ex. selling and
administrative expenses

78.Which of the following is NOT a goal of managerial accounting?

A.
Provide information needed for decision making
B.
Provide information needed for creditors
C.
Provide information needed for planning
D.
Provide information needed for control
79.What are discretionary fixed costs? committed fixed costs?
A.
Management can easily change them (research and development); cannot easily be
changed (rent, insurance)
B.
Management can't easily change them (research and development); can easily be
changed (rent, insurance)
C.
Management can't easily change them (research and development); cannot easily be
changed
80.Which of the following are associated with Planning?
A.
Specifies the resources needed to achieve the company goals
B.
Communicate's a company's goals to employees
C.
Evaluating managers to determine how their performance should be rewarded or
punished
D.
Evaluating operations to provide information as to whether they should be changed or
not
81.When a job is completed, the transaction is recorded with a
A.
debit to Work in Process Inventory and a credit to Cost of Goods Sold.
B.
debit to Finished Goods Inventory and a credit to Work in Process Inventory.
C.
debit to Cost of Goods Sold and a credit to Finished Goods Inventory.
D.
debit to Work in Process Inventory and a credit to Finished Goods Inventory.
82.What is the margin of safety ratio?
A.
(margin of safety)/(expected sales)
B.
(expected sales)/(margin of safety)
C.
(margin of safety)/(actual sales)
84.Cost of Goods Manufactured = Beginning Work In Progress + Current Manufacturing Cost Ending Work In Progress
A.
True
B.
False
85.Kevins Candies produced and sold 600 boxes of chocolate covered popcorn last month and
had total variable costs of $2,100 that reflected the costs of chocolate and popcorn
(ingredients). Each box of popcorn sells for $12.00. If production and sales are expected to
increase by 15% next month, which of the following statements is true?
A.
Total variable costs are expected to be $ 2,415
B.
Variable cost per unit is expected to be $4.025
C.
The incremental cost per unit is costs expected to be $0.35
D.
Unit variable costs are expected to be $3.05
86.How is underapplied overhead eliminated?
A.
If small amount=debit cost of goods sold and credit manufacturing overhead
if large amount=apportion and close work in process, finished goods and cost of
goods sold
B.
If small amount=credit manufacturing overhead
if large amount=apportion and close finished goods and cost of goods sold
C.
If small amount=credit cost of goods sold and credit manufacturing overhead
if large amount=apportion and close work in process, finished goods and cost of
goods sold
D.
If small amount=debit cost of goods sold and credit manufacturing overhead
if large amount=apportion and close work in process
87.Which of the following is an example of a variable cost?
A.
Direct labor (labor cost that are directly traceable to a product)
B.
Depreciation
C.
Rent
D.
Salaries
88.Which are nonmanufacturing costs?
A.
Selling Costs
B.
General and Administrative Costs
C.
Product Costs
D.
Period Costs
89.Work in Process Inventory includes the cost of
A.
Goods which are only partially completed.
B.
All goods sold during the period.
C.
All materials purchased during the last period.
D.
All goods which are completed and ready to sell.

90."What If" Analysis examines what will happen if an action is foregone

A.
True
B.
False
If action is taken
91.Which costs are only variable?
A.
Direct Material
B.
Direct Labor
C.
Manufacturing Overhead
D.
Selling Cost
E.
General and Administrative Cost
92.The cost of goods manufactured is credited to which of the following accounts?
A.
Cost of goods sold
B.
Finished goods
C.
Work in process
D.
Raw materials
93.What is the relevant range?
A.
Range of activity for which assumptions as to how costs behave are reasonably valid
B.
Range of money available
C.
Range of units available to be shipped
94.A job-order costing system is most likely to be used by a
A.
soft-drink bottler.
B.
breakfast cereal manufacturer.
C.
paint manufacturer.
D.
caterer.
95.What type of cost is utilities?
A.
Variable
B.
Semivariable
C.
Fixed
D.
Mixed
96.Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be
cooked and sold.
Wings, breading, and
$4,900
sauce
Direct labor (Variable)
3,500
Rent
1,100
Depreciation
900
Other fixed costs
400
Each wing sells for $0.80 each. How much is the budgeted variable cost per unit?
A.
$0.35
B.
$0.45
C.
$0.80
D.
$10,800
97.Variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00
in a period when 4,000 units are produced. If production is actually 5,100 units, what is the
expected total cost of the units produced?
A.
$52,000
B.
$60,800
C.
$66,300
D.
$40,800
98.An immaterial amount of underapplied overhead is debited to which of the following
accounts?
A.
Manufacturing overhead
B.
Cost of goods sold
C.
Work in process
D.
Finished goods
99.Which of the following accounts does not appear on the balance sheet?
A.
Raw Materials Inventory
B.
Finished Goods Inventory
C.
Work in Process Inventory
D.
Cost of Goods Manufactured
100.Product costs
A.
Are also called period costs.
B.
Are considered an asset until the finished goods are sold.
C.
Become an expense in the period the costs are incurred.
D.
All of these answer choices are correct.

101.Manufacturing overhead is the cost of manufacturing activities other than direct materials
and direct labor (all indirect costs).
A.
True
B.
False
102.A material amount of overapplied overhead is debited to which of the following accounts?
A.
Manufacturing overhead
B.
Work in process
C.
Finished goods
D.
Cost of goods sold
103.GAAP requires that inventories and cost of goods sold be reported at full cost. Which of the
following is defined as full cost?
A.
Direct materials, direct labor, and variable overhead
B.
Direct materials, direct labor, and fixed overhead
C.
Direct materials, direct labor, and other variable costs
D.
Direct materials, direct labor, and total overhead
104.Managerial accounting is designed for use by:
A.
Internal users
B.
Stockbrokers
C.
External users
D.
Clients
105.Multiproduct Analysis Break-Even Sales in units: (Profit+Total Fixed Costs)/(Weighted
average contribution margin per unit)
A.
True
B.
False
106.Which of the following costs is expensed as incurred?
A.
Direct materials
B.
Sales salaries
C.
Indirect labor
D.
Factory depreciation
107.Which are production of goods costs?
A.
Selling Costs
B.
General and Administrative Costs
C.
Product Costs
D.
Period Costs
108.Which are associated with Process Costing?
A.
Companies produce goods to a customer's unique specifications
B.
Cost of job accumulated on job cost sheet
C.
Companies produce large quantities of identical items
D.
Cost accumulate by each operation
E.
Unit cost of items determined dividing costs of production by number of units produced
109.Management by exception is an example of:
A.
Decision making.
B.
Incremental analysis.
C.
Planning
D.
Control.
110.Which is Period Costs?
A.
Costs associated with securing and filling customer orders ex. advertising, sales
salaries, depreciation of sales equipment
B.
Costs associated with the firm's general management ex. HR, accounting, corporate
headquarters, and other support costs
C.
Costs assigned to goods produced ex direct materials, direct labor, and manufacturing
overhead
D.
Costs expensed in period incurred identified with accounting periods ex. selling and
administrative expenses