places emphasis on special purpose information
Managerial Accounting
planning, directing, and controlling
The management of an organization performs several broad functions. They are...
ceos and cfos must certify that financial statements give a fair presentation of the company's operating results
After passage of the Sarbanes-Oxley Act of 2002:
product cost- not manufacturing overhead or period cost
Direct materials are a:
depreciation on testing equipment
Which of the following costs would a computer manufacturer include in manufacturing overhead?
sales manager's salary
Which of the following is not an element of manufacturing overhead
product cost
Indirect labor is a:
Wages, paid to a cost accounting department supervisor
Which of the following costs are classified as a period cost
$550,000
For the year, Redder Company has CGM of $600,000, beginning FG Inv of $200,000, and EFG Inv of $250,000. The CGS are:
a merchandising company and a manufacturing company
Cost of goods available for sale is step in the calculation of cost of goods sold of:
raw materials and WIP only
A cost of goods manufactured schedule shows beginning and ending inventories for:
Beg WIP+Total Man Costs-End WIP
The formula to determine the cost of goods manufactured is:
FG inv, WIP inv, raw materials
A manufacturer may report three inventories on its balance sheet: 1. raw materials 2. WIP 3. FG. Indicate what sequence these inventories appear on a balance sheet
activity based costing
Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?
increasing deregulation, increasing global competition, and a shift toward providing services rather than goods
Examples of recent trends in the economic environment of the US businesses are:
product costs
Cost accounting involves the measuring, recording, and reporting of:
it manufactures products with unique characteristics
a company is more likely to use a job order costing system if:
raw materials inventory
in accumulating raw materials costs, companies debit the cost of raw materials purchased in a perpetual system to:
factory labor
When incurred, factory labor costs are debited to:
parallels the physical flow of materials as they are converted into finished goods
the flow of costs in job order costing:
the materials are issued by the materials storeroom
Raw materials are assigned to a job when:
material requisition slips, time tickets, and the predetermined overhead rate
the source documents for assigning costs to job cost sheets are:
debit finished goods inventory
in recording the issuance of raw materials in a job order cost system, it would be incorrect to:
work in process inventory and a credit to factory labor
the entry when direct factory labor is assigned to jobs is a debit to:
direct labor cost, direct labor hours, or machine hours
the formula for computing the predetermined manufacturing overhead rate is estimated by an expected annual operating activity, expressed as:
$144,000
In crawford company, the predetermined overhead rate is 80% of direct labor cost. During the month, crawford incurs $210,000 of factory labor costs, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead debited to WIP inventory
debit finished goods inventory at $4,500 and credit WIP inventory $4,500
mynex company completes job #26 at a cost of $4,500 and later sells it for $7,000 cash. A correct entry is:
from the WIP inventory account
at the end of an accounting period, a company using a job order costing system prepares the cost of goods manufactured:
makes an adjusting entry by debiting CGS for $1,200 and crediting MO for $1,200
at end of year a company has a $1,200 debit balance in MO. The company:
actual overhead is greater than applied
manufacturing overhead is underapplied if:
the products produced are heterogenous in nature
Which of the following items is NOT a characteristic of a process cost system:
manufacturing costs are assigned the same way in a job order and in a process cost system
indicate which of the statements is NOT correct
WIP, finished goods, CGS
in a process cost system, the flow of costs is:
often debits two or more WIP inventory
in making the journal entry to assign raw materials costs, a company:
is assigned to a WIP account for each production department on the basis of predetermined overhead rate
in a process cost system, manufacturing overhead:
labor costs and overhead costs
conversion costs are the sum of:
23,000
the mixing department's output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending WIP 60% complete to materials and conversion costs. The equivalent units of production are:
7,000
in RYZ company, there are zero units in beginning WIIP, 7,000 units started into production, and 500 units in ending WIP 20% completed. The physical units to be accounted for are:
26,000 and 24,000
mora company has 2,000 units in beginning WIP, 20% complete to conversion costs, 23,000 units transferred out to Finished goods, and 3,000 units in ending WIP 33 1/3% complete as to conversion costs. The beginning and ending inventory is fully complete as
$5.00
fortner company has no beginning WIP; 9,000 units are transferred out and 3,000 units in ending WIP are one third finished as to conversion costs and fully complete as to materials cost. If total materials cost is $60,000, the unit materials cost is:
$55,000
largo company has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending WIP, 40% complete as to conversion costs, and fully complete as to materials cost, the total cost assignable to ending WIP inventory is
shows both the production quantity and cost data related to a department
a production cost report:
units started into production+units in beginning WIP
in a production cost report, units to be accounted for are calculated as:
28,000 and 27,500
hollins company uses the FIFo method to compute equivalent units. It has 2,000 units in beginning WIP, 20% complete as to conversion costs, 25,000 units started and completed and 3,000 units in ending WIP, 30% complete as to conversion costs. All units ar
$5.00
KLM company uses the FIFO method to compute equivalent units. It has no beginning WIP; 9,000 units are started and completed and 3,000 units in ending WIP are one third completed. All material is added at the beginning of the process. If total materials c
$55,00
toney company uses the FIFo method to compute equivalent units. It has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending WIP, 100% complete to materials and 40% complete to conversion costs, the total cost as
vary in total directly and proportionately with changes in the activity level and remain the same per unit at every activity level
variable costs are costs that
the range over which the company expects to operate during a year
the relevant range is
variable cost element and a fixed cost element
mixed costs consist of a:
between $50 and $100
your phone service provider offers a plan that is classified as a mixed cost. the cost per month for 1,000 minutes is $50. If you use 2,000 minutes this month, your cost will be:
$.075 variable and $450 fixed
kendra corporation's total utility costs during the past year were $1,200 during its highest month and $600 during its lowest month. These costs corresponded with 10,000 units of production during the high month and 2,000 units during the low month. What
fixed costs per unit
one of the following is NOT involved in CVP analysis. That factor is:
net income will always be identical on both
when comparing a traditional income statement to a CVP income statement:
is revenue remaining after deducting variable costs and may be expressed as contribution margin per unit
contribution margin
$700,000
cournot company sells 100,000 wrenches for $12 a unit. Fixed costs are $300,000, and net income is $200,000. What should be reported as variable expenses in the CVP income statement?
$200,000
gossen company is planning to sell 200,000 plier for $4 per unit. The contribution margin ratio is 25%. If gossen will break even at this level of sales, what are the fixed costs?
will be $30
brownstone company's contribution margin ratio is 30%. If brownstone's sales revenue is $100 greater than its break even sales in dollars, its net income:
variable costs+fixed costs+target net income
the mathematical equation for computing required sales to obtain target net income is: Required sales=
actual sales-break even sales
margin of safety is computed as:
30%
marshall company had actual sales of $600,000 when break even sales were $420,000. What is the margin of safety ratio?
determine and evaluate, make decision, review results
the three steps in management's decision making process are 1. review results of decision 2. determine and evaluate possible courses of action, and 3. make the decision. The steps are prepared in the following order:
change under alternative courses of action
incremental analysis is the process of identifying the financial data that:
both financial and nonfinancial information
in making business decisions, management ordinarily considers:
fixed costs only
a company is considering the following alternatives: revenues, variable costs, and fixed costs. Which of the following are relevant in choosing between alternatives?
increase $12,000
it costs a company $14 of variable costs and $6 of fixed costs to produce product Z200 that sells for $30. A foreign buyer offers to purchase 3,000 units at $18 each. If the special offer is accepted and produced with unused capacity, net income will:
decrease $3,000
It costs a company $14 of variable costs and $6 of fixed costs to produce product Z200. Product Z200 sells for $30. A buyer offers to purchase 3,00 units at $18 each. The seller will incur special shipping costs of $5 per unit. If the special offer is acc
add $30,000 to other costs in the Make column
Jobart company is currently operating at full capacity. It is considering buying a part from an outside supplier rather than making it in house. If jobart purchases the part, it can use the released productive capacity to generate additional income of $30
manufacturing costs that will be saved, the purchase price of the units, and opportunity costs
in a make or buy decision, relevant costs are:
$4,000
derek is performing incremental analysis in a make or buy decision for item x. If derek buys item x, he can use its released productive capacity to produce item z. Derek will sell item z for $12,000 and incur production costs of $8,000. Derek's incrementa
incremental processing costs
the decision rule in a sell or process further decision is: process further as long as the incremental revenue from processing exceeds
process further; net income per unit will be greater
walton inc. makes an unassembled product that it currently sells for $55. Production costs are $20. Walton is considering assembling the production and selling it for $68. The cost to assemble the product is estimated at $12. What decision should Walton m
sunk cost
in a decision to retain or replace equipment, the book value of the old equipment is a:
fixed expenses allocated to the eliminated segment will have to be absorbed by other segments
if an unprofitable segment is eliminated:
$10,000 decrease
a segment of Hazard inc. has the following data: sales $200,000, variable expenses 140,000, fixed expenses 100,000. If this segment is eliminated , what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated
the coordination of activities is facilitated
which of the following is not a benefit of budgeting?
the primary method of communicating agreed upon objectives throughout an organization
a budget:
research analysis
the essentials of effective budgeting do Not include:
same time period
compared to budgeting, long-range planning generally has the:
not the starting point for the master budget
a sales budget is:
desired ending finished goods units less beginning finished goods units
the formula for the production budget is budgeted sales units plus:
9,500
direct materials inventories are kept in pounds in byrd company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired ending inventory is 2,200 pounds, the total pounds, the to
no correct answer is given
the formula for computing the direct labor budget is to multiply the direct labor cost per hour by the:
capital expenditure budget
each of the following budgets is used in preparing the budgeted income statements EXCEPT the:
the end product of the operating budgets
the budgeted income statement is:
developed from the budgeted balance sheet for the preceeding year and the budgets for the current year, the last operating budget prepared, and used to prepare the cash budget
the budgeted balance sheet is:
beginning cash balance+cash receipts-cash disbursements+/-financing=ending cash balance
the format of a cash budget is:
$78,000
expected direct materials purchases in read company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash paymen
a merchandise purchases budget replaces the production budget, and the manufacturing budgets are not applicable
the budget for a merchandiser differs from a budget for a manufacturer because:
begin the budgeting process by budgeting expenditures rather than receipts
in most cases, not for profit entities:
using static budgets
budgetary control involves all but one of the following:
daily, weekly, and monthly
budget reports are prepared:
sales report
a production manager in a manufacturing company would most likely receive a:
a projection of budget data at a single level of activity
a static budget is:
fixed
a static budget is useful in controlling costs when cost behavior is:
$30,000 fixed plus $6 per direct labor hour variable
at zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000. At 10,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000. F
$400 unfavorable
at 9,000 direct labor hours, the flexible budget for indirect materials is $27,000. If $28,000 of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials:
directly controls
under responsibility accounting, the evaluation of a manager's performance is based on matters that the manager:
cost centers, profit centers, and investment centers
responsibility centers include
include only controllable costs
responsibility reports for cost centers:
a cost center
the accounting department of a manufacturing company is an example of:
controllable costs and revenues
to evaluate the performance of a profit center manager, upper management needs detailed information about:
controllable margin
in a responsibility report for a profit center, controllable fixed costs are deducted from contribution margin to show:
controllable margin dollars and average operating assets
in the formula for return on investment (ROI), the factors for controllable margin and operating assets are:
reducing variable and/or controllable fixed costs
a manager of an investment center can improve ROI by:
budgets are a total amount and standards are a unit amount
standards differ from budgets in that:
are predetermined unit costs which companies use as measures of performance
standard costs:
management must use a static budget
the advantages of standard costs include all of the following except:
allow for rest periods, machine breakdowns, and setup time
normal standards:
a management decison
the setting of standards is:
MPV= (actual quantity
actual price)-(Standard quantity
standard price)
This formula is incorrect:
$300 unfavorable
in producing a product AA, 6,300 pounds of direct materials used at a cost of $1.10 per pound. The standard was 6,000 pounds at $1.00 per pound. The direct materials quantity variance is:
quantity variance is $1,600 favorable
inn producing ZZ, 14,800 direct labor hours were used at a rate of $8.20 per hour. The standard was 15,000 hours at $8.00 per hour. Based on these data, the direct labor:
standard hours allowed for the work done is the measure used in computing the variance
which of the following is correct about the total overhead variance?
actual overhead less overhead applied
the formula for computing the total overhead variance is:
they should only be sent to the top level of management
which of the following is INCORRECT about variance reports?
both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amount
in using variance reports to evaluate cost control, management normally looks into:
report inventory and CGS at standard cost as long as there are no significant differences between actual and standard cost
generally accepted accounting principles allow a company to:
earnings per share
which of the following would NOT be an objective used in the customer perspective of the balanced scorecard approach?
it reports only favorable variances
Which of the following is incorrect about a standard cost accounting system?
fixed overhead rate*(normal capacity hours-standard hours allowed)
the formula to compute the overhead volume variance is:
decision to build a new plant, decision to renovate an existing facility, and decision to buy a piece of machinery
which of the following are an example of a capital budgeting decision?
plant managers, capital budget committee, officers, board of directors
what is the order of involvement of the following parties in the capital budgeting authorization process?
it ignores the time value of money, and it ignores the useful life of alternative projects
what is a weakness of the cash payback approach?
Project B because it has a shorter cash payback period
Siegel industries is considering two capital budgeting projects. Project A requires an initial investment of $48,000. It is expected to product net annual cash flows of $7,000. Project B requires an initial investment of $75,000 and is expected to produce
It will make it less likely that the project will be accepted
Which is a true statement regarding using a higher discount rate to calculate the net present value of a project?
project's rate of return exceeds the required rate of return
a positive net value means that the:
hurdle rates, required rate of return, and cutoff rate
which of the following are an alternative name for the discount rate?
include a conservative estimate of their value, or ignore their value in your initial net present value calculation, but then estimate whether their potential value is worth at least the amount of the net present value deficiency
if a project has intangible benefits whose value is hard to estimate, the best thing to do is:
a decrease in customer complaints due to poor quality
an example of an intangible benefit provided by a capital budgeting project is:
1.23
the following information is available for a potential capital investment: initial investment $80,000, salvage value 10,0000, net annual cash flow 14,820, net present value 18,112, useful life 10 years. The potential investment's profitability index is:
on all significant capital expenditure projects
A post audit of an investment project should be performed:
the company's required return
a project should be accepted if its internal rate of return exceeds:
9%
the following information is available for a potential capital investment. initial investment $60,000, net annual cash flow 15,400, net present value 3,143, useful life 5 years. The potential investment's internal rate of return is approximately:
the time value of money is considered
Which of the following is INCORRECT about the annual rate of return technique?
21%
The following information is available for a potential capital investment: initial investment $120,000, annual net income 15,000, net annual cash flow 27,500, salvage value 20,000, useful life 8 years. The potential investment's annual rate of return is a
intracompany
Comparisons of data within a company are an example of the following comparative basis:
base year amount
In horizontal analysis, each item is expressed as a percentage of the:
net sales
In vertical analysis, the base amount for depreciation expense is generally:
vertical analysis
the following schedule is a display of what type of analysis? Current assests- $200,000- 25%, PPE- $600,000- 75%, Total Assests- $800,000
120%
Sammy corporation reported net sales of $300,000, $330,000, and $360,000 in the years 2009, 2010, and 2011 respectively. If 2009 is the base year, what is the trend percentage for 2011?
Both a and b- acid-test ratio and current ratio
which of the following measures is an evaluation of a firm's ability to pay current liabilities?
Both a and b- inventory turnover and average days to sell inventory
A measure useful in evaluating the efficiency in managing inventories is:
60.8 days
compute the days in inventory for 2011.
3.0:1
Compute the current ratio for 2011
17.1%
compute the profit margin for 2011
44%
Compute the return on common stockholder's equity
14 times
compute the times interest eared for 2011
both a and b- gains and losses on the disposal of the discontinued segment and gains and losses from operations of the discontinued segment
in reporting discontinued operations, the income statement should show in a special section:
$300,000 and $75,000
Scout corporation has income before taxes of $400,000 and an extraordinary loss of $100,000. If the income rate is 25% on all items, the income statement should show income before extraordinary items and extraordinary items, respectively, of:
the company is continually reporting pro forma income numbers
which situation below might indicate a company had a low quality of earnings?