Introduction to Accounting Final - Managerial Multiple Choice

a favorable materials price variance would most likely occur when

the standard price is more than the actual price

which will decrease the net present value of an investment in a new machine

a decrease in volumes sold

a cost that is relevant to making a short term decision is always

different for one alternative compared to another alternative

indirect labor is included in manufacturing overhead because

it is difficult to determine the indirect labor incurred to make one unit and it is a necessary cost to make the product

the wages for machine operators of the machines that make the product are

a product cost that is variable

which of the following statements is not true for FIFO and weighted average process costing?

equivalent units for ending inventory are never the same

product costs are expensed when

the product is sold to the customer

segment or division profit is computing by including

all segment sales, direct variable expenses, and traceable costs

if all else remains constant, a decrease in average operating assets will

increase the return on investment (ROI)

the formula: high $ - low $ divided by high activity - low activity directly caculates

variable cost per activity

which of the following won't be affected when sales are as expected and production in units is higher for this month than expected

the amount of cash collections in the following month

manufacturing overhead includes the following costs

costs of the facilities and management at the manufacturing plant

managers use which of the following information provided by the managerial accountant for decision making

information relevant to the decision that is being made

the use of indirect labor is initially recorded as an increase in

manufacturing overhead

when manufacturing overhead is applied to products based on machine hours, a favorable efficiency variance will occur when:

less machine hours are used to produce the products manufactured than expected

work in progress inventory is increased (debited) when

direct costs are incurred in production

costs incurred to pack the product to get it ready to ship to the customer are

period costs

to get the actual cost of work in progress that is transferred to finished goods, you would include

actual direct costs + actual manufacturing overhead + beginning WIP - Ending WIP

a company incurred the same sales, fixed costs and cost per unit in the current year as it did in the prior year. Production is lower in the current year and finished goods inventory decreased. When preparing the current year income statement for its shar

income will be lower this year than last year

the purpose of a flexible budget is to determine

the amount of expected profit from various sales volumes

a company operating at less than full capacity should price a special order to cover

all incremental production costs

to determine the quantity of raw materials that must be purchased this period, a company must take

the quantity required for production and the change in finished goods inventory

which of the following is a fixed manufacturing overhead quantity variance?

overhead volume variance

the cost of ending finished goods using the FIFO method of process costing is determined by

taking equivalent units started and competed times the cost of each equivalent unit and then add the total cost of beginning inventory

a company could never incur an operating loss greater than

total costs

when using a flexible budget, if the volume decreases

total costs will decrease

a traditional cost system is different from an activity based costing system because

cost groups are determined for activity based costing

standard quantity allowed means

actual units produced multiplied by the standard required per unit

when calculating break even, which of the following assumptions is not used

fixed costs DO change per unit as volume changes

the only difference in absorption and variable costing income is

manufacturing overhead is a different amount when finished goods inventory changes

operating leverage is used to estimate

how income will change as sales change

the term relevant range means the range that

fixed costs will not change within that range

responsibility accounting defines a profit center as one with a manger who is responsible for

all revenues and all unallocated costs

when a cost changes in total and the cost per unit does not change, the cost is always

a variable cost

a company calculates cost of goods manufactured so that they can

report costs on the income statement and balance sheet

which of the following would be considered part of the cost of inventory

rent all the manufacturing facility

when the discount rate increases

net present value of future cash flows decreases

a company that uses variable costing for management decisions depends on

cost volume relationships

using activity based costing for external financial reporting is a violation of GAAP because

period costs are assigned to products and treated as product costs for analysis

which cost characteristics are most important to making a short term decision

avoidable or unavoidable

when manufacturing overhead is over applied it means that

more activit was used than planned and total budgeted manufacturing overhead expense was more than or equal to actual expense

which of the following is related to a variable costing income statement is true

you can determine fixed productions costs from looking at the statement

which of the following is a major assumption that is used in cost volume profit analysis

total contribution margin will change as volume changes

when the fixed overhead budget variance is 0

actual overhead spent is equal to budgeted overhead dollars

if the sales volume decreases and nothing else changes

margin of safety will decrease in units

a cost that is fixed

will not change proportionately to changes in production volume

a mixed cost

has a flat cost and a cost per usage

contributed margin is defined as

the amount of sales revenue that is available to cover fixed costs

the process of assigning manufacturing overhead costs to a job is called

applying

which of the following decisions is a short term decision

accepting a special order