Which is not a characteristic of management accounting information? Focuses on the future. Emphasizes the external financial statements. Emphasizes relevance. Provides detailed information about parts of the company.
Emphasizes the external financial statements.
World-class businesses must compete based on time. To compete effectively, many companies have developed what? JIT management. Enterprise resource planning. Cost Standards. All of the above.
Just-in-Time Management
What is not part of manufacturing overhead?
Depreciation
In computing COGs, what is the manufacturer's counterpart to the merchandiser's purchases?
Cost of Goods Manufactured
A management accountant who avoids conflicts of interest meets the ethical standard of what? Competence. Integrity. Objectivity. Confidentiality.
Integrity
How do you calculate predetermined manufacturing overhead rate based on machine hours?
Budgeting OH costs / Budgeted Machine Hours
What don't you include when calculating manufacturing overhead costs?
Depreciation, Repair, and Direct Labor/Materials.
What accounts would you use to close a manufacturing overhead account?
Manufacturing Overhead - Debit. COGs - Credit.
In general, what do transferred-in costs include? Costs incurred in all prior processes. Costs incurred in the previous period. Costs incurred in all the prior periods. Costs incurred in only the previous process.
Costs incurred in all prior processes.
True or false: ABC is primarily for manufacturing companies.
False.
True or false: ABC focuses on indirect costs.
True.
True or false: ABC is more refined than one that uses a companywide overhead rate.
True.
Which account is NOT used in JIT costing?
Work in process (WIP) Inventory
A customer finds a defect in a product and sales go down. What kind of quality cost is that? Prevention. Appraisal. External. Internal.
External.
Testing a product before sending it to a customer is what kind of quality cost? Prevention. Appraisal. External. Internal.
Appraisal.
For a driving school, straight-line depreciation on cars is what kind of cost? Fixed. Variable. Mixed. None of the above.
Fixed.
On a CVP graph, the total cost line intersects the vertical (dollars) line at what?
The level of the fixed costs.
If the company increases its fixed costs for Product B, then the contribution margin per unit will: Increase, Decrease, or remain the same.
Remain the same.
In making short term business decisions you should: Discount cash flows to present value. Separate variable from fixed costs. Focus on total costs. Use a conventional income statement.
Separate variable from fixed costs.
In deciding which product line to emphasize, a company's manager should focus on the product line with the highest: Profit per unit. Contribution margin per unit of the constraining factor. Contribution margin per unit. Contribution margin ration.
Contribution margin per unit of the constraining factor.
Which is relevant when making outsourcing decisions? Avoidable fixed costs. Manufacturing cost per unit of making in-house. Expected use of the freed capacity. The variable cost of producing the product in-house.
The variable cost of producing the product in-house.
When companies are price-setters their products/services: Have a lot of competitors. Are commodities. Are priced using target-price emphasis. Are unique.
Are unique.
Cash Payback Formula
Amount Invested / Annual Cash Inflow
ARR Means
Accounting Rate of Return
NPV Means
Net Present Value
IRR Means
Internal Rate of Return
ARR Formula
Average Annual Operating Income / Average Amount Invested
Average Amount Invested Formula (Denominator of ARR Formula)
(Amount Invested + Residual Value) / 2
Which of these uses accrual accounting instead of net cash flows? ARR. NPV. Payback. IRR.
ARR
Which does not consider investment profitability? ARR. NPV. Payback. IRR.
Payback
What does the IRR show?
The interest rate at which the NPV of the investment is zero.
Which of the following is the most reliable method for making capital budgeting decisions? NPV. Payback. Post-audit. ARR.
NPV.
True or false. Depreciation is considered when calculating IRR.
False.
Which of the following is the starting point of the master budget? Operating expense budget. Purchase and COGs budget. Sales budget. Inventory budget.
Sales budget.
The balance sheet is part of which element of the master budget? Financial. Capital expenditure. Operating. None of the above.
Operating.
Which manager is the highest in the organization. Investment. Revenue. Profit. Cost.
Investment.
What is NOT one of the potential advantages of decentralization? Improves motivation and retention. Supports use of expert knowledge. Increases goal congruence. Improves customer relations.
Increases goal congruence.
Manufactured yield rate (units produced per unit of time) would be which balanced scorecard perspective? Customer. Internal Business. Financial. Learning and growth.
Internal Business.
Performance evaluation of a cost center is typically based on what: Sales Volume Variance. ROI. Static Budget Variance. Flexible Budget Variance.
Flexible Budget Variance.