Managerial accounting is applicable to:
All of these
The reporting standard for external financial reports is:
generally accepted accounting principles
Planning is a function that involves
setting goals and objectives for an entity
A manufacturing process requires small amounts of glue. The glue used in the production process is classified as an
indirect material
Because of automation, which component of product cost is declining?
Direct labor
Which one of the following represents a period cost?
The VP of Sales salary and benefits
Cost of goods sold
appears on both manufacturing and merchandising companies' income statements
cost of goods manufactured is calculated as follows:
Beginning WIP + direct materials used + direct labor+ manufacturing overhead - ending WIP
Dolan Manufacturing company's accounting records reflect the following inventories:
$660,000
The equivalent of finished goods inventory for a merchandising firm is referred to as
merchandise inventory
For a manufacturing company, which of the followings is an example of a period cost
Wages of salespersons
the two basic types of cost accounting systems are
job order and process cost systems
in a job order cost accounting system, the Raw Materials Inventory account is
a control account
Kline Manufacturing has the following labor costs:
$440,000
The entry to record the acquisition of raw material on account is
Raw Materials Inventory
Accounts Payable
A process cost system would most likely be used by a company that makes
breakfast cereal.
The flow of costs in a job order cost system
involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done.
Cost of raw materials is debited to Raw Materials Inventory when the
materials are received.
Job cost sheets constitute the subsidiary ledger for the
Work In Process Inventory account.
Which one of the following best describes a job cost sheet?
It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.
The labour costs that have been identified as indirect labour should be charged to
manufacturing overhead
Manufacturing overhead is applied to each job
by means of a predetermined overhead rate.
Cost of goods sold is obtained from
the finished goods inventory records
On the cost of goods manufactured schedule, the cost of goods manufactured agrees with the
amount transferred from Work in Process Inventory to Finished Goods during the period.
A process cost accounting system is most appropriate when
similar products are mass-produced.
Differences between a job order cost and a process cost system include all of the following except the
flow of costs
Which statement best reflects a distinguishing factor between a job order cost system and a process cost system?
The number of work in process accounts
Which of the following manufacturing cost elements occurs in a process cost system?
All of these
A product requires processing in two departments, Department A and then Department B, before it is completed. Costs transferred out of Department A will be transferred to
Work in Process�Department B
When manufacturing overhead costs are assigned to production in a process cost system, they are debited to
the Work in Process account.
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 60,000 units were started
60,000 equivalent units
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 60,000 units were started
51,000 equivalent units
Equivalent units are calculated by
multiplying the percentage of work done by the physical units
5,000 units in a process that are 70% complete are referred to as
3,500 equivalent units of production
Which of the following is not a necessary step in preparing a production cost report?
Prepare the job order cost sheet
If there are no units in process at the beginning of the period, then
the units to be accounted for will equal the units transferred out and the units in process at the end of the period.
Madison Industries has equivalent units of 2,000 for materials and for conversion costs. Total manufacturing costs are $200,000. Total materials costs are $150,000. How much is the conversion cost per unit?
$25.00
In a process cost system, a production cost report is prepared
for each processing department
Just-in-time processing requires
that suppliers of the company be able to deliver on short notice exact quantities of raw materials.
The elements of JIT do not include
efficient competitors.
What is the primary benefit of ABC?
It provides more accurate and meaningful product costing
Which would be an appropriate cost driver for the ordering activity?
Purchase orders
Which of the following is not an advantage of activity-based costing?
Eliminates arbitrary assignments of overhead
As of December 31, 2011, Nilsen Industries had $2,000 of raw materials inventory. At the beginning of 2011, there was $1,600 of materials on hand. During the year, the company purchased $274,000 of materials; however it paid for only $264,000. How much in
$273,600
A company expected its annual overhead costs to be $900,000 and direct labor costs to be $1,000,000. Actual overhead was $870,000, and actual labor costs totaled $1,100,000. How much is the companys predetermined overhead rate to the nearest cent?
$0.90
Redman Company manufactures customized desks. The following pertains to Job No. 978:
direct material used $9,450
direct labor hours worked 360
direct labor rate per hour $15.00
machine hours used 300
applied factory overhead rate per machine hour $22.00
$21,450
Manufacturing overhead is applied to each job
by means of a predetermined overhead rate
the existence of under- or overapplied overhead at the end of the year:
requires an adjustment to Cost of Goods Sold
Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n)
predetermined overhead rate
Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts?
Cost of Goods Sold
A process cost accounting system is most appropriate when
similar products are mass-produced
which of the following is a true statement about process cost systems?
a process cost system has one work in process account for each process
In process cost accounting, manufacturing costs are summarized on a
production cost report
A product requires processing in two departments, Department A and then Department B, before it is completed. Costs transferred out of Department A will be transferred to
Work in Process-Packaging Department
A primary driver of overhead costs in continuous manufacturing operation is:
machine hours
A process with no beginning work in process, completed and transferred out 14,000 units during a period and had 7,000 units in the ending work in process that were 50% complete. How much is equivalent units of production for the period for conversion cost
17,500 equivalent units
Gloria Company had no beginning work in process. During the period, 8,000 units were completed, and there were 800 units of ending work in process. How many units were started into production?
8,800
If there are no units in process at the beginning of the period, then
the units to be accounted for will equal the units transferred out and the units in process at the end of the period
the total units accounted for equals units in
ending work in process + units transferred out
If 100,000 units are started into production there was no beginning work in process, and 40,000 units are in process at the end of the period, how many units were completed and transferred out?
60,000
In the production cost report, the total
physical units accounted for equals the units to be accounted for
which best describes the flow of overhead costs in an activity-based costing system?
Overhead costs --> activity cost pools --> cost drivers --> products
often the most difficult part of computing accurate unit costs is determining the proper amount of ________ to assign to each product, service, or job.
overhead
predetermined overhead rates in traditional costing are often based on
direct labor costs for job order costing and machine hours for process costing
the last step in activity-based costing is to
assign manufacturing overhead costs for each activity cost pool to products
an example of an activity cost pool is
setting up machines
One of Melman Company's activity cost pools is inspecting, with estimated overhead of $100,000. Melman produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to throw rugs?
$35,000
To use activity-based costing, it is necessary to know the
all of the above
which would be appropriate cost driver for the ordering and receiving activity cost pool?
purchase orders
which of the following is a value-added activity?
machining
which of the following is a non-value-added activity?
inventory control
in service industries
a larger proportion of overhead costs are company-wide costs.
A variable cost is a cost that
varies in total in proportion to changes in the level of activity
a fixed cost is a cost which
remains constant in total with changes in the level of activity
cost behavior analysis applies to
all entities
which of the following is not a fixed cost
direct materials
the relevant range of activity refers to the
levels of activity over which the company expects to operate
firms operating at 100% capacity
are the exception rather than the rule
if whisper wings airlines cuts its domestic fares by 30%
a profit can be earned either by increasing the number of passengers or by decreasing variable costs
In applying the high-low method, which months are relevant?
february and april
In applying the high-low method, what is the fixed cost?
$26,250
the high-low method is often employed in analyzing
mixed costs
in CVP analysis, the term "cost
includes manufacturing costs plus selling and administrative expenses
internal reports that review the actual impact of decisions are prepared by
management accountants
costs that will differ between alternatives and influence the outcome of a decision are
relevant costs
incremental analysis would be appropriate for
all of these
if a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then
the order will likely be rejected
a company is within plant capacity. it is contemplating whether a special order should be accepted. the order will not impact regular sales. if the company accepts the special order, what will occur?
net income will increase if the special sales price per unit exceeds the unit variable costs
which statement is true concerning the decision rule on whether to make or buy?
the company should buy if the cost of buying is less than the cost of producing
which decision will involve no incremental revenues?
make or buy decision
Tasty bites produces corn chips. the cost of one batch is below:
$17.00 per batch
The decision rule on whether to sell or process further
is process further if incremental revenue from such processing exceeds the incremental processing costs
costs incurred before the split-off point are
sunk costs
book value of old equipment is considered to be a
sunk cost
a budget
is an aid to management
budgeting is usually most closely associated with which management function?
planning
it is important that budget be accepted by
all of these
long-range planning
generally encompasses a longer period of time than an annual budget
a sales forecast
shows forecasts for the industry and for the firm
the financial budgets include the
cash budget and the budgeted balance sheet
the single most important output in preparing financial budgets is the
cash budget
the following information was taken from Noble Company's cash budget for the month of July:
$100,000
during September, the capital expenditure budget indicates a $280,000 purchase of equipment. The ending September cash balance from operations is budgeted to be $40,000. The company wants to maintain a minimum cash balance of $20,000. what is the minimum
$260,000
budgeting in not-for-profit organizations
usually starts with budgeting expenditures, rather than receipts
a critical factor in budgeting for a service firm is to
coordinate professional staff needs with anticipated services
the purpose of the sales budget report is to
determine whether sales goals are being met.
a static budget is appropriate in evaluating a manager's performance if
actual activity closely approximates the master budget activity
a flexible budget
projects budget data for various levels of activity.
the master budget of rondelli company shows that the planned activity level for next year is expected to be 50,000 machine hours. at this level of activity, the following manufacturing overhead costs are expected:
$988,000
which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?
fixed manufacturing overhead
what budgeted amounts appear on the flexible budget?
budgeted amounts for the actual activity level achieved
management by exception
means that material differences will be investigated
as one moves up to each higher level of managerial responsibility,
a greater number of costs are controllable
top management can control
all costs
a cost center
only incurs costs and does not directly generate revenues
a profit center is
a responsibility center that incurs costs and generates revenues
a standard cost is
a predetermined cost
the difference between a budget and a standard is that
a budget expresses a total amount, while a standard expresses a unit amount
ideal standards
reflect optimal performance under perfect operating conditions
most companies that use standards set them at
the normal level
a total materials variance is analyzed in terms of
price and quantity variances
the total materials variance is equal to the
sum of the materials price variance and the materials quantity variance
which one of the following describes the total overhead variance?
the difference between what was actually incurred and overhead applied
in using variance reports, management looks for
significant variance
the balanced scorecard
incorporates financial and non financial measures in an integrated system
the investigation of materials price variance usually begins in the
purchasing department
labor efficiency is measured by the
labor quantity variance