Managerial Accounting Exam 1

undercoated manufacturing overhead results when:

actual overhead is greater than allocated overhead

which of the following is not one of the primary responsibilities of management?

adhering to GAAP

Planning involves which of the following activities?

setting goals and objectives for the company

Which of the following is being fulfilled when management compares the budget to actual results?

controlling

budgets are a way for the managers to communicate their

plans

comparing actual results to budgets is an example of which of the following management functions?

controlling

overseeing the day-to-day operations of a company’s is an example of which of the following

directing

evaluating results against the plan is an example of which of the following management functions?

controlling

how often should managerial accounting reports be prepared?

as often as necessary

which of the following statements is true regarding managerial accounting information?

managerial accounting information emphasizes relevance

which of the following statements is false about financial accounting?

financial accounting provides sufficient information for managers to effectively plan and control operations

which of the following statements is true and managerial accounting?

managerial accounting reports provide detailed internal information

which of the following are the internal decision makers of a company?

managers

__ are a company’s decision makers

managers

management accountants rarely interact with employees from other business such as marketing and customer service

false

the treasurer and the controller report directly to the CFO

true

the internal audit department reports directly to the audit committee, a subcommittee of the board of directors

true

managerial accountants no longer perform routine mechanical accounting tasks in most companies

true

managerial accountants are now considered to be similar to internal consultants and business advisors

true

oral and written communications are considered amoung the skills that are critical to management accountants

true

what position is typically responsible for general financial accounting, managerial accounting, and tax and tax reporting

controller

the IMA issues which of the following certifications?

CMA

the standards in the IMA statement of ethical professional practice includes

competence confidentiality integrity and credibility

all of the following are overarching principles in the IMA statement of ethical professional practice except

integrity

the standards of the IMA statement of ethical professional practice include which of the following?

integrity

preparing financial statements in accordance with GAAP is an example of

competence

communicating information fairly and objectively is an example of which ethical standard

credibility

performing duties in accordance with relevant laws, regulations and technical standards comprise the IMA professional ethics standard

competence

inflating your expenses for a company-sponsored conference that discredits the profession is a violation of which ethical standard

integrity

what ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week

confidentiality

what is the name of the professional association for managerial accountants?

institute of management accountants

over allocated manufacturing overhead results when:

actual overhead is less than allocated overhead

Determining how much manufacturing overhead is over allocated or underallocated:

is done at the end of the period

If manufacturing overhead has been over allocated during the period, then:

the jobs produced during the period have been overcosted

If manufacturing overhead has been underallocated during the period, then which of the following is true?

The jobs produced during the period have been undercosted

cost of goods sold account is debited and finished goods inventory is credited for:

the sale of goods to a customer

under which of the following situations is finished goods inventory debited and work-in-process inventory account credited?

transfer of goods to the finished goods storeroom

the cost of direct labor used in production is recorded as a:

debit to work-in-process inventory account

the cost of indirect labor used in the factory is recorded as a:

debit to manufacturing overhead account

How is the cost of direct materials used in production recorded?

debit to work-in-process inventory account

How is the cost of indirect materials used in the factory recorded?

debit to manufacturing overhead account

when job costing is used at a service firm, the bill to the client shows:

the billing rate and hours spent on the job

the _______ is the hourly price charged to clients for professional labor

billing rate

the journal entries needed for job costing at a service company:

are simpler than those needed at a manufacturing company

service firms develop a predetermined rate for some costs. This rate is called the:

indirect cost allocation rate

the first three steps to allocating manufacturing overhead are take before the year begins and include all of the following except:

allocating some manufacturing overhead to each individual job

what is the primary factor that causes a "cost" called?

cost driver

A(n) _______ is an estimated manufacturing overhead rate computed during the year:

predetermined manufacturing overhead rate

assigning manufacturing overhead costs and other indirect costs is called:

cost allocation

manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is:

allocate some manufacturing overhead to each individual job

manufacturing overhead is allocated on the basis of:

Direct labor hours, direct labor costs, machine hours, or all of the above

allocating manufacturing overhead costs is done:

during the period

when is the predetermined manufacturing overhead rate computed?

before the period starts

how do you calculate the predetermined manufacturing rate used to allocate manufacturing overhead costs?

by dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base

which of the following would be an example of a typical manufacturing overhead cost?

depreciation on factory equipment

______ laws, or "take-back" laws, create future costs associated with the production of electronic devices and require manufacturers of electronic devices to take back their products at the end of the products’ lives:

Extended Producer Responsibility (EPR)

if a job consists of a batch of identical units, how can managers find the unit cost?

by dividing the total job cost by the number of units in the job

management can use job cost information for each of the following except:

all of the listed choices are possible uses of job information

the difference between the sales price and the job cost is:

gross profit

how is the cost-plus price determined?

cost + markup on cost

Process costing is used by companies that produce large numbers of identical units of production in a continuous fashion:

true

job costing systems accumulate the costs for each individual job:

true

companies should always use job costing rather than process costing:

false

the end goal of process costing and job costing at a manufacturing company is the same: to find the cost of producing one unit of product:

true

a job costing system can be used by which types of companies?

service, manufacturing, and merchandising businesses

which product costing system would better account for a unique product?

job costing system

the two basic types of costing systems are:

job costing and process costing

which of the following industries would be most likely to use a job costing system?

commercial building construction

which of the rolling is an example of an industry that would use a process costing rather than a job costing system?

coca-cola

which of the following types of costing is used for many similar products?

process costing

which of these documents authorizes the purchase of specific raw materials from a specific supplier?

purchase order

a ______ is used to accumulate the costs of a job:

job cost record

the ________ substantiates the total of the raw materials inventory account shown on the company’s balance sheet:

raw materials records

which of these documents informs the storeroom to send specific materials to the factory floor?

materials requisition

a _______ is a source document used to track employee hours:

labor time record

a _______ is used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job:

job cost record

in the basic flow of inventory through a manufacturing system, which of the following occurs first in a job costing system?

raw materials inventory

in the basic flow of inventory through a manufacturing system, which of the following occurs second in the job costing system?

work in process inventory

in the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system?

finished goods inventory

in the basic flow of inventory through a manufacturing system, which of the following occurs last in the job costing system?

cost of goods sold

which of the following types of information differs between alternatives and can affect the future?

relevant

which of the following represents a sunk cost?

a historical cost that is never relevant

subtracting the costs of one alternative from the costs of the other alternative would be called the _______ cost.

differential

when deciding to buy a new computer, all of the following should be considered except for the:

cost of the old computer

when making a decision to buy a new computer, all of the following should be considered except:

sunk costs

a company is deciding whether to purchase production equipment that can produce units more quickly than the current equipment. which of the following costs would be relevant to its decision?

the cost of the new equipment

a company is deciding whether to purchase production equipment that can produce units more quickly than the current equipment. which of the following costs would be relevant to its decision?

the additional labor required to run the new equipment

a restaurant is facing a decision about whether it should bake its own apple pies or whether it should continue to purchase the pies from a local bakery. which of the following costs would be relevant to its decision?

the purchase price of the apple pies purchased from the local bakery

a company is deciding whether to purchase hybrid cars for its salespeople or gasoline – engine cars. all of the following costs would be relevant to its decision except:

the book value of the current fleet of sales vehicles

to forecast total costs at a given level of production, management would use which of the following calculations?

total fixed costs + (variable cost per unit x total predicted)

what is the cost of making one more unit called?

marginal cost

Plowin’ supply plans to make 19,000 tractors at its plant. fixed costs are $570,000 and variable cost are $210 per tractor. what is the average cost per tractor?

$240

A(n) _________ cost is one whose total amount changes in direct proportion to a change in volume:

variable

an example of a fixed cost for a manufacturer would be which of the following?

salary of plant manager

which of the following describes the way in which total fixed costs behave?

they will remain the same throughout production levels within the relevant range

product costs and period costs receive similar treatment when presented in the financial statements:

false

the income statements of manufacturing companies are more complex than those of service or merchandising companies:

true

the financial statements of a merchandiser are more complex than those of a manufacturer:

false

service companies have the most complex accounting with regard to the income statement:

false

cost of goods sold is a major expense of service companies:

false

the schedule of cost of goods manufactured is prepared before the income statement for a manufacturing company:

true

which of the following items is not used when calculating the cost of goods manufactured?

salesperson salaries

before operating income can be determined for a manufacturer, which of the following is calculated?

Cost of goods sold, cost of goods manufactured, cost of good available for sale, or all of the above

the only difference in the balance sheets of various types of businesses (for example, manufacturing vs. service) is:

current assets

the balance sheet of a service company would include which of the following?

accounts receivable

the income statement of a retailer would include which of the following?

cost of goods sold

the income statements for both a merchandiser and manufacturer would include which of the following?

operating expenses

a merchandiser’s purchases are equivalent to a manufacturer’s:

cost of goods manufactured

Tuity Fruity Beverage company’s operating activities for the year:
Purchases – $140,300
Operating Expenses – $80,600
Beginning inventory – $12,000
Ending inventory – $19,000
Sales revenue – $300,500

What is the cost of goods available for sale?

$152,300

Tuity Fruity Beverage company’s operating activities for the year:
Purchases – $140,000
Operating Expenses – $80,900
Beginning inventory – $12,500
Ending inventory – $18,000
Sales revenue – $300,000

what is the cost of goods sold for the year?

$134,500

Tuity Fruity Beverage company’s operating activities for the year:
Purchases – $140,400
Operating Expenses – $80,400
Beginning inventory – $12,300
Ending inventory – $18,500
Sales revenue – $300,000

what is the gross profit for the year?

$165,800

if a company wants to determine a products cost, it must assign both direct and indirect costs:

true

direct costs can be traced to specific units:

true

indirect costs cannot be traced to the cost objects, so they are allocated

true

which of the following items could be an example of a cost object?

a manufacturing plant, a international plant, the accounting department, or all of the above are example of potential cost objects

which of the following is not an example of an indirect cost incurred in manufacturing automobiles?

cost of the automobile engines

a factory janitors wages would be classified as ________ when determining the cost of a manufactured product:

an indirect cost

a salespersons salary would be classified as ________ when determining the cost of a manufactured product:

a period cost

the cost of lighting the factor would be classified as _______ when determining the cost of a manufactured product:

an indirect cost

which of the following would not be considered a direct cost of a mattress?

glue

all of the following would be considered a direct material for a kitchen cabinet except:

sand paper

prime costs consist of:

direct materials and direct labor

conversion costs consist of:

direct labor and manufacturing overhead

an example of direct labor would be which of the following?

wages of assembly line personnel

which of the following is an example of direct labor?

wages of a machine operator

which of the following is an example of indirect labor in a manufacturing plant?

plant managers

which of the following is an example of overhead expense in a factory?

wages of factory maintenance personnel

indirect materials, indirect labor, and indirect manufacturing costs are what type of manufacturing cost?

manufacturing overhead

which of the following would not be considered a product cost of a manufacturer?

freight out

period costs are:

always recorded as an expense

inventorial product costs for a manufactured product include:

the costs of direct materials, direct labor, and manufacturing overhead

which of the following types of companies has raw materials, work in process and finished goods inventory?

manufacturers

which type of company makes up the largest sector of the US economy?

service companies

the balance sheet of a service company has:

little or no inventory

which type of company typically produces its own inventory?

manufacturer

what type of company resells tangible products it purchases ready – made from suppliers?

wholesaler, retailer, merchandiser, or all of the above

how would Chevrolet classify its partially completed vehicles?

work in process inventory

a _______ companys balance sheet reports just one inventory called "inventory"

merchandising

all of the following items would be found in raw materials inventory for a furniture manufacturer except:

assembly worker wages

all of the following are part of a companys value chain except:

administration

which element of the value chain would depreciation on a factory be classified as?

production

testing ways to increase the strength of your product would be classified as which element of the value chain?

research and development

which element of the value chain would a technical support hotline for customers be considered?

customer service

advertising expenses would be considered which element of the value chain?

marketing

the costs associated with reengineering machinery and its location within the factory to increase efficiency would be considered which element of the value chain?

design

the costs incurred to transport merchandise to a company’s retail store would be considered to be what element of the value chain?

production or purchases

which type of system integrates ALL of the companys departments, worldwide functions, and data?

ERP system

according to the sarbanes-oxley act, who is responsible for establishing and maintaining internal controls over financial reporting?

the CEO and CFO

in recent years, there has been an increasing awareness and growing interest in __________ and social responsibility by both consumers and corporations

sustainability

the "triple bottom line" focuses on what three factors that influence a firms ability to survive and thrive in the long run?

profit, people, planet

under SOX, a CPA firm is permitted to perform which of the following services for an audit client with pre-approval from the clients audit committee?

tax

the SEC is considering the move to adopt IFRS for which types of companies?

all US public traded companies

IFRS

international financial reporting standards

XBRL

extensible business reporting language

in what year will XBRL be required for all publicity traded companies?

2011

XBRL can best be described as a:

a standardized tagging system for financial statement data

________ is the business philosophy and a strategy of manufacturing without waste:

lean thinking

companies may adopt which of the following in an attempt to increase their competitive edge?

green initiatives, TQM, lean thinking, or all of the above

the sarbanes-oxley act was enacted:

to restore trust in publicly traded companies

ISO 9001:2008 is a(n):

certification that a company complies with international quality standards

which of the following is a software system that integrates all of a company’s departments?

ERP