EB 125 Managerial Accounting Final Exam Database Fall 2011

EB 125 Managerial Accounting Final Exam Database – Fall 2011

1. / Which of the following are strategies based on a firm's approach to market share growth?
A) / Handle, Hermetic, Hold, or Harvest / C) / Handle, Expand, Low-Cost, or Divest
B) / Build, Hold, Harvest, or Divest / D) / Build, Expand, Hold, or Divest
2. / Which of the following is not a component of the IMA Statement of Ethical Professional Practice standards?
A) Reliability B) Confidentiality C) Integrity D) Credibility
3. / The leading professional organization for managerial accountants is
A) / The American Institute of Managerial Accountants.
B) / The Society of American Management Accountants.
C) / The Institute of Management Accountants.
D) / The National Society of Management Accountants.
4. / Which of the following is not a correct statement relating to the balanced scorecard?
A) / It was developed in the early 1990s by David Norton and Robert Kaplan
B) / It is a collection of performance measures that track an organization's progress toward achieving its goals
C) / The selection of performance measures used is driven by the organization's network of facilities used to produce and deliver its product.
D) / It uses both financial and non-financial performance measures.
5. / Which of the following is not an activity in which managerial accounting is designed to assist managers?
A) Reporting B) Controlling C) Decision making D) Evaluation
6. / Which of the following is not a category for performance measures used for a balanced scorecard?
A) Financial B) Customer C) Internal business processes D) Regulatory
7. / Which of the following are managers most likely to monitor whether using product differentiation or low-cost production strategy?
A) / Customer satisfaction
B) / The production process
C) / External information such as competitor actions
D) / None of the above
8. / Decision makers sometimes might need to sacrifice precision for timeliness because
A) / Receiving highly accurate information after the deadline has passed would be of no help.
B) / The nature of many business decisions does not require precision in managerial accounting reports.
C) / Both A and B.
D) / Neither A nor B.
9. / In the context of managerial accounting, relevant information
A) / Is information that will make a difference in the decision.
B) / Is information that has been provided by the controller.
C) / Must be provided in quantitative terms.
D) / Must be analyzed by the chief financial officer before being provided to managers.
10. / Which of the following is not an input into the monitoring activities relating to production?
A) / Actual production rate and output
B) / Checking output against the planned inventory level
C) / Anticipated manufacturing capacity
D) / All of the above are monitoring activities
11. / Which of the following is not a characteristic of managerial accounting reports?
A) / Managerial accounting reports are designed to provide the ultimate decision maker with the appropriate information.
B) / Managerial accounting reports come in a variety of formats.
C) / Managerial accounting reports are not distributed to the general public.
D) / All of the above are characteristics of managerial accounting reports.
12. / An example of an external user is a
A) / Managerial accountant. / C) / Potential Investor.
B) / Vice-President of Marketing. / D) / Payroll Manager.
13. / Which of the following is a not a consequence of unethical behavior?
A) / It can lead to illegal activity.
B) / It can lead to the destruction of the firm.
C) / It can lead to inferior financial performance.
D) / All of the above are consequences of unethical behavior.
14. / Under the Sarbanes-Oxley Act, which of the following related to the corporate code of ethics is not required?
A) / Must be published n the annual report or on the corporate website or provided at no charge upon request.
B) / Must disclose the likelihood of a breach of the code based on the industry and structure of the corporation.
C) / Must disclose all instances in which these codes have been waived for a particular individual.
D) / Must disclose all changes to the code.
15. / Which of the following is not a duty of a management accountant under the IMA Statement of Ethical Professional Practice's credibility standard?
A) / Communicate information fairly and objectively.
B) / Disclose all relevant information that could reasonably be expected to influence and intended user's understanding of the reports, analyses, or recommendations.
C) / Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.
D) / All of the above are include under the credibility standard.
16. / Managerial accounting is used by managers to
A) Plan. B) Evaluate. C) Control. D) All of the above.
17. / Which of the following is not a duty of a management accountant under the IMA Statement of Ethical Professional Practice's credibility standard?
A) / Mitigate actual conflict of interest.
B) / Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
C) / Maintain an appropriate level of professional expertise.
D) / Abstain from engaging in or supporting any activity that might discredit the profession.
18. / Which of the following is not a category for performance measures used for a balanced scorecard?
A) / Learning and growth / C) / Internal business processes
B) / Competitive / D) / Customer
19. / A problem with traditional computerization of operation was that
A) / Functional areas such as marketing and production created systems to meet their own needs without considering the needs of other areas.
B) / Traditional systems often resulted in a collection of mismatched or redundant systems.
C) / Both A and B.
D) / Neither A nor B.
20. / The leading professional organization for management accountants is the
A) / American Association of Management Accountants.
B) / Institute of Management Accountants.
C) / National Association of Accountants.
D) / Society of Management Accountants.
21. / A traditional GAAP income statement does not help managers predict the financial results of their decisions because the format of the statement is based on cost function rather than cost behavior. Which of the following is not classified as a cost function?
A) Product B) Sales C) Administration D) Variable
22. / If activity level decreases, what happens to the unit fixed cost?
A) / It decreases.
B) / It increases.
C) / It remains the same.
D) / It depends on how much the activity level increases.
23. / Which of the following is not a step in estimating total cost using the high-low method?
A) / Identify the highest and lowest levels of activity
B) / Visually “fit” a line to the plotted points
C) / Compute the variable cost per unit
D) / Calculate the fixed cost using either the high point or the low point.
24. / The high-low method differs from the scattergraph in that the high-low method
A) / Is simple to prepare and interpret whereas the scattergraph requires the use of statistical techniques.
B) / Is less costly than the scattergraph method.
C) / Uses a statistical technique to estimate the cost components.
D) / Requires only two data points – the lowest point of activity and the highest point of activity.
25. / Which of the following is an example of a variable cost?
A) Rent B) Insurance C) Direct material D) Depreciation
26. / A traditional GAAP income statement does not help managers predict the financial results of their decisions because the format of the statement is based on cost function rather than cost behavior. Which of the following is not classified as a cost behavior?
A) / Product
B) / Fixed
C) / Variable
D) / All of the above are classified as cost behaviors.
27. / You and two friends decide to rent an apartment off campus. You have found an apartment for $750 per month. You and your two friends will share the rent equally. This is an example of a
A) Fixed cost. B) Variable cost. C) Mixed cost. D) Step cost.
28. / A discretionary fixed cost
A) / Remains the same regardless of the level of activity.
B) / Increases as the level of activity increases.
C) / Can be changed in the short run.
D) / Can be changed over the long run.
29. / There is an important relation between contribution margin and profit. Which of the following statements is not true?
A) / As the number of units sold increases, total contribution margin increases, but fixed costs remain the same.
B) / As the number of units sold rises, profit increases by the additional contribution margin per unit.
C) / As the number of units sold increases, total contribution margin and fixed costs increase.
D) / As the number of units sold decreases, total contribution margin decreases, but fixed costs remain the same.
30. / The formula for the contribution margin ratio is
A) / Contribution margin divided by sales
B) / Contribution margin divided by net income
C) / Contribution margin divided by gross profit
D) / Contribution margin divided by (sales less variable costs)
31. / A contribution margin format income statement
A) / Is based on cost function rather than on cost behavior.
B) / Allows managers to assess the impact of sales volume on operating income.
C) / Both A and B.
D) / Neither A nor B.
32. / If activity level decreases, what happens to the total fixed cost?
A) / It remains the same.
B) / It decreases.
C) / It increases.
D) / It depends on how much the activity level increases.
33. / The contribution margin ratio can be used to
A) / Determine the increase in profits from a given dollar increase in sales revenue.
B) / Impact of fixed costs on contribution margin.
C) / Both A and B.
D) / Neither A nor B.
34. / There is an important relation between contribution margin and profit. Which of the following statements is not true?
A) / As the number of units sold rises, profit increases by the variable cost per unit.
B) / As the number of units sold increases, total contribution margin increases, but fixed costs remain the same.
C) / As the number of units sold rises, profit increases by the additional contribution margin per unit.
D) / As the number of units sold decreases, total contribution margin decreases, but fixed costs remain the same.
35. / Assume a scattergraph shows $100 at no activity and $1,500 at an activity level of 1,000 units. The variable cost per unit is:
A) $2 B) $1.40 C) $2.50 D) $5.00
36. / On a scattergraph, once the individual points have been plotted,
A) / Enter the information into a statistical calculator to calculate the total cost.
B) / Count the points and divide by variable cost per unit.
C) / Draw a line through them to estimate the cost relationship.
D) / Multiply the high point by the variable cost per unit to calculate the total cost.
37. / Which of the following is not an example of a variable cost?
A) / Direct material / C) / Direct labor.
B) / Indirect material / D) / President of the company's salary.
38. / Chocolate Delight sells chocolate dipped fruit to local restaurants. Chocolate Delight delivered 30,000 chocolate dipped strawberries to customers in May and 24,000 in June. Delivery costs for the two months were $1,500 and $1,200, respectively. Using these two months' data, the delivery cost function is best estimated as
A) / ($2 x number of strawberries) + $800
B) / ($0.02 x number of strawberries) + $900
C) / ($0.05 x number of strawberries) + $0
D) / ($0.05 x number of strawberries) + $600
39. / A limitation of using the scattergraph method to estimate the cost components of total cost is:
A) / The scattergraph method is complex and costly to use.
B) / The scattergraph method requires the use of statistical software.
C) / The scattergraph method is not an accepted method for many companies.
D) / The choice of the line used to estimate the cost components is subjective.
40. / Cross Creek Company sells concrete culverts. Currently, the company's sales revenue is $900,000, variable costs total $450,000 and fixed costs total $300,000. If Cross Creek's controller has calculated the company's breakeven point to be $597,000, what is the company's margin of safety?
A) $15,000 B) $153,000 C) $303,000 D) $447,000
41. / Assume Buddy's Farm Supply wants to make $45,000 in net income. If the tax rate is 25%, how much operating income must Buddy have?
A) $56,250 B) $60,000 C) $180,000 D) $360,000
42. / Assume a sales price per unit of $20, variable cost per unit $16, and total fixed costs of $168,000. What is the breakeven point?
A) 420,000 units B) $420,000 C) 840,000 units D) $840,000
43. / On the breakeven graph, the point at which the total sales revenue line and the total cost line intersect is
A) / Contribution margin / C) / Net income
B) / Breakeven point / D) / Operating income
44. / Which of the following formulas is used to calculate the breakeven point in units?
A) / Total fixed costs divided by contribution margin per unit.
B) / Total fixed costs divided by total contribution margin.
C) / Total fixed costs divided by contribution margin ratio.
D) / None of the above formulas calculate the breakeven point in units.
45. / On the breakeven graph, any level of sales to the left of the breakeven point represents
A) Fixed cost. B) Variable cost. C) Operating income. D) Operating loss.
46. / The sales of each product relative to total sales is referred to as
A) Horizontal Mix. B) Sales Mix. C) Managed Ratio. D) None of the above.
47. / On the breakeven graph, any level of sales to the right of the breakeven point represents
A) Fixed cost. B) Variable cost. C) Operating income. D) Operating loss.
48. / When costs go down
A) / Operating profit goes down. / C) / Contribution margin goes down.
B) / Operating profit goes up. / D) / Contribution margin goes up.
49. / One way to compute the expected change in operating income due to a change to sales volume as a given level of sales is to compute
A) / Degree of operating leverage / C) / Scattergraph analysis
B) / High-low analysis / D) / Horizontal analysis
50. / While customers and cost influence prices, so does
A) / Contribution margin / C) / Competition
B) / Fixed versus variable costs / D) / None of the above
51. / Assume a sales volume of 6,000 units, unit selling price of $20, unit variable cost of $12, and total fixed costs of $20,000. What is the margin of safety in units?
A) 2,500 B) 3,500 C) 6,000 D) 8,000
52. / The formula for margin of safety in sales dollars is
A) / Current unit sales minus Breakeven unit sales.
B) / Actual sales minus Budgeted sales.
C) / Current sales revenue minus Breakeven sales revenue.
D) / None of the above.
53. / Assume a sales price per unit of $25, variable cost per unit $15, and total fixed costs of $18,000. What is the breakeven point?
A) 45,000 units B) $45,000 C) 37,500 units D) $37,500
54. / Which of the following formulas is not used to calculate the breakeven point?
A) / Total fixed costs divided by contribution margin per unit.
B) / Total fixed costs divided by (sales price per unit less variable cost per unit).
C) / Total fixed costs divided by contribution margin ratio.
D) / Total fixed cost divided by total contribution margin.
55. / The “plus” in cost-plus pricing is often referred to as
A) Extra profit B) Margin of Safety C) Markup D) None of the above
56. / If a company sells it product for $30 and has a unit cost of $12, what is the company's markup percentage?
A) 35% B) 40% C) 25% D) 150%
57. / A breakeven graph
A) / Illustrates the relationship between volume and sales price.
B) / Illustrates the relationship between volume and total costs.
C) / Illustrates the relationship between breakeven and operating income.
D) / Illustrates the relationship between sales and costs.
58. / On the breakeven graph, if sales price and variable cost remain constant and fixed costs decrease, the breakeven point will
A) Shift upward B) Shift downward. C) Shift to the right D) Shift to the left
59. / At the breakeven point
A) / Sales revenue equals zero.
B) / Contribution margin equals total variable costs.
C) / Sales revenue equals total costs.
D) / Operating income equals total costs.
60. / Gough's Manufacturing had underapplied overhead totaling $5,000 during the period. To dispose of this underapplied overhead, Gough should
A) / Increase the cost of goods sold by $5,000
B) / Decrease the cost of goods sold by $5,000
C) / Increase the work in process account by $5,000
D) / Decrease the work in process account by $5,000
61. / At the beginning of the year, managers at King Industries estimated $400,000 in manufacturing overhead. 20,000 direct labor hours and 50,000 machine hours. Actual manufacturing costs at the end of the year were $425,000 in manufacturing overhead, 22,000 direct labor hours and 47,000 machine hours. If overhead is applied based on direct labor hours, how much overhead was applied during the year?
A) $399,960 B) $440,000 C) $467,500 D) $425,040
62. / When a company purchases materials for use in the production process, the cost of those materials is recorded in which of the following accounts?
A) / Finished Goods Inventory / C) / Raw Materials Inventory
B) / Work in Process Inventory / D) / Supplies Expense
63. / At what point are manufacturing costs expensed?
A) / When finished goods are sold
B) / When they are transferred out of Work in Process
C) / When they are entered into production
D) / At the end of the accounting period
64. / When a product is sold to a customer, which of the following inventory accounts is increased or decreased?
A) / Work in Process is decreased and Finished Goods is increased
B) / Finished Goods is increased and Cost of Goods Sold is decreased
C) / Finished Goods is decreased and Cost of Goods Sold is increased
D) / Raw Materials is decreased and Cost of Goods Sold is increased.
65. / Period costs are associated with the
A) / Selling of products. / C) / Both a and b.
B) / The administration of the business. / D) / Neither a nor b.
66. / Fabric used in the manufacture of baseball jerseys is an example of:
Direct Material / Product Cost
a. / Yes / No
b. / Yes / Yes
c. / No / Yes
d. / No / No
A) A B) B C) C D) D
67. / When indirect materials are used, which of the following accounts increases?
A) / Raw Materials Inventory / C) / Finished Goods Inventory
B) / Work in Process Inventory / D) / Manufacturing Overhead
68. / Which of the following items is not classified as direct material for Family Ice Cream Parlor?
A) / The cost of empty ice cream cones
B) / The cost of milk used in the manufacturing of ice cream
C) / The cost of hairnets worn by production line workers
D) / The cost of strawberries used in the manufacturing of ice cream
69. / Spikes Sports Manufacturing Company uses a job order costing system to account for its production of specialty golf accessories. On May 31 the company reported the following balances in its inventory accounts: $45,000 in Raw Materials, $25,000 in Work in Process, and $15,000 in Finished Goods. On May 31, the total of all open job order cost sheets would be
A) $45,000. B) $25,000. C) $70,000. D) $85,000.
70. / If the ending balance in Raw Materials Inventory is $3,500, $60,000 was purchased, and $61,500 was transferred to Work in Process Inventory during the period, what was the amount in beginning inventory?
A) $1,500 B) $2,000 C) $3,500 D) $5,000
71. / If the beginning balance in the Raw Materials Inventory account for the month was $25,000, the ending balance of $22,000 and material used during the month was $130,000, what is the amount of materials purchased during the month?
A) $177,000 B) $130,000 C) $127,000 D) $133,000
72. / Which of the following documents is used to release direct materials from the storeroom to the factory floor?
A) / Materials requisition slip / C) / Bill of materials
B) / Job cost sheet / D) / Application sheet
73. / If the amount of overapplied or underapplied manufacturing overhead is small, most companies will generally make an adjustment to
A) / Work in Process Inventory. / C) / Cost of Goods Sold.
B) / Finished Goods Inventory. / D) / All of the above.
74. / Which of the following is not classified as a direct labor cost?
A) / Wages of the store manager at Starbucks
B) / Wages of the assemblers who put planes together at Boeing