1. Management accounting focuses primarily on providing data for:
a. External uses by stockholders and creditors.
b. Internal uses by managers.
c. External uses by the Securities and Exchange Commission.
d. External uses by the Internal Revenue Service.
2. Compared to financial accounting, managerial accounting places more emphasis on:
- Provide information primarily for internal purposes
- reporting information for purpose of management actions
- future oriented (planning, budgeting)
3. Which of the following is not one of the three basic activities of a manager?
a. Planning
b. Controlling
c. Directing and motivating
d. Compiling management accounting reports
4. After careful planning, Jammu Manufacturing Corporation has decided to switch to a just-in-time inventory system. At the beginning of this switch, Jammu has 30 units of product in inventory. Jammu has 2,000 labor hours available in the first month of this switch. These hours could produce 500 units of product. Customer demand for this first month is 400 units. If just-in-time principles are correctly followed, how many units should Jammu plan to produce in the first month of the switch?
a. 400
b. 430
c. 470
d. 370
5. A detailed financial plan for the future is known as a:
a. budget.
b. performance report.
c. organization chart.
d. Segment
6. Indirect labor is a part of:
a. Prime cost.
b. Conversion cost.
c. Period cost.
d. Nonmanufacturing cost.
7. John Johnson decided to leave his former job where he earned $12 per hour to go to a new job where he will earn $13 per hour. In the decision process, the former wage of $12 per hour would be classified as a(n):
a. sunk cost.
b. direct cost.
c. fixed cost.
d. opportunity cost.
8. The following costs were incurred in January:
Direct materials $33,000
Direct labor $28,000
Manufacturing overhead $69,000
Selling expenses $16,000
Administrative expenses $21,000
Conversion costs during the month totaled: $97,000
9. Wall Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company's estimated costs for the next year are:
Direct materials $3,000
Direct labor $20,000
Depreciation on factory equipment $6,000
Rent on factory $12,000
Sales salaries $29,000
Factory utilities $15,000
Indirect labor $6,000
It is estimated that 10,000 direct labor hours will be worked during the year. The predetermined overhead rate will be: $3.90
10. Which of the following industries would be most likely to use a process costing system?
a. Hospital
b. Ship builder
c. Movie studio
d. Oil refinery
11. Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost?
High-Low Least- Squares
A) Yes Yes
B) Yes No
C) No Yes
D) No No
12. The high-low method is used with which of the following types of costs?
a. Variable
b. Mixed
c. Fixed
d. Step-variable
13. The following data pertains to activity and maintenance costs for two recent years:
Year 2 Year 1
Activity level in units 11,125 6,000
Maintenance cost $6,250 $4,200
If the high-low method is used to separate fixed and variable components of the cost, which of the following statements is correct?
A) the variable cost is .70 per unit of activity
B) the fixed costs is $2050
C) the variable cost is 2.50 per unit of activity
D) the fixed cost is 1,800
14. Setting up a machine to change from producing one product to another is an example of a:
A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity
15. In preparing a master budget, top management is generally best able to:
A) prepare detailed departmental-level budget figures.
B) provide a perspective on the company as a whole.
C) point out the particular persons who are to blame for inability to meet budget goals.
D) responses a, b, and c are all correct.
16. Thirty percent of Sharp Company's sales are for cash and 70% are on account. Sixty percent of the account sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder is uncollectible. The following are budgeted sales data for the company:
January February March April
Total sales $50,000 $60,000 $40,000 $30,000
Total cash receipts in April are expected to be: $33,640
17. On January 1, Colver Company has 6,500 units of Product A on hand. During the year, the company plans to sell 15,000 units of Product A, and plans to have 5,000 units on hand at year end. How many units of Product A must be produced during the year?
18. Which of the following would produce a materials price variance?
a. an excess quantity of materials used
b. an excess number of direct labor-hours worked in completing a job.
c. shipping materials to the plant by air freight rather than by truck.
d. breakage of materials in production
19. The following materials standards have been established for a particular raw material used in the company's sole product:
Standard quantity per unit of output 1.0 pound
Standard price $16.60 per pound
The following data pertain to operations concerning the product for the last month:
Actual materials purchased 2,200 pounds
Actual cost of materials purchased $34,650
Actual materials used in production 1,900 pounds
Actual output 2,100 units
What is the materials quantity variance for the month?
a. $3,320 F
b. $3,150 F
c. $4,980 U
d. $4,725 U
20. The following materials standards have been established for a particular raw material used in the company's sole product:
Standard quantity per unit of output 0.1 pound
Standard price $18.20 per pound
The following data pertain to operations for the last month:
Actual materials purchased 5,700 pounds
Actual cost of materials purchased $100,320
Actual materials used in production 5,600 pounds
Actual output 55,800 units
What is the materials price variance for the month?
a. $1,820 U
b. $1,760 U
c. $3,420 F
d. $352 U
21. The following labor standards have been established for a particular product:
Standard labor-hours per unit of output 8.0 hours
Standard labor rate $13.10 per hour
The following data pertain to operations concerning the product for the last month:
Actual hours worked 4,000 hours
Actual total labor cost $53,000
Actual output 400 units
What is the labor efficiency variance for the month?
a. $10,600 U
b. $11,080 U
c. $11,080 F
d. $10,480 U
22. The following labor standards have been established for a particular product:
Standard labor-hours per unit of output 2.4 hours
Standard labor rate $15.45 per hour
The following data pertain to operations concerning the product for the last month:
Actual hours worked 5,400 hours
Actual total labor cost $85,860
Actual output 2,200 units
What is the labor rate variance for the month?
a. $1,908 U
b. $2,430 U
c. $4,284 U
d. $4,284 F
23. The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output 5.6 hours
Standard variable overhead rate $19.15 per hour
The following data pertain to operations for the last month:
Actual hours 5,100 hours
Actual total variable overhead cost $99,195
Actual output 1,100 units
What is the variable overhead efficiency variance for the month?
a. $20,299 F
b. $18,769 F
c. $1,848 F
d. $20,617 F
24. The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output 2.8 hours
Standard variable overhead rate $16.30 per hour
The following data pertain to operations for the last month:
Actual hours 7,600 hours
Actual total variable overhead cost $127,300
Actual output 2,500 units
What is the variable overhead spending variance for the month?
a. $3,420 U
b. $3,150 F
c. $10,050 U
d. $13,200 U
25. If the price a company paid for overhead items, such as utilities, decreased during the year, the company would probably report a(n):
a. favorable efficiency variance.
b. favorable spending variance.
c. unfavorable efficiency variance.
d. unfavorable spending variance
26. Hall Company's standards call for 750 direct labor-hours to produce 500 units. During May 400 units were produced. The company worked 650 direct labor-hours. The standard hours allowed for May production would be: ?
A) 750 hours
B) 650 hours
C) 600 hours
D) 100 hours
27. Which of the following would not be included in operating assets in return on investment calculations?
A) Cash.
B) Accounts Receivable.
C) Equipment
D) Factory building rented to (and occupied by) another company.
28. Gunderman Corporation has two divisions: the Alpha Division and the Charlie Division. The Alpha Division has sales of $230,000, variable expenses of $131,100, and traceable fixed expenses of $63,300. The Charlie Division has sales of $540,000, variable expenses of $307,800, and traceable fixed expenses of $120,700. The total amount of common fixed expenses not traceable to the individual divisions is $119,200. What is the company's net operating income?
A) $147,100
B) $331,100
C) $27,900
D) $211,900
29. When a multi-product factory operates at full capacity, decisions must be made about what products to emphasize. In making such decisions, products should be ranked based on:
A) selling price per unit
B) contribution margin per unit
C) contribution margin per unit of the constraining resource
D) unit sales volume
30. Kahn Company produces and sells 8,000 units of Product X each year. Each unit of Product X sells for $10 and has a contribution margin of $6. It is estimated that if Product X is discontinued, $50,000 of the $60,000 in fixed costs charged to Product X could be eliminated. These data indicate that if Product X is discontinued, overall company net operating income should:
a. decrease by 38,000 per year
b. increase by 38,000 per year
c. decrease by 2,000 per year
d. increase by 2,000 per year