question

The equivalent of finished goods inventory for a merchandising firm is referred to as

answer

merchandise history

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How have many companies significantly lowered inventory levels and costs?

answer

They have a just-in-time method.

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What term describes all business processes associated with providing a product or service?

answer

The value chain

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What is "balanced" in the balanced scorecard approach?

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The emphasis on financial and non-financial performance measurements

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Many companies now focus on reducing defects in finished products with the goal of zero defects. This is called

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Total quality management

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The function that pertains to keeping the activities of the enterprise on track is

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controlling

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For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to

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cost of good manufactured

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The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively

answer

Finished Goods Inventory and Work in Process Inventory.

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Managerial accounting applies to each of the following types of businesses except

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managerial accounting applies to all types of firms.

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Managerial accounting information is generally prepared for

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managers

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Managerial accounting information

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pertains to subunits of the entity and may be very detailed.

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The major reporting standard for presenting managerial accounting information is

answer

relevance.

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Managerial accounting is also called

answer

management accounting

question

Managerial accounting is applicable to

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manufacturing entities. not-for-profit entities. service entities.

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The reporting standard for external financial reports is

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generally accepted accounting principles

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Planning is a function that involves

answer

setting goals and objectives for an entity.

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The managerial function of controlling

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includes performance evaluation by management.

question

The management function that requires managers to look ahead and establish objectives is

answer

planning.

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Directing includes

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coordinating a company's diverse activities and human resources to produce a smooth-running operation

question

Cost of goods manufactured is calculated as follows:

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Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.

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The equation which reflects a CVP income statement is

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Sales - Variable costs - Fixed costs = Net income.

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Manufacturing overhead is applied to each job

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by means of a predetermined overhead rate.

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Overhead application is recorded with a

answer

credit to Manufacturing Overhead.

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At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting

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Cost of Goods Sold.

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If actual overhead is less than applied manufacturing overhead, then manufacturing overhead is:

answer

overapplied.

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If, at the end of the year, Manufacturing Overhead has been overapplied, it means that

answer

actual overhead costs were less than the overhead assigned to jobs.

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When the company assigns factory labor costs to jobs, the direct labor cost is debited to

answer

Work in Process Inventory

question

Which of the following statements about under- or overapplied manufacturing overhead is correct?

answer

After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted, Manufacturing Overhead will have a zero balance.

question

Which of the following is correct regarding cost systems?

answer

Work in process account Job Order: one, Process:one for each process

question

When manufacturing overhead costs are assigned to production in a process cost system, they are debited to

answer

a Work in Process account.

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It is necessary to calculate equivalent units of production in a department because

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some units worked on in the department are not fully complete.

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A production cost report

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will show quantity and cost data for a production department.

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The costs that are easiest to trace directly to products are

answer

direct materials and direct labor.

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Activity-based costing

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allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.

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Use of activity-based costing will result in the development of

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multiple activity-based overhead rates

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Companies that switch to ABC often find they have

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been overpricing some products, been sacrificing profitability by underpricing some products and possibly losing market share to competitors.

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Which of the following factors would suggest a switch to activity-based costing?

answer

Overhead costs constitute a significant portion of total costs

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The primary benefit of ABC is it provides

answer

more accurate product costing.

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Cost behavior analysis is a study of how a firm's costs

answer

respond to changes in the level of business activity.

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If a firm increases its activity level,

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some costs will change, others will remain the same.

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If the activity level increases 10%, total variable costs will

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increase 10%.

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A mixed cost contains

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a variable element and a fixed element.

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The high-low method is criticized because it

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ignores much of the available data by concentrating on only the extreme points

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The high-low method is often employed in analyzing

answer

mixed costs.

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To which function of management is CVP analysis most applicable?

answer

Planning

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In an equipment replacement decision, the cost of the old equipment is a(n)

answer

sunk cost

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A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

answer

The current disposal price of the old equipment

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The potential effects of the decision to eliminate a line of business on existing employees and the community are

answer

qualitative factors.

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A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to:

answer

provide relevant revenue and cost data about each course of action.

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Which of the following will always be a relevant cost?

answer

Opportunity cost

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Costs that will differ between alternatives and influence the outcome of a decision are

answer

Relevant costs

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Relevant costs are always

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avoidable costs

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The process of evaluating financial data that change under alternative courses of action is called

answer

incremental analysis.

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Incremental analysis is most useful

answer

in developing relevant information for management decisions.

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In incremental analysis,

answer

all costs are relevant if they change between alternatives.

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Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity?

answer

Net income will increase if the special sales price per unit exceeds the unit variable costs.

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On the basis of the budget reports,

answer

management may modify the future plans, management analyzes differences between actual and planned results, and management may take corrective action.

question

The best measure of the performance of the manager of a profit center is the

answer

amount of controllable margin generated by the profit center.

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Top management's reaction to a difference between budgeted and actual sales often depends on

answer

the materiality of the difference.

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A static budget is not appropriate in evaluating a manager's effectiveness if a company has

answer

substantial variable costs.

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A cost is considered controllable at a given level of managerial responsibility if

answer

the manager has the power to incur the cost within a given time period.

question

As one moves up to each higher level of managerial responsibility,

answer

a greater number of costs are controllable.

question

A responsibility report should

answer

show only those costs that a manager can control.

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An unfavorable materials quantity variance would occur if

answer

actual pounds of materials used were greater than the standard pounds allowed.

question

Allowances should not be made in the direct labor quantity standard for

answer

wasted time.

question

An unfavorable labor quantity variance may be caused by

answer

worker fatigue or carelessness.

question

When is a variance considered to be 'material'?

answer

When it is large compared to the actual cost

question

Alex Co. prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?

answer

Cost of goods sold

question

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

answer

separately disclosed.

question

Which is not one of the four most commonly used perspectives on a balanced scorecard?

answer

The external process perspective

question

The customer perspective of the balanced scorecard approach

answer

evaluates the company from the viewpoint of those people who buy its products or services

question

In reporting variances,

answer

the reports should facilitate management by exception.

question

The higher the risk element in a project, the

answer

higher the discount rate

question

The discount rate that will result in the lowest net present value for a project is

answer

the highest rate used to evaluate the project.

question

Which of the following will increase the net present value of a project?

answer

A decrease in the discount rate

question

The profitability index is computed by dividing the

answer

present value of cash flows by the initial investment.

question

The capital budgeting method that allows comparison of the relative desirability of projects that require differing initial investments is the

answer

profitability index

question

If a project has a positive net present value, its profitability index will be

answer

greater than one.

question

A post-audit should be performed using

answer

the same evaluation technique used in making the original decision.

question

The internal rate of return is the interest rate that results in a

answer

zero NPV.

question

The capital budgeting technique that finds the interest yield of the potential investment is the

answer

internal rate of return method.

question

If the internal rate of return is less than the discount rate, then the net present value of a project is

answer

negative.

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