Flashcards and Answers – Managerial Accounting Final
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Which is not a characteristic of management accounting information? Focuses on the future. Emphasizes the external financial statements. Emphasizes relevance. Provides detailed information about parts of the company.
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Emphasizes the external financial statements.
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World-class businesses must compete based on time. To compete effectively, many companies have developed what? JIT management. Enterprise resource planning. Cost Standards. All of the above.
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Just-in-Time Management
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What is not part of manufacturing overhead?
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Depreciation
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In computing COGs, what is the manufacturer's counterpart to the merchandiser's purchases?
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Cost of Goods Manufactured
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A management accountant who avoids conflicts of interest meets the ethical standard of what? Competence. Integrity. Objectivity. Confidentiality.
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Integrity
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How do you calculate predetermined manufacturing overhead rate based on machine hours?
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Budgeting OH costs / Budgeted Machine Hours
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What don't you include when calculating manufacturing overhead costs?
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Depreciation, Repair, and Direct Labor/Materials.
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What accounts would you use to close a manufacturing overhead account?
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Manufacturing Overhead - Debit. COGs - Credit.
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In general, what do transferred-in costs include? Costs incurred in all prior processes. Costs incurred in the previous period. Costs incurred in all the prior periods. Costs incurred in only the previous process.
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Costs incurred in all prior processes.
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True or false: ABC is primarily for manufacturing companies.
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False.
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True or false: ABC focuses on indirect costs.
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True.
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True or false: ABC is more refined than one that uses a companywide overhead rate.
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True.
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Which account is NOT used in JIT costing?
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Work in process (WIP) Inventory
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A customer finds a defect in a product and sales go down. What kind of quality cost is that? Prevention. Appraisal. External. Internal.
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External.
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Testing a product before sending it to a customer is what kind of quality cost? Prevention. Appraisal. External. Internal.
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Appraisal.
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For a driving school, straight-line depreciation on cars is what kind of cost? Fixed. Variable. Mixed. None of the above.
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Fixed.
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On a CVP graph, the total cost line intersects the vertical (dollars) line at what?
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The level of the fixed costs.
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If the company increases its fixed costs for Product B, then the contribution margin per unit will: Increase, Decrease, or remain the same.
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Remain the same.
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In making short term business decisions you should: Discount cash flows to present value. Separate variable from fixed costs. Focus on total costs. Use a conventional income statement.
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Separate variable from fixed costs.
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In deciding which product line to emphasize, a company's manager should focus on the product line with the highest: Profit per unit. Contribution margin per unit of the constraining factor. Contribution margin per unit. Contribution margin ration.
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Contribution margin per unit of the constraining factor.
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Which is relevant when making outsourcing decisions? Avoidable fixed costs. Manufacturing cost per unit of making in-house. Expected use of the freed capacity. The variable cost of producing the product in-house.
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The variable cost of producing the product in-house.
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When companies are price-setters their products/services: Have a lot of competitors. Are commodities. Are priced using target-price emphasis. Are unique.
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Are unique.
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Cash Payback Formula
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Amount Invested / Annual Cash Inflow
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ARR Means
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Accounting Rate of Return
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NPV Means
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Net Present Value
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IRR Means
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Internal Rate of Return
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ARR Formula
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Average Annual Operating Income / Average Amount Invested
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Average Amount Invested Formula (Denominator of ARR Formula)
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(Amount Invested + Residual Value) / 2
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Which of these uses accrual accounting instead of net cash flows? ARR. NPV. Payback. IRR.
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ARR
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Which does not consider investment profitability? ARR. NPV. Payback. IRR.
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Payback
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What does the IRR show?
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The interest rate at which the NPV of the investment is zero.
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Which of the following is the most reliable method for making capital budgeting decisions? NPV. Payback. Post-audit. ARR.
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NPV.
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True or false. Depreciation is considered when calculating IRR.
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False.
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Which of the following is the starting point of the master budget? Operating expense budget. Purchase and COGs budget. Sales budget. Inventory budget.
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Sales budget.
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The balance sheet is part of which element of the master budget? Financial. Capital expenditure. Operating. None of the above.
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Operating.
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Which manager is the highest in the organization. Investment. Revenue. Profit. Cost.
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Investment.
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What is NOT one of the potential advantages of decentralization? Improves motivation and retention. Supports use of expert knowledge. Increases goal congruence. Improves customer relations.
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Increases goal congruence.
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Manufactured yield rate (units produced per unit of time) would be which balanced scorecard perspective? Customer. Internal Business. Financial. Learning and growth.
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Internal Business.
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Performance evaluation of a cost center is typically based on what: Sales Volume Variance. ROI. Static Budget Variance. Flexible Budget Variance.
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Flexible Budget Variance.
