Flashcards on Managerial Accounting Practice
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A company can expect to receive which of the following benefits when it uses a budgeting process? A. The budget provides managers with a benchmark against which to compare actual results for performance evaluation. B. The budget helps motivate employees to achieve sales growth and cost-reduction. C. The planning required to develop the budget helps managers foresee and avoid potential problems before they occur. D. All of the above.
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A
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A company prepares a five-year budget. This budget would be considered a(n) A. Operational Budget B. Flexible Budget C. Strategic Budget D. Master Budget
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C
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The budgeted statement of cash flows is part of which element of the master budget? A. The financial budget B. The operating budget C. The capital expenditures budget D. None of the above
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A
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Which of the following expenses would not appear in the cash budget? A. Depreciation expense B. Marketing expense C. Interest expense D. Wages expense
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A
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Which of the following is the cornerstone of the master budget? A. The production budget B. The selling & admin expense budget C. The sales budget D. The budgeted balance sheet
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C
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Information technology has made it easier for managers to perform all of the following tasks except A. combining individual units' budgets into the companywide budget B. removing budgetary slack from the budget C. preparing performance reports that identify variances between actual and budgeted revenues and costs D. sensitivity analyses
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B
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The budgeted balance sheet is part of which element of the master budget? A. Financial budget B. Capital expenditures budget C. Operating budget D. None of the above
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A
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Which is not one of the potential advantages of decentralization? A. Supports use of expert knowledge B. Increases goal congruence C. Improves customer relations D. Improves motivation and retention
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B
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The Quaker Foods division of PepsiCo is most likely treated as a(n) A. cost center B. revenue center C. investment center D. profit center
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C
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Which of the following is not a goal of performance evaluation systems? A. promoting goal congruence and coordination B. communicating expectations C. reprimanding unit managers D. providing feedback
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C
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Which of the following balanced scorecard perspectives essentially asks, "Can we continue to improve and create value?" A. Internal Business B. Learning and growth C. Customer D. Financial
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B
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The performance evaluation of a cost center is typically based on its A. ROI B. Sales Volume Variance C. Flexible Budget Variance D. Static Budget Variance
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C
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In making short-term special decisions, what should you do? A. Use a traditional costing approach. B. Focus only on quantitative factors. C. Separate variable from fixed costs. D. Focus on total costs.
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C
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Which of the following is relevant to Kitchenware.com's decision to accept a special order at a lower sale price from a large customer in China? A. Kitchenware.com's investment in its website B. The cost of Kitchenware.com's warehouses in the United States. C. The cost of shipping the order to the customer. D. Founder Eric Crowley's salary
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C
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Which of the following costs are irrelevant to business decisions? A. Sunk costs B. Avoidable costs C. Costs that differ between alternatives D. Variable costs
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A
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When making decisions, managers should consider A. sunk costs in their decisions B. revenues that differ between alternatives C. costs that do not differ between alternatives D. only variable costs
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B
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When pricing a product or service, managers must consider which of the following? A. Only variable costs B. Only manufacturing costs C. Only period costs D. All costs
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D
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When companies are price-setters, their products and services A. are priced by managers using a target-pricing emphasis. B. tend to be unique C. tend to be commodities D. tend to have a lot of compeititors
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B
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In deciding whether to drop its electronics product line, Smith Company should consider A. the revenues it would lose from dropping the product B. how dropping the electronics product line would affect sales of its other products like DVDs C. the costs it could save by dropping the product line D. all of the above
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D
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In deciding which product lines to emphasize when a production constraint exists, Kitchenware.com should focus on the product line that has the highest A. profit per unit of product B. contribution margin ratio C. contribution margin per unit of product D. contribution margin per unit of the constraining factor
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D
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When making outsourcing decisions, which of the following is true? A. The variable cost of producing the product in-house is relevant. B. The total manufacturing unit cost of making the product in-house is relevant. C. Expected use of the freed capacity is irrelevant. D. Avoidable fixed costs are irrelevant.
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A
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When deciding whether to sell as is or process a product further, managers should ignore which of the following? A. The revenue if the product is sold as is B. The cost of processing further C. The revenue if the product is processed further D. The cost of processing the product thus far
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D
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What is the first step of capital budgeting? A. Identifying potential projects B. Gathering the money for the investment C. Getting the accountant involved D. All of the above
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A
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Which of the following methods does not consider the investment's profitability? A. NVP B. AAR C. Payback D. IRR
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C
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Which of the following affects the present value of an investment? A. The interest rate B. The number of time periods (length of the investment) C. The type of investment (annuity versus single lump sum) D. All of the above
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D
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Which of the following is true regarding capital rationing decisions? A. Companies should always choose the investment with the shortest payback. B. Companies should always choose the investment with the highest NPV. C. Companies should always choose the investment with the highest ARR. D. None of the above
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D
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In computing the IRR on an expansion at Mountain Creek Resort, Vernon Valley would consider all of the following expect A. depreciation on the asset built in the expansion B. the cost of the expansion C. present value factors D. predicted cash inflows over the life of the expansion
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A
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The IRR is A. the firm's hurdle rate B. the interest rate at which the NPV of the investment is zero C. the same as the ARR D. None of the above
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B
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Which of the following is the most reliable method for making capital budgeting decisions? A. ARR method B. NPV method C. Post-audti method D. Payback method
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B
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Ian Corp. is considering two expansion projects. The first project streamlines the company's warehousing facilities. The second project automates inventory utilizing bar code scanners. Both projects generate postivie NPV, yet Ian Corp. only chooses the bar coding project. Why? A. The IRR of the warehousing project is less than the company's required rate of return for capital projects. B. The company is practicing capital rationing. C. The payback is greater than the warehouse project's life. D. All of the above are true.
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B
