1. The managers of process manufacturing systems focus on the series of processes needed to complete the production of products. (Points : 3)
True
False
2. Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers. (Points : 3)
True
False
3.
Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?
(Points : 3)
Unit Variable costs remain constant, unit fixed costs remain constant
Unit Variable costs increase, unit fixed costs decrease
Unit Variable costs decrease, unit fixed costs remain constant
Unit Variable costs remain constant, unit fixed costs decrease
4.
A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.
(Points : 3)
True
False
5. The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer. (Points : 3)
True
False
6. The usual starting point for preparing a master budget is forecasting or estimating: (Points : 3)
Expenditures
Production
Sales
7. Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service. (Points : 3)
True
False
8. The formula to compute direct labor rate variance is to calculate the difference between (Points : 3)
actual costs + (actual hours * standard rate)
actual costs - standard cost
(actual hours * standard rate) - standard costs
actual costs - (actual hours * standard rate)
9. Ace Company wants to give their managers the greatest amount of responsibility over their department's accounting. Which of the following responsibility centers would accomplish that goal? (Points : 3)
Cost center
Profit center
Investment center
Company center
10. A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n): (Points : 3)
profit center
investment center
volume center
cost center
11. Another name for relevant cost is unavoidable cost. (Points : 3)
True
False
14.
Costs that remain constant in total dollar amount as the level of activity changes are called:
(Points : 3)
fixed costs
mixed costs
opportunity costs
variable costs
15. As the level of output activity increases, fixed cost per unit remains constant. (Points : 3)
True
False
16. In Just-In-Time manufacturing large amounts of inventory is kept on hand so items can be produced just when they are needed by the customer. (Points : 3)
True
False
17. Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell. (Points : 3)
True
False
21. Explain the difference between fixed and variable costs AND give 2 examples of each for a car manufacturer. (Points : 10)
22.
For each item shown below, indicate whether it is a product cost or a period cost,and for each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.
a. Administrative salaries
b. Direct labor
c. Advertising
d. Property tax on the factory
e. Interest Expense
(Points : 10)
23.
What is capital budgeting? Why are capital budgeting decisions often difficult and risky?
(Points : 10)
24.
Briefly describe both the payback period method and the net present value method of comparing investment alternatives.
(Points : 10)
25. The two basic types of cost accounting systems are:
Job order and process costing
Job order and customized product costing
Process costing and perpetual costing
Perpetual costing and periodic costing
26. Which of the following would most likely use a process cost system?
Guitar manufacturer
Paint manufacturer
Custom furniture manufacturer
Tax consulting company
27. At Flint Company, the unit sales price is $84; the unit variable cost is $62 and fixed costs total $202,400. What is the break-even in units?
8,400
9,000
9,200
9,400
28.
Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?
Unit Variable costs remain constant, unit fixed costs remain constant
Unit Variable costs increase, unit fixed costs decrease
Unit Variable costs decrease, unit fixed costs remain constant
Unit Variable costs remain constant, unit fixed costs decrease
29. When preparing a budget, the first budget to be prepared is the _______ budget.
Administrative
Cash
Purchases
Sales
41. A company is considering purchasing a machine for $21,200. The machine will generate an after-tax net income of $4,100 per year. What is the payback period for the new machine?
9.2 years
11.8 years
0.19 years
5.2 years
42.
In business decision-making, managers typically examine the two fundamental factors of:
Risk and capital investment
Risk and rate of return
Capital investment and rate of return
Risk and payback
43. According to the Institute of Management Accountants Statement of Ethical Professional Practice, which of the following is NOT included:
Competence
Integrity
Credibility
Compliance
44. An employee is dissatisfied with the resolution of an ethical conflict at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:
Report the incident to the State Board of Accountancy
Contact the Institute of Management Accountants
Make the president of the company aware of the ethical conflict
Contact the next level of management who is not involved in the ethical conflict
True
False
2. Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers. (Points : 3)
True
False
3.
Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?
(Points : 3)
Unit Variable costs remain constant, unit fixed costs remain constant
Unit Variable costs increase, unit fixed costs decrease
Unit Variable costs decrease, unit fixed costs remain constant
Unit Variable costs remain constant, unit fixed costs decrease
4.
A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.
(Points : 3)
True
False
5. The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer. (Points : 3)
True
False
6. The usual starting point for preparing a master budget is forecasting or estimating: (Points : 3)
Expenditures
Production
Sales
7. Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service. (Points : 3)
True
False
8. The formula to compute direct labor rate variance is to calculate the difference between (Points : 3)
actual costs + (actual hours * standard rate)
actual costs - standard cost
(actual hours * standard rate) - standard costs
actual costs - (actual hours * standard rate)
9. Ace Company wants to give their managers the greatest amount of responsibility over their department's accounting. Which of the following responsibility centers would accomplish that goal? (Points : 3)
Cost center
Profit center
Investment center
Company center
10. A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n): (Points : 3)
profit center
investment center
volume center
cost center
11. Another name for relevant cost is unavoidable cost. (Points : 3)
True
False
14.
Costs that remain constant in total dollar amount as the level of activity changes are called:
(Points : 3)
fixed costs
mixed costs
opportunity costs
variable costs
15. As the level of output activity increases, fixed cost per unit remains constant. (Points : 3)
True
False
16. In Just-In-Time manufacturing large amounts of inventory is kept on hand so items can be produced just when they are needed by the customer. (Points : 3)
True
False
17. Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell. (Points : 3)
True
False
21. Explain the difference between fixed and variable costs AND give 2 examples of each for a car manufacturer. (Points : 10)
22.
For each item shown below, indicate whether it is a product cost or a period cost,and for each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.
a. Administrative salaries
b. Direct labor
c. Advertising
d. Property tax on the factory
e. Interest Expense
(Points : 10)
23.
What is capital budgeting? Why are capital budgeting decisions often difficult and risky?
(Points : 10)
24.
Briefly describe both the payback period method and the net present value method of comparing investment alternatives.
(Points : 10)
25. The two basic types of cost accounting systems are:
Job order and process costing
Job order and customized product costing
Process costing and perpetual costing
Perpetual costing and periodic costing
26. Which of the following would most likely use a process cost system?
Guitar manufacturer
Paint manufacturer
Custom furniture manufacturer
Tax consulting company
27. At Flint Company, the unit sales price is $84; the unit variable cost is $62 and fixed costs total $202,400. What is the break-even in units?
8,400
9,000
9,200
9,400
28.
Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?
Unit Variable costs remain constant, unit fixed costs remain constant
Unit Variable costs increase, unit fixed costs decrease
Unit Variable costs decrease, unit fixed costs remain constant
Unit Variable costs remain constant, unit fixed costs decrease
29. When preparing a budget, the first budget to be prepared is the _______ budget.
Administrative
Cash
Purchases
Sales
41. A company is considering purchasing a machine for $21,200. The machine will generate an after-tax net income of $4,100 per year. What is the payback period for the new machine?
9.2 years
11.8 years
0.19 years
5.2 years
42.
In business decision-making, managers typically examine the two fundamental factors of:
Risk and capital investment
Risk and rate of return
Capital investment and rate of return
Risk and payback
43. According to the Institute of Management Accountants Statement of Ethical Professional Practice, which of the following is NOT included:
Competence
Integrity
Credibility
Compliance
44. An employee is dissatisfied with the resolution of an ethical conflict at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:
Report the incident to the State Board of Accountancy
Contact the Institute of Management Accountants
Make the president of the company aware of the ethical conflict
Contact the next level of management who is not involved in the ethical conflict
