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1 | |
A major difference between financial accounting and managerial accounting relates to differences in the users. Related to Smith Manufacturing Company, which of the following best describes a user of managerial accounting information? (LO 1) |
| | A) | Credit manager of a vendor for Smith Manufacturing |
| | B) | Purchasing manager for Smith Manufacturing |
| | C) | Bank manager reviewing a loan application from Smith Manufacturing |
| | D) | IRS divisional manager reviewing the tax return of Smith Manufacturing |
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2 | |
When comparing managerial accounting information with financial accounting information, which of the following related to managerial accounting information would be TRUE? (LO 1) |
| | A) | It must be based on GAAP. |
| | B) | It emphasizes information about the company as a whole. |
| | C) | It presents estimates of future financial operations. |
| | D) | It includes an analysis of historical cost. |
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3 | |
Alex Company spent $2,500 cash to build 10 desks: $940 for materials, $1,270 for a carpenter's labor, and $290 for tools used to make the desks. None of the desks have been sold. What amount should Alex Company expense for the desks? (LO 2) |
| | A) | $0 |
| | B) | $1,270 |
| | C) | $1,560 |
| | D) | $2,500 |
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4 | |
Which of the following is NOTa product cost? (LO 2) |
| | A) | Cost of wood used in making a table top |
| | B) | Cost of labor to assemble a table |
| | C) | Cost of company president's salary |
| | D) | Cost of electricity to operate a machine used to sand wood for a table |
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5 | |
In what account are the costs of building a chair accumulated until the chair is sold? (LO 2) |
| | A) | Materials |
| | B) | Labor |
| | C) | Finished goods inventory |
| | D) | Cost of goods sold |
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6 | |
Which of the following costs are product costs? (LO 4) |
| | A) | General operating costs |
| | B) | Selling and administrative costs |
| | C) | Material costs |
| | D) | Interest costs |
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7 | |
Which of the following is NOT a product cost? (LO 5) |
| | A) | Direct materials |
| | B) | Direct labor |
| | C) | Manufacturing overhead |
| | D) | Selling and administrative costs |
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8 | |
Johnson Manufacturing paid $5,000 for materials, $4,000 for production labor, and $5,000 for sales salaries. It also had $3,500 for depreciation of manufacturing equipment and $2,500 for depreciation of office furniture. What is the average cost per unit to produce 50 units? (LO 3, LO 4) |
| | A) | $400 |
| | B) | $350 |
| | C) | $300 |
| | D) | $250 |
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9 | |
Which of the following is NOT an overhead cost related to producing tables? (LO 5) |
| | A) | The production supervisor's salary |
| | B) | The cost of nails |
| | C) | The cost of a wood tabletop |
| | D) | Depreciation of manufacturing equipment |
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10 | |
Use the following information to answer questions 10 - 13.- Acquired $30,000 cash by issuing common stock.
- Paid $10,000 for all material used in starting and completing 50 products this period.
- Paid $6,000 for administrative salaries.
- Paid $8,000 for wages of production workers.
- Recognized depreciation of $2,500 on office furniture.
- Recognized depreciation of $3,500 on manufacturing equipment.
- Collected $28,000 in cash for all sales made during the period.
What was the total product cost for the period? (LO 4, LO 5) |
| | A) | $30,000 |
| | B) | $24,500 |
| | C) | $24,000 |
| | D) | $21,500 |
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11 | |
If out of the 50 units completed 5 units are in ending inventory, what is the amount of ending inventory? (LO 3, LO 4, LO 5) |
| | A) | $28,000 |
| | B) | $21,500 |
| | C) | $19,350 |
| | D) | $2,150 |
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12 | |
What was the gross margin for the period? (LO 3, LO 4, LO 5) |
| | A) | $2,150 |
| | B) | $8,650 |
| | C) | $28,000 |
| | D) | $30,000 |
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13 | |
What is the net cash flow from operating activities? (LO 5) |
| | A) | $58,000 inflow |
| | B) | $28,000 inflow |
| | C) | $4,000 inflow |
| | D) | $3,000 outflow |
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14 | |
Which of the following costs is generally NOT assigned to the cost of the product through cost allocation? (LO 5) |
| | A) | Indirect material |
| | B) | Indirect labor |
| | C) | Direct labor |
| | D) | Depreciation |
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15 | |
Due to an error in processing invoices, some product costs were treated as general, selling, and administrative costs. Which of the following indicates how this error affects the financial statements, assuming production exceeded sales during the period? (LO 6) |
| | A) | Cash flows from operating activities are overstated. |
| | B) | Inventory is understated. |
| | C) | Net income is overstated. |
| | D) | Gross margin is understated. |
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16 | |
Which of the following is NOT included in the standards of ethical conduct for management accountants? (LO 7) |
| | A) | Competence |
| | B) | Confidentiality |
| | C) | Integrity |
| | D) | Independence |
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17 | |
The Providence Manufacturing Company produced and sold 100 units during the period. The company recorded $5,000 of overhead costs related to these 100 units as general, selling and administrative expenses. What will be the effect of this error on the financial statements for the period? (LO 6) |
| | A) | Inventory will be understated. |
| | B) | Gross margin will be overstated. |
| | C) | General, selling and administrative expenses will be understated. |
| | D) | Net income will be overstated. |
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18 | |
Which of the following is the best example of an upstream cost? (LO 8) |
| | A) | Advertising |
| | B) | Research and development |
| | C) | Sales commissions |
| | D) | Uncollectible accounts receivable |
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19 | |
Which of the following is NOT used in cost plus pricing decisions? (LO 8) |
| | A) | Product costs |
| | B) | Upstream costs |
| | C) | Regulatory costs incurred by the federal government |
| | D) | Downstream costs |
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20 | |
Which of the following is FALSE? (LO 9) |
| | A) | Managers of all companies analyze costs to control material, labor, and overhead. |
| | B) | Managers of all companies analyze costs to properly value inventory. |
| | C) | Managers of all companies need to improve quality. |
| | D) | Managers of all companies need to improve productivity. |
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21 | |
Which of the following is the term used when identifying the best practices of world class competitors? (LO 10) |
| | A) | Activity-based management |
| | B) | Value-based management |
| | C) | Benchmarking |
| | D) | Value chain analysis |
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22 | |
Which of the following is NOT the result of a JIT inventory system? (LO 10) |
| | A) | Reduced inventory holding costs |
| | B) | Reduced product quality |
| | C) | Improved efficiency |
| | D) | Improved customer satisfaction |
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23 | |
Which of the following is NOT included in Total Quality Management (TQM)? (LO 10) |
| | A) | A systematic problem-solving philosophy that encourages front-line workers to achieve zero defects |
| | B) | An organizational commitment to achieving customer satisfaction |
| | C) | A commitment to top quality regardless of the cost |
| | D) | Continuous improvement through an ongoing process where employees learn to eliminate waste |
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24 | |
Which of the following is NOT a concern of Activity-Based Management (ABM)? |
| | A) | The value chain |
| | B) | Value-added taxation |
| | C) | Value-added activities |
| | D) | Nonvalue-added activities |
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25 | |
Which of the following facilitates a just-in-time (JIT) inventory system? (LO 10) |
| | A) | Most-favored buying status |
| | B) | Most-favored customer status |
| | C) | Most-favored delivery status |
| | D) | Most-favored payment status |
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