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Question(s) / Instruction(s):

ACC 561 Final Exam 3:  with steps to problems

 

1) Department performance reports can be used to help department heads determine _____.

A. who is primarily responsible for any deviations from plans

B. how effectively and efficiently the department is operating

C. how effectively the department is operating

D. how efficiently the department is operating

 

 

2) According to the Financial Executives Institute, one function of the treasurer is _____.

A. government reporting

B. Short term financing

C. tax administration

D. reporting and interpreting financial information

 

 

3) According to the Financial Executives Institute, one function of controllership is _____.

A. provision of capital

B. short term financing

C. reporting and interpreting financial information

D. investments

 

4) Ethical accountants are important to society because _____.

A. none of these answers is correct

B. they pay their taxes

C. the information produced is reliable

D. they will not go to prison and waste taxpayers' money

 

 

5) Which of the following is not a major factor causing changes in management accounting today?

A. E-commerce is not a major factor.

B. Declining work ethic is not a major factor.

C. Increased global competition is not a major factor.

D. Increasing importance of the service sector of the economy is not a major factor.

 

 

6) According to the Institute of Management Accountants’ Statement of Ethical Professional Practice, the standard of competence includes:

A. All of these answers are correct

B. avoiding actual or apparent conflicts of interest

C. the ongoing development of the accountant’s knowledge and skills

D. disclosing all relevant information

 

 

7) _____ refers to accounting information developed for managers within an organization.

A. Tax accounting

B. Financial accounting

C. Managerial accounting

D. Internal auditing

 

 

8) The primary users of management accounting information are _____.

A. suppliers

B. internal decision makers

C. governmental regulatory authorities

D. bankers

 

 

9) _____ is (are) the accounting system's effect on the decision of managers.

A. Computerization

B. Simplicity

C. The cost-benefit balance

D. Behavioral implications

 

 

10) The _____ is also called the statement of financial position.

A. balance sheet

B. income statement

C. statement of retained earnings

D. statement of cash flows

 

 11) The accrual basis of accounting recognizes the impact of transactions on the financial statements in the period when _____.

A. the transaction occurs

B. cash is received or disbursed

C. the accounting equation is decreased

D. revenues are earned and expenses are incurred

 

 

12) _____ would not appear on the financial statements for a sole proprietorship.

A. Unearned Sales Revenues

B. Paid-in Capital

C. Accumulated Depreciation

D. Cost of Goods Sold

 

 

 13) Valuing assets at replacement cost to facilitate the measurement of “economic income” violates the _____ accounting convention.

A. conservatism

B. materiality

C. cost benefit

D. objectivity

 

 

14) The use of acquisition cost less depreciation in valuing an asset on the balance sheet is the logical result of the _____ accounting convention.

A. materiality

B. cost-benefit

C. conservatism

D. continuity

 

 

15) Mr. Bryant invested $50,000 cash in a new corporation. The new corporation will record this transaction with a debit to_____.

A. Paid-in Capital and a credit to Retained Earnings for $50,000

B. Cash and a credit to Retained Income for $50,000

C. Cash and a credit to Paid-in Capital for $50,000

D. Retained Earnings and a credit to Cash for $50,000

 

 

16) The statement of cash flows is used for all of the following except_____.

A. revealing commitments that may restrict future courses of action

B. showing the relationship of net income to changes in cash

C. evaluating the creditworthiness of the organization

D. determining a company’s ability to pay its debts when they are due

 

 

17) Sylvester Company requires clients to pay in advance for legal services. One such client made a $4,000 payment on May 1, and Sylvester Company recorded this transaction in the appropriate liability account. As of May 20, the legal services that the client requested had been completed. The May 20 accounting entry will:

A. decrease liabilities and increase revenues

B. increase revenues and increase liabilities

C. decrease assets and decrease liabilities

D. decrease assets and increase revenues

 

 

18) The difference between a single and multiple step income statement is that a single step income statement_____.

A. calculates net income using one method, whereas a multiple step income statement calculates net income under two or more methods

B. shows only one year's net income, whereas a multiple step income statement shows multiple years' net income

C. calculates gross profit and operating income, whereas a multiple step income statement does not

D. groups all revenues together and all expenses together, whereas a multiple step income statement separates certain revenues and expenses from each other and presents subtotals

 

  

19) Which value chain function would include the cost of computer-aided design equipment and cost to develop the prototype of a product?

A. The marketing function would include these costs

B. The production function would include these costs.

C. The design of product, services, and processes function would include these costs.

D. The distribution function would include these costs.

 

 

20) Output measures of both resources and activities are _____.

A. fixed activities

B. stages of production

C. cost drivers

D. variable activities

 

 

21) Number of engineering hours is a likely cost driver for which value chain function?

A. The production function has number of engineering hours as a likely cost driver

B. The marketing function has number of engineering hours as a likely cost driver.

C. The research and development function has number of engineering hours as a likely cost driver.

D. The design function has number of engineering hours as a likely cost driver.

 

22) Knothole Company sells desks at $480 per desk. The costs associated with each desk are as follows: Direct materials $195 Direct labor 126 Variable factory overhead 51 Total fixed costs for the period are $456,840. The break-even volume in dollars is _____.

A. $2,030,400

B. $456,840

C. none of these answers is correct

D. $1,573,560

 

 

23) Hug Me Company produces dolls. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor. If total fixed costs are $435,000, then the break even volume in dollars is _____.

A. $1,023,529

B. $621,429

C. $1,450,000

D. $435,000

 

24) Walnut Corporation sells desks at $480 per desk. The costs associated with each desk are as follows: Direct materials $195 Direct labor 126 Variable factory overhead 51 Total fixed costs for the period are $456,840. The contribution margin per desk is _____.

A. $126

B. $51

C. $195

D. $108

 

 

25) _____ of approximating cost functions does not involve the analysis of past costs.

A. Engineering analysis

B. High low analysis

C. least-squares regression

D. Visual fit analysis

 

 

26) In relation to a cost function, the term reliability means_____.

A. whether the cost function conforms to a given mathematical model

B. how well the cost function predicts future costs

C. whether the costs and activities can be easily observed

D. how well the cost function explains past cost behavior

 

 

27) Managers should apply two principles to obtain accurate and useful cost functions. These principles are ____.

A. believability and validity

B. reliability and validity

C. plausibility and believability

D. plausibility and reliability

 

 

28) _____ is a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.

A. Cost driver accounting

B. Activity based costing

C. Transaction costing

D. Transaction based accounting

  

29) _____ is an example of the external financial reporting purpose of the cost management systems.

A. Budget reporting

B. The product mix to optimize profitability

C. The cost of a manufacturing process

D. The amount of inventory that should appear on the balance sheet

  

30) The change from traditional costing to activity-based costing may reveal that _____.

A. low volume products are overcosted

B. both high and low volume products are undercosted

C. both high and low volume products are overcosted

D. high volume products are overcosted

  

31) A _____ gives the expected sales under a given set of conditions.

A. sales forecast

B. sales budget

C. sales prediction

D. budget forecast

  

32) _____ budgeting is when budgets are formulated with the active participation of all affected employees

A. Team

B. Shared

C. Participative

D. Financial

  

33) _____ models are mathematical models of the master budget that can react to any set of assumption about sales, costs, and product mix.

A. Financial planning

B. Futuring

C. Accounting

D. Budgeting analysis

  

34) A sales forecast is _____.

A. all of these answers are correct

B. the result of decisions to create conditions

C. a prediction of sales under a given set of conditions

D. the same as a sales budget that will generate a desired level of sales

  

35) The master budget includes forecasts for all of the following except _____.

A. cash disbursements

B. sales

C. balance sheets

D. number of employees

 

 36) Important factors considered by sales forecasters include all of the following except _____.

A. marketing research studies

B. the desired level of sales

C. competitors’ activities

D. past patterns of sales

  

37) The master budget quantifies targets for all of the following except _____.

A. cost driver activity

B. sales

C. markets

D. production

  

38) _____ probably would not be used as a measure of activity in a flexible budget.

A. Number of direct labor hours worked

B. Number of hours worked by salespeople

C. Number of machine hours used

D. Sales volume

  

39) Which of the following statements is false?

A. Flexible budgets are not based on the same revenue and cost behavior assumptions as the static budget.

B. Flexible budgets are automatically matched to changes in activity levels

C. Flexible budgets are prepared for a range of activity.

D. Flexible budgets help provide a basis for management by exception.

 

 40) _____ is not a type of cost allocation.

A. Reallocation of costs from production departments to service departments

B. Allocation of costs to the appropriate organizational unit

C. Allocation of costs of a particular organizational unit to products or services

D. Reallocation of costs from service departments to production departments

 

 41) The use of budgeted service department cost rates protects using departments from _____.

A. all of these answers are correct

B. service outages

C. price fluctuations

D. service department efficiencies

  

42) Costs are allocated for all the following purposes except to _____.

A. determine inventory levels

B. compute income and asset valuation

C. predict the economic effects of planning and control decisions

D. obtain reimbursement

 

 

43) Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:

Maintenance     Personnel     Mixing     Finishing

Direct dept. costs     $126,000     $84,000     $105,000     $175,000

Square footage     800     400     1,600     1,200

Number of employees     8     12     24     32

If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.

A. $31,500

B. $57,000

C. $47,250

D. $42,750

 

44) Kevin Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year: Maintenance Personnel Mixing Finishing Direct dept. costs $126,000 $84,000 $105,000 $175,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is _____.

A. $105,000

B. $42,000

C. $31,500

D. $72,000

  

45) Martinez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year: Maintenance Personnel Mixing Finishing Direct dept. costs $50,400 $33,600 $42,000 $5,600 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 If the step down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Personnel to Maintenance is _____.

A. $0

B. $4,998

C. $3,539

D. $4,200

 

 

46) factory overhead appears on the absorption-costing income statement as_____.

A. a fixed expense

B. part of cost of goods sold

C. a production volume variance

D. part of cost of goods sold and as a production volume variance

 

 

47) In absorption costing, costs are separated into the major categories of_____.

A. manufacturing and nonmanufacturing

B. manufacturing and fixed

C. variable and nonmanufacturing

D. fixed and variable

 

 

48) Absorption costing assigns _____ to the product.

A. all fixed and variable costs

B. variable manufacturing costs

C. variable and fixed manufacturing costs

D. all variable costs

 

 

49) Identify which of the following is not a characteristic of a management control system.

A.A management control system aids and coordinates the process of making decisions.

B.A management control system encourages short term profitability.

C.A management control system coordinates forecasting sales and cost driver activities, budgeting, and measuring and evaluating performance.

D.A management control system motivates individuals throughout the organization to act in concert.

 

 

50) _____ is (are) the most basic component of a management control system.

A. Top management’s preferences

B. The organization’s long-range budget

C. The stockholder’s preferences

D. The organization’s goals

 

 

51) _____ is the logical integration of management accounting tools to gather and report data and to evaluate performance.

A. A management control system

B. A financial reporting system

C. An internal control system

D. A quality control system

 

 

52) Speedo Company’s revenues are $300 on invested capital of $240. Expenses are currently 70% of sales. If Angelo Company can reduce its invested capital by 20%, return on investment will be _____.

A. 93.75%

B. 46.88%

C. 18.75%

D. 75%

                         

53) The following information is available for the Peter Company:

Sales $150,000

Invested Capital 156,250

ROI 10%

The return on sales is _____.

A. none of these answers is correct

B. 62.50%

C. 10.00%

D. 10.42%

 

 

54) _____ is a measure of income or profit divided by the investment required to obtain that income or profit.

A. Residual income

B. Return on investment

C. Return on sales

D. Capital turnover 

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