managerial accounting quiz #1 march 15, 2021

Managerial Accounting

QUIZ #1 March 15, 2021

1. How is accounting information prepared by management accountants used within an organization?

A) to help operating managers make decisions

B) to plan an organization's operations

C) to control an organization's operations

D) all of the above

2. A company is setting the price on a special order of a manufactured product routinely made. What type

of information is needed to set the price?

A) Scorekeeping

B) attention directing

C) problem-solving

D) interim reports

3. To evaluate managers' decisions and the productivity of organizational units, organizations use

________.

A) annual financial statements

B) quarterly financial statements

C) bimonthly financial statements

D) performance reports

4. The management accountant prepares the following performance report for a company's first year of

operations:

Budget Actual Variance

Sales $100,000 $110,000 ?

Cost of Goods Sold 50,000 45,000 ?

Selling Expenses 20,000 19,000 ?

Administrative Expenses 10,000 11,000 ?

Operating Income $20,000 $35,000 ?

Required:

Compute variances for each line item on the income statement. Also indicate if the variances are favorable or

unfavorable.

Answer:

Budget Actual Variance

Sales $100,000 $110,000 $10,000 F

Cost of Goods Sold 50,000 45,000 5,000 F

Selling Expenses 20,000 19,000 1,000 F

Administrative Expenses 10,000 11,000 1,000 U

Operating Income $20,000 $35,000 $15,000 F



0. PLEASE WRITE YOUR UG NUMBER

1. A brainstorming group in the Research and Development area is charged with developing new product

ideas for the company. What is a good cost driver of the cost of this activity?

A) number of parts in new products proposed

B) number of new product proposals

C) number of workers

D) number of engineering hours

2. Cost drivers are ________.

A) the different functions in the value chain

B) different types of functional areas in the firm

C) measures of activities that require the use of resources and thereby cause costs

D) different types of cost calculations

3. As cost-driver level decreases in the relevant range, fixed costs per unit of cost driver ________, but total

fixed costs ________.

A) increase; do not change

B) decrease: do not change

C) do not change; increase

D) do not change; decrease

4. The relevant range applies to ________.

A) variable costs only

B) fixed costs only

C) fixed costs and variable costs

D) none of the above

5. If individual cost steps are uniform and the decision being made spans a number of steps, the step costs

are treated as a ________.

A) fixed cost

B) mixed cost

C) incremental cost

D) variable cost



1. The break-even point on the cost-volume-profit graph is where the ________.

A) total cost line intersects the net profit line

B) total cost line intersects the net loss line

C) revenue line intersects the total cost line

D) revenue line intersects the variable cost line

2. Kaprelian Company sells desks at $480 per desk. The variable costs are $300 per desk. Total fixed costs for

the period are $400,000. The contribution margin ratio is ________.

A) 22.5%

B) 37.5%

C) 40.6%

D) 62.5%

3. Step Company has total variable costs of 80% of total revenues and fixed costs of $20 million per year.

What is the break-even point expressed in total revenue dollars?

A) $10 million

B) $12.5 million

C) $20 million

D) $100 million

4. I f the variable cost per unit increases, what is the effect on the break-even point? (Assume no other

changes.)

A) The break-even point increases.

B) The break-even point decreases.

C) The break-even point remains the same.

D) The break-even point is zero.

5, What is the margin of safety in dollars?

A) planned net income minus actual net income

B) planned revenue minus actual expenses

C) actual revenue in dollars minus planned revenue in dollars

D) planned sales in dollars minus break-even sales in dollars


QUIZ # 4 April 05,2021

1. The use of high technology equipment to manufacture products instead of highly skilled labor usually

results in ________.

A) higher discretionary fixed costs

B) higher discretionary variable costs

C) lower risk

D) higher operating leverage

2. If a company eliminates all discretionary costs due to a severe recession, this could ________.

A) ensure that the company reports a net loss

B) ensure that the company reports a net profit

C) reestablish a company's competitive position in an industry

D) impair a company's competitive position in an industry

3. Donahue currently produces 120,000 units at a cost of $400,000. Of the $400,000 cost, $200,000 is a fixed

cost. Next year Donahue expects to produce 145,000 units. Donahue's relevant range for production activities

is 100,000 to 150,000 units. If 145,000 units are produced next year, what is the expected fixed cost for next

year?

A) $200,000

B) $241,667

C) $441,667

D) $483,333

4. A linear cost function is estimated over the relevant range of 0 to 1,000 orders. The equation estimated is: Y

= $25,000 + $89X where Y equals the total order-processing cost and X equals the number of orders. If the

number of orders increases to 1,800, what is the predicted total order-processing cost?

A) $25,000

B) $160,200

C) $185,200

D) cannot be determined

5. Consider the following linear mixed-cost function:

Y = $120,000 + $2.70X

Where: Y = total annual maintenance cost

X = number of patient-days

What does the $120,000 represent?

A) variable cost per patient-day

B) total variable cost

C) fixed cost per patient-day

D) total fixed cost


QUIZ #5 April 12 ,2021

1. Direct labor cost is the primary cost driver of support costs for two products. Product One has direct labor

costs of $8.50 per unit and Product Two has direct labor costs of $130 per unit. The support costs assigned to

each product is the direct labor cost times five. What is the support cost assigned to Product One and Product

Two?

Product One Product Two

A) $8.50 $130

B) $5.00 $76.47

C) $42.50 $650

D) $5.00 $26.00

2. When estimating cost functions, engineering analysis based on observations of employee behavior has the

following disadvantage: ________.

A) the employees may have altered their normal work habits because they are being observed

B) it is less expensive than account analysis

C) it does not use all of the data points

D) the coefficient of determination is not reliable

3. The high-low, visual-fit and least squares regression methods are more objective methods to estimate cost

functions than ________ and ________.

A) activity analysis; account analysis

B) activity analysis; engineering analysis

C) account analysis; engineering analysis

D) capacity analysis; activity analysis

4. A cost function with one independent variable is estimated with least squares regression. The coefficient of

determination for the equation is 0.50. This statistic indicates that ________.

A) the independent variable does not explain changes in the dependent variable very well

B) the dependent variable does not explain changes in the independent variable very well

C) the cost estimates are correct 50 percent of the time

D) the cost estimates are not correct 50 percent of the time

5. Presented below is the production data for six months of the year showing the mixed costs incurred by

Madeline Company.

Month Cost Units

July $6,000 4,000

August $11,250 9,500

September $11,500 9,000

October $11,700 10,500

November $14,000 12,000

December $12,850 10,000

Madeline Company uses the high-low method to analyze mixed costs. The predicted total cost at an

operating level of 10,000 units is ________.

A) $11,725

B) $11,800

C) $12,000

D) $12,850


QUIZ #6 April 19, 2021

1. Which of the following is an example of a strategic management decision that uses cost information?

A) determining the ending balance of Merchandise Inventory for financial reporting to external users

B) determining the product mix

C) assessing a cost control program in a factory

D) determining the amount of Cost of Goods Sold for financial reporting to external users

2. A product such as Sure-Fine Graham Crackers, and a customer such as an Internet customer, are both

examples of ________.

A) cost accounting

B) cost management system

C) cost assignment

D) cost objects

3. The monthly indirect production cost is Depreciation Expense on Assembly Equipment of $100,000. The

cost allocation base is number of machine hours. The expected level of production in a month is 10,000

machine hours. What is the amount of indirect production cost per unit assigned to Product 1 and Product 2.

Product 1 requires 10 machine hours per unit. Product 2 requires 20 machine hours per unit.

Product 1 Product 2

A) $1 $2

B) $10 $20

C) $100 $200

D) none of the above

4. Which of the following costs is a direct cost for a manufactured product?

A) Depreciation Expense on factory equipment used for several products

B) Wages Expense of an assembly worker who works specifically on the product

C) Accountants who determine the product costs for all the products manufactured

D) Factory Supervisor Salary Expense where the supervisor oversees the production of several different types

of products


QUIZ #7 April 26, 2021

1. Factory overhead does NOT include ________.

A) electricity bill in factory

B) insurance Expense on factory building

C) supplies used in factory

D) wages of janitors in corporate headquarters

2. A manufacturing company has identified several costs. Indicate whether each of the following costs is an

Inventoriable cost(I) or a Period cost(P):

_____ 1. Rent Expense on factory equipment

_____ 2. Cost of subassemblies used in producing product

_____ 3. Wages of machine operators in factory

_____ 4. Rent Expense on computers at corporate office

_____ 5. Wage Expense for janitors in factory

_____ 6. Repairs Expense for factory equipment

_____ 7. Office Supplies Expense at corporate office

_____ 8. Wage Expense for janitors at corporate office

_____ 9. Wages of security guards at corporate office

_____ 10. Property taxes on factory building and land

_____ 11. Wages of security guards at factory

_____ 12. Wages of forklift driver in factory

_____ 13. Supplies Expense for factory

_____ 14. Wages of forklift operators in factory

_____ 15. Distribution Expenses

Answer:

1. I 2. I 3. I 4. P 5. I 6. I 7. P 8. P 9. P 10. I 11. I 12. I 13. I 14. I 15. P

3. The following information was taken from the accounting records of Henry Manufacturing Company:

Direct materials purchased $75,000

Direct materials used $56,000

Direct manufacturing labor costs $20,000

Indirect manufacturing labor costs $10,000

Sales Salaries Expense $35,000

Miscellaneous Factory Expenses $5,000

Administrative Expenses $40,000

Finished Goods Inventory, beginning $10,000

Finished Goods Inventory, end $12,000

Work-In-Process Inventory, beginning 0

Work-In-Process Inventory, end 0

What is Cost of Goods Manufactured? A) $86,000 B) $89,000 C) $91,000 D) $96,000


QUIZ #8 May 10, 2021

1. The most effective budget processes facilitate communication from top management to ________ and from

lower level managers and employees to ________.

A) the SEC; the audit committee

B) stockholders; creditors

C) lower level managers and employees; top management

D) creditors; stockholders

2. A budget is an example of an informal business plan.

Answer: FALSE

3. Michael Company has a sales budget for next month of $300,000. Cost of goods sold is expected to be 50%

of sales. All units are paid for in the month following purchase. The beginning inventory is $10,000 and an

ending inventory of $12,000 is desired. Beginning accounts payable is $76,000. The purchases for next month

are ________.

A) $138,000

B) $140,000

C) $150,000

D) $152,000

4. The first step in preparing the master budget is the ________.

A) cash budget

B) capital budget

C) operating expense budget

D) sales budget


QUIZ #9 May 17, 2021

1. Downstairs Company has the following sales budget for the last six months of 2010:

July $100,000

August 80,000

September 110,000

October 80,000

November 100,000

December 94,000

Historically, the cash collection of sales has been as follows:

65% of sales collected in month of sale

25% of sales collected in month following sale

8% of sales collected in second month following sale

2% of sales uncollectible

What are the expected cash collections of sales in October?

A) $79,500

B) $85,900

C) $92,400

D) $99,500

2. Santelle Company expects August sales to be $30,000. Approximately 40% of sales are cash sales.

Collection of credit sales are 50% in the month of sale, 40% in the month following sale and 5% two months

following sale. The remaining 5% is uncollectible. ________ is the expected cash collection in August from

August sales.

A) $9,000

B) $12,000

C) $21,000

D) $36,000


QUIZ #10 May 24, 2021

1. When preparing a flexible budget income statement, ________ costs are constant at different levels of

activity.

A) variable

B) step

C) contributed

D) fixed

2. Oroz Company had the following information available:

Expected Costs and Selling Price Based on 5,000 units:

Variable manufacturing costs per unit $32

Fixed manufacturing costs per unit $20

Selling price per unit $70

Expected production level 5,000 units

In the flexible budget at 10,000 units, what is the total manufacturing cost?

A) $250,000

B) $420,000

C) $520,000

D) $700,000

3. A company that has an activity-based costing system with multiple cost drivers will prepare a(n) ________

budget.

A) financial planning

B) short-range planning

C) activity-based flexible

D) strategic

4. Garcia Company planned to produce 12,000 units. This level of activity required 40 setups at a cost of

$18,000 plus $500 per setup. Actual production was 10,000 units, requiring 15 setups. Actual setup cost was

$26,000. What is the static budget amount for total setup costs?

A) $21,000

B) $25,500

C) $26,000

D) $38,000

managerial accounting quiz #1 march 15, 2021

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