MA Chapter 7-11 Multiple Choice PDF

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Managerial Accounting Chapter 7 Multiple Choice 1. Which of the following conditions favours using departmental overhead rates in place of plant which overhead rate? A)Manufacturing overhead represents a small population of total cost. B)Different jobs or products use departments to a different extent C)Departments use a similar amount of indirect costs. D)Products spend the same amount of time in each department. Bond Industries uses developmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments, assembly and sanding. The assembly Department uses a departmental overhead rate of $20 per machine hour, while descending Department uses a developmental overhead rate of $15 per direct labour hour. Job 542 uses the following direct labour hours and machine hours in two departments: Actual results Direct labour hours used Machine hours used

Assembly Department 4 9

Sanding Department 3 5

The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by job 542 is $1,200 2) how much manufacturing overhead would be allocated to job 542 using the developmental overhead rates? A ) $125 B) $155 C) $225 D) $245 Explanation: C) Assembly Dept $20 x 9 machine hours equals $180 Sanding Dept $15 x 3 direct hours equals $45 Total $225 3) What was the total cost of job 542 if Bond Industries used the departmental overhead rates to allocate manufacturing overhead? A) $1,375 B) $1,425 C) $1,500 D) $1,600 Explanation D) Labour ($25x 4hrs) + ($25x3 hrs) = $175.00 Materials = $1200.00 Overhead Assembly dept $25 x 9 hrs = $180.00

Sanding dept $15 x 3 hrs = Total = $1600.00

$ 45.00

4. Research and development would most likely be classified as a A) unit-level activity B) batch-level activity C) product-level activity D) facility-level activity 5. Using factory utilities would most likely be classified as a A) unit-level activity B) batch-level activity C) product-level activity D) facility-level activity 6. Which of the following describes how, in ABC, the activity allocation rate is computed? A) The total estimated activity cost pool is divided by the total estimated activity allocation based. B) The total estimated activity allocation base is divided by the total estimated activity cost pool. C) The total estimated activity allocation base is multiplied by the total estimated activity cost pool. D) You take the total estimated activity allocation base and subtract the total estimated total activity cost pool. 7. Which of the following is MOST likely to be the cost driver for the packaging and shipping activity? A) Number of orders shipped B) Number of setups C) Number of units produced D) Hours of testing 8. Which of the following statements is TRUE regarding activity-based costing systems? A) ABC systems accumulate overhead costs by departments. B) ABC costing systems are less complex and, therefore, less costly than traditional systems. C) ABC costing systems can be used in manufacturing firms only. D) ABC costing systems have separate indirect cost allocation rates for each activity. 9. The benefits of using the ABC costing system are higher if the company A) has high indirect costs. B) produces many different products that use differing amounts of resources. C) produces only one product. D) has high indirect costs and produces many different products that use differing amounts of resources.

10. Signs that a product cost system is not working properly include A) managers don’t understand costs and profits B) the cost system was installed five years ago C) the cost system has multiple allocation bases. D) the cost system is fully depreciated.

Managerial Accounting Chapter 8 Multiple Choice LO 6 1. Expected future data that differs among alternative course of action are referred to as: A) irrelevant information B) historical information C) predictable information D) relevant information 2. Which of the following is a sunk cost? A) Operating costs for a new vehicle B) Trade in value of old vehicle C) Purchase price of new vehicle D) Purchase price of vehicle to be traded in 3. Fixed costs that may be avoided in the future are referred to as A) replacement costs B) opportunity costs C) relevant costs D) sunk costs 4. Which of the following describes the products and service of companies that are price-setters? A) They are priced by managers using a target-costing emphasis. B) They tend to be unique. C) They tend to have a lot of competitors. D) They tend to have commodities.

5. Which of the following pairs are characteristics of price-takers? A) Less competition and target pricing. B) Target costing and heavy competition. C) Cost-plus pricing and less competition. D) Cost-plus pricing and lack of product uniqueness.

6. Big-box retailers such as Best Buy are considered price takers because A) their products are unique. B) there is less competition in the consumer electronics retail sector C) their products are not unique. D) they emphasize cost-plus pricing. 7. Which of the following describes the target total cost? A) Revenue at market price minus desired profit. B) Revenue at market price plus desired profit. C) Total cost plus desired profit. D) Total cost minus actual cost. 8. In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be A) relevant to the decision. B) irrelevant to the decision. C) opportunity costs D) sunk costs 9. When deciding whether to accept a special order, which of the following is irrelevant? A) Available excess capacity B) The variable costs associated with the special order. C) Fixed costs that will not be affected by the order. D) The effect of the order on regular sales. 10. A manager should always reject a special order if A) there is available excess capacity. B) the special order price is less than the variable costs of the order. C) the special order price is less than the regular sales price. D) the special order will require variable nonmanufacturing expenses. 11.Common fixed costs that are allocated between departments are generally A) direct fixed costs of the department. B) relevant to the decision of whether to drop the department. C) direct fixed costs of other departments. D) irrelevant to the decision of whether to drop the department. 12. A grocery store decides to drop its health and beauty section of products because it has been unprofitable. This strategy could backfire because A) the store can readily fill the available space. B) it has automatically saved the department’s fixed costs. C) the store’s sales may suffer by not having this convenience category of products. D) variable costs are not avoidable.

13.Which of the following is irrelevant in the decision for a manufacturing company’s manager to drop the electronics product line? A) The costs it could save by dropping the product line. B) The revenues it would lose from dropping the product line. C) How dropping the electronic product line would affect sales of its other products (like CDs) D) The cost of the manufacturing equipment specific to that product line. 14. Which of the following best describes a “constraint”? a) The distribution of all products to be sold b) Expected future costs that differs among alternatives c) Benefits foregone by not choosing an alternative course of action d) A factor that restricts production or sale of a product 15. Which of the following would not be a constraint for selling product? a) Having excess capacity on the shelves b) Available labour hours for employees c) Store hours d) Machine time 16. In making the decision whether to sell a product as is or process the product further, the expected income from selling the product as is may be defined as which of the following? a) A sunk cost of processing the product further b) The opportunity cost of processing the product further c) The opportunity cost of selling the product as is d) A limiting factor in processing the product further 17. In a sell or process further decision, the company should process further if the extra a) cost of processing further is the same as the extra revenue b) revenue from processing further is less than the extra cost c) cost of processing further is less than extra revenue d) cost of processing further is greater than the extra revenue Managerial Accounting Chapter 9 Multiple Choice 1. Strategic planning involves A) setting short-term goals that extend one year into the future. B) setting long-term goals that extend 5-10 years into the future. C) setting goals for next month. D) executing directives from the board of directors.

2. Which of the following is an advantage of zero-based budgeting? A) It is time consuming. B) It is labour intensive. C) It forces managers to justify every dollar put in the budget, so some expenses may be lower than they were in previous years. D) It requires less examination of current expenditures. 3. Which of the following is an advantage of the budgeting process? A) Assures that the lowest cost materials will be obtained. B) Coordinates the activities of the organization. C) Assures the company will achieve its objectives. D) Guarantees that a profit will be achieved. 4. Which of the following statements about budgeting is NOT true? A) The operating budget should be prepared by top management, rather than mid-management personnel, because they have the overall objectives of the company in mind. B) Budgeting is an aid to planning and control. C) Budgets help to coordinate the activities of the entire organization. D) Budgets promote communication and coordination between departments. LO 2 5. Which of the following budgets begins with the number of units to be sold? a) Manufacturing overhead budget b) Production budget c) Direct materials budget d) Capital expenditures budget 6. Desired ending inventory is 80% of beginning inventory. If cost of goods sold is $3000,000, which of the following statements is TRUE regarding purchases? a) Purchases will be more than cost of goods sold. b) Purchases will be 80% of cost of goods sold. c) Purchases will equal cost of goods sold. d) Purchases will be less than cost of goods sold. Explanation: 100,000 + ? = 300,000 + (80% x 100,000)

7. Clark Company has beginning inventory of 16,000 units and expected sales of 23,000 units. If the desired ending inventory is 18,000 units, how many units should be produced? a) 25,000 b) 21,500 c) 11,000 d) 57,000 Explanation: Produce = Sales + Ending inventory – beginning inventory = 23,000 + 18,000 – 16,000 8. Stuart Corporation recorded sales of $200,000 during March. Management expects sales to increase 5% in April, another 4% in May, and another 10% in June. Cost of goods sold its expected to be 80% of sales. What is the budgeted gross profit for June? a) 45,427 b) 48,048 c) 240,240 d) 43,680 Explanation: = 200,000 x (1.05) x (1.04) x (1.10) = 240,240 Gross Profit = 240,240 x 20% No # 9 LO 4 10. The practice of directing executive attention to important deviations from budgeted amounts is called management by a) exception b) objective c) control d) analysis 11. Which of the following managers is at the highest level of the organization? a) Cost centre manager b) Revenue centre manager c) Profit centre manager d) Investment centre manager 12. A manger being evaluated only on year-to-year same store sales would be part of a(n) a) cost centre b) investment centre c) profit centre d) revenue centre

Managerial Accounting Chapter 10 Multiple Choice 1. 2. 3.

4. Assuming that all activity is within the relevant range, a decrease in the activity level in a flexible budget will a) decrease total fixed costs b) decrease the variable cost per unit c) decrease total costs d) increase the variable cost per unit 5. A sales volume variance for units is the difference between the a) number of units actually sold and number of units expected to be sold according to the static budget b) number of units in the flexible budget at two levels of activity c) actual units sold and the number of units in the flexible budget d) actual sales volume and normal sales volume 6. A flexible budget variance is the difference between a) actual results and amounts in the static budget b) amounts in the flexible budget and the actual results c) amounts in the flexible budget and the static budget d) the budgeted amounts for each level of sales in the flexible budget LO 3 7. Which of the following is a carefully predetermined cost that is usually expressed on a per unit basis? a) Allocated cost b) Applied cost c) Flexible cost d) Standard cost

8. Blackwell Manufacturing, which produces flip-flops, is developing direct material standards. Each flipflop requires 0.52 kilograms of a special foam. The allowance for waste is 0.03 kilograms per flip-flop, while the allowance for rejects is 0.02 kilograms per flip-flop. What is the standard quantity of foam per flip-flop? a) 0.52 kilograms b) 0.54 kilograms c) 0.57 kilograms d) 0.55 kilograms 10. Nadia Corporation, which manufactures straw hats, is developing direct labour standards. The basic direct labour rate is $10.00 per hour. Payroll taxes are 12% of the basic direct labour rate, while fringe benefits such as vacation and health care insurance, are $4.00 per hour. What is the standard rate per direct labour hour? a) $15.20 b) $10.00 c) $14.00 d) $11.20 Explanation: $10.00 x 1.12% = $11.20 Fringe benefits 4.00 Total $15.20 11. If a worker drops the raw material during production and the raw material must be discarded, which variance is directly impacted? a) Materials price variance b) Materials efficiency variance c) Labour price variance d) Labour efficiency variance 12. If the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired, which variance is directly impacted? a) Materials price variance b) Materials efficiency variance c) Labour price variance d) Labour efficiency variance

Managerial Accounting Chapter 11 Multiple Choice LO 1 1.Which of the following is FALSE concerning profit centres and cost centres? a) a profit centre can exist within a decentralized organization b) a cost centre can exist within a centralized organization c) a cost centre can exist within a decentralized organization d) if a profit centre exists within a centralized organization, there cannot be any cost centres in the organization 2. Which of the following statements is FALSE? a) a centralized structure does not empower employees to handle customer complaints directly b) a decentralized structure forces top management to lose some control over the organization c) decentralization slows responsiveness to local needs for decision making d) decentralization can increase motivation be allowing managers to exercise greater individual initiative...