MAS MCQs all topics 20 1 9 PDF

Preview

Summary

TEST BANKMANAGEMENT ACCTG. – 1Mgt. Acctg. Environment Management Accounting A. Is governed by generally accepted accounting principles. B. Draws from disciplines other than accounting C. Is geared primarily to the past rather than future. D. Places more emphasis on precision of data compared with fi...

Description

TEST BANK MANAGEMENT ACCTG. – 1

C. D.

Financial accounting, managerial accounting, cost accounting, inventory accounting, Payroll accounting, tax accounting, and sales forecasting. Tax accounting, internal accounting, internal auditing, general accounting.

Mgt. Acctg. Environment 1.

Management Accounting A. Is governed by generally accepted accounting principles. B. Draws from disciplines other than accounting C. Is geared primarily to the past rather than future. D. Places more emphasis on precision of data compared with financial accounting which does not place more emphasis on accuracy of information.

2.

Management accounting is an integral part of the management process. As such, it provides essential information for the following objectives except A. Maintaining the current level of resources utilization as well as internal and external communication. B. Measuring and evaluating performances. C. Planning strategies and controlling current activities of the organization. D. Enhancing objectivity in decision-making.

3.

The chief management accountant called “controller” traditionally performs these functions except A. The establishment and implementation of the financial planning process. B. Financial and management reporting and interpretation. C. Protection of company resources and economic evaluation. D. Relate to specific problems where expert help is required.

6. Management accountants help design, develop, install and maintain reporting systems which are aligned with the structures of the organization. These systems provide information that are useful for decision making. Management decision processes fall into three categories. A. Repetitive, non programmed and strategic B. Repetitive, programmed and strategic C. Repetitive, non programmed and nonstrategic D. Non repetitive, non programmed and strategic 7.

In this element of internal control, the object is to gauge the efficiency of the various levels of people in the organization as well as the quality and quantity of results. A. Records and reports B. Standards and performance. C. Internal audit D. Policies and procedures.

12.

You are newly appointed as controller of ABC Corporation. Among the jobs your department would do, include the following: A. Cash receipts, cash disbursement, general accounting, taxation, financial statements analysis and internal auditing. B. Financial reporting, strategic planning, managerial accounting, taxation, financial statement analysis and internal accounting.

15.

Which of the following characteristics does not relate to management accounting? A. Accounting reports may include non-monetary information. B. It is subject to restrictions imposed by GAAP. C. Reports are often based on estimates and are seldom useful for everything other than the purpose for which they are prepared. D. It provides data for external users within the business organizations.

22.

The 1. 2. 3. 4.

activities in a management system’s control process can be grouped into four: Measurement of actual performance Deciding and implementing corrective action. Determining standards of performance. Comparing actual performance versus standards and analyzing results.

The A. B. C. D.

above steps must be done in this sequence: 4,3,2,1 3,1,4,2 1,3,4,2 3,4,1,2

23.

The A. B. C. D.

concept of “management by exception” refers to management’s Consideration of only those items which vary materially from plans. Consideration of only rare events. Consideration of items selected random. Events that involve material amount.

28.

A type of managerial accounting that refers to the determination of the cost of products and services regardless of whether they are variable or non-variable is known as A. Differential accounting B. Activity accounting C. Full cost accounting D. Responsibility accounting

29.

A type of managerial accounting that refers to the determination of the operating cost regardless of cost behavior is A. Differential accounting B. Full cost accounting C. Responsibility accounting D. Profitability accounting

COSTS CONCEPTS, CLASSIFICATION AND SEGREGATION 1.

The A. B. C. D.

term relevant cost applies to all the following decision situations except the Acceptance of a special order. Determination of a product price. Replacement of equipment. Addition or deletion of a product line.

2.

A decision-making concept, described as “the contribution to income that is foregone by not using a limited source for its best alternative use.” is called A. Marginal Cost B. Incremental Cost C. Potential Cost D. Opportunity Cost

5.The term that refers to costs incurred in the past that are not relevant to a future decision is A. Full absorption costing B. Under-allocated indirect cost C. Sunk cost D. Incurred marginal cost Q 5-7 are based on the following information. Management accountants are frequently asked to analyze various decision situations including the following: I. The cost of a special device that is necessary if a special order is accepted. II. The cost proposed annually for the plant service for the grounds at corporate headquarters. III. Joint production cost incurred to be considered in a sell-at-split versus a process-further decision. IV. The cost of alternative use of plant space to be considered in a make-or-buy decision. V. The cost of obsolete inventory acquired several years ago, to be considered in a keepversus-disposal decision. The A. B. C. D.

cost described in situations I and IV are Prime cost Discretionary costs Relevant costs Differential costs

The A. B. C. D.

costs described in situations III and V are Prime costs Sunk costs Discretionary costs Relevant costs

The A. B. C. D.

cost describe in II is a Prime costs Discretionary costs Relevant costs Differential costs

B. C. D.

The variable cost The cost to produce an additional unit. The manufacturing unit cost.

9.

Opportunity costs are A. Costs irrevocably incurred by past actions. B. The difference between actual and standard costs. C. Not recorded in the accounting records. D. Partly fixed costs and partly variable costs.

10.

Cost of goods sold is a component of the income statement. In a merchandising establishment, this refers to purchases adjusted for changes in inventory. In a manufacturing company, what replaced purchases to arrive at cost of goods sold? A. Finished goods B. Fixed manufacturing overhead C. Work in process inventory D. Cost of goods manufactured

14. When all manufacturing cost used in production are attached to the products, whether direct, or indirect, variable or fixed, this is called A. Process costing B. Absorption costing C. Variable costing D. Job order costing 15.

Al-kris Company uses a regression equation to analyze the behavior of its transportation costs (T) as a function of travel time (H). They developed the following equation using two years’ observation with a related coefficient of determination of 85: T= 100,000 + P50H If 500 hours of travel time were logged in one period, the related point estimate of

total transportation costs would be A. P110,000 B. P121,250 C. P106,250 D. P125,000 16.

These are among the methods of segregating fixed cost and variable costs except A. Breakeven method B. Simple regression analysis C. Scattergraph method D. High-low method.

Highest cost – Lowest cost

= Difference in cost

=Variable cost /

unit 8.

Management accountants are concerned with incremental unit costs. These costs are similar to the following, except A. The economic marginal cost

Highest hour – Lowest hour =Difference in hour Highest or lowest Cost

=

xxx

- Variable cost (UVC x highest or lowest hour) Fixed cost

17.

D.

Cost of Steam P15,850 13,400 16,370 19,800 17,600 18,500 P101,520

P0.93

xxx

Dongian, Inc. is preparing a flexible budget for the next year and requires a breakdown of the cost of steam used in its factory into the fixed and variable elements. The following data on the cost of steam used and direct labor hours worked are available for the last 6 months of this year. Month July August September October November December

19.

xxx

Direct Labor Hours 3,000 2,050 2,900 3,650 2,670 2,650 16,920

23. For the six months of the year, the highest level of activity for MDG Corporation was 18,000 full units of production with maintenance cost at P114,000 and its lowest level of activity for the same period was at 14,000 full units of production with maintenance cost at P94,000. What amount of maintenance cost should MDG expect in a month in which it was scheduled 16,000 equivalent full units of production. A. P 24,000 B. P104,000 C. P 80,000 D. P114,000 24.

Assuming that Dongian uses the high-low method of analysis. The estimated variable cost of steam per direct labor hour is: A. P4.00 B. P5.42 C. P5.82 D. P6.00

Simple regression analysis provides the means to evaluate a line of regression, which is fitted to a plot of data and represents A. The way costs change with respect to the dependent variable. B. The way costs change with respect to both independent variable and dependent variables. C. The variability expense with pesos of production. D. The way costs change with respect to the independent variable.

25.

What is the amount of fixed cost? A. P14,600 B. P 8,200 C. P 5,200 D. P 0

The A. B. C. D.

27.

The segregation of fixed costs and variable costs is key to proper cost analysis. Regression analysis is a technique used for this purpose. Identify the appropriate statements below on regression analysis: 1. It assumes that a change in value of a dependent variable is related to the change in the value of an independent variable. 2. A linear relationship between direct cost and production volume can cause a problem when using accounting data for regression analysis. 3. It attempts to find an equation for the linear relationship among variable. 4. It establishes a cause and effect relationship.

Mark Company estimates handling costs at two activity levels as follows: Kilos handled 80,000 60,000

Cost P160,000 132,000

What is Mark’s estimated cost of handling 75,000 kilos? A. P150,000 B. P153,000 C. P157,500 D. P132,000 20. The total production cost for 20,000 units was P21,000 and the total production cost for making 50,000 units was P34,000. Once production exceeds 25,000 units, additional fixed costs of P4,000 were incurred. The full production cost per unit for making 30,000 units is: A. P 0.30 B. P 0.68 C. P 0.84

A. B. C. D.

slope of the line of regression is The rate at which the independent variable varies. The rate at which the dependent variable varies. The level of fixed costs. The level of the total variable costs.

All four statements are appropriate. Statements 1, 3 and 4 only. Statements 1 and 3 only. Statements 2 and 4 only. Y = a + bx Where : Y = Total cost a = Fixed cost b = Variable cost / unit or hour x = number of units or hours

29. For the month just ended, the cost components to make Product AB was P50 per unit plus fixed

costs of P250,000. One thousand units were produced. For the month the cost to make the product will be P55 per unit plus fixed cost of P250,000. Fifteen hundred units are expected to be produced. The estimates of the underlying but unknown intercept and slope coefficient for the current month are A. P250,000 and P50 B. P55 and P250,000 C. PP50 and P250,000 D. P250,000 and P55 33.

Which of the following may be used to estimate how both the number of shipments and the weight of materials handled affect inventory warehouse costs? A. Economic order quantity analysis B. Probability analysis C. Correlation analysis D. Multiple regression analysis

34.

A non-linear cost function A. Does not effectively describe the behavior of costs all the time. B. Never describes the behavior of costs in relation to the cost driver. C. Has two constants and single slope. D. Always describes the behavior of costs in relation to the driver.

35.

39.

letter “x” in the standard regression equation is best described as a (an) Independent variable Dependent variable Constant coefficient Coefficient of determination

Q = P6,000 + P5.25Z If 1,000 machine hours are worked in one month, the related point of estimate of total maintenance costs would be A. P11,250 B. P10,125 C. P 5,250 D. P 4,725 Y =P575,000 + P8.50x represents the behavior of maintenance costs (Y) as a function of machine hours (x). Thirty (30) monthly observations wee used to develop the foregoing regression equation. The related coefficient of determination was .90. If 2,500 machine hours were worked in one month, the related point estimate of total variable maintenance costs would be: A. P23,000 B. P21,250 C. P25,250 D. P19,125

MARGINAL COSTING and COST-VOLUME-PROFIT ANALYSIS 1.

In the standard regression equation Y = a + bx, the letter b is best described as a(n): Independent variable Dependent variable Constant coefficient

The A. B. C. D.

Pure Company has developed a regression equation to analyze the behavior of its maintenance costs (Q) as a function of machine hours (Z). The following equation was developed by using 30 monthly observations with a related coefficient of determination of 0.90:

44.

A. B. C.

Variable coefficient

Based upon the data described from the regression analysis, 420 maintenance hours in a month would mean the maintenance costs (rounded to the nearest peso) would be budgeted at A. P3,780 B. P3,600 C. P3,790 D. P3,746

Crescent Company has the data relating total production costs to volume for each quarter during the past five years. During this period, production volume has varied substantially. The method of production has been relatively unchanged and the cost behavior has been complex. What is the most appropriate method for estimating future production cost? A. Linear programming B. Cost-volume-earnings approach C. Time-series or trend regression analysis D. Program evaluation review technique Q. 36-38 are based on the following. In preparing the annual profit plan for the coming year, Venus Company wants to determine the cost behavior pattern of the maintenance costs. Venus has decided to use linear regression by employing the equation Y = a + bx for maintenance costs. The prior year’s data regarding maintenance hours and costs and the results of the regression analysis are given below, Average cost per hour P 9.00 a 684.65 b 7.2884 Standard error of a 49.515 Standard error of b .12126 Standard error of the estimate 34.469 r2 .99724

D.

2.

Cost-volume-profit analysis assumes that over the relevant range A. Variable costs are nonlinear B. Fixed costs are nonlinear C. Selling prices are unchanged D. Total costs are unchanged Cost-volume-profit analysis assumes that over the relevant range total A. Revenues are linear

B. C. D. 2.

Costs are unchanged Variable costs are nonlinear Fixed costs are nonlinear

Break-even analysis assumes that over the relevant range A. Selling prices are unchanged. B. Variable costs are nonlinear C. Total costs are unchanged D. Fixed costs are nonlinear

5.The amount of variable cost per unit and total fixed cost within a relevant range behave this way in relation to production level: A. Production increases, unit variable cost increases, total fixed cost increases. B. Production decreases, unit variable cost decreases, total fixed cost decreases. C. Production increases, unit variable cost remains constant, total fixed cost remains the same. D. Production increases, unit variable cost decreases, total fixed cost remains the same. 6.Assuming that a flexible budget is in use, production levels are expected to increase within a relevant ranged, the expected effect on fixed cost per unit per unit (FCU) and variable costs per unit (VCU)would be A. FCU to decrease and VCU to decrease B. FCU to decrease and VCU no change C. FCU no change and VCU no change D. FCU no change and VCU to decrease 7.

One of the major assumptions limiting to reliability of break-even analysis is that A. The cost of productivity will continually increase. B. The cost of production factors varies with changes in technology. C. Total variable cost will remain unchanged over the relevant range. D. Total fixed cost will remain unchanged over the relevant range.

9.

At breakeven point, fixed cost is always A. Less than contribution margin B. Equal to contribution margin C. More than variable cost D. More than the contribution margin

15.

The A. B. C. D.

16.

rate or amount that sales may decline before losses are incurred is called: Sensitive level of income Variable sales ratio Margin of safety Residual income rates

Total unit costs are A. Relevant for cost-volume-profit analysis B. Independent of the cost system used to generate them C. Irrelevant in marginal analysis

D.

Needed for determining product contribution Sales (S) Variable C/S (VC) Manufacturing margin Variable expenses(VE) Contribution Margin (CM) -Fixe Costs & Expenses(F C&E) Income Before Income Tax (IBIT)

xxx xxx xxx xxx xxx xxx xxx

Q19-20 are based on the following selected budgeted data of Ritz Company for the coming year: Selling price per unit Budgeted sales Fixed expenses Variable cost per unit

P 600,000 150,000

12.00

8.00

What is the breakeven sales in units? A. 35,000 B. 37,500 C. 40,000 D. 45,000 What is the margin of safety ratio in percent? A. 15% B. 20% C. 30% D. 25 BEP (Units) = FC / UCM Ratio)

(OR)

BEP(u) = Actual Sales x (1 – MS

BEP (Peso) = FC /CMR Margin of Safety = Budgeted or Actual Sales – Breakeven Sales (OR) MS= Sales x MSR ( B or A S ) (BES) MSR = MS / ACTUAL (or BUDGETED) SALES MSR = NPR / CMR MSR = [ 1 – (BE Sales / Actual Sales) ] AT BEP: PROFIT (LOSS) = 0 Sales = Total Costs Contribution Margin = Total Fixed Costs Relevant Formulas CONTRIBUTION MARGIN = ? CM = SALES – VARIABLE COST

CM = FIXED COSTS + IBIT

CM = SALES x CMR

CM = Quantity sold

B. C. D.

x UCM CMR = ? CMR = 100% - VCRatio CMR = UCM / USP / MSR

CMR = CM / SALES CMR = NPR

UCM = ? UCM = USP – UVC UCM = FC / BEP (IN UNITS) UCM = CM / QUANTIRY SOLD

24. A company produced 500 units of a product and incurred the following costs. Direct materials, P8,000; direct labor, P10,000; overhead (20% fixed), P45,000. If the sales value of 500 units is P102,000, what is the contribution margin percentage? A. 44% B. 47% C. 53% D. 74% 25.

PROFIT = ? PROFIT = CM – FIXED COST PROFIT = SALES x MS Ratio x CM Ratio PROFIT = SALES x NPRatio Change in Profit = CM – Inc. in FC Change in Profit = CM + Dec in FC

23.

Ratio = VC / SALES Ratio = UVC / USP Ratio = 100% - CMR RATIO = ( CHANGE IN COST – Inc. in FC) / Change in Sales RATIO = ( CHANGE IN COST +Dec. in FC) / Change in Sales

28.

Ces Co’s operating percentages were as follows: Revenues

100% Cost of goods sold: Variable Fixed

50% 10%

60% Gross profit 40% Other operating expenses: Variable Fixed
<...