Managerial Accounting

1 January 2017

The ability to meet short-term obligations and to efficiently generate revenues is called: Liquidity and Efficiency 3. The ability to generate future revenues and meet long-term obligations is referred to as: Solvency 4. The ability to provide financial rewards sufficient to attract and retain financing is called: Profitability 5. The ability to generate positive market expectations is called: Market Prospects 6.

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Standards for comparisons in financial statement analysis include: Intra-company, Competitor, Industry, Guidelines 7. The comparison of a company’s financial condition and performance across time is known as: Horizontal Analysis 8. A company’s sales in 2004 were $ and in 2005 were $. Using 2004 as the base year, the sales trend percent for 2005 is: Analysis Period amount/Base Period Amount x100 9. One of several ratios that reflects solvency includes the: Debt-to-equity ratio 10.

Current assets divided by current liabilities is the: Current Ration 11. Ch. 18Managerial accounting is different from financial accounting in that: (users and decision makers, purpose of info, flexibility of practice, timeliness of information, time decision, focus of information, nature of information) 12. Which of the following items are management concepts that were created to improve companies’ performances? All of the above- just in time manufacturing, customer orientation, total quality management, and continuous improvement. 13.

An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called: Continuous improvement 14. A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called: customer orientation.

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: just-in-time manufacturing. 6. The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is: Lean Business model 17. A direct costs is a cost that is: traceable to a single cost object. 18. An opportunity cost is: the potential benefit lost by choosing a specific action from two or more alternatives. 19. Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are: Direct Labor 20.

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called: Product Costs 21. Materials that are used in support of the production process but that do not become a part of the product and are not clearly identified with units or batches of product are called: Indirect Materials 22. Classifying costs by behavior involves: Fixed or Variable costs 23.

Raw materials that physically become part of the product and can be traced to specific units or batches of product are called: Direct Costs 24. A mixed cost: a combination of fixed and variable costs 25. A fixed cost: does not change in the volume of activity. 26. Which of the following costs is not included in factory overhead? Direct materials or direct labor 27. The three major cost components of a manufactured product are: Direct materials, direct labor, and factory overhead 28. Costs that are first assigned to inventory are called: Product costs 29. Costs that flow directly to the current income statement are called: period costs 30.

Products that are completed and are ready to be sold by the manufacturer are called: finished goods inventory 31. Products that are in the process of being manufactured but are not yet complete are called: goods in process inventory 32. Another title for goods in process inventory is: work in process inventory 33. The unit contribution margin is: the amount by which a product’s unit selling price exceeds its total unit variable cost. (Sales price per unit-total variable cost per unit) 34. The contribution margin ratio: The percent of a units selling price that exceeds total unit variable cost.

Contribution margin per unit/sales price per unit) 35. Factory overhead costs normally include all of the following except: finished goods 36. The total cost of goods completed during the accounting period for a manufacturer is called: The manufacturing statement 37. A manufacturing firm’s cost of goods manufactured is equivalent to a merchandising firm’s: Cost of goods sold 38. Juliet Corporation has accumulated the following accounting data for the year: The cost of goods manufactured for the year is: Direct materials used + direct labor + factory overhead + beginning goods in process – ending goods in process 39.

A manufacturing company has a beginning finished goods inventory of $, raw material purchases of $, cost of goods manufactured of $, and an ending finished goods inventory of $. The cost of goods sold for this company is: Beginning Inventory + Inventory Purchases – End Inventory 40. The following information relates to the manufacturing operations of the IMH Publishing Corporation for the year. The raw materials used in manufacturing during the year totaled $. Raw materials purchased during the year amount to: 41.

Ajax Company accumulated the following account information for the year: Using the above information, total factory overhead costs would be: All expenses added 42. A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a: Manufacturing statement. 43. A unit of a business that not only incurs costs, but also generates revenues, is called a: Profit center 44. Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called: An escapeable expense or direct expenses 45.

Expenses that are not easily associated with a specific department, and which are incurred for the benefit of more than one department, are: Indirect expenses 46. A difficult problem in calculating the total costs and expenses of a department is: Assigning indirect expenses to the department 47. A company has two departments, A and B, that incur delivery expenses. The delivery expenses that should be charged to Dept. A and Dept. B, respectively, are: 48. Costs that the manager has the power to determine or at least strongly influence are called: Controllable costs 49.

A report that specifies the expected and actual costs under the control of a manager is a: Responsibility Accounting Report 50. The most useful evaluation of a manager’s cost performance is based on: Cost performance 51. A responsibility accounting performance report reports: performance 52. A single cost incurred in producing or purchasing two or more essentially different products is a(n): differential cost 53. Calculating return on total assets for an investment center is defined by the following formula for an investment center: net income/average total assets 54. Dresden, Inc. , has four departments.

Information about these departments follows: If maintenance costs are allocated to the other departments based on floor space occupied by each, the amount of maintenance cost allocated to the Cutting Department is: 55. Able Company has two operating (production) departments: Assembly and Fabricating. Assembly has 150 employees and occupies 44,000 square feet; Fabricating has 100 employees and occupies 36,000 square feet. Indirect factory expenses for the current period are as follows. Administration is allocated based on workers in each department; maintenance is allocated based on square footage.

The total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is: 56. A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called: Activity based costing 57. A factor that causes the cost of an activity to go up or down is a(n): number of suppliers 58. A cost that remains the same in total even when volume of activity varies is a: Cost volume profit 59. A cost that changes with volume, but not at a constant rate, is called a: Curvilinear cost 60.

A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n): Step-wise cost 61. Which one of the following statements is not true? 62. A company’s normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the: Relevant Range 63. The margin of safety is the excess of: expected sales over the break-even sales level. 64. A firm expects to sell X units of its product at $ per unit. Pretax income is predicted to be $.

If the variable costs per unit are $, total fixed costs must be: 65. A product sells for $ per unit, and its variable costs per unit are $. The fixed costs are $. If the firm wants to earn $0 pretax income, how many units must be sold? 66. Total contribution margin in dollars divided by pretax income is the: DOL Degree of operating leverage 67. A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume levels on a scatter diagram with a straight line is called the: High-Low method

The contribution margin per nit is: the amount by which a product’s unit selling price exceeds its total unit variable cost= sales price per unit- total variable cost per unit. The break-even point in units is: fixed cost divided by contribution margin per unit. 68. 69. 70. Brown Company’s contribution margin ratio is %. Total fixed costs are $. What is Brown’s break-evenpoint in sales dollars? Fixed cost/contribution margin ration 71. The ratio of the sales volume for the various products sold by a company is called the: 72. Preparing a master budget is usually the responsibility of: Manager 73.

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting is called: Rolling budgets 74. Operating budgets include all the following budgets except the: budgeted balance sheet 75. Financial budgets include all the following except the: include the cash budget, budgeted income statement, and budgeted balance sheet. 76. The master budget includes: individual budgets for sales, purchases, production, various expenses, capital expenditure, and cash 77. The usual starting point for preparing a master budget is forecasting or estimating: the sales forecast or sales budget 78.

The master budget process usually ends with: Financial Budget 79. Bentels Co. desires a December 31 ending inventory of X units. Budgeted sales for December are X units. The November 30 inventory was X units. Budgeted purchases are: calculate ending inventory for each quarter 80. Ecology Co. sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year. Ending inventory for each month should be X% of the next month’s sales, and the December 31 inventory is consistent with that policy.

How many units should be purchased in February? 81. When preparing the cash budget, all the following should be considered except: Amortization expense 82. Northern Company is preparing a cash budget for June. The company has $ cash at the beginning of June and anticipates $ in cash receipts and $ in cash disbursements during June. Northern Company has an agreement with its bank to maintain a cash balance of at least $. As of May 31, the company owes $ to the bank. To maintain the $ required balance, during June the company must: 83.

The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are: Cost analysis 84. A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a: Flexible budget 85. A company’s flexible budget for X units of production showed sales, $; variable costs, $; and fixed costs, $. The operating income expected if the company produces and sells X units is: 86. Which department is often responsible for the direct materials price variance?

The purchasing department 87Use the following data to find the direct labor cost variance. (Actual hours worked ? Standard rate) ? (Standard hours allowed ? Standard rate)] 88. What is the direct materials quantity variance? It measures the difference between the quantity of materials used in production and the quantity that should have been used. (Actual quantity used ? Standard price) ? (Standard quantity allowed ? Standard Price)] 89. What is the direct materials price variance? is the difference between the actual purchase price and standard purchase price of materials. (Actual quantity purchased ?

Actual price) ? (Actual quantity purchased ? Standard price) 90. The direct labor efficiency variance is: This variance measures the productivity of labor time (actual hours worked x standard rate)-(standard hours allowed x standard rate) 91. The direct labor rate variance is: Difference between the standard direct labor rate and the actual direct labor rate, multiplied by the actual direct labor hours worked. 92. The net cash flow of a particular investment project: Both B and C ( B. Equals the total of the inflows of the project. C. Equals the total of the outflows of the project. 93.

Capital budgeting decisions are risky because: the outcome is uncertain, large amounts of money are usually involved, the investment involves a long-term commitment, and the decision could be difficult or impossible to reverse, no matter how poor it turns out to be. 94. A minimum acceptable rate of return for an investment decision is called the: Internal rate of return 95. The rate that yields a net present value of zero for an investment is the: 96. A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called: Sunk cost 97.

What is the payback period for this machine? Cost of investment/annual net cash flow 98. What is the accounting rate of return for this machine? Annual after tax net income/annual average investment 99. Saxon Manufacturing is considering purchasing two machines. Each machine costs $ and will produce cash flows as follows. Which machine should Saxon purchase? 100. Alpha Co. can produce a unit of Beta for the following costs. An outside supplier offers to provide Alpha with all the Beta units it needs at $ per unit. If Alpha buys from the supplier, Alpha will still incur X% of its overhead. Alpha should:

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