Exam 1

Question 1

Financial accounting is most concerned with meeting the needs of internal users (T or F)

Answer 1

False

Question 2

Cost accounting serves as a bridge between financial and managerial accounting (T or F)

Answer 2

True

Question 3

The expression of what an organization wishes to accomplish and how it will serve its customers is contained in the ________.

Answer 3

Mission statement

Question 4

Core competencies are…

Answer 4

different for every organization, internal functions crucial to the success and survival of a company, and considered influences on corporate strategies.

Question 5

The set of processes that convert inputs into services and products that consumers use is called…

Answer 5

the value chain.

Question 6

The value chain…

Answer 6

is the foundation of strategic resource management.

Question 7

The learning and growth perspective of the balanced scorecard focuses on using an organization’s intellectual capital to adapt to or influence customer needs and expectations (T or F)

Answer 7

True

Question 8

The balanced scorecard perspective that addresses concerns about organizational growth is the…

Answer 8

financial perspective

Question 9

The ethical standards established for management accountants are in the areas of…

Answer 9

competence, confidentiality, integrity, and credibility.

Question 10

What ethical structure has been violated if an accountant fails to prepare financial statements according to industry standards?

Answer 10

competence

Question 11

A cost object is anything for which management wants to collect or accumulate (T or F)

Answer 11

True

Question 12

The term “relevant range” as used in cost accounting means the range over which…

Answer 12

cost relationships are valid.

Question 13

When cost relationships are linear, total variable prime costs will vary in proportion to changes in…

Answer 13

production volume.

Question 14

An example of a fixed cost is

Answer 14

straight-line depreciation.

Question 15

The portion of an asset’s value on the balance sheet is referred to as an expired cost (T or F)

Answer 15

False

Question 16

When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n)

Answer 16

decrease in the fixed element

Question 17

Product costs are deducted from revenue…

Answer 17

as goods are sold

Question 18

Product cost components include…

Answer 18

indirect production labor wages, rent on a factory building, and janitorial supplies used in a factory

Question 19

The indirect costs of converting raw material into finished goods are called

Answer 19

overhead costs

Question 20

In an actual cost system, overhead is assigned to Work in Process Inventory with a debit entry to the account (T or F)

Answer 20

True

Question 21

Absorption costing is commonly used for external reporting (T or F)

Answer 21

True

Question 22

In an actual cost system, factory overhead is assigned directly to products and services (T or F)

Answer 22

True

Question 23

If overapplied factory overhead is material, the account is closed by a credit to Cost of Goods Sold (T or F)

Answer 23

False

Question 24

Normal capacity considers a present and future production levels and cyclical fluctuations (T or F)

Answer 24

True

Question 25

Since overhead costs are indirect costs,

Answer 25

they require some process of allocation.

Question 26

When a manufacturing company has a highly automated manufacturing plant producing many different products, which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process?

Answer 26

machine hours

Question 27

In the formula y=a +bX, a represents

Answer 27

fixed cost

Question 28

An outlier is

Answer 28

typically not used in analyzing a mixed cost.

Question 29

Overapplied overhead will result if

Answer 29

overhead costs incurred were less than overhead costs charged to production.

Question 30

In a normal cost system, factory overhead is assigned to an overhead control account and then allocated to products and services (T or F)

Answer 30

True

Question 31

The first step in performing activity analysis is to prepare a process map (T or F)

Answer 31

True

Question 32

The sum of the non-value-added time and the value-added time equals

Answer 32

cycle time

Question 33

Which of the following adds customer value?

Answer 33

processing time

Question 34

Lead time in a production process includes both value and non-value added time.

Answer 34

True

Question 35

For one product that a firm produces, the manufacturing cycle efficiency is 20 percent. If the total production time is 12 hours, what is the total manufacturing time?

Answer 35

60 hours

Question 36

Which of the following is typically regarded as a cost driver in traditional accounting practices?

Answer 36

number of direct hours worked

Question 37

Costs that are common to many different activities within an organization are known as _____ costs.

Answer 37

organizational-level

Question 38

In activity-based costing, preliminary cost allocations assign costs to

Answer 38

activities

Question 39

An activity center is an organizational unit

Answer 39

for which management wants separate activity information

Question 40

Product complexity refers to the number of processes through which a product flows (T or F)

Answer 40

False