Final

Question 1

The extent to which an organization uses fixed costs in its cost structure is measured by

Answer 1

operating leverage

Question 2

The contribution margin ratio is

Answer 2

unit contribution margin divided by the selling price.

Question 3

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Answer 3

Fixed costs ÷ CMR.

Question 4

The cost of inventory currently owned by a company is an example of a (n):

Answer 4

sunk cost.

Question 5

Which of the following costs can be ignored when making a decision?

Answer 5

sunk costs.

Question 6

Which of the following can influence a company’s pricing decisions?

Answer 6

Manufacturing costs, competitors, customer demand, pricing laws

Question 7

Factors in a decision problem that cannot be expressed in numerical terms are:

Answer 7

qualitative in nature.

Question 8

The comprehensive set of budgets that serves as a company’s overall financial plan is commonly known as:

Answer 8

a master budget.

Question 9

A manufacturing firm would begin preparation of its master budget by constructing a

Answer 9

sales budget.

Question 10

The hurdle rate that is used in a net-present-value analysis is the same as the firm’s:

Answer 10

discount rate and minimum desired rate of return.

Question 11

I. As shown in your text, the payback period considers the time value of money.
II. The payback period can only be used if net cash inflows are uniform throughout a project’s life.
III. The payback period ignores cash inflows that occur after the payback period is reached.

Which of the above statements is (are) correct?

Answer 11

III. The payback period ignores cash inflows that occur after the payback period is reached.

Question 12

Which of the following business models considers financial, customer, internal operating, and other measures in the evaluation of performance?

Answer 12

Balanced scorecard.

Question 13

Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting?

Answer 13

A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, decision making, directing, and control.

Question 14

The relevant range is that range of activity:

Answer 14

where management expects the firm to operate.

Question 15

Which of the following costs should be ignored when choosing among alternatives?

Answer 15

Sunk costs.

Question 16

Service companies use cost information for

Answer 16

planning and control purposes.

Question 17

Product costing in a manufacturing firm is the process of:

Answer 17

assigning costs to the firm’s inventory.

Question 18

The process of assigning overhead costs to the jobs that are worked on is commonly called:

Answer 18

overhead application.

Question 19

All of the following are inventoried under variable costing except:

a. variable manufacturing overhead and fixed manufacturing overhead.
b. fixed manufacturing overhead.
c. variable manufacturing overhead.
d. direct materials.
e. direct labor.

Answer 19

fixed manufacturing overhead.

Question 20

Under variable costing, fixed manufacturing overhead is:

Answer 20

expensed immediately when incurred.

Question 21

Which of the following does not typically appear on a contribution income statement?

a. Total fixed costs.
b. Net income.
c. Total variable costs.
d. Gross margin.
e. Contribution margin.

Answer 21

Gross margin.

Question 22

At which step or steps in the decision-making process do qualitative considerations generally have the greatest impact?

Answer 22

Making a decision.

Question 23

Under the time and material pricing method, a customer would be charged for:

Answer 23

Material costs, labor costs, overhead, and profit margin.

Question 24

Which of the following outcomes is (are) sometimes associated with participative budgeting?

Answer 24

Budget preparation time can be somewhat lengthy and the problem of budget padding may arise.

Question 25

Which of the following is the proper calculation of a company's depreciation tax shield?

Answer 25

Depreciation × tax rate.

Question 26

A typical job-cost record would provide information about all of the following items related to an order except: ``` applied manufacturing overhead. direct labor costs incurred. administrative costs. direct labor hours worked. the cost of direct materials used. ```

Answer 26

administrative costs.

Question 27

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

Answer 27

overhead applied to Work-in-Process Inventory.

Question 28

The term "normal costing" refers to the use of:

Answer 28

predetermined overhead rates.

Question 29

Amounts spent for charitable contributions are an example of a(n):

Answer 29

discretionary fixed costs.

Question 30

``` Which of the following techniques is not used to analyze cost behavior? a. High-low method. b. Multiple regression. c. Linear programming. Correct d. Visual-fit method. e. Least-squares regression. ```

Answer 30

Linear programming.

Question 31

Product costing in a manufacturing firm is the process of:

Answer 31

assigning costs to the firm's inventory.

Question 32

Overhead application is also known as:

Answer 32

overhead absorption.

Question 33

Overton Enterprises is converting to an activity-based costing system. It wishes to depict the various activities in its manufacturing process along with the activities' relationships. Which of the following is a tool that the company can use to accomplish this task?

Answer 33

Storyboards

Question 34

CVP analysis can be used to study the effect of: a. changes in selling prices on a company's profitability. b. changes in variable costs on a company's profitability. c. changes in fixed costs on a company's profitability. d. changes in product sales mix on a company's profitability. e. All of the answers are correct. Correct

Answer 34

All of the above.

Question 35

Under variable costing, fixed manufacturing overhead is:

Answer 35

expensed immediately when incurred.

Question 36

The extent to which an organization uses fixed costs in its cost structure is measured by:

Answer 36

operating leverage.

Question 37

Which of the following terms describes a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share?

Answer 37

Penetration pricing.

Question 37

Which of the following best defines the concept of a relevant cost?

Answer 37

A future cost that differs among alternatives.

Question 38

A company's hurdle rate is generally influenced by:

Answer 38

both the cost of capital and project risk.

Question 39

Which of the following would likely be considered an internal user of accounting information rather than an external user?

Answer 39

mid-level managers.

Question 40

Which of the following inventories would a discount retailer report as an asset?

Answer 40

Merchandise inventory.

Question 41

The left side of the Manufacturing Overhead account is used to accumulate:

Answer 41

actual manufacturing overhead costs incurred throughout the accounting period.

Question 42

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:

Answer 42

hierarchy.

Question 43

The break-even point is that level of activity where:

Answer 43

contribution margin is equal to fixed costs.

Question 44

If a proposal's profitability index is greater than one:

Answer 44

the NPV is positive.

Question 45

The systematic follow-up on a capital project to see how the project actually turns out is commonly known as:

Answer 45

a postaudit.

Question 46

The role of managerial accounting information in assisting management is a(n):

Answer 46

attention-directing role.

Question 47

The day-to-day work of management teams will typically comprise all of the following activities except:

Answer 47

cost minimizing.

Question 48

Property taxes are an example of a(n):

Answer 48

committed fixed costs.

Question 49

Income reported under absorption costing and variable costing is:

Answer 49

typically the same.

Question 50

Under variable costing, which of the following is not considered a product cost?

Answer 50

Fixed manufacturing overhead.

Question 51

Consider the following statements about pricing: I. Prices are often determined by the market, subject to the constraint that costs must be covered in the long run. II. Prices are often based on costs, subject to the constraint that customers and competitors will exert an influence. III. A balance of market forces and cost is important when making pricing decisions. Which of the above statements is (are) true?

Answer 51

All

Question 52

Cost-plus pricing formula

Answer 52

Price = cost + (markup percentage × cost).

Question 53

At which step or steps in the decision-making process do qualitative considerations generally have the greatest impact?

Answer 53

Making a decision.

Question 54

Company A uses a pricing approach where the initial price for a product is set high and then lowered, and Company B uses an approach where initial prices are set low in an effort to gain market share. What terms best describe these practices?

Answer 54

company A skimming and company b penetration

Question 55

Generally speaking, budgets are not used to:

Answer 55

identify a company's most profitable products.

Question 56

FPMs

Answer 56

FPMs have become less popular in recent years because of computers and spreadsheets.

Question 57

A cash flow measured in nominal dollars is

Answer 57

the actual cash flow that we experience.

Question 58

Committed fixed costs would include:

Answer 58

depreciation on buildings and equipment.

Question 59

Electricity costs that were incurred by a company's production processes should be debited to:

Answer 59

manufacturing overhead.

Question 60

The process of assigning overhead costs to the jobs that are worked on is commonly called:

Answer 60

overhead application.

Question 61

Which of the following product-costing systems is/are required for tax purposes?

Answer 61

Absorption costing.

Question 62

Which of the following pricing practices is illegal?

Answer 62

Predatory pricing.

Question 63

Which of the following features is typically absent in target costing?

Answer 63

An approach that begins with the determination of a product or service's target cost.

Question 64

Which of the following best defines the concept of a relevant cost?

Answer 64

A future cost that differs among alternatives.

Question 65

A cash flow measured in nominal dollars is:

Answer 65

the actual cash flow that we experience.

Question 66

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

Answer 66

overhead applied to Work-in-Process Inventory.

Question 67

Assuming the number of units sold and produced are the same, which of the following statements is true when comparing net income using absorption and variable costing?

Answer 67

Net income will be the same under both methods.

Question 68

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Answer 68

Fixed costs ÷ CMR.

Question 69

If a company has excess capacity, which of the following is a sensible bidding strategy?

Answer 69

Base the bid on the incremental costs incurred because the job will contribute toward the company's profit.

Question 70

When an organization involves its many employees in the budgeting process in a meaningful way, the organization is said to be using an approach most commonly known as:

Answer 70

Participative budgeting.

Question 71

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:

Answer 71

cash budget.

Question 72

Which of the following is the proper calculation of a company's depreciation tax shield?

Answer 72

Depreciation × tax rate.

Question 73

Generally speaking, which of the following would not directly affect a company's income tax payments?

Answer 73

Land owned by the firm.

Question 74

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?

Answer 74

Planning.

Question 75

In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:

Answer 75

product-line diversity and a large proportion of non-unit-level activities.

Question 76

The term "normal costing" refers to the use of:

Answer 76

predetermined overhead rates.

Question 77

Which of the following is the correct method to calculate a predetermined overhead rate?

Answer 77

Budgeted overhead cost ÷ budgeted amount of cost driver.

Question 78

At a given sales volume, the vertical distance between the fixed cost line and the total cost line represents:

Answer 78

variable cost.

Question 79

Which of the following calculations can be used to measure a company's degree of operating leverage?

Answer 79

Contribution margin ÷ income.

Question 80

Who collects data and provide information so that decisions can be made and often serve as a cross-functional team member, making a wide range of decisions.

Answer 80

Managerial accountants

Question 81

Which of the following management tools is a key component of target costing?

Answer 81

Value engineering.

Question 82

Consider the following statements about budgetary slack: Managers build slack into a budget so that they stand a greater chance of receiving favorable performance evaluations. Budgetary slack is used by managers to guard against uncertainty and unforeseen events. Budgetary slack is used by managers to guard against dollar cuts by top management in the resource allocation process. Which of the above statements is (are) true?

Answer 82

All

Question 83

Discounted-cash-flow analysis focuses primarily on:

Answer 83

the timing of cash flows.

Question 84

The left side of the Manufacturing Overhead account is used to accumulate:

Answer 84

actual manufacturing overhead costs incurred throughout the accounting period.

Question 85

What is price skimming?

Answer 85

Initial price is high and then lowered

Question 86

The difference between absorption manufacturing cost and total cost with respect to product pricing is caused by:

Answer 86

both variable selling and administrative cost and allocated fixed selling and administrative cost.

Question 87

Nonprofit organizations begin their budgeting process with:

Answer 87

services to be provided.

Question 88

A depreciation tax shield is a(n):

Answer 88

reduction in income tax.