Management Flashcards
- A company sell pretzels for $1.50/bag. Their February ending inventory was $1600. Marketing prepares the following forecast:
January 15,000 bags
February 12,000 bags
March 16,000 bags
Total 43,000 bags
Projected sales for April 13,000 bags. Try to maintain 10% of the next month’s forecasted sales in inventory. What is the projected for march?
a) 14,800 b) 16,000 c)15,700 d)16,500 e)can’t be determined from the data provided
Same info as no 1. What is the sales budget for January?
SECOND NUMBER TIMES BY % For example. First month=March Second month=April April * 0.10
(c ) 15,700
March= 16,000
April 13,000 (0.10) = 1300
March+April-Ending Inventory
16,000 + 1,300 = 17,300, 17,300 – 1600 = 15,700
Second answer
SECOND NUMBER TIMES BY % For example. First month=January Second month=February February * 0.10 January+February(.10)= 16,200 (1.50 perbag)
15,000 + 12,000 (0.10) = 16,200 (1.50)=24,300
Budgets are
Uses by individual, staffs, managers department.
Management accounting places more emphasis on
a. certified financial statement
b. future activities
c. historial cost information
d. cash flow
e. annual tax returns
B. Future activities
A listing of line item that the organization will use to classify its accounting information is?
a. balance sheet
b. income statement
c. chart of accounts
d. schedule of cash flows
e. production cost response
A
RABBIT
11.00
The brothers sell pretzels for $150 per back, marketing prepares the following sales forcast for the 1st quarter of the year.
jan 15000
feb 12000
march 16000
What is the sales budget for the 1st quarter
64500
15000+12000+16000
= 43000 (budgeted sales for 1st quarter)
43000 x $150 = $6,450,000 total sales.
Compute the fixed cost? DM 100000 DL 150000 Overhead 75000 sales 120000
• Fixed cost will be Overhead 75000. If answer is not 75000 then “None of above”
Look at overhead its 7500
Overhead can be both fixed or variable and usually have a percentage of fixed and variable costs.
Variable for sure are DM and DL so you can eliminate 100000 and 150000.
If anything it would be 75000
Cost that are always relevent in making decisions are
a) cost incurred each period, b)cost that can be avoided, c) cost that are sunk d) cost that are fixed e) none
(b) Cost that can be avoided,
OR D
Sunk costs are NEVER relevant. Relevant costs are the ones that can be avoided!
B.
NPV and IRR not TRUE
(c) NPV alone can be used to compare investments of different sizes
IRR: screen projects or to rank them; higher IRR is more desireable.
NPV: Positive means acceptable, negative is unnacceptable, and 0 is acceptable. Generally considered more reliable than the IRR for screening and ranking projects.
Company Z (long question)
What are the fixed cost?(d) 20% of the sales revenue
which of the following is typically a starting point for the budget process?
a. a summary cash budget
b. a sales budget
c. a budget balance sheet
d. a production budget
e. a materials purchase budget
B. A sales budget
Starting> Sales Budget
Selected sales and cost data for a special job are given below
Direct material used 100,000
Direct labor 150,000
Factory overhead (100% direct, 40% variable) 75,000
Selling and administration ( 50% direct, 60% variable)120,000
Complete the Total Cost:
a. 120,000
b. 225,000
c. 352,000
d. 135,000
e. 93,000
C.
Complete the Total Cost: C. 352,000
100,000 + 150,000 + 30,000 (75000 X 0.40) + 72,000 (120000 X 0.60)
MULTIPLY BY VARIABLE
DM+DL+FOH(Variable)+Selling and admin(0.60)
DM: 100,000
DL: 150,000
Variable Overhead: (75,000 x.40): 30,000
Admin costs: (120,000 x .60): 72,000
100k + 150k + 30k + 72k = 352,000
C.
*only the variable costs are relevant.
Tax accounting is generally most used by:
a. Share holder
b. Manager
c. Creditors
d. Internal revenue service
e. Decision makers
B or E
Most likely E
I’m guessing that they’re comparing tax accounting to financial accounting.
If Tax Accounting is the same as Managerial Accounting, then the answer is the Manager.
B.
The term “product cost” as used in cost and managerial accounting context means.
a. an expenses
b. a variable cost
c. all manufacturing or production cost of the product
d. all fixed cost associated with a product
e. none
C
The discount rate for use in capital budgeting decision is also referred to as
a. a cost o capital
b. the cost of capital
c. the hurdle rate
d. the minimum required rate of return
e. all none
D
What is break even point in units? Sale price $7.50 per unit Variable cost $2.25 per unit Fixed cost $10,000 Units sold 20,000
a. 1333
b. 1905
c. 10000
d. 20000
e. some number other than these 4
b. 1905 (7.50-2.25=5.25) & (1000/5.25)
Sales price - Variable cost=5.25
Contribution Margin: 7.5 (sale price) - 2.25 (variable)
= $5.25
Break even = fixed cost / Contribution Margin
= 10,000/ 5.25
=1905
1. Which of the following is referring Management Accounting? A. Is required by law B. Is not subject to GAAP C. Primarily stands by it self D. Is and end itself E. Emphasis on the part
B
2. The main purpose of management accounting is to provide information to? A. Shareholders B. Managers C. Creditors D. Government Agencies E. All of the above
B
- The term product cost as used in cost and managerial acct context means?
A. All cost of producing, selling and support a product
B. An expense
C. A variable cost
D. All manufacturing of production cost of the product
E. All fixed cost associated with a product
D
4. The sum of direct materials plus Direct Labor is classified as? A. Product cost B. Conversion Cost C. Period Cost D. Prime Cost E. Manufacturing Cost
D
5. Which of the following organization would be most likely to adopt a process cost system? A. Custom home builder B. Law office C. Paper Manufacturing D. Dental Office E. TV Sales and service organization
C
- Zero based budget?
A. Start the budget process from last years number
B. Require mangers to build budget from the ground up
C. Are used primarily to invest short term cash
D. Involve planning for long same inventory
E. None of the above
B
Which of the following pairs most accurately represents the ease of traceability cost? A. Direct costs and Indirect costs B. Variable costs and Fixed costs C. Product costs and Period costs D. Standard costs and Operation costs E. Sunk costs and Incremental costs
B NOT THIS
A. Since direct costs are the most easily traced.
The primarily purpose for carrying on cost Accounting activities are? A. To set asset values B. To measure in cost or core C. To plan operation D. To control operation E. None
A
Over and Under Applied Over Head occurs when?
a. when either the overhead cost driver are estimated incorrectly
b. when actual cost are equal to estimate cost
c. when the amount of the estimated cost driver equals the amount of the cost driver
d. not often
e. when estimated overhead and the estimated cost driver are forecasted perfectly.
A
Chief Accounting officer in an organization is :
a) Vice President of Finance
b) Treasurer
c) Controller
d) General Accounting manager
e) tax manager
C
financial accounting information is most generally most useful to :
a) external parties b) internal parties c) environmentalist d) government agencies e) management decision maker
A
All the following are period cost except:
a) order getting costs b) order delivery cost c) factory rent
d) advertising cost e) administrative cost
C
Which of the following would most likely classified as direct material cost?
a) factory supplies b)an engine in a custom automobile c)depreciation in the assembly group d)Advertising expenses e)none
B
Pairs that most accurate for the cost volume analysis
a) direct cost and indirect cost
b) fixed cost and variable cost
c) product cost and period cost
d) standard cost and operation cost
e) sunk cost and incremental cost
B
- the cost of rent for manufacturing plant is generally considered to be
Prime Cost Product Cost
a) no yes
b) no no
c) yes no
d) yes no
e) manufacturing plant rent is not normally either of the 4 answers
A
23. Target pricing : A target cost + target profit B target cost – target profit C target cost – target profit D Target cost= target price-target profit E none are correct
E
Initial cash cost of investment $75,000
Estimated annual cash savings $18,000
Predicted residual value at the end of life $3,000
Estimated useful life 2 years
Cost of capital 12%
If Present Value factor of an annuity of $1 at 12% and 7 years is 4.564 and the present value factor of a payment of $1 at 12% and 7 years is 0.452. what is the total present value of the estimated cash inflow?
A 4,167 years B $82,152 C $1,356 D $83,508 E $8,508
D
PV of annuity: 4.564
18,000 x 4.564 = 82152 Present value of cost savings/ cash inflow.
B. Wow so easy.
Huts sells hot dog $2/each. The variable cost is $1 and $0.35 is fixed overhead cost. A summer camp wishes to buy 100 hotdogs for $1.25/each. Whats the profit for hut? A increase by $65 B increase by $10 C decrease by $10 D decrease by $65 E none
C
Wishes to buy 100. Look at 100 and think 10
Lamar’s disc rate 12 %. If the discount rate the present value of an annuity of $1 at 12% for 8 years is 4.968 what is the present value of the salvage value ? A $99,360 B 10 C $248,400 D $596,160 E the answer can’t be compute
E
NOT E
?????
————————————————————————-
I know this is a part of capital budgeting, but in the equations i’ve been looking through, they have something to do with the cash flow yearly, which this problem doesn’t give.
I think it’s E.
If the problem gives you a beginning salvage value, multiply it with 4.968.
kamp corporation has the following info Unit sales price $10 Total fixed cost $50,000 Variable cost per input $6 Compute contribution margin? A $10 B $6 C $5 D $4 E $3
Also find the _____?
A.83,xxx
B. 50,000
Contribution margin = Sales revenue – Variable expense D. $4 (10 – 6)
NOT 83,00
Which phrase best describes the current role of a management accountant in an organization?
A. managerial accountants prepare the financial statements for publication
B. managerial accountants are primarily information collectors.
C. managerial accountants make key decisions for an organization.
D. managerial accountants facilitate the decisions for an organization
E. managerial accountants file the organization tax returns.
D
What is the variable cost ratio? Total $ % $37,500 $15,000 $22,500 60%
$15,000 $ 7,500 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ A 100% B 40% C 60% D 75% E none
C. 60% (6/10 X 100)= 60 Total $ % $37,500 $15,000 $22,500 60% $15,000 $ 7,500
