MANAGERIAL ACCOUNTING (OFFICIAL)

Question 1

Management accountant place more emphases on which of the following:

a. certified financial statement
b. future activities
c. historial cost information
d. cash flow
e. annual tax returns

Answer 1

b. future activities

Question 2

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

Answer 2

a. balance sheet

Question 3

The primary purpose for carrying on “cost accounting activity” is

A. T set asset values
B. To measure in cost or core
C. To plan operation
D. To control operation

Answer 3

C. To plan operation

Question 4

Cost volume profit (CVP) analysis to answer which of the following:

  a) What sales volume is needed to break even?
  b) What sales volume is needed to make a desired profit?
  c) Given a sales volume, what is the expected profit?
  d) How could changes in price, VC, TF and output affect profit?
  e) ALL

Answer 4

(e) ALL

Question 5

The amount of overhead applied to a product or service is normally calculated by:

a. Divide estimate overhead by estimated units of the cost driver.
b. Multiply estimate overhead by estimate units of the cost driver.
c. Divide the predetermined overhead rate by the actual units of the cost driver.
d. Multiply the predetermined overhead rate by the actual units of the cost driver.
e. Multiply the actual overhead rate by the predetermined overhead rate

(ON THE EXAM)

Answer 5

a. Divide estimate overhead by estimated units of the cost driver.

Question 6

Comparing actual outcomes with budget outcomes, then following up, is a example of:

a. planning activities
b. operating activities
c. controlling activities
d. accounting activities
e. staffing activities

Answer 6

c. controlling activities

Question 7

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

Answer 7

b. a sales budget

Question 8

Tax accounting is generally most used by:

a. Share holder
b. Manager
c. Creditors
d. Internal revenue service (IRS)
e. Decision makers

(ON THE EXAM)

Answer 8

d. Internal revenue service (IRS)

Question 9

The term “product cost” as used in cost and managerial accounting context means:

a. all cost of producing, selling and support a product
b. an expense
c. a variable cost
d. all manufacturing or production cost of the product
e. all fixed cost associated with a product

Answer 9

d. all manufacturing or production cost of the product

Question 10

Which of the following organization would be most likely to adopt a process costing system?

a. customer homebuilder
b. law office
c. paper manufacture
d. dental office
e. TV sale and services organization

(ON THE EXAM)

Answer 10

c. paper manufacture

Question 11

The discount rate for use in capital budgeting decision is also referred to as:

a. a cost of capital
b. the cost of capital
c. the hurdle rate
d. the minimum required rate of return
e. all none

Answer 11

d. the minimum required rate of return

Question 12

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

(ON THE EXAM)

Answer 12

B. Is not subject to GAAP

Question 13

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

Answer 13

B. Managers

Question 14

The sum of direct materials plus Direct Labor is classified:

A.	Product cost 
B.	Conversion Cost 
C.	Period Cost 
D.	Prime Cost 
E.	Manufacturing Cost

(ON THE EXAM)

Answer 14

D. Prime Cost

Question 15

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

Answer 15

B. Require mangers to build budget from the ground up

Question 16

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

Answer 16

A. Direct costs and Indirect costs

Question 17

Find cost volume profit (CVP)

a. Direct and fixed cost
b. Variable and fixed cost
c. Direct and period cost
d. Sunk cost and ???
e. Sunk cost and Investment

Answer 17

b. Variable and fixed cost

Question 18

Over and Under 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.

Answer 18

a. when either the overhead cost driver are estimated incorrectly

Question 19

Chief Accounting officer in an organization is:

a) Vice President of Finance
b) Treasurer
c) Controller
d) General Accounting manager
e) tax manager

Answer 19

c) Controller

Question 20

Financial accounting information is most generally most useful to:

a) external parties
b) internal parties
c) environmentalist
d) government agencies
e) management decision maker

Answer 20

a) external parties

Question 21

All the following are period cost except:

a) order getting costs
b) order delivery cost
c) factory rent
d) advertising cost
e) administrative cost

Answer 21

c) factory rent

Question 22

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

Answer 22

b) an engine in a custom automobile

Question 23

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

Answer 23

b) fixed cost and variable cost

Question 24

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

Answer 24

A. target cost + target profit

Question 25

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

Answer 25

D. managerial accountants facilitate the decisions for an organization

Question 26

A thing of value that is owned by an organization and is expected to provide future benefit is classified as which of the following?

A. asset
B. liability
C. equity
D. revenue
E. expense

Answer 26

A. asset

Question 27

A quantified plan of action for management is:

A. certified balance sheet
B. certified income statement
C. statement of cash flows
D. budget
C. cost of production report

Answer 27

D. budget

Question 28

Which equation best represents the basic production budget?

A. Sales forecast in units - projected ending inventory - beginning inventory
B. Total projected production needs - beginning inventory + projected ending inventory
C. Sales budget in units + target projected ending inventory units – beginning inventory units.
D. Projected production volume – projected ending inventory – beginning inventory
E. Sales budget in units + projected ending inventory – projected ending inventory

Answer 28

C. Sales budget in units + (target) projected ending inventory units – beginning inventory units.

Question 29

If the net present value of an investment is less than 0, and the cost of capital (K) is 16%, then the internal rate of return would be:

(b) More than 16%
(b) Less than 16%
(b) Equal than 16%
(b) None of the above

Answer 29

(b) Less than 16%

Question 30

Manager should use budget for which:

(a) Control operations.

Answer 30

(a) Control operations.

Question 31

92. In setting the price of a particular product / service for the congress, which of the following should represent the best cost basis?

a. Product / service cost
b. Marketing cost
c. Administrative cost
d. Production market cost
e. Production market and administrative cost

Answer 31

e. Production market and administrative cost

Question 32

An alternate name for the “Time Adjusted rate of return is:

a. Cost of capital
b. The hurdle rate
c. The minimum rate of return
d. The investment burden rate
e. The internal rate of return

Answer 32

e. The internal rate of return

Question 33

What type of their special short run decision is most likely to be needed to make:

a. Accept reject a special order
b. Bring standard product
c. Make it yourself or buy it from out side
d. Sell now or process future
e. All

Answer 33

c. Make it yourself or buy it from out side

Question 34

Which of the following is most representative of what is a summary cash budget?

a. cash flow from activities
b. cash flow from O/P
c. cash flow from Investing activities
d. cash flow from Borrowing activities
e. All

Answer 34

e. All

Question 35

Unplanned uses of organization recourses, usually measured by the resources given up are defined as?

a. An expense
b. A cost
c. A loss
d. A production cost
e. A period cost

(ON THE EXAM)

Answer 35

d. A production cost

Question 36

Which of the following accounting is in the Calculation of working capital:

a. R/E
b. Sales
c. Merchandise Inventory
d. Common stock
e. Long-term debt

Answer 36

c. Merchandise Inventory

Question 37

Cost that is always relevant 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

Answer 37

b) cost that can be avoided

Question 38

Product or service costing influences?

A. Production management making manufacture decision.
B. Marketing manager making price decision.
C. Finance manager making investment decision
D. Human resources manager making sales
E. All of them are true.

Answer 38

A. Production management making manufacture decision.

Question 39

Which of the following is a present value method and capital investments?
A. Average rate of return
B. Accounting rate of return
C. Cash payback method
D. Net present value
E. Payback reciprocal

Answer 39

D. Net present value

Question 40

Sum of direct labor plus manufacturing overhead is classified:

A. Product cost 
B. Conversion cost
C. Period cost
D. Prime Cost
E. manufacture cost

(ON THE EXAM)

Answer 40

B. Conversion cost

Question 41

Sales revenue is 40,000 for period, variable expanses are 30,000, `fixed exp. 7,500. Net income before taxes would be?

A. 10,000
B. 37,500
C. 2,500		
D. 7,500
E. 30,000

Answer 41

C. 2,500

40,000 - 30,000 - 7,500 = 2,500

Question 42

Liability of a company are owned:

A. Debits
B Owners
C. Creditors
D. Stockholders

Answer 42

C. Creditors

Question 43

In the long run product sales price must be sufficient to cover
A. Design cost
B. Manufacturing cost
C. Marketing cost
D. Serving cost
E. All of the all 4 of the other answers need to be covered.

Answer 43

E. All of the all 4 of the other answers need to be covered.

Question 44

Balance sheet shows
A. Revenue liability and stokehold equity
B. Expense dividend and stockholder equity.
C. Revenue expense and dividend.
D. Assets liabilities and stockholder equity
E. None

Answer 44

D. Assets liabilities and stockholder equity

Question 45

Which of the following isn’t accounting assumption?

A. Integrity
B. Going concern 
C. Time period
D. Economic entry
E. None

Answer 45

A. Integrity

Question 46

Expected future cost that differ between decision alternatives at hand are know
A. Sunk cost
B. Prime cost
C. Period cost 
D. Relevant cost
E. Indirect cost

Answer 46

D. Relevant cost

Question 47

Long – term investment decision require consideration of
A. Time value of money
B. Cost behavior
C. Forecasted cash flow
D. Relevant cost
E. All of the other answers should be considered.

Answer 47

C. Forecasted cash flow

Question 48

Nik’s beginning equity 4,350 million; Net income 490 million dividends withdraw 100 million.  Increase in equity due to the times 50 million. Its ending equity is?
A. 3,810 million		 
B. 4,690 million
C. 470 million
D. 4,990 million
E. 371 million

Answer 48

A. 3,810 million 4,350 – 490 – 100 + 50 = 3,810

Question 49

Rules adopted by the accounting professor as guides in preparing financial statements are:

A. Comprised of both general and specific principles
B. Known as general accepted accounting principle
C. Abbreviated as GAAP
D. Intended to make information in financial statement.
E. All

Answer 49

B. Known as general accepted accounting principle

Question 50

The principle that requires every business to be accounted for separately and distinctly from it’s owner or owners is known as the:

A. Objective
B. Business entitle     
C. Goms – corem 
D. Revenue recognition 
E Cost

Answer 50

B. Business entitle

Question 51

The concept that a business has a reasonable expectation of remedy in business for the force able future is called?

A. Economic entitle assumption
B. Monetary unit  
C. Time period
D. going concern 
E. None.

Answer 51

D. going concern

Question 52

Cost Accounting:

a. set asset values
b. measure income
c. plan operation
d. control operation
e. all

Answer 52

e. all

Question 53

7. Short run decisions is management likely to be:

a. accept of reject speed order
b. pricing standard products
c. make it yourself buy from outside
d. sell now or proceed further
e. all

Answer 53

c. make it yourself buy from outside

Question 54

8. Future cost differ between alternations:
   a. sunk cost
   b. prime cost
   c. period cost
   d. relevant cost
   e. indirect cost

Answer 54

d. relevant cost

Question 55

9. Which of the following statement is true about Ethics?
   a. Managerial Acc.
   b. Ethical issue
   c. Ethical behavior
   d. Most managers
   e. Only boss

Answer 55

a. Managerial Acc.

Question 56

10. Monetary amount
    a. an asset
    b. a liability
    c. an equity

Answer 56

b. a liability

Question 57

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 

What is the variable cost ratio? 
A. 100% 
B. 40% 
C. 60%	
D. 75%

Answer 57

D. $4

contribution margin=sales revenue - variable expense
10-6=4

C. 60%

(variable cost/sales price)100
6/10100=60

Question 58

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

Answer 58

A. Direct costs and Indirect costs

Question 59

A company sells pretzels for $1.50/bag. Their February ending inventory was $1,600. 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 are 13,000 bags. Try to maintain 10% of the next month’s forecasted sales in inventory. What is the projected for March?

Answer 59

SECOND NUMBER TIMES BY %
For example. 
First month=March 
Second month=April 
April * 0.10 

March= 16,000
April 13,000 (0.10) = 1300
March+April-Ending Inventory
16,000 + 1,300 = 17,300, 17,300 – 1600 = 15,700

15,700

April (10%) 13,000 * 10% = 1,300
70 16,000
February (Ending Inventory) (1,600)
1,300 + 16,000 - 1,600 = 15,700

Question 60

A company sells pretzels for $1.50/bag. Their February ending inventory was $1,600. 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 are 13,000 bags. Try to maintain 10% of the next month’s forecasted sales in inventory.
What is the sales budget for January?

Answer 60

January 15,000
February (10%) 12,000 * 10% = 1,200
15,000 + 1,200 = 16,200
16,200 * $1.50 = $24,300

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

Question 61

RABBIT

Answer 61

$11

Question 62

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?

Answer 62

15000+12000+16000
= 43000 (budgeted sales for 1st quarter)

(15,000 + 12,000 + 16,000 = 43,000 43,000 * 150 = 6,450,000)

Question 63

Compute the fixed cost?

DM 100000
DL 150000
Overhead 75000
sales 120000

Answer 63

Fixed cost will be Overhead 75000. If answer is not 75000 then “None of above”

Question 64

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

Answer 64

DM: 100,000
DL: 150,000
Variable Overhead: (75,000 x.40): 30,000

Admin costs: (120,000 x .60): 72,000

100,000 + 150,000 + 30,000 (75,000 *40%) + 72,000 (120,000 *60%)

c. 352,000

Question 65

Scuffy has the following product information
Sales price $7.50 per unit 
Variable cost $2.25 per unit 
Fixed cost $10,000 
Units sold 20,000 

What is breakeven point in sales?

a. 1333
b. 1905
c. 10000
d. 20000
e. some number other than these 4

(ON THE EXAM)

Answer 65

Fixed Cost / (Price - Variable Cost)

10,000 / (7.50 - 2.25) = 1905

b. 1905

Question 66

Scuffy has the following product information.
Sales price $7.50 per unit 
Variable cost $2.25 per unit 
Fixed cost $10,000 
Units sold 20,000 

What is total contribution margin?

Answer 66

Contribution margin = Sales Revenue – Variable Expense

($7.50 * 20,000) – ($2.25 * 20,000) = 105,000

105,000

Question 67

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

Answer 67

a) no yes

Question 68

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

(ON THE EXAM)

Answer 68

B. decrease by $10

(1.25 – 1 – 0.35 = - 0.10)

(Look at 100 and think 10)

Question 69

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

Answer 69

18,000 x 4.564 = 82152 Present value of cost savings/ cash inflow.

Question 70

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

Answer 70

E. the answer can’t be compute

Question 71

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 

What is the variable cost ratio?    
A. 100%
B. 40%
C. 60%		
D. 75%
E. none

Answer 71

Contribution margin = Sales revenue – Variable expense
$4 = (10 – 6)

D $4

(Variable Cost / Sales Price) * 100

6/10 *100 = 60

C. 60%

Question 72

Hilton Corporation had sales revenue of $1,105 for the month. Marketing expenses for the month were $60 and administrative expenses were $50

Inventory classification 1st day of the month end of month
Direct material $60 $70
Work in process 120 115
Finished goods 150 165

During the month, Hilton purchased $250 of raw materials and spent $400 of direct labor. Other manufacturing costs such supervisory salaries and utilities were $90 and plant equipment depreciation was $100.

Direct materials used for the month are? 
A. 240 
B. 285 
C. 590 
D. 640 
E. 830 

One question will be What are the Direct labor used for the month?

Answer 72

(Beg + Purchase) - End

(60 + 250) - 70 = 240

Question 73

Selected sales and cost data for a special job are below

Direct materials used $100,000
Direct labor 150,000
F overhead 75,000 (100% indirect, 40%variable)
Selling and administration 120,000(50% direct, 60% variable)
Compute the period costs?

Answer 73

Period Costs, so it is 120,000.

or

Direct Period Costs then we need to do (120,000 * 50% = 60,000)

Question 74

Selected sales and cost data for a special job are below:
Direct materials used $100,000
Direct labor 150,000
F overhead 75,000 (100% indirect, 40%variable)
Selling and administration 120,000(50% direct, 60% variable)

Compute the prime costs?

a. 250,000
b. 225,000
c. 310,000
d. 135,000
e. 325,000

(ON THE EXAM)

Answer 74

Prime costs = Direct material + Direct Labor
100,000+150,000 =250000

a. 250,000

Question 75

D.M -- $7000
D.L -- $2000 
M. Overhead - $10,000 
Work-in-process(bb) $ ? 
End work in process$4000 
Cost of Goods Manufactured $18,000 
Revenue $25,000 F.Goods(bb)$6000 
Cost of Gods Sold $ ? 
F. Goods(eb)$9000 
Operating expense$6000 
Net income $ ? 
Gross margin (profits)$ ? 
What is the cost of good sold?

Answer 75

COGS = Beg Inv. + Purchase - End Inv.

6,000 + 18,000 - 9,000 = 15,000

Question 76

The following information is provided for company Z.
Per unit Total % 
Sales revenue (1500 units) $37,500 
Variable costs $15,000 40 
Contribution Margin $22,500 
Fixed cost $15,000 
Net income$7,500 

What are the Fixed costs per unit?
What is the price per unit?

Answer 76

What are the Fixed costs per unit?

(Fixed Cost / Number of units) (15,000 / 1,500 = 10)

What is the price per unit?
(Sales revenue/Number of units)
(37,500/1,500 = 25)

Question 77

Hilton Corporation had sales revenue of $1,105 for the month. Marketing expenses for the month were $60 and administrative expenses were $50

Inventory classification 1st day of the month end of month
Direct material $60 $70
Work in process $120 $115
Finished goods $150 $165

During the month, Hilton produced and transferred into finished Goods units with a cost of $915. The cost of goods sold for the month was?

Answer 77

Answer 900

Start finished goods + 915 - end of finished goods = 900

150 + 915 - 165 = 900

Question 78

David has the following product information.
Sales price 		7.50 a unit
Variable cost 	2.25 a unit
Fixed cost 		$10,000
Units sold 		20,000     

What is the contribution margin per unit?

What is the contribution margin ratio?

Answer 78

What is the contribution margin per unit?
CM = Price – Variable Cost
7.50 - 2.25 = 5.25
CM = 5.25

What is the contribution margin ratio?
CM Ratio = (CM / Sales) * 100
5.25/7.50*100 = 70
CM Ration= 70%

Question 79

How to calculate NPV?

ON THE EXAM

Answer 79

Present value of cost savings - Present value of required investment = NPV.

NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.

Question 80

Calculate the cost for September, if 10% of cost occurs previous month, 25% of cost next month and 65% of cost occur during the sales month (in this case with be Sept.)? July = 100,000 August = 80,000 Sept = 110,000

Answer 80

July = 100,000 * .10 = 10,000
August = 80,000 * .25 = 20,000
Sept. = 110,000 * .65 = 71,500

10,000 + 20,000 + 71,500 = 101,500

Question 81

A factor that causes or leads to a change in a cost or activity is a:

A. Slope
B. Intercept
C. Driver
D. Variable Term
E. Cost Object

(ON THE EXAM)

Answer 81

C. Driver

Question 82

Cost information:

(a) Is used by accountants across an organization.
(b) Is used by managers across an organization.
(c) Is used by businesses across an organization.
(d) Is used by organizations across an organization.

(ON THE EXAM)

Answer 82

(b) Is used by managers across an organization.