MANAGERIAL ACCOUNTING (OFFICIAL) Flashcards
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
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. balance sheet
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
C. To plan operation
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
(e) ALL
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)
a. Divide estimate overhead by estimated units of the cost driver.
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
c. controlling activities
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
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)
d. Internal revenue service (IRS)
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
d. all manufacturing or production cost of the product
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)
c. paper manufacture
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
d. the minimum required rate of return
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)
B. Is not subject to GAAP
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. Managers
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)
D. Prime Cost
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
B. Require mangers to build budget from the ground up
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
A. Direct costs and Indirect costs
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
b. Variable and fixed cost
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.
a. when either the overhead cost driver are estimated incorrectly
Chief Accounting officer in an organization is:
a) Vice President of Finance
b) Treasurer
c) Controller
d) General Accounting manager
e) tax manager
c) Controller
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) external parties
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) factory rent
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) an engine in a custom automobile
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) fixed cost and variable cost
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
A. target cost + target profit
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. managerial accountants facilitate the decisions for an organization
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
A. asset
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
D. budget
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
C. Sales budget in units + (target) projected ending inventory units – beginning inventory units.
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
(b) Less than 16%
Manager should use budget for which:
(a) Control operations.
(a) Control operations.
- 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
e. Production market and administrative cost
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
e. The internal rate of return
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
c. Make it yourself or buy it from out side
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
e. All
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)
d. A production cost
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
c. Merchandise Inventory
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
b) cost that can be avoided
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.
A. Production management making manufacture decision.
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
D. Net present value
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)
B. Conversion cost
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
C. 2,500
40,000 - 30,000 - 7,500 = 2,500
Liability of a company are owned:
A. Debits
B Owners
C. Creditors
D. Stockholders
C. Creditors
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.
E. All of the all 4 of the other answers need to be covered.
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
D. Assets liabilities and stockholder equity
Which of the following isn’t accounting assumption?
A. Integrity B. Going concern C. Time period D. Economic entry E. None
A. Integrity
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
D. Relevant cost
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.
C. Forecasted cash flow
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
A. 3,810 million 4,350 – 490 – 100 + 50 = 3,810
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
B. Known as general accepted accounting principle
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
B. Business entitle
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.
D. going concern
Cost Accounting:
a. set asset values
b. measure income
c. plan operation
d. control operation
e. all
e. all
- 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
c. make it yourself buy from outside
- Future cost differ between alternations:
a. sunk cost
b. prime cost
c. period cost
d. relevant cost
e. indirect cost
d. relevant cost
- Which of the following statement is true about Ethics?
a. Managerial Acc.
b. Ethical issue
c. Ethical behavior
d. Most managers
e. Only boss
a. Managerial Acc.
- Monetary amount
a. an asset
b. a liability
c. an equity
b. a liability
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%
D. $4
contribution margin=sales revenue - variable expense
10-6=4
C. 60%
(variable cost/sales price)100
6/10100=60
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
A. Direct costs and Indirect costs
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?
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
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?
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
RABBIT
$11
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?
15000+12000+16000
= 43000 (budgeted sales for 1st quarter)
(15,000 + 12,000 + 16,000 = 43,000 43,000 * 150 = 6,450,000)
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”
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
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
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)
Fixed Cost / (Price - Variable Cost)
10,000 / (7.50 - 2.25) = 1905
b. 1905
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?
Contribution margin = Sales Revenue – Variable Expense
($7.50 * 20,000) – ($2.25 * 20,000) = 105,000
105,000
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) no yes
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)
B. decrease by $10
(1.25 – 1 – 0.35 = - 0.10)
(Look at 100 and think 10)
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
18,000 x 4.564 = 82152 Present value of cost savings/ cash inflow.
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. the answer can’t be compute
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
Contribution margin = Sales revenue – Variable expense
$4 = (10 – 6)
D $4
(Variable Cost / Sales Price) * 100
6/10 *100 = 60
C. 60%
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?
(Beg + Purchase) - End
(60 + 250) - 70 = 240
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?
Period Costs, so it is 120,000.
or
Direct Period Costs then we need to do (120,000 * 50% = 60,000)
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)
Prime costs = Direct material + Direct Labor
100,000+150,000 =250000
a. 250,000
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?
COGS = Beg Inv. + Purchase - End Inv.
6,000 + 18,000 - 9,000 = 15,000
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?
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)
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 900
Start finished goods + 915 - end of finished goods = 900
150 + 915 - 165 = 900
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?
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%
How to calculate NPV?
ON THE EXAM
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.
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
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
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)
C. Driver
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)
(b) Is used by managers across an organization.
