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Question 1

Which of the following is a staff position?

A. Vice-president of production
B. Vice-president of finance
C. Vice-president of marketing
D. Plant foreman

Answer 1

B. Vice-president of finance

Question 2

Which of the following characteristics is inherent to management accounting?

A. Reporting of historical information
B. Compliance to generally accepted accounting principles
C. Contribution approach income statement
D. External users of financial report

Answer 2

C. Contribution approach income statement

Question 3

The treasury function is usually not concerned with

A. financial reporting.
B. short-term financing.
C. cash custody and banking
D. credit extension and collection of bad debts.

Answer 3

A. financial reporting.

Question 4

The decision to employ a resource in a specific way implies giving up the returns from other possible uses of the same resource. Such returns are considered costs of the alternative chosen as they are profits of the alternative forgone. These
costs must be evaluated by the decision-maker and they are called

A. Opportunity costs
B. Incremental costs
C. Standard costs
D. Manufacturing costs

Answer 4

A. Opportunity costs

Question 5

When there is one scarce resource, the product that should be produced first is the product with

A. the highest contribution margin per unit of the scarce resource
B. the highest sales price per unit of scarce resource
C. the highest demand
D. the highest contribution margin per unit

Answer 5

A. the highest contribution margin per unit of the scarce resource

Question 6

Which of the following is true for a make-or-buy decision?

A. The reliability of the outside supplier of the component is important to the decision.
B. Depreciation on equipment used in making the component and having no other use is the critical factor in the decision.
C. Opportunity costs are irrelevant.
D. The company should make the component if the purchase price is less than the per-unit variable cost to make the component.

Answer 6

A. The reliability of the outside supplier of the component is important to the decision.

Question 7

produce a low margin item. The low-margin item should be manufactured if it can be sold for more than its

A. Fixed costs
B. Indirect costs
C. Variable costs
D. Variable costs plus any opportunity cost of the idle facilities

Answer 7

D. Variable costs plus any opportunity cost of the idle facilities

Question 8

Copeland Inc. produces X-547 in a joint manufacturing process. The company is studying whether to sell X-547 at the split-off point or upgrade the product to become Xylene. The following information has been gathered:
I. Selling price per pound of X-547
II. Variable manufacturing costs of upgrade process
III. Avoidable fixed costs of upgrade process
IV. Selling price per pound of Xylene
V. Joint manufacturing costs to produce X-547
Which items should be reviewed when making the upgrade decision?

A. I, II, and IV.
B. I, II, III, and IV.
C. All items
D. I, II, IV, and V.

Answer 8

B. I, II, III, and IV.

Question 9

Goal congruence exists when

A. the goals of the company harmonize with each other.
B. the company’s managers are pursuing their own goals effectively.
C. the company’s managers are pursuing the goals of the company.
D. all of the above are true.

Answer 9

C. the company’s managers are pursuing the goals of the company.

Question 10

When the majority of authority is maintained by top management personnel, the organization is said to be

A. centralized.
B. decentralized.
C. composed of cost centers. D. engaged in transfer pricing activities.

Answer 10

A. centralized.

Question 11

The primary difference between centralization and decentralization is

A. separate offices for all managers.
B. geographical separation of divisional headquarters and central headquarters.
C. the extent of freedom of decision making by many levels of management.
D. the relative size of the firm.

Answer 11

C. the extent of freedom of decision making by many levels of management.

Question 12

Residual income is used as a performance measure in

A. profit centers.
B. cost centers.
C. investment centers.
D. revenue centers.

Answer 12

C. investment centers.

Question 13

___________ is after-tax operating profit minus the total annual cost of capital.
A. ROI
B. Residual income
C. EVA
D. Net income

Answer 13

C. EVA

Question 14

A transfer price results when

A. two divisions of the same company sell to the same wholesaler
B. two divisions of the same company sell competing products
C. one division sells to another division within the company
D. two divisions of the same company sell in foreign countries

Answer 14

C. one division sells to another division within the company

Question 15

The maximum of the transfer price negotiation range is

A. determined by the buying division.
B. set by the selling division.
C. influenced only by internal cost factors.
D. negotiated by the buying and selling division.

Answer 15

A. determined by the buying division.

Question 16

Manufacturing cycle efficiency is an example of a balanced-scorecard measure of the

A. internal business process perspective.
B. customer perspective.
C. learning and growth perspective.
D. financial perspective.

Answer 16

A. internal business process perspective.

Question 17

The general model for calculating a price variance is:

A. actual quantity of inputs × (actual price - standard price).
B. standard price × (actual quantity of inputs - standard quantity allowed for output).
C. (actual quantity of inputs at actual price) - (standard quantity allowed for output at standard price).
D. actual price × (actual quantity of inputs - standard quantity allowed for output).

Answer 17

A. actual quantity of inputs × (actual price - standard price).

Question 18

Efficiency variances focus on the difference between

A. actual quantity used and standard quantity allowed for units produced
B. actual costs of inputs and standard costs of inputs
C. actual quantity used and standard quantity allowed for budgeted production
D. both a and b

Answer 18

A. actual quantity used and standard quantity allowed for units produced

Question 19

A company uses regression analysis to estimate the functional relationship between an independent variable (cost driver)
and overhead cost. Assume that the following equation is being used:
Y = a + bx
What is the symbol for the independent variable

A. Y
B. X
C. Bx
D. A

Answer 19

B. X

Question 20

Under variable costing:
I. All fixed factory overhead is treated as a period cost and is expensed in the period incurred.
II. Cost of goods sold includes only variable manufacturing costs.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 20

C. Both I and II

Question 21

Which of the following is/are correct regarding conformance and nonconformance costs?
I. Conformance costs include both prevention and appraisal.
II. Nonconformance costs include internal and external failure.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 21

C. Both I and II

Question 22

Which of the following are included in product costs under variable costing?
I. Variable manufacturing overhead.
II. Fixed manufacturing overhead.
III. Selling and administrative expenses.

A. I, II, and III
B. I and III
C. I and II
D. I

Answer 22

C. I and II

Question 23

A production worker is paid a salary of P650 per month, plus an extra 5 cents for each unit produced during the month.
What is the best description of the type of labor cost?

A. A variable cost
B. A fixed cost
C. A step cost
D. A semi-variable cost

Question 24

For better management acceptance, the flow of data to be used for budgeting should begin with

A. Accounting department
B. Top management
C. Lower levels of management
D. Budget committee

Answer 24

C. Lower levels of management

Question 25

Which of the following budgets is based more on planned future operating practices than on current practices?
A. Activity-based budgeting
B. Zero-based budgeting
C. Kaizen budgeting
D. Continuous budgeting

Answer 25

C. Kaizen budgeting

Question 26

Which of the following budgets focuses on constant cost justification?

A. Activity-based budgeting
B. Project budgeting
C. Continuous budgeting
D. Zero-based budgeting

Answer 26

D. Zero-based budgeting