Reference no: EM132190686

Question: PRINCIPLES OF MANAGERIAL ACCOUNTING

1. Management Accounting is all about (remember, choose best answer)

a. Doing Financial Accounting, but without debits and credits

b. Providing information to management that will be valuable for decision-making

c. Ensuring that companies act ethically

d. Reporting accurate costs to management

e. Using non-financial information in place of financial reporting!!

2. What would the income of a business be if there were zero sales during a period?

a. It depends on the sign of the positronic hydridifier, but generally income equals the contribution margin.

b. Net Assets (Total Assets less Liabilities)

c. Income would be $12,000.

d. Income would be a loss if there were no sales, The loss would be equal to fixed costs e. Simple, if there are no sales, income equals zero.

3. If you found out that in April your labor costs were higher than budgeted on your production jobs, but you know for sure that there was no overtime paid and everyone got exactly their budgeted hourly rate you could comfortably conclude that?

a. Your workers took longer than you budgeted for those production jobs

b. The production quality for the month was higher than expectations

c. The price variance was favorable.

d. The price variance was unfavorable.

e. There is not enough information to make any of the above conclusions comfortably

4. If you are trying to make a completely rational, financial-based decision about renting a car to go on a trip or using your own car, you should consider all of the following EXCEPT?

a. The cost of the car rental

b. The cost of gas if the rental car gets much better mileage than your car

c. The wear and tear on your car (tires, oil, general wear from driving on the trip

d. The cost of insurance on your own car

5. Sam calls your Sales Manager, telling her over a fancy lunch, that he would like to purchase a lot of special he will only NOT be relevant to whether she should accept the order at this lower price watches your company makes. She is thrilled, until he says that pay $10 each (the watches usually sell for $18) Which of the following would?

a. Savings on monogramming because the customer says for this special order, he doesn't need them monogrammed

b. Depreciation costs on existing equipment used to produce the special order

c. Whether other customers will find out about the deal (and want the same pricing)

d. None of the above are not relevant, (THAT MEANS THEY ALL ARE RELEVANT.

6.Let's say your company bases overhead allocations on machine hours and you have already calculated the overhead allocation rate. If you want to apply that rate to one producto job, which of the following must be known before you can apply the overhead to that job ?

a. Actual units produced for the job.

b. Total actual number of machine hours for that particular job.

c. Total actual number of machine hours for all jobs

d. Total estimated number of machine hours for that particular job.

e. Total estimated number of machine hours for all jobs.

7. We said the High-Low" method of cost estimating was really a terrible method because?

a. It represents complicated concepts that are both difficult to teach and difficult for students to grasp.

b. Although pretty simple to teach and understand its results are often misle because it uses extreme outcomes to predict normal outcomes.

c. Although once a reliable method, recent advances in standard costing and variance analyses techniques have simply made high-low procedures somewhat obsolete.

d. none of the above.

8-We look at VARIANCES to gauge our performance. If our overall cost of materials to manufacture 1,000 chairs (our product) was higher than we estimated, then we could safely conclude that:

a. The price per unit of raw materials was definitely higher than estimated

b. The total quantity of raw materials used was definitely more than estimated

c. Both a and b are true.

d. Either a or b is true, but not both of them.

e. At least a or b is true, or they both could be true But at least a or b must be true.

9. Why is the amount a company paid for equipment previously purchased not relevant to a decision about whether to replace t with newer equipment?

a. It is relevant, none of the following other responses are true

b. Because the cost of new equipment is not a function of the cost of old equipment

c. Because the previous purchase is a decision made in the past, which cannot be changed. That cost is what is called a sunk cost - it's fixed and unchangeable matter what purchase decisions are later considered

d. Because the depreciable life and method of depreciation are already in place.

10. When we calculated breakevens for businesses in class we made the simplifying assumption (which was pretty realistic on an overall basis) that total fixed costs

a. Will decrease as volume goes up

b. Are constant

C. Are greater than the level of residual income.

d. Behave the same as variable costs

E. Will increase as volume goes up

11. If the production and sales volume of a company DECREASES, which of the following costs statements is TRUE

a. Total Fixed costs will increase

b. Total Fixed costs will decrease.

c. Variable costs per unit will increase

d. Variable costs per unit will decrease

e./ None of the above is true

12. Activity Based Costing seems like a more complicated costing system because:

a. It uses the contribution margin approach to determining income

b. It generally uses multiple regression techniques

c. It includes period costs in the calculation of cost of goods sold

d. It uses several cost rates instead of just one

Fill the blank: Typically a manufacturing company would have three inputs to PRODUCTION; ------(2) Direct Labor and (3) Overhead