Managerial Accounting test

1. Which of the following is a characteristic of management accounting?

It must follow generally accepted accounting principles.

It is used primarily by internal users.

It is concerned primarily with reporting past performance.

It uses historical costs as the sole measurement unit.

2. An example of a period cost is:

advertising costs.

indirect materials.

product design costs.

direct materials.

3. Which of the following is not an objective of product costing systems?

To provide information for cost planning

To assist in the preparation of the income statement

To determine the optimal amount of products to manufacture

To provide information for product pricing

4. Which of the following entities probably would use a process costing system?

An oil refinery

A yacht builder

A custom furniture company

A custom screw manufacturer

5. Activity-based management includes all of the following except identifying:

customer satisfaction with a product or service.

the resources that are consumed by each activity.

activities as value-adding.

how resources are consumed by each activity.

6. An insurance company pays its employees a commission of 6 percent on each sale. What is the proper classification of the cost of sales commissions?

Constant cost

Variable cost

Mixed cost

Fixed cost

7. Which type of budgeting utilizes employees at all levels of the company?

Group budgeting

Selective budgeting

Target budgeting

Participative budgeting

8. Standard costs are useful for all but which of the following?

Determining actual costs

Preparing budgets and forecasts

Evaluating the performance of workers and management

Helping to develop appropriate selling prices

9. An example of a pricing objective is to:

ignore long-term pricing strategies in favor of short-term profits.

increase market share irrespective of the cost of a product.

maintain a price that is always under that of the competition.

maintain a minimum rate of return.

10. The overall objective of controlling the costs of quality is to eliminate:

appraisal costs.

costs of nonconformance.

costs of conformance.

the costs of quality.

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