MCQ Final exam Corporate Financial and Managerial Accounting

Which one of the following characteristics would likely be associated with a just-in-time inventory method? (Points : 1)

      [removed] Ending inventory of work in process that would allow several production runs
      [removed] A backlog of inventory orders not yet shipped
      [removed] Minimal finished goods inventory on hand
      [removed] An understanding with customers that they may come to the showroom and select from inventory on hand

Question 2.2. The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is (Points : 1)

      [removed] manufacturing overhead.
      [removed] indirect materials.
      [removed] indirect labor.
      [removed] direct labor.

Question 3.3. For inventoriable costs to become expenses under the matching principle, (Points : 1)

      [removed] the product must be finished and in stock.
      [removed] the product must be expensed based on its percentage-of-completion.
      [removed] the product to which they attach must be sold.
      [removed] all accounts payable must be settled.

Question 4.4. The principle difference between a merchandising and a manufacturing income statement is the (Points : 1)

      [removed] cost of goods sold section.
      [removed] extraordinary item section.
      [removed] operating expense section.
      [removed] revenue section.

Question 5.5. A distinguishing feature of managerial accounting is (Points : 1)

      [removed] external users.
      [removed] general-purpose reports.
      [removed] very detailed reports.
      [removed] quarterly and annual reports.

Question 6.6. Which of the following is one of the components of cost accounting? (Points : 1)

      [removed] It involves measuring product costs.
      [removed] It involves the determination of company profits.
      [removed] It requires GAAP to be applied.
      [removed] It requires cost minimizing principles.

Question 7.7. If the entry to assign factory labor showed only a debit to Work In Process Inventory, then all labor costs were (Points : 1)

      [removed] direct labor.
      [removed] indirect labor.
      [removed] overtime related.
      [removed] regular hours.

Question 8.8. If, at the end of the year, Manufacturing Overhead has been overapplied, it means that (Points : 1)

      [removed] actual overhead costs were greater than the overhead assigned to jobs.
      [removed] actual overhead costs were less than the overhead assigned to jobs.
      [removed] overhead has not been applied to jobs still in process.
      [removed] cost of goods will have to be increased by the amount of the overapplied overhead.

Question 9.9. In computing equivalent units, ___________ is not part of the equivalent units of production formula. (Points : 1)

      [removed] units transferred out
      [removed] beginning work in process
      [removed] ending work in process
      [removed] None of these is correct.

Question 10.10. The total units accounted for equals units in (Points : 1)

      [removed] beginning work in process – units transferred out.
      [removed] beginning work in process + ending work in process.
      [removed] ending work in process + units transferred out.
      [removed] ending work in process – units started into production.

Question 11.11. In process cost accounting, manufacturing costs are summarized on a (Points : 1)

      [removed] job order cost sheet.
      [removed] process order cost sheet.
      [removed] production cost report.
      [removed] manufacturing cost sheet.

Question 12.12. Which would be an appropriate cost driver for the ordering activity? (Points : 1)

      [removed] Machine setups.
      [removed] Purchase orders.
      [removed] Machine hours.
      [removed] Inspections.

Question 13.13. Cost behavior analysis applies to (Points : 1)

      [removed] retailers.
      [removed] wholesalers.
      [removed] manufacturers.
      [removed] all entities.

Question 14.14. Which one of the following is not an assumption of CVP analysis? (Points : 1)

      [removed] All units produced are sold.
      [removed] All costs are variable costs.
      [removed] Sales mix remains constant.
      [removed] The behavior of costs and revenues are linear within the relevant range.

Question 15.15. Kohler Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs. Which of the following is true about the break-even point in units? (Points : 1)

      [removed] It will remain unchanged.
      [removed] It will decrease.
      [removed] It will increase.
      [removed] It cannot be determined from the information provided.

Question 16.16. Which is the true statement? (Points : 1)

      [removed] In a CVP income statement, costs and expenses are classified only by function.
      [removed] The CVP income statement is prepared for both internal and external use.
      [removed] The CVP income statement shows contribution margin instead of gross profit.
      [removed] In a traditional income statement, costs and expenses are classified as either variable or fixed.

Question 17.17. Which of the following is not an operating budget? (Points : 1)

      [removed] Direct labor budget
      [removed] Sales budget
      [removed] Production budget
      [removed] Cash budget

Question 18.18. The total direct labor hours required in preparing a direct labor budget are calculated using the (Points : 1)

      [removed] sales forecast.
      [removed] production budget.
      [removed] direct materials budget.
      [removed] sales budget.

Question 19.19. The cash budget reflects (Points : 1)

      [removed] all revenues and all expenses for a period.
      [removed] expected cash receipts and cash disbursements from all sources.
      [removed] all the items that appear on a budgeted income statement.
      [removed] all the items that appear on a budgeted balance sheet.

Question 20.20. Instead of a production budget, a merchandiser will prepare a (Points : 1)

      [removed] pseudo-production budget.
      [removed] merchandise purchases budget.
      [removed] master time sheet.
      [removed] sales forecast.

Question 21.21. Limpia Industries produced 320,000 units in 150,000 direct labor hours. Production for the period was estimated at 330,000 units and 165,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at (Points : 1)

      [removed] 160,000 hours and 165,000 hours.
      [removed] 165,000 hours and 150,000 hours.
      [removed] 160,000 hours and 150,000 hours.
      [removed] 150,000 hours and 150,000 hours.

Question 22.22. Costs that relate specifically to one center and are incurred for the sole benefit of that center are (Points : 1)

      [removed] common fixed costs.
      [removed] direct fixed costs.
      [removed] indirect fixed costs.
      [removed] noncontrollable fixed costs.

Question 23.23. The foreign subsidiary of a large corporation is (Points : 1)

      [removed] not a responsibility center.
      [removed] a profit center.
      [removed] a cost center.
      [removed] an investment center.

Question 24.24. Management by exception (Points : 1)

      [removed] is most effective at top levels of management.
      [removed] can be implemented at each level of responsibility within an organization.
      [removed] can only be applied when comparing actual results with the master budget.
      [removed] is the opposite of goal congruence.

Question 25.25. The direct materials quantity standard should (Points : 1)

      [removed] exclude unavoidable waste.
      [removed] exclude quality considerations.
      [removed] allow for normal spoilage.
      [removed] always be expressed as an ideal standard.

Question 26.26. If actual direct materials costs are greater than standard direct materials costs, it means that (Points : 1)

      [removed] actual costs were calculated incorrectly.
      [removed] the actual unit price of direct materials was greater than the standard unit price of direct materials.
      [removed] the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.
      [removed] the purchasing agent or the production foreman is inefficient.

Question 27.27. Which of the following statements is false? (Points : 1)

      [removed] The overhead volume variance indicates whether plant facilities were used efficiently during the period.
      [removed] The costs that cause the overhead volume variance are usually controllable costs.
      [removed] The overhead volume variance relates solely to fixed costs.
      [removed] The overhead volume variance is favorable if standard hours allowed for output are greater than the standard hours at normal capacity.

Question 28.28. Incremental analysis is synonymous with (Points : 1)

      [removed] difficult analysis.
      [removed] differential analysis.
      [removed] gross profit analysis.
      [removed] derivative analysis.

Question 29.29. Opportunity cost is usually (Points : 1)

      [removed] a standard cost.
      [removed] a potential benefit.
      [removed] a sunk cost.
      [removed] included as part of cost of goods sold.

Question 30.30. Capital budgeting is the process (Points : 1)

      [removed] used in sell or process further decisions.
      [removed] of determining how much capital stock to issue.
      [removed] of making capital expenditure decisions.
      [removed] of eliminating unprofitable product lines.

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