Questions

Question 1

Management accountants are required by the Institute of Management Accountants (IMA) to obtain a certain number of continuing professional education hours. This is to comply with which of the following standards of ethical conduct

Question 1 options:

	a) confidentiality
	b) integrity
	c) competence
	d) objectivity

Question 2

Which of the following is a fixed factory overhead cost:

Question 2 options:

	a) advertising expense
	b) direct labor costs
	c) factory building depreciation
	d) office president's salary

Question 3 (12 points)

Aaron Company's year-end finished goods inventory for the current year is higher than the year-end finished goods inventory for last year. This indicates that during the current year Aaron company

Question 3 options:

	a) finished more goods than were sold
	b) sold more goods than were finished
	c) finished more goods than last year
	d) sold more goods than last year

Question 4

A company manufactures small planes. One of these planes was started on April 15, completed on May 15, and sold on June 15. Where would the cost of this plane appear on the April, May, and June financial statements respectively? (assume the financial statements are prepared at the end of each month)

Question 4 options:

	a) work-in-process, work-in-process, cost of goods sold
	b) direct materials, work-in-process, finished goods
	c) work-in-process, cost of goods sold, gross margin
	d) work-in-process, finished goods, cost of goods sold

Question 5

Which of the following statements is true?

Question 5 options:

	a) a misclassification of a period cost as a product cost will understate the unit cost of a product
	b) a misclassification of a factory overhead cost as an operating cost will overstate the unit cost of a product
	c) a misclassification of a selling expense as a general and administrative expense will have no effect on the operating income
	d) a misclassification of an indirect labor cost as a general and administrative expense will overstate the total manufacturing cost

Question 6

An understatement of the Finished Goods Inventory account at the end of a period will lead to which of the following

Question 6 options:

	a) an understatement of the Cost of Goods Sold in the current period
	b) an overstatement of the Gross Margin in the current period
	c) an understatement of the Net Income for the current period
	d) an overstatement of the Net Income for the current period

Question 7

Office salaries	$25,000
Advertising expense	$13,000
Materials inventory, Jan 1	$39,000
Direct labor	$30,000
Materials inventory, Jan 31	$38,000
Office supplies	$1,000
Sales	$118,000
Work-in-process, Jan 1	$12,000
Materials purchased	$16,000
Work-in-process, Jan 31	$16,000
Finished goods, Jan 1	$24,000
Factory depreciation	$12,000
Finished goods, Jan 31	$22,000
Units completed	5,600
Factory utilities	$6,000
Factory rent	$17,000

Use the above information to answer questions 7 - 9

Cook Co. reports the above information for January 2013.

Determine the cost of materials used in January

Question 7 options:

	a) $17,000
	b) $38,000
	c) $55,000
	d) $55,000

Question 8

Use the following information to answer questions 7 - 9

Cook Co. reports the following information for January 2013.

Office salaries	$25,000
Advertising expense	$13,000
Materials inventory, Jan 1	$39,000
Direct labor	$30,000
Materials inventory, Jan 31	$38,000
Office supplies	$1,000
Sales	$118,000
Work-in-process, Jan 1	$12,000
Materials purchased	$16,000
Work-in-process, Jan 31	$16,000
Finished goods, Jan 1	$24,000
Factory depreciation	$12,000
Finished goods, Jan 31	$22,000
Units completed	5,600
Factory utilities	$6,000
Factory rent	$17,000

Determine the cost of goods sold (COGS) for January.

Question 8 options:

	a) $76,000
	b) $78,000
	c) $80,000
	d) $94,000

Question 9

Use the following information to answer questions 7 - 9

Cook Co. reports the following information for January 2013.

Office salaries	$25,000
Advertising expense	$13,000
Materials inventory, Jan 1	$39,000
Direct labor	$30,000
Materials inventory, Jan 31	$38,000
Office supplies	$1,000
Sales	$118,000
Work-in-process, Jan 1	$12,000
Materials purchased	$16,000
Work-in-process, Jan 31	$16,000
Finished goods, Jan 1	$24,000
Factory depreciation	$12,000
Finished goods, Jan 31	$22,000
Units completed	5,600
Factory utilities	$6,000
Factory rent	$17,000

Compute the unit cost for January (round to 2 decimal places):

Question 9 options:

	a) $14.64
	b) $13.93
	c) $14.11
	d) $14.82

Question 10

Which of the following statements is false?

Question 10 options:

	a) the t-stat indicates how significant a contribution a specific independent variable makes to a regression model
	b) the most critical step in the regression process is the correct identification of the independent variables
	c) the cost estimation model obtained from a regression analysis is more reliable than a cost estimation model obtained using the high-low method
	d) in a multiple regression model, an independent variable with a t-statistic of -2.46 indicates that it is not making a contribution to the overall model

Question 11

Use the following information to answer questions 11 - 13

Photon Dynamics has run two simple regressions and one multiple regression to estimate factory overhead (FOH) costs: the simple regressions use # of units produced and the # of machine hours as the independent variables whereas the multiple regression uses both variables. The outputs of these 3 regressions are provided below:

Item	Simple regression (Units)	Simple regression (Machine hours)	Multiple regression (Both variables)
Intercept	$3,000	$2,600	$3,200
R²	0.89	0.67	0.92
Coefficient	2.50	1.82	1.80 (units)
			4.90 (machine hours)

The best cost estimation model to estimate FOH costs is:

Question 11 options:

	a) Y = $3,000 + 0.89 (# of units)
	b) Y = $2,600 + 1.82 (# of machine hours)
	c) Y = $3,200 + 1.80 (# of units) + 4.90 (# of machine hours)
	d) Y = $3,200 + 2.5 (# of units) + 1.82 (# of machine hours)

Question 12

Use the following information to answer questions 11 - 13

Item	Simple regression (Units)	Simple regression (Machine hours)	Multiple regression (Both variables)
Intercept	$3,000	$2,600	$3,200
R²	0.89	0.67	0.92
Coefficient	2.50	1.82	1.80 (units)
			4.90 (machine hours)

Using the best cost estimation model the estimated FOH costs if Photon expects to produce 300 units and use 50 machine hours is

Question 12 options:

	a) $3,750
	b) $3,985
	c) $2,691
	d) $4,760

Question 13

Use the following information to answer questions 11 - 13

Item	Simple regression (Units)	Simple regression (Machine hours)	Multiple regression (Both variables)
Intercept	$3,000	$2,600	$3,200
R²	0.89	0.67	0.92
Coefficient	2.50	1.82	1.80 (units)
			4.90 (machine hours)

Which of the following statements is true?

Question 13 options:

	a) 10% of the variation in FOH costs remains unexplained in the best model.
	b) Based on all 3 models, 30% is the maximum variation in FOH costs that remains unexplained.
	c) These 3 models assume different levels of fixed costs.
	d) Machine hours is the better predictor of FOH costs.

Question 14

Which of the following statements is false?

Question 14 options:

	a) In a multiple regression model, the t-stat for each independent variable is always consistent with the R-squared for the overall model.
	b) It is possible to have a multiple regression model with a strong R-squared even though an individual cost driver may not be making a significant contribution to the model.
	c) The slope of the cost estimation model is not related to the level of fixed costs.
	d) A cost estimation model using the high-low method will almost always produce a different intercept and slope compared to a regression model.

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