Chapter 1: The Manager and Management Accounting
Q1) Customer response time involves ________.
A) the speed it takes a customer to respond to an advertisement and place an order
B) the speed at which an organization responds to customer requests
C) the speed it takes to develop a new product
D) the speed it takes an organization to develop a Total Quality Management (TQM)
program
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Q2) Customer response time involves ________.
A) the speed it takes a customer to respond to an advertisement and place an order
B) the speed at which an organization responds to customer requests
C) the speed it takes to develop a new product
D) the speed it takes an organization to develop a Total Quality Management (TQM)
program
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Q3) A company's CFO oversees banking and short- and long-term financing,
investments, and cash management.
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Chapter 2: An Introduction to Cost Terms and Purposes
Q1) Rapid Cabinet Makers Inc. provided the following information for last month:
If sales reduce to half the amount in the next month, what is the projected operating
income?
A) $1,000
B) $6,000
C) $4,500
D) $18,500
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Chapter 12: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
Q1) Which of the following is the correct mathematical expression to calculate partial
productivity?
A) Sales value of output produced ÷ Quantity of all inputs used
B) Quantity of output produced ÷ Quantity of input used
C) Quantity of output produced ÷ Costs of all inputs used
D) Sales value of output produced ÷ Cost of inputs required to produce current year
production in previous year
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Q2) The time taken to fulfill clients' requests is an example of the ________ measure of
a balanced-scorecard.
A) internal business process perspective
B) customer perspective
C) learning and growth perspective
D) financial perspective
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Q3) An organization that is using the cost leadership approach would ________.
A) incur costs for innovative R&D
B) provide products at a higher cost than competitors
C) focus on productivity through efficiency improvements
D) bring products to market rapidly
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Chapter 8: Flexible Budgets, Overhead Cost Variances, and
Management Control
Q1) Which of the following journal entries is used to record fixed overhead costs
allocated?
A) Fixed Overhead Allocated Work-in-Process Control
B) Work-in-Process Control Fixed Overhead Allocated
C) Fixed Overhead Control Work-in-Process Control
D) Fixed Overhead Allocated Fixed Overhead Control
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Q2) When variable overhead efficiency variance is favorable, it can be safely assumed
that the ________.
A) actual rate per unit of the cost-allocation base is higher than the budgeted rate
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity
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Q3) Standard costing is a costing system that allocates overhead costs on the basis of
the standard overhead-cost rates times the standard quantities of the allocation bases
allowed for the actual outputs produced.
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Chapter 6: Master Budget and Responsibility Accounting
Q1) The number of units in the sales budget and the production budget may differ
because of a change in ________.
A) ending finished goods inventory levels
B) total overhead charges for the year
C) beginning direct material inventory levels
D) sales returns and allowances
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Q2) After a budget is agreed upon and finalized by the management team, the amounts
should NOT be changed for any reason.
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Q3) Antique Brass Company has budgeted sales volume of 122,000 units and budgeted
production of 114,000 units, while 24,000 units are in beginning finished goods inventory.
How many units are targeted for ending finished goods inventory?
A) 24,000 units
B) 32,000 units
C) 8,000 units
D) 16,000 units
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Chapter 13: Pricing Decisions and Cost Management
Q1) Expo Manufacturing Inc., is in the process of evaluating a new product using the
following information:
-A new transformer has three production runs each year, each with $15,000 in setup
costs.
-The new transformer incurred $50,000 in development costs and is expected to be
produced over the next three years.
-Direct costs of producing the transformers are $40,000 per run of 5700 transformers
each.
-Indirect manufacturing costs charged to each run are $115,000.
-Destination charges for each transformer average $2.00.
-Customer service expenses average $0.70 per transformer.
-The transformers are selling for $35 the first year and will increase by $2 each year
thereafter.
-Sales units equal production units each year.
What is the estimated life-cycle operating income for the first three years?
A) $556,170
B) $2,221,170
C) $179,590
D) $2,196,970
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Chapter 4: Job Costing
Q1) X-Industries manufactures 3-D printers. For each unit, $3,400 of direct material is
used and there is $2,600 of direct manufacturing labor at $16 per hour. Manufacturing
overhead is applied at $20 per direct manufacturing labor hour. Calculate the profit
earned on 46 units if each unit sells for $9,500.
A) $65,320
B) $35,880
C) $11,500
D) $3,250
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Q2) Sky High Company has two departments, X and Y. The following estimates are for
the coming year:
A single indirect-cost rate based on direct manufacturing labor-hours for the entire
plant is ________.
A) $25.00 per direct labor-hour
B) $12.60 per direct labor-hour
C) $27.50 per direct labor-hour
D) $16.50 per direct labor-hour
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Chapter 18: Spoilage, Rework, and Scrap
Q1) Outose Concept manufactures small tables in its Processing Department. Direct
materials are added at the initiation of the production cycle and must be bundled in
single kits for each unit. Conversion costs are incurred evenly throughout the production
cycle. Before inspection, some units are spoiled due to undetectable materials defects.
Spoiled units generally constitute 5% of the good units. Data for December 2017 are as
follows:
What cost is allocated to abnormal spoilage using the weighted-average
process-costing method? (Round any cost per unit calculations to the nearest cent.)
A) $ 0
B) $28,150
C) $25,177
D) $77,200
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Chapter 15: Allocation of Support-Department Costs,
Common Costs, and Revenues
Q1) The issue of "allowable costs" is applicable in government cost-plus contracts.
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Q2) The dual-rate cost-allocation method provides better information for decision
making than the single-rate method as it differentiates between fixed and variable costs
and its allocation.
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Q3) Which of the following is an advantage of a dual-rate method?
A) It is the most widely used method in practice.
B) It is less costly to implement.
C) It avoids the expensive analysis for categorizing costs as either fixed or variable.
D) It allocates fixed cost as per the budgeted usage that helps in short and long-run
planning.
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Chapter 9: Inventory Costing and Capacity Analysis
Q1) To discourage producing for inventory, management can ________.
A) discourage using nonfinancial measures such as units in ending inventory compared
to units in sales as nonfinancial measures may not be congruent with management
performance goals
B) evaluate performance over a quarterly period rather than a single year
C) develop budgeting and planning activities that reduce management's freedom to
inappropriately build inventory through increased production
D) implement absorption costing across all departments
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Q2) Which of the following inventory costing methods shown below is required by GAAP
(Generally Accepted Accounting Principles) for external financial reporting?
A) absorption costing
B) variable costing
C) throughput costing
D) direct costing
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Q3) Normal capacity utilization is the level of capacity that satisfies average customer
demand over a period and takes into account seasonal, cyclical, and trend factors.
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Chapter 11: Decision Making and Relevant Information
Q1) Business function costs are the sum of all variable and fixed costs in all business
functions of the value chain.
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Q2) ________ is relevant in a decision to replace equipment.
A) Warehouse rent costs
B) Book value of old equipment
C) Accumulated depreciation on old equipment
D) Salvage value
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Q3) Determining which products should be produced when the plant is operating at full
capacity is referred to as a(n) ________.
A) outsourcing analysis
B) total alternative approach
C) product-mix decision
D) short-run focus decision
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Chapter 21: Capital Budgeting and Cost Analysis
Q1) The Ambitz Corporation has an annual cash inflow from operations from its
investment in a capital asset of $44,000 (excluding the deprecation) each year for seven
years. The corporation's income tax rate is 35%. Calculate the total after-tax cash inflow
from operations for seven years.
A) $308,000
B) $308,002
C) $200,200
D) $44,000
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Q2) What are the four alternative methods for evaluating capital budgeting projects?
What is an advantage and disadvantage of each method?
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Q3) The focus in capital budgeting should be on ________.
A) favorable and unfavorable variance
B) expenses under accrual accounting
C) expected future cash flows that differ between alternatives
D) allocation of overheads
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Chapter 10: Determining How Costs Behave
Q1) Write a linear cost function equation for each of the following conditions. Use y for
estimated costs and X for activity of the cost driver.
[Link] manufacturing labor is $15 per hour.
[Link] materials cost $25.60 per cubic yard.
[Link] have a minimum charge of $500, plus a charge of $0.25 per kilowatt-hour.
[Link] operating costs include $250,000 of machine depreciation per year, plus $100
of utility costs for each day the machinery is in operation.
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Q2) Which of the following functions represents the least total cost assuming the
number of units is equal in each case?
A) y = 180 + 9X
B) y = 90 + 5X
C) y = 90 + 9X
D) y = 180 + 5X
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Q3) A cost function is a mathematical description of how a cost changes with changes
in the level of an activity relating to that cost.
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