Question 1

When are period costs counted as inventory?

Accepted Answer

A)  Before products are sold. 
B)  After products are sold. 
C)  After products are completed, but before they are sold. 
D)  Never. 
A)  Before products are sold. 
B)  After products are sold. 
C)  After products are completed, but before they are sold. 
D)  Never.

Question 2

Indirect costs are:

Accepted Answer

A)  costs that are not worth the effort to trace to a specific cost object. 
B)  costs that change, in total, in direct proportion to changes in activity levels. 
C)  always irrelevant. 
D)  costs that remain constant no matter the activity level. 
A)  costs that are not worth the effort to trace to a specific cost object. 
B)  costs that change, in total, in direct proportion to changes in activity levels. 
C)  always irrelevant. 
D)  costs that remain constant no matter the activity level.

Question 3

Whether a cost is treated as direct or indirect depends on whether tracing the cost is both possible and feasible

Accepted Answer

A) True 
 B)False

Question 4

A relevant cost is a cost that:

Accepted Answer

A)  has the potential to influence a decision. 
B)  changes in direct proportion to changes in activity level. 
C)  can be traced to a specific cost object. 
D)  is used for control purposes. 
A)  has the potential to influence a decision. 
B)  changes in direct proportion to changes in activity level. 
C)  can be traced to a specific cost object. 
D)  is used for control purposes.

Question 5

Financial accounting information is generally used exclusively by internal parties such as managers

Accepted Answer

A) True 
 B)False

Question 6

Variable costs are always direct costs

Accepted Answer

A) True 
 B)False

Question 7

The cost of not doing something is a(n):

Accepted Answer

A)  out-of-pocket cost. 
B)  opportunity cost. 
C)  direct cost. 
D)  cost object. 
A)  out-of-pocket cost. 
B)  opportunity cost. 
C)  direct cost. 
D)  cost object.

Question 8

A cost object is:

Accepted Answer

A)  an item for which managers are trying to determine the cost. 
B)  an item to which managers must directly trace costs. 
C)  an item to which it is not worth the effort of tracing costs. 
D)  an item for sale by a business. 
A)  an item for which managers are trying to determine the cost. 
B)  an item to which managers must directly trace costs. 
C)  an item to which it is not worth the effort of tracing costs. 
D)  an item for sale by a business.

Question 9

Which of the following statements is true about the use of managerial accounting information in nonprofit organizations?

Accepted Answer

A)  Universities do not exist strictly to earn profit for shareholders, so managerial accounting information is not vital to their operations. 
B)  Unlike other nonprofits, hospitals (which exist with a focus on financial results in addition to health metrics) make use of managerial accounting. 
C)  Because managers of nonprofit organizations need timely and relevant information to make decisions, managerial accounting is vital to these organizations. 
D)  Because nonprofit organizations - hospitals, educational institutions, charities - do not exist with a profit motive, they do not use managerial accounting principles. 
A)  Universities do not exist strictly to earn profit for shareholders, so managerial accounting information is not vital to their operations. 
B)  Unlike other nonprofits, hospitals (which exist with a focus on financial results in addition to health metrics) make use of managerial accounting. 
C)  Because managers of nonprofit organizations need timely and relevant information to make decisions, managerial accounting is vital to these organizations. 
D)  Because nonprofit organizations - hospitals, educational institutions, charities - do not exist with a profit motive, they do not use managerial accounting principles.

Question 10

Which of the following functions of management involves providing feedback for future plans?

Accepted Answer

A)  Planning 
B)  Implementing 
C)  Reviewing 
D)  Control 
A)  Planning 
B)  Implementing 
C)  Reviewing 
D)  Control

Question 11

Manufacturing costs are:

Accepted Answer

A)  always relevant. 
B)  always fixed. 
C)  the costs incurred to produce a final product. 
D)  split into prime costs and conversion costs. 
A)  always relevant. 
B)  always fixed. 
C)  the costs incurred to produce a final product. 
D)  split into prime costs and conversion costs.

Question 12

Melinda's Custom Homes, a construction company that builds custom-designed houses, incurred costs for the following items.   Calculate each of the following, where the cost object is the houses built by the company:
a. Total variable costs
b. Total fixed costs
c. Total direct costs
d. Total indirect costs

Accepted Answer

a. Total variable costs: $478,900 = $105

Question 13

Managerial accounting information includes all of the following except:

Accepted Answer

A)  Budgets. 
B)  Performance evaluations, for example budget-to-actual reports. 
C)  Cost reports. 
D)  Financial statements prepared in accordance with generally accepted accounting principles. 
A)  Budgets. 
B)  Performance evaluations, for example budget-to-actual reports. 
C)  Cost reports. 
D)  Financial statements prepared in accordance with generally accepted accounting principles.

Question 14

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to reduce opportunities for error and fraud?

Accepted Answer

A)  Internal control report from management 
B)  Code of ethics 
C)  Stronger oversight by directors 
D)  Internal control audit by external auditors 
A)  Internal control report from management 
B)  Code of ethics 
C)  Stronger oversight by directors 
D)  Internal control audit by external auditors

Question 15

Prime costs include direct materials, direct labor, and manufacturing overhead

Accepted Answer

A) True 
 B)False

Question 16

Melinda's Custom Homes, a construction company that builds custom-designed houses, incurred costs for the following items. Place an "X" in the appropriate column to indicate whether they are direct or indirect, and whether they are variable or fixed. The cost object is the houses built by the company.

Accepted Answer

The answer of Melinda's Custom Homes, a construction company that...

Question 17

Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

Accepted Answer

A)  The cost of the wood in the table. 
B)  The cost of rent on the factory where the table is manufactured. 
C)  The salary of the supervisor who oversees all production for the firm. 
D)  Depreciation on the tools used to manufacture the table. 
A)  The cost of the wood in the table. 
B)  The cost of rent on the factory where the table is manufactured. 
C)  The salary of the supervisor who oversees all production for the firm. 
D)  Depreciation on the tools used to manufacture the table.

Question 18

Which of the following types of organizations sells goods to the general public?

Accepted Answer

A)  Service companies 
B)  Manufacturing firms 
C)  Merchandising companies 
D)  Retailers 
A)  Service companies 
B)  Manufacturing firms 
C)  Merchandising companies 
D)  Retailers

Question 19

For each of the following independent cases, compute the missing values:

Accepted Answer

The answer of For each of the following independent cases,...

Question 20

Which of the following is not a characteristic of managerial accounting?

Accepted Answer

A)  Information is used by internal parties. 
B)  Information is subjective, relevant, future-oriented. 
C)  Reports are prepared as needed. 
D)  Reports are prepared according to GAAP. 
A)  Information is used by internal parties. 
B)  Information is subjective, relevant, future-oriented. 
C)  Reports are prepared as needed. 
D)  Reports are prepared according to GAAP.

When are period costs counted as inventory?

Indirect costs are:

Whether a cost is treated as direct or indirect depends on whether tracing the cost is both possible and feasible

A relevant cost is a cost that:

Financial accounting information is generally used exclusively by internal parties such as managers

Variable costs are always direct costs

The cost of not doing something is a(n):

A cost object is:

Which of the following statements is true about the use of managerial accounting information in nonprofit organizations?

Which of the following functions of management involves providing feedback for future plans?

Manufacturing costs are:

Managerial accounting information includes all of the following except:

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to reduce opportunities for error and fraud?

Prime costs include direct materials, direct labor, and manufacturing overhead

Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

Which of the following types of organizations sells goods to the general public?

For each of the following independent cases, compute the missing values:

Which of the following is not a characteristic of managerial accounting?

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 1: Introduction to Managerial Accounting

When are period costs counted as inventory?

Indirect costs are:

Whether a cost is treated as direct or indirect depends on whether tracing the cost is both possible and feasible

A relevant cost is a cost that:

Financial accounting information is generally used exclusively by internal parties such as managers

Variable costs are always direct costs

The cost of not doing something is a(n):

A cost object is:

Which of the following statements is true about the use of managerial accounting information in nonprofit organizations?

Which of the following functions of management involves providing feedback for future plans?

Manufacturing costs are:

Managerial accounting information includes all of the following except:

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to reduce opportunities for error and fraud?

Prime costs include direct materials, direct labor, and manufacturing overhead

Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

Which of the following types of organizations sells goods to the general public?

For each of the following independent cases, compute the missing values:

Which of the following is not a characteristic of managerial accounting?

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Financial Statement Analysis

Filters