Question 1

Which one of the following is NOT an ethical guideline that the Institute of Management Accountants (IMA) requires its members to follow?

Accepted Answer

A)  Not disclose confidential information 
B)  Maintain objectivity when communicating information to decision makers 
C)  Act with both actual and apparent integrity in all situations 
D)  All of these are correct 
A)  Not disclose confidential information 
B)  Maintain objectivity when communicating information to decision makers 
C)  Act with both actual and apparent integrity in all situations 
D)  All of these are correct

Question 2

Violet Company typically has $360,000 of fixed costs and $25 of variable costs per unit. Violet plans to sell 8,000 units this period. In order for Violet to break-even, what price should Violet charge per unit?

Accepted Answer

A)  $70 
B)  $25 
C)  $45 
D)  $20 
A)  $70 
B)  $25 
C)  $45 
D)  $20

Question 3

You currently work as a machinist in a factory. Your salary is $45,000 per year. You are thinking about quitting your job and going back to college. It will take you two years to obtain your college degree. Tuition and other costs of the education will total $60,000. The $60,000 cost of the education is a(n):

Accepted Answer

A)  Opportunity cost 
B)  Differential cost 
C)  Sunk cost 
D)  Variable cost 
A)  Opportunity cost 
B)  Differential cost 
C)  Sunk cost 
D)  Variable cost

Question 4

Glue used in the manufacture of chairs would most likely be classified as:

Accepted Answer

A)  Direct materials 
B)  Manufacturing overhead 
C)  Period cost 
D)  Direct labor 
A)  Direct materials 
B)  Manufacturing overhead 
C)  Period cost 
D)  Direct labor

Question 5

Which is NOT a period cost of operating a retail store?

Accepted Answer

A)  Cost of merchandise sold 
B)  Store manager's salary 
C)  Store rent 
D)  Corporate computer cost 
A)  Cost of merchandise sold 
B)  Store manager's salary 
C)  Store rent 
D)  Corporate computer cost

Question 6

Capital budgeting is:

Accepted Answer

A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future. 
A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future.

Question 7

Production prioritizing is:

Accepted Answer

A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future. 
A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future.

Question 8

Which of the following is a fundamental characteristic of management accounting as compared to financial accounting?

Accepted Answer

A)  Uses only financial data 
B)  Satisfies a competitive need 
C)  Uses generally accepted accounting principles 
D)  Is governed by regulatory agencies 
A)  Uses only financial data 
B)  Satisfies a competitive need 
C)  Uses generally accepted accounting principles 
D)  Is governed by regulatory agencies

Question 9

Variances which result from a comparison of actual performance against expected results would be used in which management function?

Accepted Answer

A)  Planning 
B)  Controlling 
C)  Evaluating 
D)  None of these are correct 
A)  Planning 
B)  Controlling 
C)  Evaluating 
D)  None of these are correct

Question 10

Assume that Lily Company has total fixed costs of $48,000 for the period. Each unit sells for $40. The variable cost per unit is $24. How many units must be sold to break even?

Accepted Answer

A)  1,200 
B)  2,000 
C)  3,000 
D)  4,000 
A)  1,200 
B)  2,000 
C)  3,000 
D)  4,000

Question 11

The product costs of a software development company would NOT include:

Accepted Answer

A)  Computer lease 
B)  Salary of the CEO 
C)  Supplies used by programmers 
D)  Computer programmers' salaries 
A)  Computer lease 
B)  Salary of the CEO 
C)  Supplies used by programmers 
D)  Computer programmers' salaries

Question 12

Identifying problems and opportunities is a product of which process?

Accepted Answer

A)  Evaluating 
B)  Long-term planning 
C)  Short-term planning 
D)  Controlling 
A)  Evaluating 
B)  Long-term planning 
C)  Short-term planning 
D)  Controlling

Question 13

When considering the purchase of a new truck, the depreciation expense on the old truck is considered a(n):

Accepted Answer

A)  Variable cost 
B)  Opportunity cost 
C)  Sunk cost 
D)  Differential cost 
A)  Variable cost 
B)  Opportunity cost 
C)  Sunk cost 
D)  Differential cost

Question 14

The first step in management planning is:

Accepted Answer

A)  Defining the problem 
B)  Identifying reasonable alternative courses of action 
C)  Evaluating the alternatives 
D)  Choosing and implementing the best alternative 
A)  Defining the problem 
B)  Identifying reasonable alternative courses of action 
C)  Evaluating the alternatives 
D)  Choosing and implementing the best alternative

Question 15

Assume that Rose Company sold 15,000 units to break even this period. Each unit sells for $100. The variable cost per unit is $65. What were fixed costs for the period?

Accepted Answer

A)  $975,000 
B)  $525,000 
C)  $1,500,000 
D)  $300,000 
A)  $975,000 
B)  $525,000 
C)  $1,500,000 
D)  $300,000

Question 16

Which of the following costs should NOT be considered when making a future decision?

Accepted Answer

A)  Sunk costs 
B)  Opportunity costs 
C)  Indirect costs 
D)  Fixed costs 
A)  Sunk costs 
B)  Opportunity costs 
C)  Indirect costs 
D)  Fixed costs

Question 17

List and describe the three management functions.

Accepted Answer

The answer of List and describe the three management functions....

Question 18

Strategic planning is:

Accepted Answer

A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future. 
A)  The continual evaluation of the profitability of the various product lines and divisions. 
B)  The systematic planning for long-term investments in operating assets. 
C)  Broad, long-range planning. 
D)  Planning decisions regarding current operations and those of the immediate future.

Question 19

Complete the following phrases by inserting the appropriate cost term.

Accepted Answer

The answer of Complete the following phrases by inserting the...

Question 20

Zodiac Company's total costs are the same at all levels of activity. The company's cost structure must have all:

Accepted Answer

A)  Fixed costs 
B)  Variable costs 
C)  Product costs 
D)  Sunk costs 
A)  Fixed costs 
B)  Variable costs 
C)  Product costs 
D)  Sunk costs

Exam 15: Management Accounting and Cost Concepts

Which one of the following is NOT an ethical guideline that the Institute of Management Accountants (IMA) requires its members to follow?

Violet Company typically has $360,000 of fixed costs and $25 of variable costs per unit. Violet plans to sell 8,000 units this period. In order for Violet to break-even, what price should Violet charge per unit?

Glue used in the manufacture of chairs would most likely be classified as:

Which is NOT a period cost of operating a retail store?

Capital budgeting is:

Production prioritizing is:

Which of the following is a fundamental characteristic of management accounting as compared to financial accounting?

Variances which result from a comparison of actual performance against expected results would be used in which management function?

Assume that Lily Company has total fixed costs of $48,000 for the period. Each unit sells for $40. The variable cost per unit is $24. How many units must be sold to break even?

The product costs of a software development company would NOT include:

Identifying problems and opportunities is a product of which process?

When considering the purchase of a new truck, the depreciation expense on the old truck is considered a(n):

The first step in management planning is:

Assume that Rose Company sold 15,000 units to break even this period. Each unit sells for $100. The variable cost per unit is $65. What were fixed costs for the period?

Which of the following costs should NOT be considered when making a future decision?

List and describe the three management functions.

Strategic planning is:

Complete the following phrases by inserting the appropriate cost term.

Zodiac Company's total costs are the same at all levels of activity. The company's cost structure must have all:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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