Question 1

For a manufacturing company, both direct labor costs and indirect labor costs are classified as product costs.

Accepted Answer

A) True 
 B)False

Question 2

The objective of a just-in-time inventory system is to totally eliminate all inventories.

Accepted Answer

A) True 
 B)False

Question 3

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following items would be reported directly on the income statement as a period cost?

Accepted Answer

A)  Selling and administrative salaries 
B)  Cost of lubricant for oiling machinery 
C)  Wages paid to machine operators 
D)  All of these. 
A)  Selling and administrative salaries 
B)  Cost of lubricant for oiling machinery 
C)  Wages paid to machine operators 
D)  All of these.

Question 5

Unlike manufacturers, service companies do not have an inventory of products.

Accepted Answer

A) True 
 B)False

Question 6

Managerial accounting information is limited or restricted by which of the following authorities or principles?

Accepted Answer

A)  Securities and Exchange Commission 
B)  Generally Accepted Accounting Principles 
C)  Managerial Accounting Standards Board 
D)  Value-Added Principle 
A)  Securities and Exchange Commission 
B)  Generally Accepted Accounting Principles 
C)  Managerial Accounting Standards Board 
D)  Value-Added Principle

Question 7

As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?

Accepted Answer

A)  Integrity 
B)  Confidentiality 
C)  Competence 
D)  Objectivity 
A)  Integrity 
B)  Confidentiality 
C)  Competence 
D)  Objectivity

Question 8

Which of the following transactions would cause net income for the period to decrease?

Accepted Answer

A)  Paid $2,500 cash for raw material cost 
B)  Purchased $8,000 of merchandise inventory 
C)  Recorded $5,000 of depreciation on production equipment 
D)  Used $2,000 of office supplies 
A)  Paid $2,500 cash for raw material cost 
B)  Purchased $8,000 of merchandise inventory 
C)  Recorded $5,000 of depreciation on production equipment 
D)  Used $2,000 of office supplies

Question 9

Depreciation on manufacturing equipment is an indirect product cost, while depreciation on office equipment is a period cost.

Accepted Answer

A) True 
 B)False

Question 10

Transportation costs incurred to transfer products to customers are downstream costs.

Accepted Answer

A) True 
 B)False

Question 11

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year:   Randall's direct materials amounted to:

Accepted Answer

A)  $25,000 
B)  $225,000 
C)  $250,000 
D)  $475,000 
A)  $25,000 
B)  $225,000 
C)  $250,000 
D)  $475,000

Question 12

Just in time systems can be used by both manufacturing and merchandising companies.

Accepted Answer

A) True 
 B)False

Question 13

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Accepted Answer

A)  just-in-time (JIT). 
B)  total quality management (TQM). 
C)  activity based management (ABM). 
D)  None of these. 
A)  just-in-time (JIT). 
B)  total quality management (TQM). 
C)  activity based management (ABM). 
D)  None of these.

Question 14

Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?

Accepted Answer

A)  Credibility 
B)  Confidentiality 
C)  Integrity 
D)  Independence 
A)  Credibility 
B)  Confidentiality 
C)  Integrity 
D)  Independence

Question 15

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive. During the period, the company produced 5,000 units of Product A requiring a total of 1,600 labor hours and 2,500 units of Product B requiring a total of 400 labor hours. What allocation rate should be used if the company incurs overhead costs of $20,000?

Accepted Answer

A)  $10 per labor hour 
B)  $2.67 per unit 
C)  $12.50 per labor hour for Product A and $50 per labor hour for Product B 
D)  None of these. 
A)  $10 per labor hour 
B)  $2.67 per unit 
C)  $12.50 per labor hour for Product A and $50 per labor hour for Product B 
D)  None of these.

Question 16

What is the effect on the balance sheet of making cash sales of inventory to customers on profit?

Accepted Answer

A)  Assets and equity increase. 
B)  Assets and equity decrease. 
C)  Assets decrease and equity increases. 
D)  Assets increase and equity decreases. 
A)  Assets and equity increase. 
B)  Assets and equity decrease. 
C)  Assets decrease and equity increases. 
D)  Assets increase and equity decreases.

Question 17

Product costs flow from the balance sheet to the income statement.

Accepted Answer

A) True 
 B)False

Question 18

As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:

Accepted Answer

A)  inform subordinates that they should protect confidential information. 
B)  ensure that financial accounting records are maintained as per the governing guidelines. 
C)  monitor the activities of subordinates to assure that confidentiality is maintained. 
D)  inform subordinates that they should protect confidential information and monitor the activities of subordinates to assure that confidentiality is maintained. 
A)  inform subordinates that they should protect confidential information. 
B)  ensure that financial accounting records are maintained as per the governing guidelines. 
C)  monitor the activities of subordinates to assure that confidentiality is maintained. 
D)  inform subordinates that they should protect confidential information and monitor the activities of subordinates to assure that confidentiality is maintained.

Question 19

The benefits of a just-in-time system would include all of the following except:

Accepted Answer

A)  increased warehousing costs. 
B)  reduced inventory holding costs. 
C)  improved customer satisfaction. 
D)  decrease in the number of suppliers. 
A)  increased warehousing costs. 
B)  reduced inventory holding costs. 
C)  improved customer satisfaction. 
D)  decrease in the number of suppliers.

Question 20

Average costs are used for internal decision-making, but actual costs are required for calculating cost of goods sold.

Accepted Answer

A) True 
 B)False

For a manufacturing company, both direct labor costs and indirect labor costs are classified as product costs.

The objective of a just-in-time inventory system is to totally eliminate all inventories.

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

Which of the following items would be reported directly on the income statement as a period cost?

Unlike manufacturers, service companies do not have an inventory of products.

Managerial accounting information is limited or restricted by which of the following authorities or principles?

As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?

Which of the following transactions would cause net income for the period to decrease?

Depreciation on manufacturing equipment is an indirect product cost, while depreciation on office equipment is a period cost.

Transportation costs incurred to transfer products to customers are downstream costs.

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Randall's direct materials amounted to:

Just in time systems can be used by both manufacturing and merchandising companies.

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?

What is the effect on the balance sheet of making cash sales of inventory to customers on profit?

Product costs flow from the balance sheet to the income statement.

As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:

The benefits of a just-in-time system would include all of the following except:

Average costs are used for internal decision-making, but actual costs are required for calculating cost of goods sold.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 10: An Introduction to Management Accounting

For a manufacturing company, both direct labor costs and indirect labor costs are classified as product costs.

The objective of a just-in-time inventory system is to totally eliminate all inventories.

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

Which of the following items would be reported directly on the income statement as a period cost?

Unlike manufacturers, service companies do not have an inventory of products.

Managerial accounting information is limited or restricted by which of the following authorities or principles?

As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?

Which of the following transactions would cause net income for the period to decrease?

Depreciation on manufacturing equipment is an indirect product cost, while depreciation on office equipment is a period cost.

Transportation costs incurred to transfer products to customers are downstream costs.

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Randall's direct materials amounted to:

Just in time systems can be used by both manufacturing and merchandising companies.

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?

What is the effect on the balance sheet of making cash sales of inventory to customers on profit?

Product costs flow from the balance sheet to the income statement.

As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:

The benefits of a just-in-time system would include all of the following except:

Average costs are used for internal decision-making, but actual costs are required for calculating cost of goods sold.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters