Question 1

The cost of fixing defective units found during the quality inspections would be classified as a(n)

Accepted Answer

A)  prevention cost. 
B)  appraisal cost. 
C)  internal failure cost. 
D)  external failure cost. 
A)  prevention cost. 
B)  appraisal cost. 
C)  internal failure cost. 
D)  external failure cost.

Question 2

Which reflects a philosophy of providing customers with superior products and services?

Accepted Answer

A)  ERP 
B)  XBRL 
C)  TQM 
D)  IFRS 
A)  ERP 
B)  XBRL 
C)  TQM 
D)  IFRS

Question 3

Which term below best describes the quality cost category for "cost of testing food processors before sale"?

Accepted Answer

A)  Prevention costs 
B)  Appraisal costs 
C)  Internal failure costs 
D)  External failure costs 
A)  Prevention costs 
B)  Appraisal costs 
C)  Internal failure costs 
D)  External failure costs

Question 4

Lean production systems typically produce large batches.

Accepted Answer

A) True 
 B)False

Question 5

The CFO of a company is responsible for the day-to-day running of the company.

Accepted Answer

A) True 
 B)False

Question 6

The design of a management accounting system should consider how reports affect employees' behaviour.

Accepted Answer

A) True 
 B)False

Question 7

A clear and transparent decision based on the ethical analysis is evidence of ________ in the CPA Guidelines for Ethical Behaviour.

Accepted Answer

A)  Adherence to Rules of Professional Conduct 
B)  Conclude, Advise and Communicate 
C)  Assessing the Situation 
D)  Integrative Analysis 
A)  Adherence to Rules of Professional Conduct 
B)  Conclude, Advise and Communicate 
C)  Assessing the Situation 
D)  Integrative Analysis

Question 8

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs

Accepted Answer

A)  would usually increase. 
B)  would usually decrease. 
C)  would usually remain the same. 
D)  could not be predicted. 
A)  would usually increase. 
B)  would usually decrease. 
C)  would usually remain the same. 
D)  could not be predicted.

Question 9

The four primary responsibilities of managers are planning, directing, controlling, and decision making.

Accepted Answer

A) True 
 B)False

Question 10

Managerial accounting has its roots in the industrial age of manufacturing.

Accepted Answer

A) True 
 B)False

Question 11

Inspection of incoming raw materials and production loss caused by downtime are examples of prevention costs.

Accepted Answer

A) True 
 B)False

Question 12

Lean production systems typically strive for shorter setup times.

Accepted Answer

A) True 
 B)False

Question 13

A system in which companies purchase raw materials only when needed is called

Accepted Answer

A)  ABC. 
B)  Traditional production system 
C)  internal failure costs. 
D)  JIT production. 
A)  ABC. 
B)  Traditional production system 
C)  internal failure costs. 
D)  JIT production.

Question 14

Lean production systems typically carry large inventories.

Accepted Answer

A) True 
 B)False

Question 15

The person or position who is directly responsible for all financial concerns is the

Accepted Answer

A)  CEO. 
B)  CFO. 
C)  COO. 
D)  Treasurer. 
A)  CEO. 
B)  CFO. 
C)  COO. 
D)  Treasurer.

Question 16

International Financial Reporting Standards (IFRS) must be followed when managerial accounting reports are prepared.

Accepted Answer

A) True 
 B)False

Question 17

Use the information below to answer the following question(s).
Dylan Products has a budget of $1,200,000 in 2015 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $90,000 in variable costs. The new method will require $40,000 in training costs and $150,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 210,000 units.
Appraisal costs for the year are budgeted at $500,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $20 per failed unit of finished goods. The internal failure rate is expected to be 4% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $48 per failed unit. The company's average external failures average 2.5% of units sold. The new proposal will reduce this rate to 1%. Assume all units produced are sold and there are no ending inventories.
-How much do external failure costs change if all the changes are as the new prevention procedures anticipated? Assume all units produced are sold and there are no ending inventories.

Accepted Answer

A)  $126,000 decrease 
B)  $156,400 decrease 
C)  $100,800 decrease 
D)  $158,900 decrease 
E)  $151,200 decrease 
A)  $126,000 decrease 
B)  $156,400 decrease 
C)  $100,800 decrease 
D)  $158,900 decrease 
E)  $151,200 decrease

Question 18

An example of an appraisal cost is the cost of automating the production process.

Accepted Answer

A) True 
 B)False

Question 19

Use the information below to answer the following question(s).
Dylan Products has a budget of $1,200,000 in 2015 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $90,000 in variable costs. The new method will require $40,000 in training costs and $150,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 210,000 units.
Appraisal costs for the year are budgeted at $500,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $20 per failed unit of finished goods. The internal failure rate is expected to be 4% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $48 per failed unit. The company's average external failures average 2.5% of units sold. The new proposal will reduce this rate to 1%. Assume all units produced are sold and there are no ending inventories.
-How much will appraisal costs change assuming that the new prevention methods reduce material failures by 30% in the appraisal phase?

Accepted Answer

A)  $150,000 decrease 
B)  $229,000 decrease 
C)  $50,000 increase 
D)  $50,000 decrease 
E)  $84,000 decrease 
A)  $150,000 decrease 
B)  $229,000 decrease 
C)  $50,000 increase 
D)  $50,000 decrease 
E)  $84,000 decrease

Question 20

Product testing is a prevention cost.

Accepted Answer

A) True 
 B)False

The cost of fixing defective units found during the quality inspections would be classified as a(n)

Which reflects a philosophy of providing customers with superior products and services?

Which term below best describes the quality cost category for "cost of testing food processors before sale"?

Lean production systems typically produce large batches.

The CFO of a company is responsible for the day-to-day running of the company.

The design of a management accounting system should consider how reports affect employees' behaviour.

A clear and transparent decision based on the ethical analysis is evidence of ________ in the CPA Guidelines for Ethical Behaviour.

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs

The four primary responsibilities of managers are planning, directing, controlling, and decision making.

Managerial accounting has its roots in the industrial age of manufacturing.

Inspection of incoming raw materials and production loss caused by downtime are examples of prevention costs.

Lean production systems typically strive for shorter setup times.

A system in which companies purchase raw materials only when needed is called

Lean production systems typically carry large inventories.

The person or position who is directly responsible for all financial concerns is the

International Financial Reporting Standards (IFRS) must be followed when managerial accounting reports are prepared.

An example of an appraisal cost is the cost of automating the production process.

Product testing is a prevention cost.

Building Blocks of Managerial Accounting

Cost Behaviour

Cost-Volume-Profit Analysis

Job Costing

Process Costing

Activity Based Costing

Short-Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

Filters

Exam 1: Introduction to Managerial Accounting

The cost of fixing defective units found during the quality inspections would be classified as a(n)

Which reflects a philosophy of providing customers with superior products and services?

Which term below best describes the quality cost category for "cost of testing food processors before sale"?

Lean production systems typically produce large batches.

The CFO of a company is responsible for the day-to-day running of the company.

The design of a management accounting system should consider how reports affect employees' behaviour.

A clear and transparent decision based on the ethical analysis is evidence of ________ in the CPA Guidelines for Ethical Behaviour.

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs

The four primary responsibilities of managers are planning, directing, controlling, and decision making.

Managerial accounting has its roots in the industrial age of manufacturing.

Inspection of incoming raw materials and production loss caused by downtime are examples of prevention costs.

Lean production systems typically strive for shorter setup times.

A system in which companies purchase raw materials only when needed is called

Lean production systems typically carry large inventories.

The person or position who is directly responsible for all financial concerns is the

International Financial Reporting Standards (IFRS) must be followed when managerial accounting reports are prepared.

An example of an appraisal cost is the cost of automating the production process.

Product testing is a prevention cost.

Building Blocks of Managerial Accounting

Cost Behaviour

Cost-Volume-Profit Analysis

Job Costing

Process Costing

Activity Based Costing

Short-Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

Filters