Question 1

Managerial accounting develops reports that help internal parties effectively and efficiently run the company.

Accepted Answer

A) True 
 B)False

Question 2

Management accountants spend more time planning, analyzing and interpreting accounting data and less time recording routine accounting transactions than they have in the past.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is TRUE about managerial accounting information?

Accepted Answer

A)  It is prepared annually and quarterly. 
B)  It is audited. 
C)  It emphasizes relevance. 
D)  It must be prepared in conformity with generally accepted accounting principles (GAAP). 
A)  It is prepared annually and quarterly. 
B)  It is audited. 
C)  It emphasizes relevance. 
D)  It must be prepared in conformity with generally accepted accounting principles (GAAP).

Question 4

Budgets are the quantitative expression of management's plans.

Accepted Answer

A) True 
 B)False

Question 5

Cari and Jereme just bought a bed and breakfast inn at a very attractive price. The business had been doing poorly. Before they reopened the inn for business, they attended a seminar on operating a high quality business. Now that they are ready to open the inn, they need some advice on quality costs and management.
Required:
Identify four categories of quality costs. In addition, identify three items that would be classified in each of the categories.

Accepted Answer

Prevention:
Hiring employees with good r

Question 6

Which of the following terms best describes costs incurred to detect poor quality goods or services?

Accepted Answer

A)  Appraisal costs 
B)  Activity-based costing 
C)  Value engineering 
D)  Prevention costs 
A)  Appraisal costs 
B)  Activity-based costing 
C)  Value engineering 
D)  Prevention costs

Question 7

Which of the following refers to costs incurred in detecting poor quality goods or services?

Accepted Answer

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

Question 8

Internal failure costs occur when the company detects and corrects poor-quality goods or services after delivery to customers.

Accepted Answer

A) True 
 B)False

Question 9

The CEO of Oakville Machine Parts (OMP) is concerned with the quality of its products and the amount of resources currently spent on customer returns. The CEO would like to analyze the costs incurred in conjunction with the quality of the product.
The following information was collected from various departments within the company:

Required:
A. Complete the Cost of Quality Report.
B. Do any additional subjective costs appear to be missing from the report?
C. What can be learned from the report?

Accepted Answer

Requirement A:
 @#IMG-DLM& 
Requirement B:
Because

Question 10

The cost of product liability claims is an example of a(n)

Accepted Answer

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

Question 11

To resolve ethical dilemmas, management accountants should FIRST

Accepted Answer

A)  follow their company's established policies for Reporting unethical behaviour. 
B)  discuss the unethical situation with their immediate supervisor. 
C)  consult an attorney. 
D)  call the Society of Management Accountants "Ethics Hotline." 
A)  follow their company's established policies for Reporting unethical behaviour. 
B)  discuss the unethical situation with their immediate supervisor. 
C)  consult an attorney. 
D)  call the Society of Management Accountants "Ethics Hotline."

Question 12

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 internal failure costs change if the internal product failures are reduced by 50% with the new procedures?

Accepted Answer

A)  $168,000 decrease 
B)  $126,000 decrease 
C)  $ 84,000 decrease 
D)  $ 84,000 increase 
E)  $50,000 decrease 
A)  $168,000 decrease 
B)  $126,000 decrease 
C)  $ 84,000 decrease 
D)  $ 84,000 increase 
E)  $50,000 decrease

Question 13

Which of the following are the internal decision-makers of a company?

Accepted Answer

A)  Vendors 
B)  Customers 
C)  Managers 
D)  Shareholders 
A)  Vendors 
B)  Customers 
C)  Managers 
D)  Shareholders

Question 14

Information for external parties about past performance is provided by

Accepted Answer

A)  budget reports. 
B)  financial accounting reports. 
C)  managerial accounting reports. 
D)  planning reports. 
A)  budget reports. 
B)  financial accounting reports. 
C)  managerial accounting reports. 
D)  planning reports.

Question 15

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.
-What is the net change in the budget of prevention costs if the procedures are automated in 2015? Will management agree with the changes?

Accepted Answer

A)  $100,000 decrease, yes 
B)  $90,000 decrease, yes 
C)  $190,000 increase, no 
D)  $100,000 increase, yes 
E)  $90,000 increase, no 
A)  $100,000 decrease, yes 
B)  $90,000 decrease, yes 
C)  $190,000 increase, no 
D)  $100,000 increase, yes 
E)  $90,000 increase, no

Question 16

Which of the following types of accounting is designed to meet the needs of decision-makers inside a company?

Accepted Answer

A)  Audit accounting 
B)  Financial accounting 
C)  Managerial accounting 
D)  Tax accounting 
A)  Audit accounting 
B)  Financial accounting 
C)  Managerial accounting 
D)  Tax accounting

Question 17

Which of the following management responsibilities are being fulfilled when management uses feedback to take corrective action on the budgets?

Accepted Answer

A)  Directing and planning 
B)  Planning and decision-making 
C)  Controlling and decision-making 
D)  Planning and controlling 
A)  Directing and planning 
B)  Planning and decision-making 
C)  Controlling and decision-making 
D)  Planning and controlling

Question 18

Owners of a company are its

Accepted Answer

A)  creditors. 
B)  customers. 
C)  managers. 
D)  shareholders. 
A)  creditors. 
B)  customers. 
C)  managers. 
D)  shareholders.

Question 19

Match the following:
A) Controlling
B) Directing
C) Decision making
D) Planning
1) Setting goals and objectives.
2) The process in which management engages while it plans directs and controls operations.
3) Evaluating results of business operations.
4) Determining how to achieve company goals.
5) Overseeing the company's day to day operations.

Accepted Answer

Answers: 1

Question 20

The "triple bottom line" focuses on what three factors that influence a firm's ability to survive and thrive in the long run?

Accepted Answer

A)  People, places, things 
B)  Profit, people, planet 
C)  Profit, people, place 
D)  Planet, profit, place 
A)  People, places, things 
B)  Profit, people, planet 
C)  Profit, people, place 
D)  Planet, profit, place

Managerial accounting develops reports that help internal parties effectively and efficiently run the company.

Management accountants spend more time planning, analyzing and interpreting accounting data and less time recording routine accounting transactions than they have in the past.

Which of the following statements is TRUE about managerial accounting information?

Budgets are the quantitative expression of management's plans.

Which of the following terms best describes costs incurred to detect poor quality goods or services?

Which of the following refers to costs incurred in detecting poor quality goods or services?

Internal failure costs occur when the company detects and corrects poor-quality goods or services after delivery to customers.

The cost of product liability claims is an example of a(n)

To resolve ethical dilemmas, management accountants should FIRST

Which of the following are the internal decision-makers of a company?

Information for external parties about past performance is provided by

Which of the following types of accounting is designed to meet the needs of decision-makers inside a company?

Which of the following management responsibilities are being fulfilled when management uses feedback to take corrective action on the budgets?

Owners of a company are its

The "triple bottom line" focuses on what three factors that influence a firm's ability to survive and thrive in the long run?

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

Managerial accounting develops reports that help internal parties effectively and efficiently run the company.

Management accountants spend more time planning, analyzing and interpreting accounting data and less time recording routine accounting transactions than they have in the past.

Which of the following statements is TRUE about managerial accounting information?

Budgets are the quantitative expression of management's plans.

Which of the following terms best describes costs incurred to detect poor quality goods or services?

Which of the following refers to costs incurred in detecting poor quality goods or services?

Internal failure costs occur when the company detects and corrects poor-quality goods or services after delivery to customers.

The cost of product liability claims is an example of a(n)

To resolve ethical dilemmas, management accountants should FIRST

Which of the following are the internal decision-makers of a company?

Information for external parties about past performance is provided by

Which of the following types of accounting is designed to meet the needs of decision-makers inside a company?

Which of the following management responsibilities are being fulfilled when management uses feedback to take corrective action on the budgets?

Owners of a company are its

The "triple bottom line" focuses on what three factors that influence a firm's ability to survive and thrive in the long run?

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