Question 1

Select the incorrect statement regarding upstream and downstream costs.

Accepted Answer

A)  Companies normally incur significant downstream costs. 
B)  To be profitable, companies must recover the total cost of developing, producing, and delivering products. 
C)  Pricing decisions must consider both upstream and downstream costs in addition to manufacturing costs. 
D)  Upstream and downstream costs are reported as product costs on the income statement. 
A)  Companies normally incur significant downstream costs. 
B)  To be profitable, companies must recover the total cost of developing, producing, and delivering products. 
C)  Pricing decisions must consider both upstream and downstream costs in addition to manufacturing costs. 
D)  Upstream and downstream costs are reported as product costs on the income statement.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

The four Standards of Ethical Conduct for Management Accountants relate to competence, confidentiality, integrity, and objectivity.

Accepted Answer

A) True 
 B)False

Question 4

With respect to income taxes, managers would prefer to classify costs as assets rather than expenses.

Accepted Answer

A) True 
 B)False

Question 5

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

Accepted Answer

A)  Economic data 
B)  Financial data 
C)  Nonfinancial data 
D)  Both Financial data and Nonfinancial data 
A)  Economic data 
B)  Financial data 
C)  Nonfinancial data 
D)  Both Financial data and Nonfinancial data

Question 6

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Accepted Answer

The answer of Select the term from the list provided...

Question 7

Because management accountants prepare and analyze financial information used by company decision-makers, they are considered to be at the forefront of corporate governance.

Accepted Answer

A) True 
 B)False

Question 8

Select the correct statement regarding managerial and financial accounting.

Accepted Answer

A)  Users of managerial accounting information desire greater aggregation than do users of financial accounting information. 
B)  Both managerial and financial accounting use economic and physical data in addition to financial data. 
C)  Financial accounting is more highly regulated than managerial accounting. 
D)  Timeliness is more important in financial accounting than in managerial accounting. 
A)  Users of managerial accounting information desire greater aggregation than do users of financial accounting information. 
B)  Both managerial and financial accounting use economic and physical data in addition to financial data. 
C)  Financial accounting is more highly regulated than managerial accounting. 
D)  Timeliness is more important in financial accounting than in managerial accounting.

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

During its first year of operations, Connor Company paid $50,000 for direct materials and $36,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $14,000. General, selling, and administrative expenses were $16,000. The company produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce one unit is which of the following amounts?

Accepted Answer

A)  $20.00 
B)  $16.00 
C)  $18.40 
D)  $25.00 
A)  $20.00 
B)  $16.00 
C)  $18.40 
D)  $25.00

Question 11

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

Accepted Answer

A) True 
 B)False

Question 12

All of the following are downstream costs except:

Accepted Answer

A)  packaging costs 
B)  advertising 
C)  research and development 
D)  sales commissions 
A)  packaging costs 
B)  advertising 
C)  research and development 
D)  sales commissions

Question 13

Which of the following costs should be recorded as an expense?

Accepted Answer

A)  Administrative employee salaries 
B)  Depreciation of manufacturing equipment 
C)  Insurance for the factory building 
D)  All of these are expenses. 
A)  Administrative employee salaries 
B)  Depreciation of manufacturing equipment 
C)  Insurance for the factory building 
D)  All of these are expenses.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

Accepted Answer

Period costs include general, selling, a

Question 17

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Accepted Answer

The answer of Select the term from the list provided...

Question 18

Misclassifying a period cost as a product cost will usually correct itself in the following period.

Accepted Answer

A) True 
 B)False

Question 19

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.
What is the amount of gross margin for the first year?

Accepted Answer

A)  $15,000 
B)  $24,000 
C)  $20,000 
D)  $45,000 
A)  $15,000 
B)  $24,000 
C)  $20,000 
D)  $45,000

Question 20

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.

Select the incorrect statement regarding upstream and downstream costs.

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

The four Standards of Ethical Conduct for Management Accountants relate to competence, confidentiality, integrity, and objectivity.

With respect to income taxes, managers would prefer to classify costs as assets rather than expenses.

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Because management accountants prepare and analyze financial information used by company decision-makers, they are considered to be at the forefront of corporate governance.

Select the correct statement regarding managerial and financial accounting.

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

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

All of the following are downstream costs except:

Which of the following costs should be recorded as an expense?

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

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

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Misclassifying a period cost as a product cost will usually correct itself in the following period.

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

Select the incorrect statement regarding upstream and downstream costs.

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

The four Standards of Ethical Conduct for Management Accountants relate to competence, confidentiality, integrity, and objectivity.

With respect to income taxes, managers would prefer to classify costs as assets rather than expenses.

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Because management accountants prepare and analyze financial information used by company decision-makers, they are considered to be at the forefront of corporate governance.

Select the correct statement regarding managerial and financial accounting.

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

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

All of the following are downstream costs except:

Which of the following costs should be recorded as an expense?

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

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

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Misclassifying a period cost as a product cost will usually correct itself in the following period.

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