Deck 11: Managerial Accounting

Question 1

The function of gathering, processing, and analyzing information to provide information to internal parties for planning and controlling operations and estimate an organization's product or service costs is called

A) fund accounting.
B) financial accounting.
C) internal auditing.
D) managerial accounting.
E) productions and operations management.

Answer 1

managerial accounting.

Question 2

Managerial accounting

A) is primarily concerned with the entire organization.
B) is focused specifically on the past and the future.
C) is mandatory.
D) must be presented with a high degree of precision for external users.
E) relies on the same underlying details, same recording system, and same set of accounts as financial accounting.

Answer 2

relies on the same underlying details, same recording system, and same set of accounts as financial accounting.

Question 3

Financial and managerial accounting use the same

Answer 3

B

Question 4

Managerial accounting differs from financial accounting in that managerial accounting

A) is primarily concerned with the entire organization.
B) is governed by the generally accepted principles.
C) provides information to stockholders, creditors, and various regulatory bodies.
D) provides information to internal parties for planning and controlling and decision making.
E) is mandatory.

Question 5

Managerial accounting is generally required by the

Question 6

Financial and managerial accounts are primarily used for which of the following reporting purposes?

Question 7

Managerial accounting would focus on which of the following types of costs?

Question 8

A product cost is

A) the cost of any item that generates an organization's revenues.
B) any cost that is incurred in distributing a product.
C) the cost of labor and overhead incurred in an organization.
D) the cost of purchasing any item for use in an organization.
E) all of the above.

Question 9

Electric Home Corporation produces brass lighting fixtures. The brass used in Electric Home's manufacturing processes is a(an)

A) expired cost.
B) cost object.
C) marginal cost.
D) period cost.
E) product cost.

Question 10

Renwick Corp. manufactures custom-made jewelry. The office supplies that its employees use to perform daily operations is a(an)

A) expired cost.
B) irrelevant cost.
C) marginal cost.
D) period cost.
E) product cost.

Question 11

How are each of the following costs classified?

Question 12

Fagin Co. monitors sales costs by region. Each region would be considered a

A) cost driver.
B) cost object.
C) equity interest.
D) cost range.
E) indirect cost.

Question 13

Larry Schmidt must approve purchase orders before clerks send purchase orders to vendors. Relative to Schmidt, these purchase orders constitute a type of

A) period cost.
B) product cost.
C) sunk cost.
D) controllable cost .
E) non-controllable cost.

Question 14

Managers should only be held responsible for

A) costs under their control.
B) variable costs of their responsibility center.
C) costs within the relevant range.
D) product costs.
E) direct costs.

Question 15

Barbara Corporation prepares ready-to-eat meals. Its cost structure remains constant between 15,000 and 40,000 meals. These upper and lower limits are known as a

A) high-low limits.
B) relevant range of activity.
C) controllable and noncontrollable ranges.
D) variable and fixed ranges.
E) product pricing range.

Question 16

The relevant range of a company is used to distinguish

A) fixed and variable costs.
B) direct and indirect costs.
C) controllable and noncontrollable costs.
D) cost objects and relevant costs.
E) all of the above.

Question 17

A cost that remains constant on a per-unit basis with changes in activity levels is a(an)

A) fixed cost.
B) indirect cost.
C) mixed cost.
D) non-controllable cost.
E) variable cost.

Question 18

A cost that changes on a per-unit basis inversely with changes in activity levels is a(an)

A) fixed cost.
B) indirect cost.
C) mixed cost.
D) direct cost.
E) variable cost.

Question 19

Thibodeaux Corp. manufactures spice blends, using spices that cost $1 per pound. The cost of spice is a(an)

A) fixed cost.
B) indirect cost.
C) mixed cost.
D) non-controllable cost.
E) variable cost.

Question 20

Employee monthly salaries at Church Corp. are an example of a(an)

A) fixed cost.
B) indirect cost.
C) mixed cost.
D) noncontrollable cost.
E) variable cost.

Question 21

In an automobile manufacturing company, tires are considered what type of the following cost(s) relative to the number of cars produced?

Question 22

Ding Dong is an answering service for major corporations. The company charges its clients a $340 monthly fee and $0.50 per phone call answered. Ding Dong's pricing structure results in a(an)

A) fixed cost to clients.
B) indirect cost to clients.
C) mixed cost to clients.
D) non-controllable cost to clients.
E) variable cost to clients.

Question 23

Use the following information to answer questions
Super Fresh Bakery pays Dedric Brown a monthly salary to supervise five bakers. The bakers are paid an hourly wage.

-The cost of the flour included in Super Fresh's bread is a (an)

A) direct labor cost.
B) direct material cost.
C) indirect labor cost.
D) indirect material cost.
E) overhead cost.

Question 24

Use the following information to answer questions
Super Fresh Bakery pays Dedric Brown a monthly salary to supervise five bakers. The bakers are paid an hourly wage.

-Brown's salary relative to Super Fresh's bread is a(an)

A) direct labor cost.
B) direct materials cost.
C) indirect labor cost.
D) indirect materials cost.
E) period cost.

Question 25

Use the following information to answer questions
Super Fresh Bakery pays Dedric Brown a monthly salary to supervise five bakers. The bakers are paid an hourly wage.

-How would the bakers' wages be classified relative to Super Fresh's bread?

Question 26

Hula Juice, a smoothie restaurant, uses a substantial amount of water in its operations. In August, the busiest month, the restaurant used 20,000 gallons of water at a cost of $600. In January, the slowest month of the year, 4,000 gallons of water were used at a cost of $200. The mixed cost formula for Hula's water usage is

A) $0.02 per gallon + $120.
B) $0.025 per gallon + $100.
C) $0.025 per gallon + $80.
D) $0.033 per gallon + $68.
E) none of the above.

Question 27

The variable cost value in the high-low method can be found by dividing the change in

A) activity by the change in total cost.
B) fixed cost by the change in activity.
C) total cost by the change in activity.
D) activity by the change in total cost..
E) none of the above.

Question 28

Once the total cost at either the high or low level of activity has been found, fixed cost can be found by

A) subtracting the variable cost per unit of activity from the total cost.
B) subtracting the total variable cost from the total cost.
C) adding the change in cost from the low to the high level of activity.
D) multiplying the variable cost per unit of activity times the low level of activity.
E) none of the above.

Question 29

Lebron Co. estimated its electricity cost by using activity at 12,500 kilowatt hours and at 24,000 kilowatt hours. The cost formula was $0.03 + $1,430. Lebron Co. planned on using 18,000 kilowatt hours in March, but actually used 19,200. Lebron's expected electricity cost for March was

A) $1,805.
B) $1,970.
C) $1,988.
D) $2,006.
E) $2,150.

Question 30

Fein Corp. manufactures food processors, each containing $20 of variable costs. Fein's fixed costs are $1,200,000, spread evenly throughout the year. If Fein expects to produces 20,000 food processors in May, what is Fein's total expected cost for the month?

A) $ 100,000.
B) $ 400,000.
C) $ 500,000.
D) $1,200,000.
E) $1,600,000.

Question 31

Conversion cost includes the cost of

Question 32

A direct cost is

Question 33

Which of the following is not an example of a production overhead cost?

A) Production equipment depreciation calculated on a per-unit basis
B) Plastic used in producing automobile interiors
C) Overtime premiums paid to assembly line workers
D) Electricity to run production facilities
E) Thread used to stitch footballs

Question 34

The cost of which of the following labor categories should be classified as production overhead?

Question 35

Use the following information to answer questions
Kee-Co.'s production workers are paid $10 per hour. Overtime wages are $15 per hour and second shift workers (who never receive overtime) are paid a 10% shift premium. During June, employees worked 6,000 regular hours, 200 overtime hours, and 1,440 shift hours.

-Direct labor cost for June is

A) $60,000.
B) $74,400.
C) $76,400.
D) $78,840.
E) none of the above.

Question 36

Use the following information to answer questions
Kee-Co.'s production workers are paid $10 per hour. Overtime wages are $15 per hour and second shift workers (who never receive overtime) are paid a 10% shift premium. During June, employees worked 6,000 regular hours, 200 overtime hours, and 1,440 shift hours.

-Overhead related to production worker wages for June was

A) $ 1,440.
B) $ 2,440.
C) $ 3,000.
D) $15,840.
E) $18,840.

Question 37

Use the following information to answer questions
Down Under manufactures boomerangs and incurs the following per unit costs:


-What is the conversion cost per unit?

A) $0.02
B) $0.06
C) $0.08
D) $0.18
E) $0.20

Question 38

Use the following information to answer questions
Down Under manufactures boomerangs and incurs the following per unit costs:


-Total variable product cost per unit is

A) $0.06
B) $0.08
C) $0.18
D) $0.78
E) $0.80

Question 39

Which of the following types of goods and services are appropriate for a job order costing system versus a process costing system?

Question 40

March 2010 was Flinch Corp.'s first month in business. During the month, Flinch put enough material into process to complete 7,600 hats. At the end of March, Flinch had 2,000 hats still in process that were 30% complete as to conversion. What are the equivalent units of production for material and conversion for March 2010?
Material   Conversion

A) 5,600   6,200
B) 5,600   5,600
C) 6,200   6,200
D) 7,600   6,200
E) 7,600   7,000

Question 41

In August 2010, Doghouses Corp. placed enough wood into production to make 2,000 doghouses. August's costs for wood and labor were $6,000 and $3,040 respectively. There were no doghouses in process at the beginning of August. At the end of August, 1,600 doghouses were complete and 400 were 75% complete. What is the material and labor cost per doghouse calculated under equivalent units of production?

Question 42

The use of an actual cost system to assign costs to products

A) delays management's ability to make decisions.
B) allows the assignment of overhead to products as the overhead is incurred.
C) overcomes the seasonality of some overhead costs.
D) provides an easy tracking mechanism for all product costs.
E) all of the above.

Question 43

Which of the following is(are) included in a normal cost system?

Question 44

The primary reason that overhead should be assigned to product costs is to

A) improve the company's profitability.
B) meet the requirements of cost accounting standards.
C) increase cost of goods sold for the company.
D) determine the full cost of manufacturing a product.
E) both a and b.

Question 45

Because of the seasonality of some costs, better product cost information is provided if

A) all actual costs are assigned to products.
B) overhead is treated as a period, rather than a product, cost.
C) overhead is assigned using a predetermined rate.
D) standard costs are used for all production activities.
E) both b and c.

Question 46

A predetermined overhead rate is calculated as

A) current actual overhead cost divided by current actual activity volume.
B) current actual overhead cost divided by estimated activity volume.
C) current actual overhead cost divided by estimated units of production.
D) estimated overhead cost divided by current activity volume.
E) estimated overhead cost divided by estimated activity volume.

Question 47

In computing a predetermined overhead rate, production volume is

A) the most common measure of activity volume because it can be added across different types of products.
B) not generally used as a measure of activity volume because companies make a variety of different types of products.
C) cannot be used as a measure of activity volume because it fluctuates from year to year.
D) a common measure of activity volume if production occurs evenly throughout the year.
E) none of the above.

Question 48

Which of the following tools is most useful to determined total estimated overhead for a future year?

A) A job order costing sheet
B) A flexible budget
C) Equivalent units of production
D) Conversion costs
E) Standard cost of production

Question 49

Glycogen Corp. estimates that its 2011 overhead will be $20,000,000 and its 2011 and 2012 estimated direct labor hours (DLHs) will be 5,000,000 and 4,000,000 hours, respectively. Actual overhead in 2011 was $20,800,000. Glycogen's 2011 predetermined overhead rate per DLH is

A) $0.25.
B) $4.44.
C) $4.00.
D) $4.16.
E) $5.00.

Question 50

Jamison Corp. produces filters, each of which requires $50 of direct material and 3 direct labor hours (DLHs) of assembly time at a rate of $10 per hour. Jamison applies overhead at a rate of $5 per DLH. In 2010, Jamison produced 20,000 filters. What is the total cost of 2010 production?

A) $1,000,000
B) $1,300,000
C) $1,500,000
D) $1,700,000
E) $1,900,000

Question 51

Each tool manufactured by Allen Corp. requires one direct labor hour (DLH) of assembly at $9 per DLH. Allen applies overhead at a rate of 20% of total direct material costs. Allen's direct material cost fluctuates by volume as follows:

If Allen produced 3,500 tools in 2010, what is the total cost of 2010 production?

A) $32,844
B) $37,100
C) $38,940
D) $39,060
E) $56,700

Question 52

Use the following information for questions
Bramble Company incurs the following costs during May 2010 when 25,000 umbrellas were produced:

The predetermined overhead rate was based on direct labor hours (DLHs). Estimated total overhead cost for 2010 was $120,000 and estimated DLHs were 3,000.

-Bramble's predetermined overhead rate per DLH for the period is

A) $ 5.
B) $20.
C) $40.
D) $50.
E) $75

Question 53

Use the following information for questions
Bramble Company incurs the following costs during May 2010 when 25,000 umbrellas were produced:

The predetermined overhead rate was based on direct labor hours (DLHs). Estimated total overhead cost for 2010 was $120,000 and estimated DLHs were 3,000.

-Bramble's total production cost for May 2010 is

A) $ 52,500.
B) $ 60,500.
C) $ 62,500.
D) $ 75,500.
E) $172,500.

Question 54

If all volumes given in a flexible budget are within a company's relevant range of activity,

A) total variable cost will be the same at each volume level and total fixed cost will increase at each higher volume level.
B) total variable cost will increase at each higher volume level and total fixed cost will decrease at each higher volume level.
C) variable cost per unit will be the same at each volume level and fixed cost per unit will increase at each higher volume level.
D) variable cost per unit will be the same at each volume level and fixed cost per unit will decrease at each higher volume level.
E) variable cost per unit will increase at each volume level and fixed cost per unit will decrease at each higher volume level.

Question 55

When a company uses a normal costing system, credits to the Overhead account generally represent

A) actual overhead costs.
B) applied overhead costs.
C) amounts paid for overhead costs.
D) overapplied overhead amounts.
E) none of the above.

Question 56

At the end of 2009, Barbarich Corp. made the following estimates to compute its predetermined overhead rate for 2010: $40,000,000 of overhead costs and 10,000,000 direct labor hours. Barbarich incurred 9,800,000 actual direct labor hours and $40,300,000 of actual overhead costs. Was overhead underapplied or overapplied in 2010 and by how much?

A) $ 200,000 underapplied
B) $ 300,000 underapplied
C) $ 300,000 overapplied
D) $1,100,000 underapplied
E) $1,100,000 overapplied

Question 57

At the end of 2009, Doberman estimated that its 2010 total overhead costs would be $1,800,000 and direct labor hours would be 400,000. At the end of 2010, Doberman determined that actual direct labor hours were 450,000 and actual overhead was $1,950,000. By how much was overhead underapplied or overapplied in 2010?

A) $ 75,000 underapplied
B) $ 75,000 overapplied
C) $150,000 underapplied
D) $150,000 overapplied
E) $225,000 overapplied

Question 58

Wonderland Inc. estimates that its manufacturing overhead for 2010 will be $3,600,000. Direct labor costs are estimated to be $2,400,000. Overhead is applied to production based on direct labor costs. Actual direct labor and manufacturing overhead costs for the year were $3,750,000 and $5,800,000, respectively. What is the overapplied or underapplied during 2010?

A) $ 175,000 overapplied
B) $ 175,000 underapplied
C) $ 450,000 overapplied
D) $1,350,000 underapplied
E) $2,200,000 overapplied

Question 59

When direct and indirect materials are purchased, the

A) Raw Material Inventory is debited.
B) Raw Material Inventory is credited.
C) Variable Overhead is debited.
D) Variable Overhead is credited.
E) Work in Process Inventory is debited.

Question 60

When direct material is issued for production activity,

A) Raw Material Inventory increases and Work in Process Inventory decreases.
B) Raw Material Inventory decreases and Work in Process Inventory increases.
C) Raw Material Inventory increases and Work in Process Inventory increases.
D) Raw Material Inventory decreases and Overhead increases.
E) Overhead increases and Raw Material Inventory decreases.

Question 61

When indirect labor is recorded in a normal cost, job order cost system,

A) Work in Process Inventory is debited.
B) Finished Goods Inventory is debited.
C) Cost of Services Rendered is debited.
D) Raw Materials Inventory is debited.
E) Overhead is debited.

Question 62

When direct labor is recorded in a normal cost, job order cost system,

A) Work in Process Inventory is debited.
B) Finished Goods Inventory is debited.
C) Cost of Services Rendered is debited.
D) Raw Material Inventory is debited.
E) Overhead is debited.

Question 63

When good are completed in a manufacturing company,

A) Work in Process Inventory is debited and Finished Goods Inventory is credited.
B) Finished Goods Inventory is debited and Work in Process Inventory is credited.
C) Cost of Goods Sold is debited and Work in Process Inventory is credited.
D) Cost of Goods Sold is debited and Finished Goods Inventory is credited.
E) Work in Process Inventory is debited and Cost of Goods Manufactured is credited.

Question 64

When good are sold in a manufacturing company, the

A) Work in Process Inventory is debited and Finished Goods Inventory is credited.
B) Finished Goods Inventory is debited and Work in Process Inventory is credited.
C) Cost of Goods Sold is debited and Work in Process Inventory is credited.
D) Cost of Goods Sold is debited and Finished Goods Inventory is credited.
E) Work in Process Inventory is debited and Cost of Goods Manufactured is credited.

Question 65

Rocky Corp.'s Direct Material Inventory balance at the end of 2009 and 2010 was $200,000 and $150,000, respectively. During 2010, Rocky bought $400,000 of direct materials. During 2010, how many dollars of direct materials were transferred to Work in Process Inventory?

A) $200,000
B) $350,000
C) $400,000
D) $450,000
E) $750,000

Question 66

Bullwinkle's Direct Material Inventory balance at the end of 2009 and 2010 was $200,000 and $350,000, respectively. During 2010, Bullwinkle transferred $700,000 of direct materials to Work in Process Inventory. How many dollars of direct materials did Bullwinkle buy during 2010?

A) $150,000
B) $350,000
C) $550,000
D) $700,000
E) $850,000

Question 67

Natasha Co.'s Work in Process Inventory balance at the end of 2009 and 2010 was $200,000 and $150,000, respectively. During 2010, Natasha transferred $1,980,000 of completed products to finished goods. If $500,000 of direct labor and $300,000 overhead were added to Work in Progress Inventory during 2010, how many dollars of direct material was used in work in process?

A) $850,000
B) $1,130,000
C) $1,180,000
D) $1,230,000
E) Cannot be determined from the information give

Question 68

The total cost of the goods completed and transferred to Finished Goods Inventory during a period is called the

A) contribution margin.
B) cost of goods manufactured.
C) cost of goods sold.
D) gross margin.
E) inventory account balance at the end of the period.

Question 69

Use the following information to answer questions 69 - 70:During 2010, White Lily transferred $300,000 of direct material to Work in Process Inventory and incurred costs of $400,000 for direct labor and $200,000 for overhead. White Lily Corp. had the following beginning and ending balances for Work in Process and Finished Goods Inventory:
?

-What is White Lily's cost of goods manufactured for 2010?

A) $200,000
B) $625,000
C) $725,000
D) $800,000
E) $900,000

Question 70

Use the following information to answer questions 69 - 70:During 2010, White Lily transferred $300,000 of direct material to Work in Process Inventory and incurred costs of $400,000 for direct labor and $200,000 for overhead. White Lily Corp. had the following beginning and ending balances for Work in Process and Finished Goods Inventory:
?

-Assume that White Lily's cost of goods manufactured for 2010 was $700,000. What is the company's cost of goods sold?

A) $450,000
B) $525,000
C) $600,000
D) $700,000
E) $1,300,000

Question 71

Use the following information for questions 71 - 72:At the beginning of April, Ying Yang Inc bought $365,000 of raw materials. During April, the company incurred $125,000 in direct labor costs and $200,000 in overhead costs. Ying Yang had the following April balances related to its inventory accounts:


-What is Ying Yang's cost of goods manufactured for April?

A) $ 318,000
B) $ 333,000
C) $ 683,000
D) $1,132,000
E) $1,090,000

Question 72

Use the following information for questions 71 - 72:At the beginning of April, Ying Yang Inc bought $365,000 of raw materials. During April, the company incurred $125,000 in direct labor costs and $200,000 in overhead costs. Ying Yang had the following April balances related to its inventory accounts:


-Assume that Ying Yang's cost of goods manufactured for April was $500,000. What is Ying Yang's cost of goods sold for April?

A) $ 320,000
B) $ 430,000
C) $ 680,000
D) $ 920,000
E) $1,100,000

Question 73

Limbo Rock Corp.'s Finished Goods Inventory balance at the end of 2009 and 2010 was $1,000,000 and $800,000, respectively. During 2010, Limbo Rock incurred a total of $3,200,000 of manufacturing costs and transferred $2,500,000 from Work in Process Inventory to Finished Goods Inventory. What is Limbo Rock's 2010 cost of goods sold?

A) $4,200,000
B) $3,400,000
C) $3,000,000
D) $2,700,000
E) $2,300,000

Question 74

Closing an immaterial amount of underapplied overhead at the end of a period will cause

A) Work in Process Inventory to increase.
B) Work in Process Inventory to decrease.
C) Cost of Goods Sold to increase.
D) Cost of Goods Sold to decrease.
E) Finished Goods Inventory to increase.

Question 75

Closing an immaterial amount of overapplied overhead at the end of a period will cause

A) Work in Process Inventory to increase.
B) Work in Process Inventory to decrease.
C) Cost of Goods Sold to increase.
D) Cost of Goods Sold to decrease.
E) Finished Goods Inventory to decrease.

Question 76

Service companies generally have which of the following accounts?

Question 77

Managerial accounting emphasizes the use of generally accepted accounting principles in developing its information.

Question 78

Managerial accounting focuses on an asset's historical and replacement costs.

Question 79

A product cost relates to items that generate organizational revenues.

Question 80

A manufacturing company typically has three inventory accounts for product costs.