Question 1

The treasurer has custody of cash and funds invested in marketable securities.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following skills are needed by those who desire a high-level career in management accounting?

Accepted Answer

A)  Written and oral communication skills 
B)  Interpersonal skills 
C)  Knowledge of the industry in which their firm competes 
D)  All of these answer choices are correct.

Question 3

Equipment depreciation is generally a controllable cost for a factory department supervisor.

Accepted Answer

A) True 
 B)False

Question 4

Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 200 chaise lounge chairs were: $\begin{array}{lr}
\text { Materials cost } & \$ 6,000 \
\text { Labor cost } & 8,000 \
\text { Rent } & 2,000 \
\text { Depreciation } & 4,000 \
\text { Other fixed costs } & 5,000 \
\text { Total } & \$ 25,000
\end{array}$ Each chair is sold for $140 in July. The company plans to lower the selling price to $130 per chair at which management estimates that sales will increase to 230 chairs. Materials and labor are the only variable costs. How much is the incremental revenue associated with the price reduction?

Accepted Answer

A)  $200 
B)  $2,100 
C)  $3,750 
D)  $1,900

Question 5

On which of the following costs should a manager not be evaluated?

Accepted Answer

A)  Noncontrollable costs 
B)  Opportunity costs 
C)  Fixed costs 
D)  Variable costs

Question 6

Variable cost per unit remains constant when the number of units produced changes.

Accepted Answer

A) True 
 B)False

Question 7

Kilwin's Candies produced and sold 600 boxes of chocolate covered popcorn last month and had total variable costs of $2,100 that reflected the costs of chocolate and popcorn (ingredients). Each box of popcorn sells for $12.00. If production and sales are expected to increase by 10% next month, which of the following statements is true?

Accepted Answer

A)  Total variable costs are expected to be $1,785 
B)  Variable cost per unit is expected to be $3.50 
C)  The incremental cost per unit is costs expected to be $0.35 
D)  Unit variable costs are expected to be $2.10

Question 8

Bagel Time produced and sold 2,500 bagels last month and incurred fixed costs totaling $8,000. If production and sales are expected to decrease by 10% next month, which of the following statements is true?

Accepted Answer

A)  Total fixed costs will increase. 
B)  Total fixed costs will decrease. 
C)  Fixed cost per unit will increase. 
D)  Fixed cost per unit will decrease.

Question 9

A company purchases machinery costing $60,000 in October of 2014. Five years later, management discovers better, more efficient machine that could be purchased for $80,000 to replace the existing machine. Management has determined that they are able to sell the original machine for $15,000. In making the decision about buying the new machine, how much are total sunk costs?

Accepted Answer

A)  $60,000 
B)  $80,000 
C)  $15,000 
D)  $20,000

Question 10

Leah Berry is entering her senior year as an accounting major and has a number of options for her summer break. Her options for the 3-month break follow:
(1) Work full time at a local accounting firm making $3,200 per month.
(2) Take a summer class which will cost $600 and work half time making $1,600 per month.
(3) Take two classes at a cost of $1,200 and not work at all during the summer.
Leah's opportunity cost of taking two classes if she chooses option 3 over option 1 would be

Accepted Answer

A)  $3,200 per month. 
B)  $2,000 per month. 
C)  $1,200 per month. 
D)  $1,600 per month.

Question 11

Managerial accounting is a key provider of information that impacts the information age.

Accepted Answer

A) True 
 B)False

Question 12

A Customer Relationship Management System (CRM) might allow a customer to track his/her package as it is being shipped across the country.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a reason that current period performance results may differ from the company's budget for that period?

Accepted Answer

A)  The plan may not have been followed properly. 
B)  The plan may not have been well thought-out. 
C)  Changing circumstances may have made the plan out of date. 
D)  All of the above are reasons that actual results may differ from the company's plan.

Question 14

Flash Eyes sells mascara. In June, it produced and sold 10,000 tubes of mascara. For the month, total variable costs were $21,000 and fixed costs totaled $24,000. In July, the company produced and sold 11,000 tubes of mascara. Which of the following statements is correct for July?

Accepted Answer

A)  Total variable costs will be $21,000 
B)  Variable costs per unit will be $2.10 
C)  Variable costs per unit will be $4.50 
D)  Total fixed costs will be $26,400

Question 15

If management informs employees that bonuses will depend solely on improving the gross profit ratio (gross profit/sales), which of the following behaviors would most likely be observed?

Accepted Answer

A)  Sales people would quit trying to sell high volume, low margin core products 
B)  Overall sales would fall 
C)  Overall gross profit would fall 
D)  All of these answer choices are correct

Question 16

Rincon Gifts had the following costs in May when 400 ceramic pots were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. Which one of the following is the correct cost for Rincon?

Accepted Answer

A)  The fixed cost per unit is $3.75 
B)  The variable cost per unit is $14.50 
C)  The fixed cost per unit is $19.50 
D)  The total cost per unit is $14.50

Question 17

Classic Loungers is in the process of preparing a production cost budget for August. Actual costs in July for 200 chaise lounge chairs were: $\begin{array}{lr}
\text { Materials cost } & \$ 6,000 \
\text { Labor cost } & 8,000 \
\text { Rent } & 2,000 \
\text { Depreciation } & 4,000 \
\text { Other fixed costs } & 5,000 \
\text { Total } & \$ 25,000
\end{array}$ Each chair is sold for $140 in July. The company plans to lower the selling price to $130 per chair at which management estimates that sales will increase to 230 chairs. Materials and labor are the only variable costs. How much is the incremental cost of producing an extra 30 chairs?

Accepted Answer

A)  $1,900 
B)  $2,100 
C)  $3,750 
D)  $(200)

Question 18

Performance reports are used for control purposes.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following terms involves calculating the difference in revenue and the difference in cost between decision alternatives?

Accepted Answer

A)  Budgeting production 
B)  Incremental analysis 
C)  Profit planning 
D)  Systems development

Question 20

Variable cost per unit

Accepted Answer

A)  increases when the number of units produced increases. 
B)  does not change when the number of units produced increases. 
C)  decreases when the number of units produced increases. 
D)  decreases when the number of units produced decreases.

Exam 1: Managerial Accounting in the Information Age

The treasurer has custody of cash and funds invested in marketable securities.

Which of the following skills are needed by those who desire a high-level career in management accounting?

Equipment depreciation is generally a controllable cost for a factory department supervisor.

On which of the following costs should a manager not be evaluated?

Variable cost per unit remains constant when the number of units produced changes.

Bagel Time produced and sold 2,500 bagels last month and incurred fixed costs totaling $8,000. If production and sales are expected to decrease by 10% next month, which of the following statements is true?

Managerial accounting is a key provider of information that impacts the information age.

A Customer Relationship Management System (CRM) might allow a customer to track his/her package as it is being shipped across the country.

Which of the following is not a reason that current period performance results may differ from the company's budget for that period?

Flash Eyes sells mascara. In June, it produced and sold 10,000 tubes of mascara. For the month, total variable costs were $21,000 and fixed costs totaled $24,000. In July, the company produced and sold 11,000 tubes of mascara. Which of the following statements is correct for July?

If management informs employees that bonuses will depend solely on improving the gross profit ratio (gross profit/sales) , which of the following behaviors would most likely be observed?

Rincon Gifts had the following costs in May when 400 ceramic pots were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. Which one of the following is the correct cost for Rincon?

Performance reports are used for control purposes.

Which of the following terms involves calculating the difference in revenue and the difference in cost between decision alternatives?

Variable cost per unit