Question 1

Sleep Time produces mattresses.Each mattress has a variable cost of $260, fixed costs of $56,000 per month, and a unit selling price of $500.If the company produces and sells 400 mattresses in February, how much is the unit cost per mattress?

Accepted Answer

A) $260 
B) $400 
C) $240 
D) $100

Question 2

Which of the following costs will change when the level of business activity changes?

Accepted Answer

A) Total fixed costs 
B) Variable cost per unit 
C) A company's total costs 
D) Sunk cost

Question 3

Which of the following statements regarding incremental analysis is true? Assume that there are no opportunity costs and that the capacity exists to complete any of the alternatives.

Accepted Answer

A) The preferred alternative will have revenues that are greater than the revenues of the other alternatives. 
B) The preferred alternative will have expenses that are greater than the expenses of the other alternatives. 
C) The preferred alternative will have fixed expenses that are less than the fixed expenses of the other alternatives. 
D) The preferred alternative will have profits that are greater than the profits of the other alternatives.

Question 4

Triatt Resort has 200 rooms.Each room rents at $130 per night and variable costs total $42 per room per night of occupancy.The fixed costs total $18,700 per month.If 70% of the rooms are occupied each of the 30 nights in June, how much will total variable costs be for June?

Accepted Answer

A) $546,000 
B) $369,600 
C) $176,400 
D) $252,000

Question 5

Wilson Company's managers investigate departures from the budget that appear to be significant.What principle is being followed?

Accepted Answer

A) Small amounts do not matter 
B) Management by exception 
C) Incremental analysis 
D) You get what you measure

Question 6

Supply Chain Management (SCM) systems

Accepted Answer

A) computerize inventory control and production planning. 
B) organize activities between a company and its suppliers. 
C) automate customer service and support. 
D) allow customers to track their purchase as it is being produced.

Question 7

Performance reports often compare current performance with

Accepted Answer

A) a competing company's performance. 
B) shareholders' expected level of performance. 
C) industry standards. 
D) performance in a prior period or budgeted performance.

Question 8

Sleep Time produces mattresses.During February, each mattress had has a variable cost of $260, fixed costs of $56,000 per month, and a unit selling price of $500.If the company produces and sells 400 mattresses in March February, how much profit will the company expect for March assuming that the number of mattresses sold and the selling price per mattress remains the same as that of February?

Accepted Answer

A) $96,000 
B) $160,000 
C) $40,000 
D) $200,000

Question 9

A favorable evaluation of an operation indicates that the manager of that operation is performing adequately.

Accepted Answer

A) True 
 B)False

Question 10

A company purchases machinery costing $60,000 in October of 2017.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 11

Opportunity costs are the value of benefits forgone when one alternative is selected over another.

Accepted Answer

A) True 
 B)False

Question 12

The Sarbanes-Oxley Act requires that companies provide relevant managerial accounting information to decision-makers.

Accepted Answer

A) True 
 B)False

Question 13

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 14

A retailer purchased some trendy clothes that have gone out of style and must be marked down to 60% of the original selling price in order to be sold.Which of the following is a sunk cost in this situation?

Accepted Answer

A) The current selling price 
B) The original selling price 
C) The original purchase price 
D) The anticipated profit

Question 15

Goody Buy Electronics has received an offer from a customer for $21,600 to purchase 12,000 external hard drives.Good Buy has budgeted sales of 200,000 hard drives totaling $500,000, with fixed costs of $260,000 and total costs of $420,000.Assuming that Good Buy has the capacity to produce the additional units and that accepting this order will not affect any other orders, what effect will accepting the order have on Good Buy's profit?

Accepted Answer

A) Incremental profit will increase by $21,600 
B) Incremental profit will decrease by $9,600 
C) Incremental profit will increase by $12,000 
D) Incremental profit will decrease by $3,600

Question 16

Rom Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were: $\begin{array}{lr}
\text { Materials cost } & 5,200 \
\text { Labor cost } & 2,600 \
\text { Rent } & 1,200 \
\text { Depreciation } & 1,700 \
\text { Other fixed costs } & 4,600\
\text { Total }&\$15,300
\end{array}$ Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total cost on the August budget?

Accepted Answer

A) $17,850 
B) $16,600 
C) $9,100 
D) $15,300

Question 17

Enterprise resource planning systems focus on managing a variety of customer interactions.

Accepted Answer

A) True 
 B)False

Question 18

Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for

Accepted Answer

A) investors and banks. 
B) internal users of accounting information. 
C) shareholders and creditors. 
D) the Securities and Exchange Commission (SE
C) .

Question 19

Which of the following is one of the questions you should ask when faced with an ethical dilemma?

Accepted Answer

A) Will I get caught? 
B) What decisions alternatives are available? 
C) Are the actions illegal? 
D) How big is the effect on the company's profit?

Question 20

"You get what you measure!" refers to the relationship between

Accepted Answer

A) managerial accounting and financial accounting. 
B) ethical and unethical behavior. 
C) duties of the CEO and duties of the controller. 
D) performance measures and actions of managers.

Exam 1: Managerial Accounting in the Information Age

Sleep Time produces mattresses.Each mattress has a variable cost of $260, fixed costs of $56,000 per month, and a unit selling price of $500.If the company produces and sells 400 mattresses in February, how much is the unit cost per mattress?

Which of the following costs will change when the level of business activity changes?

Which of the following statements regarding incremental analysis is true? Assume that there are no opportunity costs and that the capacity exists to complete any of the alternatives.

Triatt Resort has 200 rooms.Each room rents at $130 per night and variable costs total $42 per room per night of occupancy.The fixed costs total $18,700 per month.If 70% of the rooms are occupied each of the 30 nights in June, how much will total variable costs be for June?

Wilson Company's managers investigate departures from the budget that appear to be significant.What principle is being followed?

Supply Chain Management (SCM) systems

Performance reports often compare current performance with

A favorable evaluation of an operation indicates that the manager of that operation is performing adequately.

Opportunity costs are the value of benefits forgone when one alternative is selected over another.

The Sarbanes-Oxley Act requires that companies provide relevant managerial accounting information to decision-makers.

A retailer purchased some trendy clothes that have gone out of style and must be marked down to 60% of the original selling price in order to be sold.Which of the following is a sunk cost in this situation?

Enterprise resource planning systems focus on managing a variety of customer interactions.

Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for

Which of the following is one of the questions you should ask when faced with an ethical dilemma?

"You get what you measure!" refers to the relationship between