102 test bank for managerial accounting 1st edition

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102 Test Bank for Managerial Accounting 1st Edition

Multiple Choice Questions Part 1 - Page 1

Manufacturing costs are generally classified into which of the following

categories?

1 A Relevant costs and irrelevant costs

2 B Direct materials, direct labor, and manufacturing overhead

3 C Prime costs and conversion costs

4 D Conversion costs, marketing costs and administrative costs

Prime costs are the same as

1 A Manufacturing costs minus non-manufacturing costs

2 B Manufacturing costs minus manufacturing overhead

3 C Manufacturing costs minus fixed costs

4 D Manufacturing costs minus direct materials

Which of the following costs is not relevant to the decision whether to replace

an old computer with a new one?

1 A The cost of the new computer

2 B The cost of the old computer

3 C The cost of a service plan on the new computer

4 D The cost to repair the old computer if a new computer is not purchased

Product costs are

1 A expensed on the income statement when incurred

2 B treated as an asset and depreciated

3 C inventoried until the units are sold

4 D considered current liabilities until paid

Which of the following is true about product and period costs?

1 A Product costs are usually manufacturing costs, and period costs are usually nonmanufacturing costs

2 B Product costs are usually nonmanufacturing costs, and period costs are usually manufacturing costs

3 C Both product and period costs are usually manufacturing costs

4 D Both product and period costs are usually nonmanufacturing costs

Manufacturing costs are

1 A always relevant

2 B always fixed

3 C the costs incurred to produce a final product

4 D split into prime costs and conversion costs

Product costs are reported

1 A only on the balance sheet

2 B only on the income statement

3 C on the balance sheet before goods are sold, and on the income statement after goods are sold.

4 D on the income statement before goods are sold, and on the balance sheet after goods are sold

Which of the following is not a manufacturing cost?

1 A Raw materials cost

2 B Marketing cost

3 C Direct labor cost

4 D Manufacturing overhead cost

When are period costs counted as inventory?

1 A Before products are sold

2 B After products are sold

3 C After products are completed, but before they are sold

4 D Never

Nonmanufacturing costs are generally classified into what two groups?

1 A Conversion costs and prime costs

2 B Direct materials and direct labor

3 C Marketing costs and administrative costs

4 D Direct labor and manufacturing overhead

A cost that has already been incurred is called a(n) _ cost

What determines the difference between a product cost and a period cost?

1 A Whether it changes when activity levels change

2 B Whether it is relevant to a particular decision

3 C Whether it can be traced to a specific cost object

4 D When the cost will be matched up against revenue on the income statement

You are to receive five gold coins from your great uncle as an incentive to study hard The coins were originally purchased in 1982 Your great uncle will deliver the coins the week after finals (assuming your grades are

"acceptable") The amount your great uncle paid for the coins is a(n)

1 A opportunity cost

2 B indirect cost

Conversion costs can be defined as

1 A Manufacturing costs plus non-manufacturing costs

2 B Direct labor plus direct materials

3 C Variable costs plus fixed costs

4 D Manufacturing costs minus direct materials

For a cost to be relevant, it must meet which of the following criteria?

1 A It must not differ between the decision alternatives and it must be incurred in the future rather than in the past

2 B It must differ between the decision alternatives and it must be incurred in the future rather than in the past

3 C It must not differ between the decision alternatives and it must have occurred in the past rather than in the future

4 D It must differ between the decision alternatives and it must have occurred in the pastrather than in the future

Prime costs are defined as

1 A Manufacturing costs plus non-manufacturing costs

2 B Direct labor plus direct materials

3 C Variable costs equal fixed costs

4 D Manufacturing overhead plus direct labor

For a cost to be relevant, it must be

1 A a differential cost and a sunk cost

2 B a differential cost, but not a sunk cost

3 C a sunk cost, but not a differential cost

4 D neither a differential cost nor a sunk cost

42 Free Test Bank for Managerial Accounting 1st Edition

by Whitecotton Multiple Choice Questions Part 1 - Page 2

Costs that are not worth the effort to trace to a specific cost object are

1 A The cost of the wood in the table.

2 B The cost of the labor used to assemble the table

3 C The cost of the glass in the table

4 D The cost of rent on the factory where the table is manufactured

A relevant cost is a cost that

1 A has the potential to influence a decision

2 B changes in direct proportion to changes in activity level

3 C can be traced to a specific cost object

4 D is used for control purposes

Indirect costs are

1 A costs that are not worth the effort to trace to a specific cost object

2 B costs that change, in total, in direct proportion to changes in activity levels

3 C always irrelevant

4 D costs that remain constant no matter the activity level

A direct cost is one which

1 A involves an actual outlay of cash for a specific cost object

2 B can be traced to a specific cost object

3 C cannot be traced to a specific cost object

4 D is not worth the effort of tracing to a specific cost object

Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

1 A The cost of the wood in the table

2 B The cost of rent on the factory where the table is manufactured

3 C The salary of the supervisor who oversees all production for the firm

4 D Depreciation on the tools used to manufacture the table

Variable costs are

1 A costs that stay the same, in total, regardless of activity level

2 B costs that vary inversely, per unit, with the number of units produced

3 C costs that vary inversely, in total, with the number of units produced

4 D costs that change, in total, in direct proportion to changes in activity levels

Which of the following cannot be an out-of-pocket cost?

1 A A direct cost

2 B An opportunity cost

3 C A variable cost

4 D A period cost.

To earn summer money, Joe could mow lawns in his neighborhood, or he could work at a local grocery store Which of the following is an out-of-pocket cost of mowing lawns?

1 A The use of his father's truck to get to job sites

2 B The wages he could have earned working at the grocery store

3 C The time spent mowing the lawns

4 D Cash paid for gas to run the lawnmower

Costs that can be traced to a specific cost object are

1 A opportunity costs

2 B direct costs

3 C indirect costs

4 D irrelevant costs

Fixed costs are

1 A costs that are not worth the effort to trace to a specific cost object

2 B costs that change, in total, in direct proportion to changes in activity levels

3 C always irrelevant

4 D costs that remain constant, in total, no matter the activity level

Variable costs are

1 A costs that are not worth the effort to trace to a specific cost object

2 B costs that change, in total, in direct proportion to changes in activity levels.

3 C always irrelevant

4 D costs that remain constant no matter the activity level

A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced This is an example of a(n)

1 A fixed cost

2 B direct cost

3 C variable cost

4 D indirect cost

What determines the difference between a variable and a fixed cost?

1 A Whether it changes when activity levels change

2 B Whether it is relevant to a particular decision

3 C Whether it can be traced to a specific cost object

4 D Whether it is related to manufacturing or nonmanufacturing activities

An irrelevant cost

1 A is also called a differential cost

2 B must differ between decision alternatives

3 C must be incurred in the future rather than in the past

4 D will not influence a decision

A fixed cost

1 A goes up in total when activity increases

2 B goes up per unit when activity increases

3 C goes down in total when activity increases

4 D goes down per unit when activity increases

To earn summer money, Joe could mow lawns in his neighborhood, or he could work at a local grocery store Which of the following is an opportunity cost of mowing lawns?

1 A Cash paid for gas to run the lawnmower

2 B The time spent mowing the lawns

3 C The wages he could have earned working at the grocery store

4 D Depreciation on the lawnmower

What determines the difference between a direct and an indirect cost?

1 A Whether it changes when activity levels change

2 B Whether it is relevant to a particular decision

3 C Whether it can be traced to a specific cost object

4 D Whether it is related to manufacturing or nonmanufacturing activities

For a cost to be relevant, it must

1 A differ between decision alternatives

2 B have already been incurred

3 C not influence a decision.

4 D not be a differential cost

A cost object is

1 A an item for which managers are trying to determine the cost

2 B an item to which managers must directly trace costs

3 C an item to which it is not worth the effort of tracing costs

4 D an item for sale by a business

Which of the following is an example of a variable cost for a manufacturing firm?

1 A The cost of rent on the factory

2 B The cost of factory supervision

3 C The cost of raw materials

4 D The cost of depreciation on equipment

Which of the following types of organizations sells goods to the general public?

1 A Service companies

2 B Manufacturing firms

3 C Merchandising companies

4 D Retailers

Which of the following is not a characteristic of managerial accounting?

1 A Information is used by external parties

2 B Information is subjective, relevant, future-oriented

3 C Reports are prepared as needed

4 D Information is reported at the decision making level

Which of the following functions of management involves arranging the necessary resources to carry out the plan?

1 A An internal report used by management

2 B An external report used by investors

3 C A report prepared according to GAAP

4 D A report prepared periodically (monthly, quarterly, annually)

What is the primary goal of accounting?

1 A To set long-term goals and objectives

2 B To arrange for the necessary resources to achieve a plan

3 C To provide information for decision making.

4 D To motivate others to work towards a plan's success

Which of the following is not a characteristic of financial accounting?

1 A Financial reports are prepared according to GAAP

2 B Information is used by external parties

3 C Information is subjective, relevant and future-oriented

4 D Reports are prepared periodically

Accounting is primarily intended to facilitate

Which of the following functions of management involves taking actions to implement the plan?

1 A Planning

2 B Organizing

3 C Directing/leading

4 D Control

Which of the following is not a characteristic of managerial accounting?

1 A Information is used by internal parties

2 B Information is subjective, relevant, future-oriented

3 C Reports are prepared as needed

4 D Information is reported for the company as a whole

Which of the following is not a characteristic of financial accounting?

1 A Financial reports are prepared according to GAAP

2 B Information is used primarily by internal parties

3 C Information is objective, reliable and historical

4 D Reports are prepared periodically

Which of the following types of organizations purchases raw materials from suppliers and uses them to create a finished product?

1 A Manufacturing firms

2 B Merchandising companies

3 C Service companies

4 D Retailers

Which of the following is not a characteristic of financial accounting?

1 A Information is reported at the decision making level

2 B Information is used by external parties

3 C Information is objective, reliable and historical

4 D Reports are prepared periodically

An out-of-pocket cost involves which of the following?

1 A Choosing to do one thing instead of another

2 B Tracing the cost directly to a cost object

3 C An actual outlay of cash

4 D Determining how the cost changes with a change in activity level

Which of the following is the correct sequencing of the managerial process?

1 A Planning - Organizing - Control - Directing/Leading

2 B Planning - Directing/Leading - Organizing - Control

3 C Planning - Organizing - Directing/Leading - Control

4 D Organizing - Directing/Leading - Planning - Control

Which of the following describes the Planning function of management?

1 A Setting short and long-term objectives

2 B Comparing actual to budgeted results and taking corrective action

3 C Taking actions to implement the plan

4 D Arranging the necessary resources to carry out the plan

Which of the following functions of management involves setting short and long-term objectives and the tactics to achieve them?

1 A Planning

2 B Organizing

3 C Directing/leading

4 D Control

Which of the following functions of management involves providing

motivation to achieve results?

Which of the following is not a characteristic of managerial accounting?

1 A Information is used by internal parties

2 B Information is subjective, relevant, future-oriented

3 C Reports are prepared as needed

4 D Reports are prepared according to GAAP

Which of the following types of organizations provides a service to customers

40 Free Test Bank for Managerial Accounting 1st Edition

by Whitecotton Multiple Choice Questions Part 2 - Page 2

The cost of NOT doing something is a(n)

4 D Stiffer fines and prison terms

Which of the following does the term "ethics" not refer to?

1 A The standards of conduct for judging fair from unfair

2 B The standards of conduct for judging right from wrong

3 C The standards of conduct for judging opportunity from incentives

4 D The standards of conduct for judging honest from dishonest

Which of the following describes the Control function of management?

1 A Setting short and long-term objectives

2 B Comparing actual to budgeted results and taking corrective action

3 C Taking actions to implement the plan

4 D Arranging the necessary resources to carry out the plan

An opportunity cost is

1 A the foregone benefit of the path not taken

2 B an actual outlay of cash

3 C the initial investment required to pursue an opportunity

4 D a cost that cannot be traced to a specific cost object

Which of the following is the definition of "cost"?

1 A Cash paid for something

2 B The value of what is given up in exchange for something else

3 C The foregone benefit of the path not taken

4 D The choice between one alternative and another

Which of the following describes one of the Directing/Leading functions of management?

1 A Setting short and long-term objectives