Test bank for managerial accounting 5th edition

Which of the following statements is correct if, Flash Eyes produced and sold 9,000 units in July.. Harrison Carpets incurred the following costs for March when 3,000 square feet of carp

Test Bank for Managerial Accounting 5th Edition

Hanover Binding plans to produce 40,000 books next year at a total cost of

$1,640,000 with a selling price per book of $66.00 The fixed costs total

$280,000 Management is considering lowering the price to $60.00 per book, and feels that this action will cause sales to climb to 50,000 books What will

be the incremental costs incurred if 50,000 books are sold?

1 A $340,000

2 B $20,000

3 C $1,700,000

4 D $1,300,000

Hanover Binding plans to produce 40,000 books next year at a total cost of

$1,640,000 with a selling price per book of $66.00 The fixed costs total

$280,000 Management is considering lowering the price to $60.00 per book, and feels that this action will cause sales to climb to 50,000 books What is the amount of incremental profit if 50,000 books are sold?

1 A The preferred alternative will have revenues that are greater than the revenues of the other alternatives

2 B The preferred alternative will have expenses that are greater than the expenses of the other alternatives

3 C The preferred alternative will have fixed expenses that are less than the fixed expenses of the other alternatives

4 D The preferred alternative will have profits that are greater than the profits

of the other alternatives

Which one of the following will most likely influence the actions of

2 B Cost of insurance for the plant

3 C Number of orders delivered on time

4 D Change in market share

“You get what you measure!” refers to the relationship between

1 A managerial accounting and financial accounting

2 B ethical and unethical behavior

3 C duties of the CEO and duties of the controller

4 D performance measures and actions of managers

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?

1 A Sales people would quit trying to sell high volume, low margin core products

2 B Overall sales would fall

3 C Overall gross profit would fall

4 D All of these answer choices are correct

Which of the following statements regarding performance measures is

true?

1 A GAAP requires performance measures for all employees

2 B Companies must select from performance measures published by its own industry when deciding how they want to assess performance

3 C Employees tend to direct their attention to what is measured and may neglect what is not measured

4 D Companies need to place emphasis on a single performance measure so employees know what to expect

ProLight plans to sell 1,600 white lights that enhance indoor plant growth next year with total budgeted sales of $48,000 and estimated profit of

$8,000 Variable costs are projected to be $17.50 per unit Customer A offers

to pay $10,000 to buy 400 lights from ProLight Total fixed costs are $12,000 per year This offer does not affect ProLight’s other planned operations How much is the incremental revenue associated with the offer from Customer A?

1 A $58,000

2 B $10,000

3 C $48,000

4 D $3,000

ProLight plans to sell 1,600 white lights that enhance indoor plant growth next year with total budgeted sales of $48,000 and estimated profit of

$8,000 Variable costs are projected to be $17.50 per unit Customer A offers

to pay $10,000 to buy 400 lights from ProLight Total fixed costs are $12,000 per year This offer does not affect ProLight’s other planned operations What

is the incremental cost associated with the offer from Customer A?

$8,000 Variable costs are projected to be $17.50 per unit Customer A offers

to pay $10,000 to buy 400 lights from ProLight Total fixed costs are $12,000 per year This offer does not affect ProLight’s other planned operations How much is incremental profit associated with the offer from Customer A?

$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?

1 A Incremental profit will increase by $21,600

2 B Incremental profit will decrease by $9,600

3 C Incremental profit will increase by $12,000

4 D Incremental profit will decrease by $3,600

Classic Loungers is in the process of preparing a production cost budget for August Actual costs in July for 200 chaise lounge chairs were: Materials cost

$ 6,000 Labor cost 8,000 Rent 2,000 Depreciation 4,000 Other fixed costs 5,000 Total $25,000 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?

Classic Loungers is in the process of preparing a production cost budget for August Actual costs in July for 200 chaise lounge chairs were: Materials cost

$ 6,000 Labor cost 8,000 Rent 2,000 Depreciation 4,000 Other fixed costs 5,000 Total $25,000 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 Under what situation should the company lower the price of its chaise lounge chairs?

1 A If total revenue exceeds totals costs under the new pricing

2 B If incremental revenue exceeds the old revenue

3 C If incremental profit is a positive number

4 D If incremental costs decrease

Which of the following is true concerning Enterprise Resource Planning (ERP) systems?

1 A They grew out of the material requirements planning systems that

preceded them

2 B They will allow customers to track their orders

3 C They are considered sunk costs

4 D All of these answer choices are correct

Which of the following would most likely be a Customer Relationship

Management System component?

1 A A system allowing customers to do online banking

2 B A system that prepares a master production schedule

3 C A system that links the company’s suppliers electronically to its databases

4 D A system that manages human resources

Supply Chain Management (SCM) systems

1 A computerize inventory control and production planning

2 B organize activities between a company and its suppliers

3 C automate customer service and support

4 D allow customers to track their purchase as it is being produced

Which of the following should be considered when making ethical

decisions?

1 A What is right?

2 B What is standard practice?

3 C Is the company’s control system is able to detect an irregularity?

4 D All of these answer choices are correct

Which of the following is one of the questions you should ask when faced with

an ethical dilemma?

1 A Will I get caught?

2 B What decisions alternatives are available?

3 C Are the actions illegal?

4 D How big is the effect on the company’s profit?

The Institute of Management Accountants (IMA)

1 A is the professional organization of managerial accountants

2 B administers the comprehensive examination which must be passed before

a person can become a CMA

3 C has developed a set of standards of ethical conduct and maintains an ethics hotline.

4 D All of these answer choices are correct

The organization which administers the Certificate in Management Accounting program is the

Which of the following is not usually a responsibility of the controller?

1 A Preparing budgets and performance reports

2 B Filing tax returns

3 C Managing cash and marketable securities

4 D Providing information for management decisions

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

1 A Written and oral communication skills

2 B Interpersonal skills

3 C Knowledge of the industry in which their firm competes

4 D All of these answer choices are correct

For which one of the following is a company’s treasurer typically held

responsible?

1 A Reporting information to the IRS

2 B Maintaining relationships with investors and creditors

3 C Preparing audited financial statements

4 D Preparing and analyzing budgets

Many companies have a chief financial officer (CFO) Which of these positions

is most likely to report directly to the CFO?

1 A Controller

2 B Chief executive officer

3 C Janitor

4 D Production supervisor

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 profit will the company expect for March assuming that number of mattresses sold and selling price per mattress remains the same as that of February month?

1 A $546,000

2 B $369,600

3 C $176,400

4 D $252,000

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 Triatt is able to increase occupancy from 70% to 80%, by how much will total costs increase per day during June?

financial impact of spending this additional money on advertising over an occupancy level of 70% during June?

1 A Net income will increase by $49,200

2 B Net income will increase by $7,800

3 C Total fixed costs will decrease

4 D Total costs will increase by $1,260

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?

1 A $60,000

2 B $80,000

3 C $15,000

4 D $20,000

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

1 A $3,200 per month

2 B $2,000 per month

3 C $1,200 per month

4 D $1,600 per month

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 incremental revenue if she chooses option 1 over option 2 would be

1 A $1,000 per month

2 B $2,200 per month

3 C $1,600 per month

4 D $1,000 per month

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 incremental profit or loss if she chooses option 2 over option 1 would be

1 A ($2,200) per month

2 B ($1,600) per month

3 C ($1,000) per month

4 D $1,000 per month

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?

1 A Total variable costs will be $21,000

2 B Variable costs per unit will be $2.10

3 C Variable costs per unit will be $4.50

4 D Total fixed costs will be $26,400

Flash Eyes sells mascara In June, it produced and sold 10,000 tubes of

mascara Total variable costs were $21,000 and fixed costs totaled $24,000 Which of the following statements is correct if, Flash Eyes produced and sold 9,000 units in July?

1 A Fixed cost per unit will be $2.67

2 B Total fixed costs will be $21,600

3 C Variable costs in total will be $40,500

4 D Variable costs per unit will be $2.33

Vita Boost Pets produces a line of cat food In August, it produced and sold 1,000 bags of food Total fixed costs were $19,000 In September, it produced 2,000 bags of food Which of the following statements is true for

September?

1 A Total fixed costs will be $38,000

2 B Total fixed costs will be $9,500

3 C Fixed cost per unit will be $19.00

4 D Fixed costs per unit will be $9.50

Harrison Carpets incurred the following costs for March when 3,000 square feet of carpet were produced and sold: • $18,500 for nylon thread used on carpet • $5,000 for scotch guard for carpet • $7,200 for jute backing to

reinforce the carpet • $6,800 for glue to be used in the manufacturing

process • $13,000 for insurance (half for administrative activities, half for production activities) • $9,000 for production employees’ wages • $6,500 for rent and utilities in the factory How much are total fixed costs for April if 3,500 square feet of carpet are produced and sold?

1 A $19,500

2 B $32,500

3 C $77,000

4 D $22,750

Harrison Carpets incurred the following costs for March when 3,000 square feet of carpet were produced and sold: • $18,500 for nylon thread used on carpet • $5,000 for scotch guard for carpet • $7,200 for jute backing to

reinforce the carpet • $6,800 for glue to be used in the manufacturing

process • $13,000 for insurance (half for administrative activities, half for production activities) • $9,000 for production employees’ wages • $6,500 for rent and utilities in the factory How much are total variable costs if 3,500 square feet of carpet are produced and sold in April?

reinforce the carpet • $6,800 for glue to be used in the manufacturing

process • $13,000 for insurance (half for administrative activities, half for production activities) • $9,000 for production employees’ wages • $6,500 for rent and utilities in the factory How much are variable costs per unit if 3,500 square feet of carpet are produced and sold in April?

1 A $22.00

2 B $15.50

3 C $12.50

4 D $18.86

Total Points: 0 correc

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

1 A investors and banks

2 B internal users of accounting information.

3 C shareholders and creditors

4 D the Securities and Exchange Commission (SEC)

The goal of managerial accounting is to provide information that managers need for

1 A planning, control, and financial reporting

2 B control, evaluation, and financial reporting

3 C planning, control, and decision making

4 D preparing reports for external users

The financial plans prepared by managerial accountants are referred to

1 A The plan may not have been followed properly

2 B The plan may not have been well thought-out

3 C Changing circumstances may have made the plan out of date

4 D All of the above are reasons that actual results may differ from the

company’s plan

Which one of the following is true as it relates to the management function of control?

1 A It is achieved by evaluating the performance of managers

2 B It is achieved by evaluating the operations for which a manager is

responsible

3 C It is necessary only when performance is less than expected

4 D It is achieved by evaluating the performance of managers and the

operations for which they are responsible

Which one of the following is the last step in the planning and control

process?

1 A Implement a plan

2 B Construct a plan

3 C Make decisions based on the evaluation of the results

4 D Compare actual results to the planned results

Performance reports often compare current performance with

1 A a competing company’s performance

2 B shareholders’ expected level of performance

3 C industry standards

4 D performance in a prior period or budgeted performance

When using management by exception, a difference between actual costs and budgeted costs

1 A should be investigated if the amount is large

2 B indicates that the planned cost was poorly estimated.

3 C indicates that the manager is doing a poor job

4 D should be ignored if it increases profit

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

1 A Small amounts do not matter

2 B Management by exception

3 C Incremental analysis

4 D You get what you measure

Below is a performance report that compares budgeted and actual profit of Atlanta Enterprises for the month of June: Budget Actual Difference Sales

$182,000 $180,000 ($2,000) Less: Cost of ingredients 145,000 141,000 4,000 Salaries 24,000 23,000 1,000 Controllable profit $ 13,000 $ 16,000 $ 3,000 In evaluating the department in terms of its changes in sales and expenses, what will be most important to investigate?

1 A is primarily directed at external users of accounting information

2 B is required by taxing authorities such as the IRS

3 C must follow GAAP

4 D focuses on future performance.

The fundamental difference between managerial and financial accounting is that

1 A all financial accounting information is audited by Certified Public

Accountants whereas managerial accounting information is audited by the IMA

2 B managerial accounting is concerned principally with budgets, whereas financial accounting is concerned with a wider range of the organization’s activities

3 C managerial accounting provides information for decision-makers within theorganization, whereas financial accounting provides information for

individuals and institutions external to the organization

4 D financial accounting information follows U.S Generally Accepted

Accounting Principles, whereas managerial accounting information generally follows rules set forth by the Institute of Management Accountants

Which of the following is a difference between financial accounting and

managerial accounting?

1 A Managerial accounting is primarily concerned with reporting the past, whilefinancial accounting is more concerned with future decisions that external users may need to make

2 B Managerial accounting uses monetary and nonmonetary information, whereas financial accounting reports monetary information

3 C Managerial accounting is primarily concerned with providing information for external users while financial accounting is concerned with internal users

4 D Financial accounting is rather detailed, while managerial accounting is more summarized

Which one of the following is most likely to make use of Ralston Enterprises’ managerial accounting information?

1 A The IRS

2 B An individual contemplating an investment in Ralston Enterprises

3 C A company that is one of Ralston’s main suppliers

4 D The production manager of Ralston’s plant in Georgia

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

1 A Total fixed costs

2 B Variable cost per unit

3 C A company’s total costs

4 D Sunk cost

Variable cost per unit

1 A increases when the number of units produced increases

2 B does not change when the number of units produced increases

3 C decreases when the number of units produced increases

4 D decreases when the number of units produced decreases

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?

1 A Total variable costs are expected to be $1,785

2 B Variable cost per unit is expected to be $3.50

3 C The incremental cost per unit is costs expected to be $0.35

4 D Unit variable costs are expected to be $2.10