ACC 561 Final Exam Guide

31 Jul ACC 561 Final Exam Guide

1) Department performance reports can be used to help department heads determine _____.

A. who is primarily responsible for any deviations from plans

B. how effectively and efficiently the department is operating

C. how effectively the department is operating

D. how efficiently the department is operating

 

 

2) Performance reports _____.

A. ignore areas that are presumed to be running smoothly

B. are deviations from a plan

C. are quantitative expressions of action plans

D. provide feedback by comparing results with plans and by highlighting deviations from plans

 

 

3) According to the Financial Executives Institute, one function of controllership is _____.

A. reporting and interpreting financial information

B. provision of capital

C. investments

D. short term financing

 

 

4) Which of the following is not a major factor causing changes in management accounting today?

A. Increasing importance of the service sector of the economy is not a major factor.

B. E-commerce is not a major factor.

C. Declining work ethic is not a major factor.

D. Increased global competition is not a major factor.

 

 

 

5) Ethical accountants are important to society because _____.

A. none of these answers is correct

B. they will not go to prison and waste taxpayers’ money

C. they pay their taxes

D. the information produced is reliable

 

 

 

6) According to the Institute of Management Accountants’ Statement of Ethical Professional Practice, the standard of competence includes:

A. All of these answers are correct

B. disclosing all relevant information

C. the ongoing development of the accountant’s knowledge and skills

D. avoiding actual or apparent conflicts of interest

 

 

 

7) Which scorecard function is associated with making non-routine decisions?

A. None of these answers is correct

B. Problem solving is associated with making non-routine decisions.

C. Scorekeeping is associated with making non-routine decisions.

D. Attention directing is associated with making non-routine decisions.

 

 

 

8) The primary users of management accounting information are _____.

A. governmental regulatory authorities

B. bankers

C. internal decision makers

D. suppliers

 

 

9) _____ is the field of accounting that develops information for external decision makers such as stockholders, suppliers, banks, and government regulatory agencies.

A. Tax accounting

B. Auditing

C. Management accounting

D. Financial accounting

 

10) Etiwanda Company’s accountant recorded a debit to Accounts Payable and a credit to Cash. This transaction will_____.

A. decrease Cash and increase Accounts Payable

B. increase Cash and decrease Accounts Payable

C. increase Cash and increase Accounts Payable

D. decrease Cash and decrease Accounts Payable

 

 

11) The _____ is also called the statement of financial position.

A. balance sheet

B. income statement

C. statement of retained earnings

D. statement of cash flows

 

12) The _____ is not one of the three major financial statements.

A. income statement

B. statement of cash flows

C. balance sheet

D. statement of equity position

 

 

 

13) The accounting convention of _____ guides the relative sophistication of the accounting system.

A. cost benefit

B. objectivity

C. conservatism

D. materiality

 

14) The accounting convention of _____ means selecting the method of measurement that yields the gloomiest immediate results.

A. objectivity

B. cost benefit

C. materiality

D. conservatism

 

15) The use of acquisition cost less depreciation in valuing an asset on the balance sheet is the logical result of the _____ accounting convention.

A. materiality

B. conservatism

C. continuity

D. cost-benefit

 

 

16) The statement of cash flows is used for all of the following except_____.

A. evaluating the creditworthiness of the organization

B. determining a company’s ability to pay its debts when they are due

C. showing the relationship of net income to changes in cash

D. revealing commitments that may restrict future courses of action

 

17) The Rebecca Company acquired merchandise inventory costing $10,000 on September 1. The company will not pay for the inventory until October 1. This transaction will affect the Rebecca Company by increasing the Merchandise Inventory account by $10,000 and _____.

A. decreasing the Capital account by $10,000

B. decreasing the Accounts Payable account by $10,000

C. increasing the Accounts Payable account by $10,000

D. increasing the Capital account by $10,000

 

 

 

18) Nonoperating items on the income statement_____.

A. appear on the income statement immediately after gross profit

B. reflect the effects of financial management decisions

C. are revenues and expenses arising from adjusting entries

D. appear only on corporate income statements

 

 

19) Output measures of both resources and activities are _____.

A. variable activities

B. stages of production

C. cost drivers

D. fixed activities

 

 

 

20) Which value chain function would include advertising costs?

A. The marketing function would include advertising costs.

B. The customer service function would include advertising costs.

C. The distribution function would include advertising costs.

D. The production function would include advertising costs.

 

 

 

21) Number of engineering hours is a likely cost driver for which value chain function?

A. The production function has number of engineering hours as a likely cost driver

B. The design function has number of engineering hours as a likely cost driver.

C. The research and development function has number of engineering hours as a likely cost driver.

D. The marketing function has number of engineering hours as a likely cost driver.

 

 

 

22) Walnut Corporation sells desks at $480 per desk. The costs associated with each desk are as follows:

Direct materials $195

Direct labor 126

Variable factory overhead 51

 

Total fixed costs for the period are $456,840. The contribution margin per desk is _____.

 

A. $126

B. $108

C. $195

D. $51

 

 

 

23) If the sales price per unit is $100, the unit variable cost is $75, and total fixed costs are $150,000, then the break even volume in dollar sales rounded to the nearest whole dollar is _____.

A. $600,000

B. $150,000

C. $200,000

D. $1,500

 

 

 

24) Hug Me Company produces dolls. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor. If total fixed costs are $435,000, then the break even volume in dollars is _____.

A. $1,023,529

B. $1,450,000

C. $621,429

D. $435,000

 

 

 

25) The _____ method of measuring cost functions is the least reliable.

A. visual fit

B. high low

C. simple least squares regression

D. multiple least squares regression

 

 

 

26) _____ of approximating cost functions does not involve the analysis of past costs.

A. Visual fit analysis

B. High low analysis

C. Engineering analysis

D. least-squares regression

 

 

 

27) Managers should apply two principles to obtain accurate and useful cost functions. These principles are ____.

A. plausibility and reliability

B. plausibility and believability

C. reliability and validity

D. believability and validity

 

 

 

28) The change from traditional costing to activity-based costing may reveal that _____.

A. low volume products are overcosted

B. high volume products are overcosted

C. both high and low volume products are overcosted

D. both high and low volume products are undercosted

 

 

 

29) _____ need cost accounting systems.

A. Service organizations and nonprofit organizations

B. Manufacturing firms and service organizations

C. Manufacturing firms and nonprofit organizations

D. Manufacturing firms, service organizations, and nonprofit organizations

 

 

 

30) _____ is an example of the external financial reporting purpose of the cost management systems.

A. The product mix to optimize profitability

B. The cost of a manufacturing process

C. The amount of inventory that should appear on the balance sheet

D. Budget reporting

 

31) A sales forecast is _____.

A. the same as a sales budget that will generate a desired level of sales

B. the result of decisions to create conditions

C. a prediction of sales under a given set of conditions

D. all of these answers are correct

 

 

 

32) _____ models are mathematical models of the master budget that can react to any set of assumption about sales, costs, and product mix.

A. Accounting

B. Financial planning

C. Budgeting analysis

D. Futuring

 

 

 

33) A _____ gives the expected sales under a given set of conditions.

A. budget forecast

B. sales budget

C. sales prediction

D. sales forecast

 

 

 

34) A _____ gives the expected sales under a given set of conditions.

A. budget forecast

B. sales budget

C. sales prediction

D. sales forecast

 

 

 

35) Important factors considered by sales forecasters include all of the following except _____.

A. competitors’ activities

B. marketing research studies

C. past patterns of sales

D. the desired level of sales

 

 

 

36) The master budget includes forecasts for all of the following except _____.

A. balance sheets

B. number of employees

C. sales

D. cash disbursements

 

 

 

37) The master budget quantifies targets for all of the following except _____.

A. markets

B. production

C. sales

D. cost driver activity

 

 

 

38) _____ are components of a master budget.

A. A continuous budget and a static budget

B. An operating budget and a financial budget

C. A strategic plan and an operating budget

D. A cash budget and an activity budget

 

 

 

39) Differences between the static budget and the flexible budget are due to _____.

A. problems of cost control

B. poor usage of material and labor

C. a combination of price and material variances

D. actual activity differing from expected activity levels

 

40) Cost allocation base refers to the _____.

A. cost driver

B. total costs to be allocated

C. total allocated costs

D. cost objectives

 

 

 

41) The use of budgeted service department cost rates protects using departments from _____.

A. service department efficiencies

B. price fluctuations

C. service outages

D. all of these answers are correct

 

 

 

42) The preferred guidelines for allocating service department costs include _____.

A. identifying the direct and indirect costs

B. evaluating performance using allocated costs for each service department

C. establishing part or all of the details regarding cost allocation in advance of rendering the service

D. allocating variable- and fixed-cost pools simultaneously

 

 

 

43) Murphy Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:

Maintenance Personnel Mixing Finishing

Direct dept. costs $126,000 $84,000 $105,000 $175,000

Square footage 800 400 1,600 1,200

Number of employees 8 12 24 32

 

 

If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Mixing is _____.

 

A. $31,500

B. $58,500

C. $63,000

D. $78,000

 

 

 

44) Gomez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year _____.

Maintenance Personnel Mixing Finishing

Direct dept. costs $126,000 $84,000 $105,000 $175,000

Square footage 800 400 1,600 1,200

Number of employees 8 12 24 32

 

 

If the step-down method is used to allocate costs and the Maintenance Department is allocated first, the amount of overhead that would be allocated from Maintenance to Mixing is:

 

A. $36,000

B. $42,750

C. $42,000

D. $63,000

 

 

 

45) Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:

Maintenance Personnel Mixing Finishing

Direct dept. costs $126,000 $84,000 $105,000 $175,000

Square footage 800 400 1,600 1,200

Number of employees 8 12 24 32

If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.

 

A. $42,750

B. $31,500

C. $57,000

D. $47,250

 

46) In absorption costing, costs are separated into the major categories of_____.

A. manufacturing and nonmanufacturing

B. manufacturing and fixed

C. fixed and variable

D. variable and nonmanufacturing

 

47) Absorption costing assigns _____ to the product.

A. variable and fixed manufacturing costs

B. all variable costs

C. all fixed and variable costs

D. variable manufacturing costs

 

 

 

48) factory overhead appears on the absorption-costing income statement as_____.

A. a production volume variance

B. part of cost of goods sold

C. part of cost of goods sold and as a production volume variance

D. a fixed expense

 

49) Identify which of the following is not a characteristic of a management control system.

 

A. A management control system motivates individuals throughout the organization to act in concert.

B. A management control system encourages short term profitability.

C. A management control system coordinates forecasting sales and cost driver activities, budgeting, and measuring and evaluating performance.

D. A management control system aids and coordinates the process of making decisions.

 

50) _____ is the first step in designing a management control system.

A. Preparing financial statements

B. Establishing organizational goals

C. Distinguishing between profit centers and cost centers

D. Evaluating management’s performance

 

 

51) _____ is (are) the most basic component of a management control system.

A. The stockholder’s preferences

B. The organization’s goals

C. Top management’s preferences

D. The organization’s long-range budget

 

52) The following information is available for the Peter Company:

Sales $500,000

Invested Capital 312,500

ROI 10%

The return on sales is _____.

A. 1.000%

B. 6.250%

C. none of these answers is correct

D. 10.000%

53) _____ is a measure of income or profit divided by the investment required to obtain that income or profit.

A. Return on investment

B. Capital turnover

C. Residual income

D. Return on sales

 

54) The following information is available for the Peter Company:

Sales $150,000

Invested Capital 156,250

ROI 10%

The return on sales is _____.

A. 10.00%

B. none of these answers is correct

C. 62.50%

D. 10.42%