ACCCOB3 Module 1/2 - Quiz 1 Theory Review (1)

Which of the following statements is TRUE?

A. Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

B. An employee overstates his reimbursable expenses in one period in order to receive needed additional cash. Since he intends to reduce his expenses the next period by the current overstatement, this act is not considered fraudulent.

C. Direct materials are not usually easily traced to a product.

D. Straight-line depreciation, rent and manager salaries are examples of variable costs.

A. Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

Which of the following statements is FALSE?

A. Managerial accounting is an activity that helps managers determine the costs of products and services, plan future activities, and compare actual to planned results.

B. Managerial accounting provides financial and non-financial information to an organization's managers and other internal decision-makers.

C. One of the usual differences between financial and managerial accounting is the timeliness of the information reported. 

D. Managerial accounting reports and information are used by external users and financial accounting reports and information are used by internal users.

D. Managerial accounting reports and information are used by external users and financial accounting reports and information are used by internal users.

Which of the following statements is TRUE?

A. Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

B. The cost of all direct materials issued to production is charged to Work in Process Inventory. 

C. When materials in production are used as indirect materials, their cost is charged to the Administrative Expenses. 

D. Direct materials and direct labor are examples of costs that are charged to the Factory Overhead account.

B. The cost of all direct materials issued to production is charged to Work in Process Inventory. 

Manufacturing-sector companies report:

A. only merchandise inventory.

B. only finished goods inventory.

C. raw materials inventory, work-in-process inventory, & finished goods inventory accounts.

D. no inventory accounts.

C. raw materials inventory, work-in-process inventory, & finished goods inventory accounts.

Merchandising companies normally report:

A. only merchandise inventory.

B. only finished goods inventory.

C. raw materials inventory, work-in-process inventory, & finished goods inventory accounts.

D. no inventory accounts

A. only merchandise inventory.

True or False: The managerial activity of monitoring a plan’s implementation and taking corrective action as needed is referred to as PLANNING.

False - monitoring a plan’s implementation and taking corrective action is referred to as CONTROLLING

True or False: The detailed formulation of action to achieve a particular end is the management activity called CONTROLLING.

False - the detailed formulation of action to achieve a particular end is PLANNING.

True or False: Period Costs are also known as non-inventoriable cost.

True

True or False: Management accounting services is only used by manufacturing organizations.

False - management accounting is used by ALL types of organizations.

True or False: Contribution Margin is computed by deducting fixed cost from the Cost of Goods Sold.

False - contribution margin is computed by deducting VARIABLE COST from the SALES.

True or False: Variable costs are costs which behave the same way with the changes in activity.

True

True or False: Manufacturing Overhead are cost that cannot be traced to a particular cost driver.

True

True or False: Any costs associated with office administration are period costs.

True

True or False: Product costs are carried in inventory until the goods are sold.

True

True or False: Salaries of the Factory workers who work in the assembly department (touch labor) are classified as indirect labor costs.

False - salaries of factory workers who work in the assembly department are classified as DIRECT LABOR COSTS.

True or False: Product costs does not include indirect labor and indirect materials.

False - product costs INCLUDES indirect labor and indirect materials as part of manufacturing overhead.

True or False: Raw Materials Inventory are the amount of raw materials used in the production.

False - raw materials inventory is the amount of raw materials that have NOT YET BEEN USED in production.

True or False: A fixed cost increase in total as output increases and decreases in total as output decreases.

False - fixed costs REMAIN CONSTANT IN TOTAL within a relevant range of production or activity.

True or False: Total Work Placed in Process include only the amount of direct materials, direct labor and applied manufacturing overhead placed during the current period.

False - Total Work Placed in Process include BEGINNING WIP, DM, DL, and Applied MOH.

True or False: A Variable cost is constant per unit of product.

True

Managerial accounting:

A. Has its primary emphasis on the future.

B. Is required by regulatory bodies such as the SEC.

C. Focuses on the organization as a whole, rather than on the organization’s segment.

D. Responses a, b, and c are all correct.

A. Has its primary emphasis on the future.

The costs of Manufacturing Overhead are classified as:

A. Conversion Cost - Yes; Manufacturing Cost - Yes; Prime Cost - Yes

B. Conversion Cost - No; Manufacturing Cost - No; Prime Cost - No

C. Conversion Cost - Yes; Manufacturing Cost - Yes; Prime Cost - No

D. Conversion Cost - No; Manufacturing Cost - Yes; Prime Cost - Yes

C. Conversion Cost - Yes; Manufacturing Cost - Yes; Prime Cost - No

Which terms below correctly describe the cost of the wood in a furniture manufacturing company?

A. Variable Cost - Yes; Administrative Cost - Yes

B. Variable Cost - Yes; Administrative Cost - No

C. Variable Cost - No; Administrative Cost - Yes

D. Variable Cost - No; Administrative Cost - No

B. Variable Cost - Yes; Administrative Cost - No

Preparation of Financial Statement for external users and internal users is:

A. Management Accounting

B. Financial Accounting 

C. Auditing 

D. Taxation

B. Financial Accounting 

A worker in a garments factory which is classified as direct labor would be:

A. Accounting staff

B. Cook in the factory pantry

C. Shop supervisor

D. Skilled Dressmaker

D. Skilled Dressmaker

Which of the following CANNOT be found on the Statement of Cost of Goods Sold?

A. Work in Process

B. Cost of Goods Manufactured

C. Finished Goods inventories (beginning)

D. Finished Goods inventories (ending)

A. Work in Process

*To compute COGS = Finished Goods inventory (beg) + Cost of Goods Manufactured - Finished Goods inventory (end)

Which of the following is an example of a Variable cost?

A. Depreciation of machineries

B. Property taxes paid by a firm to the City of Manila.

C. Cloth used for garment productions

D. Insurance of company vehicles.

E. Salary of the security guard of the warehouse

C. Cloth used for garment productions

Cost of lubrication of factory equipment incurred by a manufacturing company is classified as:

A. Direct Materials

B. Manufacturing overhead

C. Direct Labor

D. Administrative cost

B. Manufacturing overhead

Assigning costs to cost objects

A. Help managers in determining the cost incurred by a particular cost object.

B. The most reasonable way to evaluate a cost object.

C. Important in decision making and controlling function of management

D. All of these

D. All of these

Computation of Cost of goods manufactured includes all EXCEPT:

A. Work still in process at the start and end of the period.

B. Direct labor and Direct materials costs placed in process during the period

C. Manufacturing overhead incurred in production

D. Completed goods at the beginning and end of the period.

D. Completed goods at the beginning and end of the period.

Assigning cost:

A. Involves the way that a cost is linked to a particular cost object.

B. Done for better control and evaluation of cost object

C. Is allocation to a cost object using a reasonable and convenient method

D. All of the above.

D. All of the above.

An indirect cost

A. Can be easily and accurately traced to a cost object

B. Should never be assigned to a cost object

C. Is hard to trace

D. None of these

C. Is hard to trace

A variable cost in total

A. Increases as output increases and decreases as output decreases,

B. Increases as output increases and/or decreases

C. Remains constant no matter the level of output

D. Increases as output decreases and decreases as output increases

A. Increases as output increases and decreases as output decreases,

Within the relevant range, the difference between variable costs and fixed costs is:

A. Variable costs per unit fluctuate and fixed costs per unit remain constant.

B. Variable costs per unit are constant and fixed costs per unit fluctuate.

C. Both total variable costs and total fixed costs are constant.

D. Both total variable costs and total fixed costs fluctuate.

B. Variable costs per unit are constant and fixed costs per unit fluctuate.

Which two terms below describe the wages paid to janitors of a factory?

A. variable cost and direct cost

B. fixed cost and direct cost 

C. variable cost and indirect cost

D. fixed cost and indirect cost

D. fixed cost and indirect cost