management accounting end of week questions

the planning process includes:

* setting objectives
* identifying means of achieving the objectives
* making decisions
* all of the above

d

management accounting

* provides a framework to evaluate information in light of an organization's goals.
* provides relevant information to managers.
* provides relevant information to meet specific needs of persons inside the organization
* all of the above

d

which of the following characteristics does not pertain to management accounting ?

* provides information and estimates about future activity
* generates specific-purpose financial statements and reports
* provides financial and operating data multidisciplinary in scope
* has externally imposed standards

d

the setting of objectives and the identification of methods to achieve those objectives is called

* planning.
* controlling.
* performance evaluation.
* decision making.

a

___ is devoted to providing information for external users.

* Management accounting
* Financial accounting
* Internal accounting
* Cost accounting

b

the monitoring of a plans implementation is called:

* planning
* controlling
* decision making
* budgeting

\

b

which of the following costing activities is associated with the financial accounting system ?

* determining the cost of a department
* determining the cost of goods sold for financial statements
* preparing budgets
* determining the cost of a customer

b

management accounting a finical accounting differ in that management accounting information is prepared …

* following prescribed rules
* using whatever methods the company finds beneficial
* for shareholders
* to summarise the whole company with little detail

b

Management accounting is concerned with which kind of decision?

* product costing and pricing
* continuous operational improvement
* financial control


* all of the above

d

Cost accounting

* is concerned with assigning costs to various cost objects.
* attempts to satisfy the costing objectives of both financial accounting and management accounting.
* provides cost information that supports planning, controlling, and decision making.
* All of the above descriptions are true.

d

Which of the following statements correctly distinguishes between financial and management accounting?

* Management accounting reports on the whole organization.
* Financial accounting is oriented toward the future.
* Financial accounting is primarily concerned with providing information for internal users.
* Management accounting is oriented more toward the planning and control aspects of management.

d

setting the selling price of a company product is an examples of

* planning
* control
* decision making
* all of the above

c

which of the following is an example of a variable cost?

* insurance on the production equipment
* direct materials
* the production supervisors salary
* deprecation of the factory building

b

Mulholland Company manufactures various wooden furniture products. If the cost object is a product, a chair, what costs would be considered direct?

* manufacturing supervisor's salary
* depreciation on the factory building
* salary of the worker that glues the legs to the seat of the chair
* insurance on the factory

c

what is not allowed under the IAS 2

* AVCO
* LIFO
* FIFO
* WAC

b

which of the following costs is an indirect product cost?

* property taxes on plant facilities
* wages of assembly workers
* materials used
* presidents salary

a

which of the following costs is a variable cost?

* supervisors salaries
* research and development
* materials used in production
* rent

c

which item is not an example of a sunk cost?

* materials needed for production
* purchase cost of machinery
* depreciation
* all are sunk cost

a

mixed costs

* are step cost
* in total remain constant within relevant range
* have a fixed and variable component
* on a per unit basis, are constant as activity increase and decreases

c

If total warehousing cost for the year amounts to £350 000, and 40 per cent of the warehousing activity is associated with finished goods and 60 per cent with direct materials, how much of the cost would be charged as a product cost?

* 70,000
* 140,000
* 210,000
* 350,000

c

which of the following is an example of a fixed cost?

* power cost in the machine department
* wood in the manufacture of furniture
* labour cost paid on a piece basis
* lease payments on machinery

d

which of the following is a product cost

* advertising expenditures
* insurance on the office buildings
* depreciation of the salesmens car
* depreciation of the production facilities

d

___ refers to the assignment of indirect cots to cost objects

* allocation
* direct tracing
* physical observation
* cost management

a

the calculation of units costs is important for

* inventory valuation
* income determination
* pricing
* all of the above

d

which of the following accurately describes advantage and disadvantages of employing a system of allocation that uses a plant - wide rate?

* the plant-wide rate approach is the simplest to apply, but it is also the most costly to implement.
* The plant-wide rate approach is the simplest to apply, but most likely provides the least accurate product costs.
* The plant-wide rate may be straightforward, but it is not appropriate for small businesses that offer a single service or product.
* The plant-wide rate really offers no advantage whatsoever.

b

support departments

* are responsible for manufacturing the products sold to customers
* work directly on the products of the firm
* provide services directly to customers
* provide essential services to the producing departments

d

traditional - based product costing uses which of the following procedures?

* overhead costs are traced to departments, the costs are traced to products
* overhead cots are traced to activities, then costs are traced to produced

which of the following is NOT a support department?

* food services
* bottling
* health services
* security

b

examples of support departments include all of the following except

* maintenance
* personnel
* machining
* data processing

c

support department costs are accounted for in which one of the following ways?

* They are allocated directly to units of product.
* They are allocated to producing departments and then allocated to units of product.
* They are allocated to units of product and then allocated to the producing departments.
* They are expensed as incurred

b

which of the following is a key consideration inn selecting allocation base?

* the allocation base should have an indirect association with the cost objective
* the allocation base should be difficult to measure
* there should be logical association between the allocations base and the incidence of costs
* the allocation base should be out of the control of management

c

examples of producing departments include all od the following except

* mixing
* molding
* packaging
* accounting

d

___ is (are) a method of allocating service department costs that give(s) partial recognition to interdepartmental services by using a methodology that allocates service department costs sequentially both to the remaining service departments and the producing departments.

* the direct method
* the step method
* the linear algebra method
* the direct and step methods

b

an example of a production or unit level driver is

* pounds of direct materials
* number of set up
* number of batches
* number of product lines

d

a possible casual factor to use when allocation cafeteria costs would be

* number of square feet
* number of direct labour hours
* number of employees
* appraised value of square footage

c

* 15000
* 60
* 7500
* 200

b

* 108,804
* 105,413
* 103,235
* 101,013

d

* 72000
* 68200
* 56200
* 53200

b

* 9230
* 8180
* 2250
* 1680

b

Which of the following accurately describes advantages and disadvantages of employing a system of allocation that uses a plant-wide rate?

* The plant-wide rate approach is the simplest to apply, but it is also the most costly to implement
* The plant-wide rate approach is the simplest to apply, but most likely provides the least accurate product costs.
* The plant-wide rate may be straightforward, but it is not appropriate for small businesses that offer a single service or product.
* The plant-wide rate really offers no advantage whatsoever.

b

support departments

* are responsible for manufacturing the products sold to customers
* work directly on the products of the firm
* provide services directly to customers
* provide essential services to the producing departments

d

An activity-based costing system uses which of the following procedures?

* Overhead costs are traced to departments, then costs are traced to products.
* Overhead costs are traced to activities, then costs are traced to products.
* Overhead costs are traced directly to products.
* All overhead costs are expensed as incurred.

b

* 17480
* 16583
* 13110
* 12765

\

b

* 53.13
* 54.15
* 56.67
* 57.15

b

Which of the following is a reason to accumulate and separately assign costs by departments?

* The company wants to reduce the complexity of its cost accounting system.
* The company is comprised of multiple departments, each of which exhibit unique cost behaviour patterns.
* The company wishes to implement an activity based costing system.
* The company has a large amount of capital invested in human resource training.

b

Assuming sales prices and cost behaviour remain unchanged, when absorption costing is used, overproducing creates which of the following situations?

* a buildup of inventory levels
* higher net income
* less fixed costs on the income statement
* all of the above

d

In a cost-volume-profit graph, the slope of the total revenue line represents

* the selling price per unit
* the contribution margin per unit.
* the variable cost per unit.
* total contribution margin.

a

what is the next income for Eastwood using the absorption costing method

* £452 000
* £480 000
* £1 200 000
* £600 000

a

The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as:

* absorption costing.
* FIFO.
* the weighted average cost method.
* conversion costing.

a

Inventory values calculated using variable costing as opposed to absorption costing will generally be

* equal
* less
* greater
* twice as much

b

During the period, the company produced and sold 1000 units.

What is the inventory cost per unit using variable costing?

* 52
* 62
* 42
* 70

c

Total contribution margin is calculated by subtracting

* cost of goods sold from total revenues.
* fixed costs from total revenues.
* total manufacturing costs from total revenues.
* total variable costs from total revenues.

d

Assuming all other things are the same, variable cost per unit must have ____ if there was an increase in the break-even point.

* remained the same
* increased first, then decreased
* increased
* depends on the circumstances

c

\
What is the contribution margin per unit?

* £7.20
* £1.20
* £4.80
* £120 000

c

Refer to Figure C8-3. What selling price per unit is needed to obtain a before-tax profit of £270 000 at a volume of 4000 units?

£150.00

£330.00

£225.00

£105.00

b

margin of safety:

* 2000 units.
* 3000 units.
* 5000 units.
* 7000 units.

b

All of the following costs are included in inventory under absorption costing EXCEPT

* direct materials.
* direct labour.
* fixed selling expenses.
* fixed factory overhead.

c

During the period, the company produced and sold 1000 units.

What is the inventory cost per unit using absorption costing?

£104

£70

£84

£32

b

a budget is

* a planning tool
* a control tool
* a means of communicating goals to the firms divisions
* all of these

db

Which of the following appears in the cash budget?

* interest payments
* purchase of equipment on credit
* depreciation
* all of these

b

Refer to Figure C15-3. How many pounds of material would Sommers need to purchase?

216 000

225 000

207 000

201 000

c

Canceco Company produces and sells pillows. It expects to sell 10 000 pillows in the year 2008 and had 1000 pillows in finished goods inventory at the end of 2011. Canceco would like to complete operations in the year 2008 with at least 1250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for £5 each.

\n Refer to Figure C15-5. What would be the total sales for the year 2008?

£50 000

£55 000

£56 250

£51 250

\

a

how many units of products X and Y should dot company produce?

Product X Product Y

* 16 000 -0-
* 8 000 4 000
* 7 000 -0-
* 3 000 8 000

d

If Caddo can produce only one of the products in the next period, which product should be produced?

* Alpha should be produced because it requires less machine hours.
* Beta should be produced because it generates more revenue.
* Beta should be produced because it generates more contribution margin per unit.
* none of these.

d

What is the actual cost per sticker? (Round to three decimal places.)

£0.468

£0.478

£0.486

£0.487

c

What is the budgeted purchasing cost if there was production of 50 000 reflectors that will require 8000 machine hours, 25 batches and 15 000 purchase orders?

* £150,000
* £200,000
* £100,000
* none of these

b

How much cash would be collected in September from sales?

£15 400

£17 000

£16 000

£20 000

a

Gerald Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1000 and 1200 units, respectively. Beginning inventory is 4000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.
​
How many units of A1 does expect to use in production during the second month?

* 12 000 units
* 12 500 units
* 10 000 units
* 10 750 units

a

How many units are expected to be produced in April?

* 21 000 units
* 19 000 units
* 25 000 units
* 20 000 units

a

Shannon Ltd.'s standard cost card contained the following information:
​
Direct labour: 1.25 hours × £8.00 per hour = £10.00
​
Shannon planned to make 12 000 units. Shannon actually made 10 000 units using 13 000 hours.

Shannon's standard hours allowed for production was

* 12 500.
* 15 000
* 16 250.
* 13 000.

a

During April, 80 000 units of product were produced. The standard quantity of material allowed per unit was two pounds at a standard cost of £5 per pound. If there was a favourable materials usage variance of £40 000 for April, the actual quantity of materials used must have been

* 168 000 pounds.
* 152 000 pounds.
* 84 000 pounds.
* 76 000 pounds.

b

Orient's materials usage variance would be

£22 000 unfavourable.

£12 000 favourable.

£10 000 unfavourable.

£4000 unfavourable.

d

A 5 per cent wage increase for all factory employees would affect which of the following variances?

* materials price variance
* labour rate variance
* labour efficiency variance
* variable manufacturing overhead efficiency variance

b

An unfavourable materials price variance may be caused by

* excessive rework.


* a special price offered by suppliers.
* use of experienced workers.
* none of these.

d

Labour efficiency variances may be caused by

* the use of highly skilled workers.
* frequent machinery breakdowns.
* the use of marginally skilled workers.
* all of these.

d

During May, 6000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favourable materials price variance of £900 for December, the standard cost per pound must be

* £2.75.
* £2.60.
* £2.45.
* none of these.

a

An unfavourable materials price variance with a favourable materials usage variance would most likely be the result of

* machines breaking down.
* problems with labour efficiency.
* purchase of high quality materials.
* problems with labour rates.

c

Tuvok's materials usage variance is

* £1000 unfavourable.
* £1100 unfavourable.
* £2000 unfavourable.
* cannot be determined from the information given.

a

Rax's labour efficiency variance would be

* £4300 unfavourable.
* £4300 favourable.
* £1800 unfavourable.
* £1800 favourable.

c

During October, 16 000 direct labour hours were worked at a standard cost of £6 per hour. If the labour rate variance for October was £4000 unfavourable, the actual cost per labour hour must be

* £6.25.
* £6.00.
* £5.75.
* none of these.

a

Shannon Ltd.'s standard cost card contained the following information: ​ Direct labour: 1.25 hours × £8.00 per hour = £10.00 ​

Shannon planned to make 12 000 units.

Shannon actually made 10 000 units using 13 000 hours.

Shannon's labour efficiency variance was

* £4625 unfavourable.
* £4000 unfavourable.
* £27 750 unfavourable.
* £24 000 unfavourable.

b

Labour rate variances can be the result of

* the use of an average wage rate.
* unexpected overtime.
* seniority mix changes.
* all of these.

d

An unfavourable materials usage variance may be caused by

* excessive rework.
* a special price offered by suppliers.
* use of experienced workers.
* none of these.

a

The purchase of inferior direct materials at a lower price might affect which of the following variances?

* materials price variance
* materials usage variance
* labour efficiency variance
* all of these

d

A favourable materials price variance may be caused by

* excessive rework.
* a special price offered by suppliers.
* use of experienced workers.
* none of these.

b

The sales price variance is created by a difference between

* actual and standard contribution margin.
* actual and expected sales price.
* expected and standard net income.
* actual and expected sales volume.

b

For better control of direct material prices, when should direct material price variance be recognized?

* when material is purchased
* when material is issued from the storeroom
* when material is put into production
* when production is completed

a

If variable overhead is applied based on direct labour hours and there is an unfavourable labour efficiency variance,

* the materials usage variance will be unfavourable.
* the labour rate variance will be favourable.
* the variable overhead efficiency variance will be unfavourable.
* the variable overhead spending variance will be unfavourable.

c

Noelle's variable overhead efficiency variance would be

* £7000 favourable.
* £8000 unfavourable.
* £15 000 favourable.
* £23 000 unfavourable.

c

The labour rate variance is calculated as

* (Actual hourly wage rate - Standard hourly wage rate) × Actual direct labour hours used.
* (Actual hourly wage rate - Standard hourly wage rate) × Standard direct labour hours that should have been used.
* (Actual direct labour hours used - Standard direct labour hours that should have been used) × Actual hourly wage rate.
* (Actual direct labour hours used - Standard direct labour hours that should have been used) × Standard hourly wage rate.

a

The fixed overhead spending variance would be

* £2500 unfavourable.
* £2500 favourable.
* £1000 unfavourable.
* £1000 favourable.

d

An unfavourable materials price variance may be caused by

* excessive rework.
* a special price offered by suppliers.
* use of experienced workers.
* none of these.

d

The volume variance is caused by:

* the difference between the activity allowed for the actual output and the budgeted activity used in computing the fixed overhead rate.
* the difference between total budgeted fixed overhead and total standard fixed overhead assigned to production.
* the difference between the activity allowed for the actual output and the total standard fixed overhead assigned to production.
* the difference between the standard fixed overhead rate and the actual fixed overhead rate.

a

Rax’s variable standard cost per unit would be

* 78
* 192
* 246
* 222

c

The standard fixed overhead rate is calculated as

* Actual fixed overhead/Actual activity.
* Budgeted fixed overhead/Budgeted activity.
* Budgeted fixed overhead/Actual activity.
* Budgeted overhead/Budgeted activity.

b

If actual fixed overhead was £120 000 and there was a £2600 favourable spending variance and a £2000 unfavourable volume variance, budgeted fixed overhead must have been

* £124 600.
* £122 000.
* £120 000.
* £122 600.

d

Noelle's fixed overhead spending variance would be

* £10 000 unfavourable.
* £11 000 unfavourable.
* £21 000 favourable.
* £31 000 favourable.

a

Noelle's standard fixed overhead rate is

* £14.82.
* £14.48.
* £14.34.
* £14.00 \n

d

Noelle's variable overhead spending variance would be

* £7000 favourable.
* £8000 unfavourable.
* £15 000 favourable.
* £23 000 unfavourable.

b

The volume variance provides information to management about

* utilisation of plant facilities.
* cost control.
* performance for evaluation purposes.
* all of these.

a