Name: Maria Barker Date: March 9th 2011Final Exam submissionManagerial Accounting

1. Managerial accounting is primarily focused on:A) Providing creditors information on the status of their loans

B) Providing investors with useful information for valuing securities

C) Providing managers with relevant information to help achieve organizational goals

D) Providing the Internal Revenue Service with information to determine the amount of taxes owed

2. In order to be useful to managers, management accounting reports:A) Should be prepared according to Generally Accepted Accounting Principals

B) Should be prepared according to the stated Institute of Management Accounting guidelines

C) Should be prepared to meet the specific needs of decision makers

D) Should not be prepared prior to the end of a fiscal reporting period

3. A primary goal of managerial accounting is to provide information to investment managers who analyze a company's stock for external investors. True or FalseA) True

B) False

4. Financial accounting information is least useful in providing:A) Aggregate information about an organization's assets, obligations and performance

B) Information for internal decision makers

C) Information for stating corporate wide goals

D) Periodic reports for shareholders

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5. A decision to work closely with a limited number of suppliers for the purpose of ensuring that the proper materials are available at the optimal time is an example of:A) An activity cost driver

B) A batch level cost driver

C) An organizational cost driver

D) A structural cost driver

6. World-class companies must continuously struggle to improve performance in the dimension(s) of:A) Price/cost

B) Service

C) Quality

D) All of the above

7. _______________ are fundamental choices about the size and scope of operations and about technologies employed in delivering products or services to customers.A) Activities

B) Management systems

C) Organizational strategies

D) Structural cost drivers

8. To compete on the basis of price, the seller must most carefully manage:A) Cost

B) Product development

C) Service

D) Quality

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9. The process of ensuring that results agree with plans is referred to as:A) Controlling

B) Decision making

C) Organizing

D) Planning

10. The process of making the organization into a well-ordered whole is referred to as:A) Controlling.

B) Organizing

C) Motivating

D) Planning

11. Competition among companies normally takes place only on the dimension of price/cost. True or FalseA) True

B) False

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12. Classify the total costs of each of the following as variable, fixed, mixed, or step. Sales volume is the cost driver.

a. Salary of machine operator who is paid based on number of units produced on the machine - Variable cost

b. Keyboards purchased from a subcontract supplier in a computer assembly plant- Variable cost

c. Property taxes - Fixed cost

d. Salaries of quality inspectors when each inspector can evaluate a maximum of 500 units per day- Step cost

e. Annual salary for the vice president of manufacturing- Fixed cost

f. Electric power in a factory- Mixed cost

g. Raw materials used in production - Variable cost

h. Water consumed by the plant, which is based on a flat fee plus actual consumption- Mixed cost

i. Overhead costs in the factory for incidental components such as small screws and rivets. - Variable cost

j. Fire insurance on factory building - Fixed cost

13. The number of units sold is a better independent variable than square feet of all manufacturing facilities in estimating the cost function of a headphone manufacturer. True or FalseA) True

B) False

14. Fixed costs do not respond to:A) Capital expenditures made by the company

B) Changes in committed expenditures

C) Short-term changes in the amount of activity

D) Discretionary investments in the company

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15. Step costs:A) Are constant within certain ranges of activity but differ outside those ranges

of activityB) Are variable within narrowly defined ranges of activity, but constant over wider

ranges of activityC) Have no relation to number of units produced

D) Increase with each additional unit produced

16. The wheels on an automobile is classified as a variable cost with respect to the volume of cars produced in an automobile assembly plant. True or FalseA) True

B) False

17. The depreciation cost for a manufacturing building is an example of a committed fixed cost: True or FalseA) True

B) False

18. The determination of the mathematical relationship between activity level and cost is known as:A) Cost control

B) Cost estimation

C) Cost prediction

D) Regression analysis

19. The following procedure performed at the United States mint is NOT a batch level activity:A) Inspecting the first units produced to verify proper set-up

B) Movement of manufactured coins to finishing stations

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C) Setting up machinery for the stamping process

D) Stamping each individual coin

20. The following information pertains to Cutter Company's weekly activity and total costs:

Volume of Activity Total Cost110 units $1,400120 units $1,500130 units $1,600

What are Cutter's weekly fixed costs?A) $0

B) $200

C) $300

D) $1,600

21. Which of the following costs is best classified as fixed costs with respect to volume?A) Depreciation of a copy machine in the Human Resource Department

B) Electricity used to heat, light, and cool a hospital

C) Parts used in manufacturing digital cameras

D) Salaries of quality inspectors in a production facility

22. Facility level activities of an organization would NOT include:A) Building maintenance

B) Machine set up

C) Property taxes

D) The production supervisor's salary

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23. Fixed costs, variable costs, and revenues are all included in profitability analysis? True or FalseA) True

B) False

24. Cost-volume-profit analysis is most useful for determining costs. True or FalseA) True

B) False

25. A profit-Volume graph differs from a Cost-Volume-Profit graph in that:A) A profit-volume graph ignores the effect of cost on profit

B) The cost-volume-profit graph is not as practical because it can not be seen two-dimensionally

C) The cost-volume-profit graph shows revenues and costs separately

D) The profit-volume graph has only two lines: one for profit and one for volume

26. The contribution margin is:A) The difference between sales price and total variable cost

B) The difference between total sales and total cost of goods sold

C) The difference between total revenue and total variable cost

D) Total sales minus total cost of goods sold

27. Contribution margin is the difference between total revenue and total variable costs. True or FalseA) True

B) False

28. The break-even point is:A) The volume of activity where all of the variable costs, but none of the fixed costs

are recovered

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B) Where total fixed costs equal total variable costs

C) Where total revenues equal total costs

D) All of the above

29. Rozella's income statement is as follows:

Sales (10,000 units) $120,000Less variable costs – 48,000Contribution margin $72,000Less fixed costs – 24,000Net income $ 48,000

What is the contribution margin ratio?A) 167 percent

B) 30 percent

C) 40 percent

D) 60 percent

30. In a contribution income statement:A) All fixed costs are grouped together and subtracted from gross profit

B) Net income plus all fixed expenses equal the contribution margin

C) The contribution margin is computed as the difference between sales revenue and fixed costs

D) The gross margin is computed as the difference between sales revenue and the cost of goods sold

31. A basic assumption of the cost-volume-profit model is thatA) All costs can be accurately classified as either fixed or variable

B) Cost drivers can be organized into unit-level, batch level, product-level and facility-level factors

C) Higher volumes of product require lower prices

D) The mix of products changes over time

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32. Determine the unit break-even point, assuming fixed costs are $40,000 per period, variable costs are $6.00 per unit, and the sales price is $10.00 per unit.I have not been able to get an answer to match any of these multiple choice answers below, I sent an email asking for the numbers to be rechecked? thanksA) 5,000

B) 8,333

C) 12,500

D) 40,000

33. In a cost-volume-profit graph:A) An increase in unit variable costs would decrease the slope of the total costs line

B) An increase in the unit selling price would shift the break-even sales point to the left

C) An increase in the unit selling price would shift the break-even sales point to the right

D) The total revenues line crosses the horizontal axis at the break-even point

34. If a cost is identical under each alternative under consideration within a given decision context, the cost is considered:A) A sunk cost

B) An opportunity cost

C) An outlay cost

D) An irrelevant cost

35. An outlay cost is not relevant if it:A) Does not differ under the decision alternatives at hand

B) Is under $10,000 or if it is less than 2% of sales.

C) Not an opportunity cost

D) Sunk

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36. The Chat Company manufactures 2,500 telephones per year. The full manufacturing costs per telephone are as follows:

Direct materials $ 4Direct labor 16Variable manufacturing overhead 12Average fixed manufacturing overhead 10Total $42

The Electric Assembly Company has offered to sell Chat 2,500 telephones for $34 per unit. If Chat accepts the offer, $20,000 of fixed overhead will be eliminated. Chat should:A) Make the telephones; the savings is $5,000

B) Buy the telephones; the savings is $15,000

C) Buy the telephones; the savings is $20,000

D) Make the telephones; the savings is $15,000

37. Generally, the first of the following budgets to be prepared is the:A) Cash budget

B) Operations budget.

C) Sales budget

D) Purchases budget

38. Which of the following costs would be reported in the general and administrative expense budget?A) Factory overhead

B) Sales commissions

C) Direct manufacturing labor

D) Expenses incurred in an accounting department

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39. Evaluating plans and budgets in comparison with actual activities is directly related to:A) Cost control

B) Planning

C) Financial analysis

D) Control

40. Which of the following statements concerning an incremental budget is true?A) An incremental budget has revenues and expenditures assigned to specific

categories and items of responsibility.B) An incremental budget begins with the premise that every dollar of budgeted

expenditure must be justified.C) An incremental budget is often used where the relationships between inputs and

outputs are weak or nonexistent.D) An incremental budget has revenues and expenditures allocated to general areas.

41. Budgets improve ____________________ and ____________________.A) Communication; profits

B) Information; revenues

C) Revenues; profits

D) Communication; coordination

42. Which of the following statements concerning zero-based budgeting is true?A) Zero-based budgeting specifies that every line item must be rounded to the nearest

thousand dollar increment.B) Zero-based budgeting specifies that every expenditure must be justified.

C) Zero-based budgeting is a variation of the incremental approach.

D) Zero-based budgeting is mainly used to assess research and development departments and similar departments where the relationship between inputs and outputs is weakest.

43. Both investment center and cost center managers are responsible for managing:A) Revenues

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B) Net income

C) Costs

D) Contribution margins

44. Which of the following departments would NOT be classified as a profit center?A) The accounting department of a large corporation

B) The automotive division of a large corporation

C) The hardware department of a department store

D) The men's shoe department of a department store

45. In what way does a cost center differ from either an investment center or a profit center?A) Cost centers are a much less common component of current business organizations,

given the increased emphasis on value chain analysisB) A cost center is always smaller than either an investment center or a profit center

C) A cost center recognizes neither revenues nor computes income

D) Both A and B are correct

46. Martin Company is a two-division firm and has the following information available for this year:

Common fixed costs $400,000Direct fixed costs of Division A 100,000Direct fixed costs of Division B 200,000Sales revenue of Division A 400,000Sales revenue of Division B 600,000Variable costs of Division A 120,000Variable costs of Division B 180,000

What is Division A's contribution margin?A) $420,000

B) $220,000

C) $280,000

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D) $(120,000)

47. Segment reports are most often produced to coincide with:A) Internal value chains

B) Managerial lines of responsibility

C) Capital budget centers

D) None of the above

48. A precondition for effective capital budgeting requires having:A) A clearly defined mission

B) A well-defined business strategy

C) Long-range goals

D) All of the above

49. _______________ involve(s) investment of significant financial resources in projects to develop or introduce new products or services, to expand current production or service capacity, or to change current production or service facilities.A) Capital budgeting

B) Capital expenditures

C) Long range planning

D) Profitability analysis

50. Which of the following activities falls under the range of responsibility assumed by the capital budgeting committee?A) Analysis of major capital expenditure proposals

B) Approval of major capital expenditure proposals

C) Review of major capital expenditure proposals

D) All of the above

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