2. Managerial accounting A. is primarily directed at external users of accounting information. B. is required by taxing authorities such as the IRS. C. must follow GAAP. D. is optional.

3. Which of the following is most likely to make use of Spruce Companys managerial accounting information? A. the IRS B. an individual contemplating an investment in Spruce Company C. a company that is one of Spruces main competitors D. the production manager of Spruces plant in Minnesota

4. Ice Box Company manufactures refrigerators. Which of the following items is most likely to be an indirect material cost for Ice Box Company?

A. Factory supervisors salary

B. Lubricant for refrigerator door hinges

C. Glass shelves for the refrigerators

D. Refrigerator motors

5. Which of the following accounts does not appear on the balance sheet?

A. Raw Materials Inventory

B. Finished Goods Inventory

C. Work in Process Inventory

D. Cost of Goods Manufactured

6. The balance in the Finished Goods Inventory account on July 1, 2007, was

$34,000 and the June 30, 2008, balance in the Finished Goods Inventory account was $41,000. If the cost of goods manufactured was $200,000, what was the cost of goods sold?

A. $285,000

B. $193,000

C. $207,000

D. $278,000

7. Which of the following describes the differences between job-order and process costing? A. Job-order costing is used in financial accounting while process costing is used in managerial accounting.

B. Job-order costing can only be used by manufacturers; service enterprises must use process costing.

C. Job-order costing is voluntary while process costing is mandatory.

D. Job-order costing traces costs to jobs while process costing traces costs to departments and averages the costs among the units worked on during the period.

8. Which of the following costs is not added to the Work in Process account in a process costing system?

A. manufacturing overhead

B. direct materials

C. direct labor

D. advertising

9. The equivalent units are calculated by:

A. taking the units needed to complete the beginning inventory, adding the units started and taking the equivalent units in ending inventory.

B. taking the units completed plus the equivalent units in ending inventory.

C. taking the total units to account for and subtracting the equivalent units in beginning inventory.

D. taking the units started plus the equivalent units in ending inventory.

10. Department A began the period with 45,000 units. During the period the department received another 30,000 units from the prior department and completed 60,000 units during the period. The remaining units were 75% complete. The amount of equivalent units in Department As work-in-process inventory at the end of the period is:

A. 30,000.

B. 22,500.

C. 15,000.

D. 11,250.

11. Which of the following costs is least likely to be a variable cost?

A. sales commissions

B. direct labor

C. indirect materials

D. supervisory salaries