Part 1 Review:

1.Which of the following is NOT one of the "three pillars of Managerial Accounting" as discussed in

the textbook?

a.Budgetingc.Decision making

b.Controllingd.Planning

2.Which type of motivation involves "Satisfaction from a sense of accomplishment"jQuery22407373893877739154_1602710650656

a.Absolute motivation

b.Extrinsic motivation

c.Intrinsic motivation

d.Intricate motivation

3.Which of the following costs can NOT be easily and conveniently traced to a cost object?

a.Direct Labor cost

b.Indirect cost

c.Direct materials

d.Direct cost

e.None of the above.All can be easily traced.

4.Which of the following equations represents Total Cost:

VC is total variable cost;FC is total fixed cost;Q is total quantity [i.e. total units];

UnitVC is variable cost per unit;UnitFC is fixed cost per unit;* is multiplication

a.Total Cost =FC * Q+VC

b.Total Cost =FC * Q+UnitVC * Q

c.Total Cost =FC+UnitVC * Q

d.Total Cost = UnitFC * FC+UnitVC * VC

5.Consider the following costs and cost objects:

CostCost Object

I.Heating the hospitalThe pediatric department

II.The wages of the pediatric nursesThe pediatric department

a.Cost Iis a direct cost;Cost II is a direct cost.

b.Cost I is a direct cost;Cost II is an indirect cost.

c.Cost Iis an indirect cost;Cost II is a direct cost.

d.Cost I is an indirect cost;Cost II is an indirect cost.

6.Consider the following costs:

I.Rent on equipment used in the factory.

II.Salary of production Supervisor.

a.Cost I is a period cost;Cost II is a period cost.

b.Cost I is a period cost;Cost II is a product cost.

c.Cost I is a product cost;Cost II is a period cost.

d.Cost I is a product cost;Cost II is a product cost.

7.Consider the following statements:

I.If the activity level increases, then one would expect the fixed cost per unit

To increase as well.

II.Conversion costs equal product costs less Manufacturing Overhead cost.

a.I is true;II is trueNot a quiz question

b.I is true;II is false

c.I is false; II is true

d.I is false; II is false

8.Which of the following would most likely NOT be included as manufacturing overhead in a furniture

Factory?

a.The cost of the glue in a chair.

b.The amount paid to the individual who glues the chair.

c.The electricity used in cutting materials.

d.All would be included in manufacturing overhead.

e.None of the above

9.Company A has a total contribution margin of $75,000 and Fixed Expenses of $55,000 for an

income of $20,000.

Company B has a total contribution margin of $25,000 and Fixed Expenses of $5,000 for an income

of $20,000.

I. Which has a larger Degree of Operating Leverage?

II. If both companies increase sales by $100, which company will have the higher amount of income?

a.Company A has the larger Degree of Operating Leverage;Company A will have the higher income.

b.Company A has the larger Degree of Operating Leverage;Company B will have the higher income.

c.Company B has the larger Degree of Operating Leverage;Company A will have the higher income.

d.Company B has the larger Degree of Operating Leverage;Company B will have the higher income.

10.A company believes that if it spends $25,000 on an advertising campaign for one of its segments,

there will be a 20% increment in the segment's sales.The contribution margin for the segment is

60% of sales.Sales for the segment are expected to be $400,000 before the advertising campaign.

The relationship of costs to sales is expected to remain the same. The incremental net operating

income if the advertising campaign is undertaken is expected to be:

a.$23,000c. $ 9,000

b.$18,000d. $ 9,000 loss

e.None of the above.The answer is ____

11.The company reaches a Break-even point with total sales of $150,000;

total variable expenses of $120,000; and total fixed expenses of $30,000.

If Total Budgeted or Actual Sales reach $180,000, then the Margin of Safety in Dollars is:

a.$ 20,000c.$40,000

b.30,000d.60,000

e.None of the above.The answer is _____.

12."Dollar sales to breakeven" equal

a.Variable costs divided by Unit contribution margin.

b.Fixed costs divided by Unit contribution margin.

c.Fixed costs divided by Contribution margin ratio.

d.Profit divided by Unit contribution margin.

Questions 13 and 14 are based on the following information.

A club is planning an event.The following costs are expected:

Dinner per person$22

Gift items per person3

Band$2,000

Hall rental900

Tickets and advertising700

The club would like to charge $35 per person for the evening's activities.

13.The breakeven point for the activity in terms of how many tickets need be sold would be:

a.180c.360

b.260d.420

e.None of the above.The answer is _____

14.Assume that only 300 people will buy tickets.What price per ticket must be charged in order to

breakeven?

a.$33

b.37

c.41

d.43

e.None of the above.The answer is _____

15.PAX Corporation, a company that produces and sells a single product, has provided the

following information for the month:Sales [5,000 units] $205,000; Variable expenses $125,000;

fixed expenses $62,400.If relationships remain the same and 6,000 units are sold next month,

the net operating income for next month should be closest to:

a.$29,400

b.33,600

c.34,600

d.39,300

e.None of the above.The answer is _______.

16.A job-order cost sheet is used to accumulate costs for a particular job.Which of the following

would typically be entered on a Job-order cost sheet:

a.Ending Inventory of materials used on the job.

b.Actual salary of employee doing the job.

c.Electricity costs to power production equipment.

d.All of the above

17.Job-order Costing is particularly useful in assigning costs to jobs or activities with the

Characteristics of a project.Which of the following companies would be LEAST likely to use

Job-order costing:

a.A marketing firm hired to do marketing campaign.

b.A CPA firm hired to audit.

c.A management firm hired as a consultant

d.A manufacturing firm producing a multiple products

18.The Corporation has provided the following estimated costs for next year:

Direct materials

$

1,000

Direct labor

$

3,000

Sales commissions

$

4,000

Salary of production supervisor

$

2,000

Indirect materials

$

400

Advertising expense

$

800

Electricity costs to power production equipment$600

The total amount of estimated manufacturing overhead would be:

a.$ 1,800

b.$ 3,000

c.$ 3,200

d. $11,800

e.None of the above.The answer is _____

19.A company had

Estimated Machine Hours 150,000 hours

Actual Machine Hours 147,000 hours

ACTUAL Manufacturing Overhead of $1,525,000;

Predetermined Overhead Rate of $10 per Machine Hour

This would result in which of the following

a.Manufacturing Overhead Underapplied$25,000

b.Manufacturing Overhead Overapplied$25,000

c.Manufacturing Overhead Underapplied$55,000

d.Manufacturing Overhead Overapplied$55,000

e.None of the above.The answer is _____.

20.A company's uses MACHINE Hours in calculating its Predetermined Overhead Rate.

The calculation would be:

a.ActualTotal Manufacturing Costs DIVIDED BY ActualDirect Labor Hours

b.ActualTotal Manufacturing Costs DIVIDED BY Estimated Direct Labor Hours

c.Estimated Total Manufacturing Costs DIVIDED BY ActualMachine Hours

d.Estimated Total Manufacturing Costs DIVIDED BY Estimated Machine Hours

21.Consider the following statements:

I.Under Variable Costing Fixed manufacturing costs are treated as a Period expense.

II.A company produces more than it sells during the period.If the company uses Absorption

Costing its profit generally will be larger than if the company uses Variable Costing

a.I is true;II is true

b.I is true;II is false

c.I is false; II is true

d.I is false; II is false

22.A company has two segments:

a.The Company's break-even point will be lower than the sum of the segment break-even points.

b.The Company's break-even point will be the same as the sum of the segment break-even points.c.The Company's break-even point will be greater than the sum of the segment break-even points.

23. The following data have been collected for four different cost items.

Cost Item

Cost at

100 units

Cost at

140 units

W

$

8,000

$

10,560

X

$

5,000

$

5,000

Y

$

6,500

$

9,100

Z

$

6,700

$

8,580

Which of the following classifications of these cost items by cost behavior is correct?

Cost W

Cost X

Cost Y

Cost Z

a.

Variable

Fixed

Mixed

variable

b.

Mixed

Fixed

Variable

mixed

c.

Variable

Fixed

Variable

variable

d.

Mixed

Fixed

Mixed

mixed

24.Consider the following statement:

Capital budgeting is used to describe how managers plan significant investments in projects that

have long-term implications.

a.Statement is TRUE.

b.Statement is FALSE

25.Consider the following statements:

I.If you give up [i.e. loan] one hamburger today and receive three hamburgers back tomorrow,

You would earn [i.e. interest] two hamburgers.

II.For the typical investor, receiving less in the future than what one gives up today would be a good

investment.

a.I is true;II is true.

b.I is true;II is false.

d.I is false;II is true.

c.I is false;II is false.

26.The definition "The process of establishing goals and specifying how to achieve them" refers to

a.Controlling

b.Decision making

c.Managerial Accounting

d.Planning

27.The definition "The potential benefit that is given up when one alternative is selected over another"

refers to:

a.Direct cost.

b.Opportunity cost.

c.Prime cost.

d.Sunk cost

28.The definition "Any part or activity of an organization about which managers seek cost, revenue, or

profit data" refers to:

a.Section

b.Segment.

c.Unit.

d.Utility

29.The definition "A form that records the direct materials, direct labor, and manufacturing overhead

cost charged to a job"refers to:

a.Job cost sheet

b.Job-order costing

c.Job-order record

d.Work-order record

30.Consider the following statements:

I.Reynolds Enterprises sells a single product for $25.The variable expense per unit is $20 and the

fixed expense per unit is $5 at the current level of sales.The company's net operating income

would increase by $5 if one more unit is sold.

II.On a cost-volume-profit graph, the revenue line will be shown above the total expense line for

any activity level above the break-even point.

a.I is true;II is true

b.I is true;II is false

c.I is false;II is true

d.I is false;II is false

31.Ofarrell Corporation, a company that produces and sells a single product, has provided the following

information for the month:Sales [5,000 units] $205,000; Variable expenses $125,000;

fixed expenses $62,400.If relationships remain the same and 7,000 units are sold next month,

the net operating income for next month should be closest to:

a.$29,400c.$46,800

b.$33,000d. $49,600

e.None of the above.The answer is _______.

32.Consider the following statements:

I.Predetermined overhead rates are based on estimated cost and estimated activity data.

II.The cost of a completed job in a job-order costing system typically consists of the actual direct

materials cost of the job, the actual direct labor cost of the job, and the manufacturing overhead

cost applied to the job.

a.I is true;II is true

b.I is true;II is false

c.I is false;II is true

d.I is false;II is false

33.Parker Corporation has a job-order costing system and uses a predetermined overhead rate based

on direct labor Hours to apply manufacturing overhead to jobs.At the beginning of the year,

manufacturing overhead and direct labor Hours were estimated at $50,000 and 20,000 hours,

respectively.In June, Job #461 was completed.Material costs on the job totaled $3,250 and direct

labor costs totaled $2,000 at $5 per hour.If Job #461 contained 100 units, the unit product cost on

the completed job cost sheet would be:

a.$61.75c.$63.10

b.$62.50d.$55.00

e.None of the above.The answer is ______.