Question
PART II: True-False Questions -- Circle T or F to indicate your answer. 1. T F Management accounting is concerned with how financial and nonfinancial
PART II: True-False Questions -- Circle T or F to indicate your answer. 1. T F Management accounting is concerned with how financial and nonfinancial information should be used for planning, controlling, decision making, and continuous improvement. 2. T F Accounting information is relevant if it is timely, comparable, and consistent. 3. T F Goal congruence results when all of the unit managers work for the best interest of their own units. 4. T F Four ethical standards established by IMA are competence, confidentiality, integrity, and efficiency. 5. T F If the blockchain systems became universal or standardized enough, audit firms could end up being able to conduct their audits remotely, with no actual auditors on site. 6. T F As production volume increases, the total cost per unit will decreases. 7. T F Using production volume as a cost object, salaries of factory manager are classified as fixed, costs for product costing. 8. T F Opportunity costs arise in making many business and personal decisions and therefore will appear in the operating expenses section of Income Statement. 9. T F Costs that have been incurred or committed are generally relevant for decision making. 10. T F Contribution margin = Sales - Variable costs 11. T F It is desirable to have a high level of operating leverage when sales begin to fall. 12. T F Product costs are expensed during the period when they are incurred. 13. T F Breakeven point is the point at which revenues are equal to total costs of goods sold and therefore contribution margin is zero. 14. T F Variable costing assigns only variable manufacturing costs to the product. 15. T F When inventory levels decrease, absorption costing will result in a higher operating income than variable costing. 16. T F In modern manufacturing environments, product variety and product complexity are major factors driving manufacturing overhead costs.
17. T F Too many cost pools, not enough cost pools, and wrong cost drivers are some of main causes for ABC failure in many companies. 18. T F In allocating joint costs, the split-off point is the point at which joint products become identifiable. 19. T F Customer profitability analysis based on the ABC information can identify profitable and unprofitable products. 20. T F A homogeneous cost pool is a group of overhead activities in which each cost component is consumed in roughly same proportion by each product. 21. T F In general, a single unit-based driver is used in preparing a functional-based budget. 22. T F Zero-based budget starts with the assumption that current activities will be automatically continued. 23. T F Studies have shown that up to 80% of total costs are committed once the design is completed and issued for manufacturing. 24. T F ABM combines ABC information and vlue-added analysis to make process improvements that will enhance efficiency and the company's profit. 25. T F The financial accounting income statement is prepared using resources used, not resources supplied. 26. T F The theoretical underpinning of performance evaluation is the agency theory in economics that describes the relationship between a principal and an agent. 27. T F With a balanced scorecard fully developed, the performance measures of all perspectives will be linked together on a cause-and-effect basis. 28. T F Economic Value Added accounts for the opportunity cost of all capital invested in the company and represents estimate of the true economic profit that exceeds or falls short of the required minimum rate of return that shareholders and lenders could get by investing in other securities of comparable risk. 29. T F An increase in prevention and internal failure costs would cause defects to decrease. 30. T F Net Present Value Index is an application of the techniques in utilizing constrained resources.
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