1. When comparing managerial accounting information with financial accounting information, it is expected that managerial accounting information would:

1. be based upon Generally Accepted Accounting Principles (GAAP).
2. emphasize information on the company as a whole.
3. present estimates of future financial operations.
4. include an analysis of historical cost.

2. A major difference between financial accounting and managerial accounting relates to differences in the users. Which of the following best describes a user of managerial accounting information for Smith Manufacturing Company?

1. Credit manager of a vendor for Smith Manufacturing
2. Purchasing manager for Smith Manufacturing
3. Bank manager reviewing a loan application from Smith Manufacturing
4. IRS divisional manager reviewing the tax return of Smith Manufacturing

3. Which of the following is not a component of product costs?

1. Cost of wood used in making a table top.
2. Cost of labor to assemble a table.
3. Cost of company president's salary.
4. Cost of electricity to operate machinery used to make a table.

4. Johnson Manufacturing incurred the following costs: $5,000 for materials, $4,000 for production labor, $3,500 depreciation of manufacturing equipment, $2,500 depreciation of office furniture, and $5,000 for sales salaries. Fifty units were produced. What is the average cost per unit?

1. $400
2. $350
3. $300
4. $250

5. Duncan Manufacturing Company began operations on January 1, 2011. During the year, it started and completed 50 units. Product costs for the period equal:

1. Acquired $30,000 cash by issuing common stock
2. Paid $10,000 for materials.
3. Paid $6,000 for administrative salaries.
4. Paid $8,000 for wages of production workers.
5. Depreciation of office furniture $2,500.
6. Depreciation of manufacturing equipment $3,500.
7. Collected $28,000 in cash for sales of 45 units.

1. $ 30,000.
2. $ 24,500.
3. $ 24,000.
4. $ 21,500.

6. Duncan Manufacturing Company began operations on January 1, 2011. During the year, it started and completed 50 units. The company has the following transactions:

1. Acquired $30,000 cash by issuing common stock.
2. Paid $10,000 for materials.
3. Paid $6,000 for administrative salaries.
4. Paid $8,000 for wages of production workers.
5. Depreciation of office furniture $2,500.
6. Depreciation of manufacturing equipment $3,500.
7. Collected $28,000 in cash for sales of 45 units.

What was gross margin for the period?

1. $2,150
2. $8,650
3. $28,000
4. $30,000

7. Duncan Manufacturing Company began operations on January 1, 2011. During the year, it started and completed 50 units. The company has the following transactions:

1. Acquired $30,000 cash by issuing common stock for cash
2. Paid $10,000 for materials.
3. Paid $6,000 for administrative salaries.
4. Paid $8,000 for wages of production workers.
5. Depreciation of office furniture $2,500.
6. Depreciation of manufacturing equipment $3,500.
7. Collected $28,000 in cash for sales of 45 units.

What is net income for the period?

1. $ 150
2. $1,500
3. $4,000
4. $4,250

8. Of the following costs which is most likely not assigned to the cost of the product through cost allocation:

1. Indirect material
2. Indirect labor
3. Direct labor
4. Depreciation

9. The Statement of Ethical Professional Practice published by the Institute of Management Accountants does not include a section on:

1. Competence
2. Confidentiality
3. Integrity
4. Independence

10. JIT Inventory is associated with all of the following except:

1. Reduced inventory holding costs.
2. Reduced product quality.
3. Improved efficiency.
4. Improved customer satisfaction

11. Due to an error in processing invoices, some product costs were treated as period costs. Which of the following indicates how this error effects the financial statements, assuming production exceeded sales during the period?

1. Stockholders' equity is overstated.
2. Ending inventory is understated.
3. Net income is overstated.
4. Gross margin is overstated.

12. The Sarbanes-Oxley Act:

1. Requires the signature of all managers on the financial statements.
2. Prohibits whistle-blowing by employees.
3. Prohibits employees from reporting misrepresentation.
4. Requires companies to establish a code of ethics.

13. The manager of TireWorks Manufacturing mistakenly classified a salesperson as a manufacturing employee. The employee was paid $30,000 during the year. As a result of this error.

1. Net income will be overstated by $30,000.
2. Total assets will be overstated by $30,000.
3. Total equity will increase by $30,000.
4. Total liabilities will increase by $30,000.

14. Total Quality Management (TQM) includes all of the following except:

1. A systematic problem-solving philosophy that encourages frontline workers to achieve zero defects.
2. An organizational commitment to achieving customer satisfaction
3. A commitment to top quality regardless of the cost.
4. Continuous improvement through an ongoing process through which employees learn to eliminate waste.

15. Manufacturing overhead costs:

1. Include all of the ingredients required to produce a finished product.
2. Are product costs and are recorded as an asset on the balance sheet.
3. Are expensed in the period in which they are incurred. treated similar to selling, general and administrative expenses in the financial statements.
4. Can be easily traced back to a specific product.

16. The salary of the vice president of finance would be considered a(n):

1. manufacturing cost.
2. product cost.
3. administrative cost.
4. selling expense.

17. The wages of materials handling personnel in a factory would usually be considered:

Indirect labor Manufacturing overhead

A) No Yes

B) Yes No

C) Yes Yes

D) No No

1. Answer A
2. Answer B
3. Answer C
4. Answer D

18. If the cost of goods manufactured is greater than the cost of goods sold, then:

1. work in process inventory has decreased during the period.
2. finished goods inventory has increased during the period.
3. total manufacturing costs must be greater than cost of goods manufactured.
4. finished goods inventory has decreased during the period.

19. Within the relevant range:

1. both total variable costs and total fixed costs will remain constant.
2. both total variable costs and total fixed costs fluctuate.
3. fixed costs per unit will remain constant and variable costs per unit will fluctuate.
4. variable costs per unit will remain constant and fixed costs per unit will fluctuate.

20. Which one of the following costs should not be considered an indirect cost of serving a particular customer at a Pizza Hut franchise?

1. The salary of the franchise's manager.
2. The cost of the tables and chairs used to furnish the restaurant.
3. The cost of the dough used to make the pizza that is ordered.
4. The cost of lighting and heating the restaurant.