Which of the following is true of Managerial Accounting?

a.

Complies with Securities and Exchange Commission rules and regulations.

b.

Prepares general-purpose reports for people outside an organization.

c.

Uses cost-benefit analysis to determine the amount of detail presented.

d.

Presents summary historical data in compliance with generally accepted accounting principles.

2.The best example of using managerial accounting information to help organizations succeed includes which of the following?

a.

processing travel vouchers.

b.

tracking employee time and attendance.

c.

reconciling petty cash balances.

d.

implementing strategies.

3.Which of the following accurately describes the managerial accountants' professional environment and ethical responsibilities?

a.

Stockholders have an ethical responsibility to report accurately even when their own compensation suffers.

b.

Financial analysts have an ethical responsibility to report accurately even when their own compensation suffers.

c.

Managers have an ethical responsibility to report accurately even when their own compensation suffers.

d.

Managers do not have an ethical responsibility to report accurately even when their own compensation suffers.

4.Which of the following is a cost that does not change in total as the level of activity changes?

a.

fixed cost.

b.

direct cost.

c.

indirect cost.

d.

variable cost.

5.Fixed costs expressed on a per unit basis

a.

will react inversely with changes in activity.

b.

will react directly with changes in activity.

c.

are not affected by activity.

d.

should be ignored in making decisions since they cannot change over the long run.

6.What is the study of the need for activities and whether they are operating efficiently called?

a.

direct and indirect cost management.

b.

variable and fixed cost management.

c.

total quality management.

d.

activity-based management.

7.Which of the following statements is true concerning a normalized overhead rate?

a.

A normalized overhead rate should be used whenever the firm does not prepare a master budget.

b.

A normalized overhead rate is employed so that wide fluctuations and variations in the level of production will not influence unit costs.

c.

A normalized overhead rate is used by firms that have a normal production schedule.

d.

A normalized overhead rate results in distorting the income figures of the firm.

8.Which of the following represents a reason management would use JIT methods?

a.

To keep large amounts of materials on hand for production.

b.

To provide finished goods just in time for sale.

c.

To hide defective units.

d.

To prevent laying off workers during slow times.

9.The benefits of a just-in-time system usually include which of the following?

a.

elimination of non-value-added activities.

b.

increase in inventory levels, thus guarding against stock-outs.

c.

increased time spent valuating inventories.

d.

decrease in the number of deliveries required to maintain production.

10.What modern production methodology emphasizes strengthening the weakest link of the company to improve operations to become more efficient and effective?

a.

Theory of constraints.

b.

Just-in-time

c.

Total quality

d.

Total quality management.

11.What recent management innovation uses such performance measures as product reliability and service delivery, as well as traditional measures of profitability?

a.

Just-in-time production

b.

Economic order quantities

c.

Total quality management

d.

Strategic cost analysis systems

12.Ethical standards that comprise the Institute of Management Accountant's Code of Ethics do not include which of the following?

a.

competence.

b.

collegiality.

c.

integrity.

d.

objectivity.

13.All of the following are provisions of the Sarbanes-Oxley Act except:

a.

The law states that the CEO and the CFO are responsible for signing their company's financial statements and indicating that the financial statements do not omit material information.

b.

The law requires that lower-level managers submit to lie-detector tests if fraud is suspected.

c.

The law requires the company's auditor must attest to management's assessment of internal controls.

d.

The law created the Public Company Accounting Oversight Board (PCAOB), which oversees auditors of public companies.

14.Which of the following statements is true concerning a normalized overhead rate?

a.

A normalized overhead rate is employed so that wide fluctuations and variations in the level of production will not influence unit costs.

b.

A normalized overhead rate should be used whenever the firm does not prepare a master budget.

c.

A normalized overhead rate is used by firms that have a normal production schedule.

d.

A normalized overhead rate results in distorting the income figures of the firm.

15.Which of the following is not a characteristic of an effective cost system?

a.

Decision focus

b.

Different costs for different purposes

c.

Cost-benefit test

d.

Generally accepted accounting principles compliant

16.Which of the following is a deficiency of process costing?

a.

In process costing, decision makers are informed about the average cost of the units, but not the actual cost of each particular unit or job.

b.

In process costing, firms accumulate costs in a department or production process during the accounting period, then spread those costs evenly over the units produced that period, computing an average unit cost.

c.

Process costing does not require as much record keeping as job costing system because it does not require keeping track of the cost of each job.

d.

None of the answers is a deficiency.

17.Activity-based management starts with activity analysis. The four steps in activity analysis are:

1.

Chart, from start to finish, the activities used to complete the product or service

2.

Classify activities as value-added or non-value-added

3.

Eliminate non-value-added activities

4.

Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities.

The value-added activities identified in Step 2 make up the

a.

low cost solution.

b.

critical path.

c.

value chain.

d.

optimal solution.

18.Which of the following is an example of a non-value-added cost?

a.

Storage

b.

Moving items

c.

Waiting for work

d.

All of the above are non-value-added costs.

19.Activity-based management can reduce customer response time by all of the following, except for

a.

identifying those activities that consume the most resources.

b.

making activities more efficient.

c.

identifying non-value added activities.

d.

identifying fraudulent activities.

20.Which statement best describes an activity center?

a.

An organizational command post from which management controls activity.

b.

A unit of the organization that performs a set of tasks.

c.

A think-tank where managers select value-added activities.

d.

A part of the organization that has been designated for in depth study of specific activities.

21. In comparison to an activity-based costing system, traditional allocation systems would most likely distort which of the following costs?

a.

product costs.

b.

activity costs.

c.

department costs.

d.

plant costs.

22.Which of the following would be considered the single, biggest obstacle to implementing activity-based management in an organization?

a.

Lower-level employee resistance.

b.

Middle-level employee resistance.

c.

Top-level employee resistance.

d.

Customer resistance.

23.All of the following are ways in which IFRS may relate to managerial accounting except:

a.

IFRS governs managerial accounting methods.

b.

Managerial accountants usually do not use LIFO for internal reports, so managerial accounting reports are more likely to agree with IFRS than with U.S. GAAP, if the U.S. GAAP reports use LIFO.

c.

If the current IFRS approach of capitalizing R & D costs as assets prevails in the United States, then we are likely to see development costs capitalized for managerial reports.

d.

The accounting information that managers use in making decisions and evaluating performance need not comply with IFRS.

24.Significant differences between the "traditional view" of quality and the emerging "quality-based view" relate to which of the following?

a.

quality production, inspections, causes of defects, standards, purchasing, and customer focus.

b.

financial, internal business process, learning and growth, customer.

c.

total quality, smooth production flow, purchasing quality materials, well trained and flexible workforce, short customer-response times, backlog of orders.

d.

prevention costs, appraisal costs, internal failure costs, and external failure costs.

25.Which of the following would be considered a capacity-sustaining activity in the product cost hierarchy?

a.

Plant management, building depreciation, rent, heating and lighting, market research, and customer records.

b.

Market research, customer records, and promotion.

c.

Machine setups and quality inspections.

d.

Energy to run machines and direct materials.

26.Which of the following would be considered the single, biggest obstacle to implementing activity-based management in an organization?

a.

Lower-level employee resistance.

b.

Middle-level employee resistance.

c.

Top-level employee resistance.

d.

Customer resistance.

27.Which of the following prestigious, internationally renowned awards was created in Japan?

a.

The Baldrige Award.

b.

The Deming Prize.

c.

The ISO 9000 Award.

d.

The AMA Prize.

28.Significant differences between the "traditional view" of quality and the emerging "quality-based view" relate to which of the following?

a.

quality production, inspections, causes of defects, standards, purchasing, and customer focus.

b.

financial, internal business process, learning and growth, customer.

c.

total quality, smooth production flow, purchasing quality materials, well trained and flexible workforce, short customer-response times, backlog of orders.

d.

prevention costs, appraisal costs, internal failure costs, and external failure costs.

29.What is the traditional view of quality?

a.

There is never a trade-off between the cost of improving quality and maintaining the status quo.

b.

It may be cheaper to produce lower quality goods and have a minimum level of defective goods.

c.

Quality can and should always be improved.

d.

It is generally more costly to produce lower quality goods and have a minimum level of defective goods.

30.Which of the following is an example of performance measures used to measure customer satisfaction with quality?

a.

Number of Customers

b.

Customer satisfaction surveys

c.

Amount of purchases per customer

d.

Number of defective products per 1000 units produced

31.The critical success factor(s) that relate to meeting customer requirements do not include

a.

service.

b.

quality.

c.

quantity.

d.

cost.

32.Which of the following is an example of appraisal costs?

a.

Field testing

b.

Inspection of incoming materials

c.

Warranty repairs

d.

Quality engineering

33.Which of the following is an example of the costs incurred by a tire company for replacing defective tires?

a.

prevention costs.

b.

appraisal costs.

c.

internal failure costs.

d.

external failure costs.

34.Which of the following is an example of performance measures used to measure customer satisfaction with quality?

a.

Number of Customers

b.

Customer satisfaction surveys

c.

Amount of purchases per customer

d.

Number of defective products per 1000 units produced

35.Which of the following are the two costs of failing to control quality?

a.

prevention costs and appraisal costs.

b.

appraisal costs and internal failure.

c.

internal failure and external failure costs.

d.

prevention costs and external failure costs.

36.A current theme in business today is that "quality is free." Which of the following statements best exemplifies that theme?

a.

Cost-benefit analyses is the primary focus in improving quality.

b.

Quality is always free in the short-run.

c.

Short-run benefits will always outweigh the costs of improving quality.

d.

If quality is built into the product, the resulting benefits far outweigh the costs of improving quality.

37.Management tools which provide diagnostic signals and identify potential causes of a problem(s) are called

a.

control charts.

b.

cause-and-effect charts.

c.

Pareto charts.

d.

All of the answers are correct.

38.Management tools that depict variations in a process and its behavior over time, help management distinguish between random or routine variations in quality, and direct attention to variations that management should investigate are called

a.

cause-and-effect analyses.

b.

Pareto charts.

c.

control charts.

d.

All of the answers are correct.

39.Which of the following is the performance evaluation tool that measures performance by integrating financial measures, internal business process measures, learning and growth measures, and customer measures?

a.

PERT chart.

b.

balanced scorecard.

c.

Pareto chart.

d.

control chart.

40.Which of the following statements is true if a company overstates the ending balance of inventory?

a.

Cost of Goods Sold and profits will be overstated and Gross Margin will be understated.

b.

Cost of Goods Sold, Gross Margin, and profits will be understated.

c.

Cost of Goods Sold, Gross Margin, and profits will be overstated.

d.

Cost of Goods Sold will be understated, Gross Margin and profits will be overstated.