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ACCT 2020 Final Exam

If manufacturing overhead has been under-allocated during the? period, then which of the following is? true?
The jobs produced during the period have been under-costed.
In the basic flow of inventory through a manufacturing? system, which of the following occurs second in the job costing? system?
Work in process inventory
The? ________ is the hourly price charged to clients for professional labor.
Billing Rate
Which of the following items could be an example of a cost? object?
The Accounting Department, An international plant, and a manufacturing plant.
?A(n) ________ cost is one whose total amount changes in direct proportion to a change in volume.
Variable
Which statement describes direct materials in a manufacturing? setting?
Direct materials are used to determine total inventoriable product costs.
When making a decision to buy a new? computer, all of the following should be considered except
Sunk Costs
Which of the following is an example of an industry that would use a process costing rather than a job costing system?
Coca-Cola
To forecast total costs at a given level of? production, management would use which of the following? calculations?
Total fixed cost? + (variable cost per unit times× total units? predicted)
A product support hotline would be considered
Customer Service
Which of the following is not a way in which management can use job cost? information?
Determining the balance in raw materials inventory
The first three steps to allocating manufacturing overhead are taken before the year begins and include all of the following
1. estimating total manufacturing overhead costs for the coming year.
2. calculating the predetermined manufacturing overhead rate.
3. selecting an allocation base and estimating the total amount that will be used during the year.
A? ________ company’s balance sheet reports just one inventory called? “Inventory.”
Merchandising
The cost of testing incoming raw materials from a supplier would be classified as? a(n) ________ cost.
Appraisal
Using account? analysis, what type of cost is the monthly cost of a storage locker used for holding old? records?
Fixed
When using the high-low ?method, what is the correct order of the following three? steps?
1. Find The Slope
2. Find The Vertical Intercept
3. Write The Cost Equation
Which of the following is a result of cost? distortion?
Overcosting of some products and undercosting of other products
On a Cost of Quality? report, which of the following cost items should be classified as an internal failure? cost?
Net cost of scrap
Manufacturing overhead? (consisting of costs like factory? rent, factory? utilities, factory? maintenance, and other similar? costs) is usually what type of? cost?
Mixed
When absorption costing is used and management bonuses are related to operating? income, managers are more likely to
Increase inventory levels
ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on
Types of activities used by the products and the extent to which the activities are used
The use of which of the following costing systems is most likely to reduce cost distortion to a? minimum?
Activity – Based costing
Which of the following costs is an example of a fixed? cost?
Salary of plant manager
The benefits of adopting? ABC/ABM are higher for companies in competitive markets because
ABM can pinpoint opportunities for cost savings.
Research and development would most likely be classified as a? ________ cost.
Product level
Four basic steps are used in an ABC system. List the proper order of these? steps
1. Identify the primary activities and estimate a total cost pool for each.
2. Select an allocation base for each activity.
3. Calculate an activity cost allocation rate for each activity.
4. Allocate the costs to the cost object using the activity cost allocation rates.
In deciding whether to? outsource, managers must consider
Relevant fixed and variable components.
Fixed costs that continue to exist even after a product line is discontinued are called
Unavoidable fixed costs
To find a? firm’s operating leverage factor at a given level of? sales, you
Divide the contribution margin by operating income.
Fixed costs that may be avoided in the future are referred to as
Relevant costs
Which of the following describes the products and services of companies that are price??setters?
They tend to be unique.
Which of the following is irrelevant when making a? decision?
The cost of an asset that the company is considering replacing
By multiplying? ________ and then subtracting fixed? costs, managers can quickly forecast the operating income.
projected sales revenue by the contribution margin ratio
CVP analysis assumes all of the following
1. a change in volume is the only factor that affects costs.
2. the mix of products will not change.
3. revenues are linear throughout the relevant range.
The factor that restricts production or sale of a product is which of the? following?
Constraint
Contribution margin ratio is computed by
dividing contribution margin by sales revenue.
Managers should consider? ________ when making any sort of decision.
revenues that differ among alternatives
A manager should always reject a special order if
the special order price is less than the variable costs of the order.
All of the following are responsibility centers:
Profit, Cost, and Investment centers
The convenience store that is responsible for its own? revenues, costs, and is owned by a national convenience store chain may be classified as? a(n)
Profit Center
The four perspectives of the balanced scorecard include all of the following
1. Financial
2. Customer
3. Internal Process
4. The learning and growth
The? ________ is a plan that shows the units to be sold and the projected selling price and is also the starting point in the budgeting process.
Sales Budget
The? ________ is the optimum budget to managers that plan revenues and expenses at different sales volumes.
The Flexible Budget
Which of the following budgets is a major part of the master budget and it focuses on the income statement and its supporting? schedules?
Operating
A rolling budget is a budget that
is continuously? updated, so that the next 12 months of operations are always budgeted.
Which of the following items is a component of a cash payments? budget?
Cash Dividends
In which of the following company types does a manager use a sales? budget?
Manufacturing, Merchandising, and Service
The number of warranty claims may be an example of the
Internal Business Perspective
Management by? ________ is the practice that directs executive attention to large budget variances.
Exception
Which of the following budgets usually shows separate sections for fixed and variable? costs?
Operating expenses budget and manufacturing overhead budget
How does depreciation affect the calculation of a? project’s payback? period?
Depreciation does not affect the payback calculation.
At lean? companies, employees tend to be multi-skilled and crosstrained to perform a number of duties. These workers are held in high-esteem by management and are considered to be part of a team? effort, rather than a labor force to be controlled.? Consequently, this
decreases the importance of direct labor standards
?A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.
Standard Cost
Which of the following items would be considered a capital? asset?
Construction of a new store building
The time value of money depends on which of the following? factors?
1. Interest rate
2. Principal Amount
3. Number of Periods
The internal rate of return is which of the? following?
The interest rate that makes the NPV of an investment equal to zero
A? company’s purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing? department?
Direct materials price variance
Your hard work in college paid? off, quite? literally, and you received a graduate assistantship for your MBA program. The assistantship pays a stipend of $14,000 at the end of each of the next 2 years. Using an average discount rate of 22?%, the future value of your assistantship can be calculated by
PV? = $14,000 ?(Annuity FV? factor, i? = 22?%, n? = 2)
A company would consider all of the following in computing the IRR of an? investmen
1. Present Value Factors
2. predicted cash inflows over the life of the project.
3. the cost of the project.
You have been awarded a scholarship that will pay you $600 per semester at the end of each of the next 8 semesters that you earn a GPA of 3.5 or better. Using a discount rate of 55?% per? semester, which of the following is the correct calculation for determining the present value of the? scholarship?
PV? = $600 times× ?(Annuity PV? factor, i ?= 55%, n? = 8)
Operating income formula
Sales – cogs – operating expenses
Gross profit formula
Revenue – cogs
Variable cost
change in total as the volume goes up or down
Fixed cost
stays constant in total cost over a wide range of activity levels
Process costing
mass production, similar items, total costs are averaged over all units
Job costing
unique, custom products or small batches, total costs are accumulated by jobs
Margin of safety
the excess of current/expected sales over breakeven sales
Operating leverage
The relative amount of fixed and variable costs that make up total cost
Irrelevant cost
incurred/earned in the past & cannot be changed
Sunk costs
costs that do not differ between alternatives
Flex budget
Actual units x Sales price

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