Chapter 1. Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports. T 2. Managerial accounting information generally pertains to an entity as a whole and is highly aggregated. F 3. Managerial accounting applies to all forms of business organizations. Applies to all forms of business organizations. T 4. Managerial accounting internal reports are prepared more frequently than are classified financial statements. T 5. Managerial accounting is primarily concerned with managers and external users. F 6. Managerial accounting applies to each of the following types of businesses except\ a. service firms b. merchandising firms. c. manufacturing firms. d. Managerial accounting applies to all types of firms. 7. Managerial accounting information is generally prepared for a. stockholders. b. creditors. c. managers. d. regulatory agencies. 8. Managerial accounting information a. pertains to the entity as a whole and is highly aggregated. b. pertains to subunits of the entity and may be very detailed. c. is prepared only once a year. d. is constrained by the requirements of generally accepted accounting principles. 9. The major reporting standard for presenting managerial accounting information is a. relevance. b. generally accepted accounting principles. c. the cost principle. d. the current tax law. 10. Managerial accounting is also called a. management accounting b. controlling. c. analytical accounting. d. inside reporting. 11. Managerial accounting does not encompass a. calculating product cost. b. calculating earnings per share. c. determining cost behavior. d. profit planning 12. Managerial accounting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. 13. 14. 15. 16. 17. 1. 2. 3. 4. 5. 6. 7. 8. 9. d. all of these. Financial statements for external users can be described as a. user-specific. b. general-purpose. c. special-purpose. d. managerial reports. Managerial accounting reports can be described a a. general-purpose. b. macro-reports. c. special-purpose. d. classified financial statements. A distinguishing feature of managerial accounting is a. external users. b. general-purpose reports. c. very detailed reports. d. quarterly and annual reports. Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? a. Balanced scorecard b. Just-in-time inventory c. Activity-based costing d. Total quality management Financial and managerial accounting are similar in that both a. have the same primary users. b. produce general-purpose reports. c. have reports that are prepared quarterly and annually. d. deal with the economic events of an enterprise. Chapter 15 A job order cost system is most appropriate when a large volume of uniform products are produced.F The perpetual inventory method cannot be used in a job order cost system. F A job order cost system and a process cost system are two alternative methods for valuing inventories. T A job order cost system identifies costs with a particular job rather than with a set time period. T A company may use either a job order cost system or a process cost system, but not both. F Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used. F Accumulating and assigning manufacturing costs are two important activities in a job order cost system. T Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory. T In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets. T 10. A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete. F 11. The two basic types of cost accounting systems are a. job order and job accumulation systems. b. job order and process cost systems. c. process cost and batch systems. d. job order and batch systems. 12. Which of the following would be accounted for using a job order cost system? a. The production of personal computers. b. The production of automobiles. c. The refining of petroleum. d. The construction of a new campus building. 13. An important feature of a job order cost system is that each job a. must be similar to previous jobs completed. b. has its own distinguishing characteristics. c. must be completed before a new job is accepted. d. consists of one unit of output. 14. The flow of costs in a job order cost system a. involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. b. cannot be measured until all jobs are complete. c. measures product costs for a set time period. d. generally follows a LIFO cost flow assumption. 15. In a job order cost accounting system, the Raw Materials Inventory account is a. an expense. b. a control account. c. not used. d. a period cost. 16. Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15,000, and the ending balance is $9,000. During the year, the company completed 25 machines. How much is the cost per machine? (18000+9000+6000+15000-9000)/25 a. $1,080 b. $1,560 c. $1,320 d. $1,920 17. In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to a. Cost of Goods Manufactured. b. Finished Goods Inventory. c. Work in Process Inventory. d. Raw Materials Inventory. 18. Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system? a. Cost of goods sold is recognized b. Raw materials are purchased c. Factory labor is incurred d. Manufacturing overhead is incurred 19. Which of the following is not viewed as part of assigning manufacturing costs in a job order cost system a. Manufacturing overhead is applied b. Raw materials are used c. Manufacturing overhead is incurred d. Completed goods are recognized 20. In a job order cost system, it would be correct in recording the purchase of raw materials to debit a. Work in Process Inventory. b. Work in Process and Manufacturing Overhead. c. Raw Materials Inventory. d. Finished Goods Inventory. Chapter 16 1. A process cost accounting system is most appropriate when a. a variety of different products are produced, each one requiring different types of materials, labor, and overhead. b. the focus of attention is on a particular job or order. c. similar products are mass-produced. d. individual products are custom made to the specification of customers. 2. A process cost system would be used for all of the following products except a. chemicals. b. computer chips. c. motion pictures. d. soft drinks. 3. In a process cost system, a. a Work in Process account is maintained for each product. b. a materials requisition must identify the job on which the materials will be used. c. a Work in Process account is maintained for each process. d. one Work in Process account is maintained for all the processes, similar to a job order cost system. 4. Differences between a job order cost system and a process cost system include all of the following except the a. documents used to track costs. b. point at which costs are totaled. c. unit cost computations. d. flow of costs. 5. Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? a. The detail at which costs are calculated. b. The time period each covers. c. The number of work in process accounts. d. The manufacturing cost elements included. 6. Which of the following is a true statement about process cost systems? 7. 8. 9. 10. 11. 12. 13. 14. a. In process cost systems, costs are accumulated but not assigned. b. A process cost system has one work in process account for each process. c. In process cost systems, costs are summarized on job cost sheets. d. Unit costs are not computed in process cost systems. In a process cost system, unit costs are determined using a a. numerator of costs of each job. b. denominator of units produced during the period. c. denominator of units produced for the job. d. denominator of units produced for the day. In process cost accounting, manufacturing costs are summarized on a a. job order cost sheet. b. process order cost sheet. c. production cost report. d. manufacturing cost sheet. Which of the following manufacturing cost elements occurs in a process cost system? a. Direct materials. b. Direct labor. c. Manufacturing overhead. d. All of these. In a process cost system, product costs are summarized: a. on job cost sheets. b. on production cost reports c. after each unit is produced. d. when the products are sold. When manufacturing overhead costs are assigned to production in a process cost system, they are debited to a. the Finished Goods Inventory account. b. Cost of Goods Sold. c. a Manufacturing Overhead account. d. a Work in Process account. Materials requisitions are a. not used in process costing. b. generally used more frequently in process costing than job order costing. c. generally used less frequently in process costing than job order costing. d. used more frequently by latter stage production departments. It is necessary to calculate equivalent units of production in a department because a. a physical count of units is impossible. b. some units worked on in the department are not fully complete. c. the physical units in the department are always 100% complete. d. at times a department may use a job order cost system and then switch to a process cost system In a process cost system, units to be accounted for in a department are equal to the a. number of units started or transferred into the department. b. number of units transferred out of the department. 15. 16. 17. 18. 19. c. units in the beginning inventory plus the units started or transferred into the department. d. ending inventory plus the units started or transferred into the department. in a process cost system, a production cost report is prepared a. only for the first processing department. b. for all departments in the aggregate. c. for each processing department. d. only for the last processing department. A process cost system would be used by all of the following except a(n) a. chemical company. b. advertising company. c. oil company. d. computer chip company. Which of the following is considered a difference between a job order cost and a process cost system? a. The manufacturing cost elements. b. Documents used to track costs. c. The accumulation of the costs of materials, labor, and overhead. d. The flow of costs The basic similarities between job order cost and process cost systems include all of the following except the a. manufacturing cost elements. b. flow of costs. c. point at which costs are totaled. d. accumulation of the costs of materials, labor, and overhead. Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? a. The detail at which costs are calculated. b. The time period each covers. c. The number of work in process accounts. d. The manufacturing cost elements included Chapter 17 1. Assigning overhead using ABC will usually a. decrease the cost per unit for low volume products as compared to a traditional overhead allocation. b. increase the cost per unit for low volume products as compared to a traditional overhead allocation. c. provide less accurate cost per unit for low volume products than will traditional costing. d. result in the same cost per unit for low volume products as does traditional costing. 2. Companies that switch to ABC often find they have a. been overpricing some products. b. possibly losing market share to competitors. 3. 4. 5. 6. 7. 8. 9. 10. c. been sacrificing profitability by underpricing some products. d. All of the these answers are correct. Identifying and classifying activities is the a. last step under ABC. b. first step under ABC. c. second step under ABC. d. None of these answers is correct. Which of the following is not typical of traditional costing systems? a. Use of a single predetermined overhead rate. b. Use of direct labor hours or direct labor cost to assign overhead. c. Assumption of correlation between direct labor and incurrence of overhead cost. d. Use of multiple cost drivers to allocate overhead. In traditional costing systems, overhead is generally applied based on a. direct labor. b. machine hours. c. direct material dollars. d. units of production. An activity that has a direct cause-effect relationship with the resources consumed is a(n) a. cost driver. b. overhead rate. c. cost pool. d. product activity. Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job. a. direct materials b. direct labor c. overhead d. direct materials and direct labor Activity-based costing a. allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. b. accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. c. assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. d. allocates overhead directly to products and services based on activity levels. The last step in activity-based costing is to a. assign overhead costs to products, using overhead rates determined for each cost pool. b. compute the activity-based overhead rate per cost driver. c. identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. d. identify the cost driver that has a strong correlation to the activity cost pool. An activity-based overhead rate is computed as follows: a. actual overhead divided by actual use of cost drivers. b. estimated overhead divided by actual use of cost drivers. c. actual overhead divided by estimated use of cost drivers. d. estimated overhead divided by estimated use of cost drivers. Chapter 18 1. Cost-volume-profit analysis includes all of the following assumptions except a. the behavior of costs is curvilinear throughout the relevant range. b. costs can be classified accurately as either variable or fixed. c. changes in activity are the only factors that affect costs. d. all units produced are sold. 2. At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000. How much is the selling price per unit? a. $130.50 165000+96000/2000=130.5 require sales-variable cost- fix cost= net income 3. The break-even point is where a. total sales equal total variable costs. b. contribution margin equals total fixed costs. 4. Fixed costs are $900,000 and the variable costs are 75% of the unit selling price. What is the breakeven point in dollars? Fixed cost/contribution margin ration=BE point 900000/0.25=3600000 5. Fixed costs are $3,000,000 and the unit contribution margin is $150. What is the break-even point? Fixed costs/ unit contribution margin=BE 3000000/150=20000units
