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Managerial Accounting > Final > Flashcards

Final Flashcards

1
Q

The extent to which an organization uses fixed costs in its cost structure is measured by

A

operating leverage

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2
Q

The contribution margin ratio is

A

unit contribution margin divided by the selling price.

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3
Q

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

A

Fixed costs ÷ CMR.

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4
Q

The cost of inventory currently owned by a company is an example of a (n):

A

sunk cost.

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5
Q

Which of the following costs can be ignored when making a decision?

A

sunk costs.

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6
Q

Which of the following can influence a company’s pricing decisions?

A

Manufacturing costs, competitors, customer demand, pricing laws

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7
Q

Factors in a decision problem that cannot be expressed in numerical terms are:

A

qualitative in nature.

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8
Q

The comprehensive set of budgets that serves as a company’s overall financial plan is commonly known as:

A

a master budget.

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9
Q

A manufacturing firm would begin preparation of its master budget by constructing a

A

sales budget.

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10
Q

The hurdle rate that is used in a net-present-value analysis is the same as the firm’s:

A

discount rate and minimum desired rate of return.

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11
Q

I. As shown in your text, the payback period considers the time value of money.
II. The payback period can only be used if net cash inflows are uniform throughout a project’s life.
III. The payback period ignores cash inflows that occur after the payback period is reached.

Which of the above statements is (are) correct?

A

III. The payback period ignores cash inflows that occur after the payback period is reached.

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12
Q

Which of the following business models considers financial, customer, internal operating, and other measures in the evaluation of performance?

A

Balanced scorecard.

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13
Q

Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting?

A

A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, decision making, directing, and control.

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14
Q

The relevant range is that range of activity:

A

where management expects the firm to operate.

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15
Q

Which of the following costs should be ignored when choosing among alternatives?

A

Sunk costs.

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16
Q

Service companies use cost information for

A

planning and control purposes.

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17
Q

Product costing in a manufacturing firm is the process of:

A

assigning costs to the firm’s inventory.

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18
Q

The process of assigning overhead costs to the jobs that are worked on is commonly called:

A

overhead application.

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19
Q

All of the following are inventoried under variable costing except:

a. variable manufacturing overhead and fixed manufacturing overhead.
b. fixed manufacturing overhead.
c. variable manufacturing overhead.
d. direct materials.
e. direct labor.

A

fixed manufacturing overhead.

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20
Q

Under variable costing, fixed manufacturing overhead is:

A

expensed immediately when incurred.

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21
Q

Which of the following does not typically appear on a contribution income statement?

a. Total fixed costs.
b. Net income.
c. Total variable costs.
d. Gross margin.
e. Contribution margin.

A

Gross margin.

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22
Q

At which step or steps in the decision-making process do qualitative considerations generally have the greatest impact?

A

Making a decision.

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23
Q

Under the time and material pricing method, a customer would be charged for:

A

Material costs, labor costs, overhead, and profit margin.

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24
Q

Which of the following outcomes is (are) sometimes associated with participative budgeting?

A

Budget preparation time can be somewhat lengthy and the problem of budget padding may arise.

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25
Q

Which of the following is the proper calculation of a company’s depreciation tax shield?

A

Depreciation × tax rate.

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26
Q

A typical job-cost record would provide information about all of the following items related to an order except:

applied manufacturing overhead.
direct labor costs incurred.
administrative costs.
direct labor hours worked.
the cost of direct materials used.
A

administrative costs.

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27
Q

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

A

overhead applied to Work-in-Process Inventory.

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28
Q

The term “normal costing” refers to the use of:

A

predetermined overhead rates.

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29
Q

Amounts spent for charitable contributions are an example of a(n):

A

discretionary fixed costs.

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30
Q 
Which of the following techniques is not used to analyze cost behavior?
a. High-low method.
b. Multiple regression.
c. Linear programming.
Correct
d. Visual-fit method.
e. Least-squares regression.
A

Linear programming.

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31
Q

Product costing in a manufacturing firm is the process of:

A

assigning costs to the firm’s inventory.

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32
Q

Overhead application is also known as:

A

overhead absorption.

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33
Q

Overton Enterprises is converting to an activity-based costing system. It wishes to depict the various activities in its manufacturing process along with the activities’ relationships. Which of the following is a tool that the company can use to accomplish this task?

A

Storyboards

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34
Q

CVP analysis can be used to study the effect of:
a. changes in selling prices on a company’s profitability.
b. changes in variable costs on a company’s profitability.
c. changes in fixed costs on a company’s profitability.
d. changes in product sales mix on a company’s profitability.
e. All of the answers are correct.
Correct

A

All of the above.

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35
Q

Under variable costing, fixed manufacturing overhead is:

A

expensed immediately when incurred.

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36
Q

The extent to which an organization uses fixed costs in its cost structure is measured by:

A

operating leverage.

37
Q

Which of the following terms describes a pricing strategy in which a new product’s initial price is set relatively low in order to gain a large market share?

A

Penetration pricing.

37
Q

Which of the following best defines the concept of a relevant cost?

A

A future cost that differs among alternatives.

38
Q

A company’s hurdle rate is generally influenced by:

A

both the cost of capital and project risk.

39
Q

Which of the following would likely be considered an internal user of accounting information rather than an external user?

A

mid-level managers.

40
Q

Which of the following inventories would a discount retailer report as an asset?

A

Merchandise inventory.

41
Q

The left side of the Manufacturing Overhead account is used to accumulate:

A

actual manufacturing overhead costs incurred throughout the accounting period.

42
Q

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:

A

hierarchy.

43
Q

The break-even point is that level of activity where:

A

contribution margin is equal to fixed costs.

44
Q

If a proposal’s profitability index is greater than one:

A

the NPV is positive.

45
Q

The systematic follow-up on a capital project to see how the project actually turns out is commonly known as:

A

a postaudit.

46
Q

The role of managerial accounting information in assisting management is a(n):

A

attention-directing role.

47
Q

The day-to-day work of management teams will typically comprise all of the following activities except:

A

cost minimizing.

48
Q

Property taxes are an example of a(n):

A

committed fixed costs.

49
Q

Income reported under absorption costing and variable costing is:

A

typically the same.

50
Q

Under variable costing, which of the following is not considered a product cost?

A

Fixed manufacturing overhead.

51
Q

Consider the following statements about pricing:
I. Prices are often determined by the market, subject to the constraint that costs must be covered in the long run.
II. Prices are often based on costs, subject to the constraint that customers and competitors will exert an influence.
III. A balance of market forces and cost is important when making pricing decisions.
Which of the above statements is (are) true?

A

All

52
Q

Cost-plus pricing formula

A

Price = cost + (markup percentage × cost).

53
Q

At which step or steps in the decision-making process do qualitative considerations generally have the greatest impact?

A

Making a decision.

54
Q

Company A uses a pricing approach where the initial price for a product is set high and then lowered, and Company B uses an approach where initial prices are set low in an effort to gain market share. What terms best describe these practices?

A

company A skimming and company b penetration

55
Q

Generally speaking, budgets are not used to:

A

identify a company’s most profitable products.

56
Q

FPMs

A

FPMs have become less popular in recent years because of computers and spreadsheets.

57
Q

A cash flow measured in nominal dollars is

A

the actual cash flow that we experience.

58
Q

Committed fixed costs would include:

A

depreciation on buildings and equipment.

59
Q

Electricity costs that were incurred by a company’s production processes should be debited to:

A

manufacturing overhead.

60
Q

The process of assigning overhead costs to the jobs that are worked on is commonly called:

A

overhead application.

61
Q

Which of the following product-costing systems is/are required for tax purposes?

A

Absorption costing.

62
Q

Which of the following pricing practices is illegal?

A

Predatory pricing.

63
Q

Which of the following features is typically absent in target costing?

A

An approach that begins with the determination of a product or service’s target cost.

64
Q

Which of the following best defines the concept of a relevant cost?

A

A future cost that differs among alternatives.

65
Q

A cash flow measured in nominal dollars is:

A

the actual cash flow that we experience.

66
Q

Throughout the accounting period, the credit side of the Manufacturing Overhead account is used to accumulate:

A

overhead applied to Work-in-Process Inventory.

67
Q

Assuming the number of units sold and produced are the same, which of the following statements is true when comparing net income using absorption and variable costing?

A

Net income will be the same under both methods.

68
Q

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

A

Fixed costs ÷ CMR.

69
Q

If a company has excess capacity, which of the following is a sensible bidding strategy?

A

Base the bid on the incremental costs incurred because the job will contribute toward the company’s profit.

70
Q

When an organization involves its many employees in the budgeting process in a meaningful way, the organization is said to be using an approach most commonly known as:

A

Participative budgeting.

71
Q

A company’s expected receipts from sales and planned disbursements to pay bills is commonly called a:

A

cash budget.

72
Q

Which of the following is the proper calculation of a company’s depreciation tax shield?

A

Depreciation × tax rate.

73
Q

Generally speaking, which of the following would not directly affect a company’s income tax payments?

A

Land owned by the firm.

74
Q

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?

A

Planning.

75
Q

In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:

A

product-line diversity and a large proportion of non-unit-level activities.

76
Q

The term “normal costing” refers to the use of:

A

predetermined overhead rates.

77
Q

Which of the following is the correct method to calculate a predetermined overhead rate?

A

Budgeted overhead cost ÷ budgeted amount of cost driver.

78
Q

At a given sales volume, the vertical distance between the fixed cost line and the total cost line represents:

A

variable cost.

79
Q

Which of the following calculations can be used to measure a company’s degree of operating leverage?

A

Contribution margin ÷ income.

80
Q

Who collects data and provide information so that decisions can be made and often serve as a cross-functional team member, making a wide range of decisions.

A

Managerial accountants

81
Q

Which of the following management tools is a key component of target costing?

A

Value engineering.

82
Q

Consider the following statements about budgetary slack:
Managers build slack into a budget so that they stand a greater chance of receiving favorable performance evaluations.
Budgetary slack is used by managers to guard against uncertainty and unforeseen events.
Budgetary slack is used by managers to guard against dollar cuts by top management in the resource allocation process.
Which of the above statements is (are) true?

A

All

83
Q

Discounted-cash-flow analysis focuses primarily on:

A

the timing of cash flows.

84
Q

The left side of the Manufacturing Overhead account is used to accumulate:

A

actual manufacturing overhead costs incurred throughout the accounting period.

85
Q

What is price skimming?

A

Initial price is high and then lowered

86
Q

The difference between absorption manufacturing cost and total cost with respect to product pricing is caused by:

A

both variable selling and administrative cost and allocated fixed selling and administrative cost.

87
Q

Nonprofit organizations begin their budgeting process with:

A

services to be provided.

88
Q

A depreciation tax shield is a(n):

A

reduction in income tax.

Managerial Accounting (1 decks)

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