Chapter 1 Mas Req True
Chapter 1 Mas Req True
Management Accounting
MULTIPLE CHOICES: THEORIES
1. That kind of accounting concerned with providing information to management in making
decisions about the operations of the business
2. Management accounting
3. A type of managerial accounting which refers to the determination of the operating cost
regardless of cost behavior is
a. Maintaining the current level of resource utilization as well as internal and external
communication.
b. Measuring and evaluating performance.
c. Planning strategies and controlling current activities of the organization.
d. Enhancing objectivity in decision-making.
9. In financial accounting, certain rules and regulations must be followed on how financial
statements must be presented to the reader. In managerial accounting, no such restrictions
generally apply because it is:
a. An entirely different field that need not observe the broad guidelines in financial
accounting.
b. Designed to provide management with non-financial information for decision-making.
c. Designed to provide accounting and other financial data to assist management in
making business decisions.
d. A discipline that does not require preparation of other financial statements.
e. All of the above.
12. To distinguish between management accounting and financial accounting, the following
statements are correct, except:
14. You were newly appointed as controller of CZX Corporation. Among the jobs your
department would do include the following:
1. Tax management. 5.
Reporting to government regulatory agencies.
2. Financial reporting and interpretation. 6. Risk management.
3. Credit management. 7.
Economic appraisal.
4. Sourcing and investing of funds. 8. Planning for
control.
16. The chief management accountant called “controller” traditionally performs these
functions except:
22. Which of the following is not a controllership function, as distinguished from a treasury
function?
25. Which of the following acts is not performed by an independent CPA engaged to install
an accounting system?
a. Management audit.
b. Marketing forecasts.
c. Costs determination of alternatives in collective bargaining agreements.
d. Job evaluation and salary administration.
30. Which of the following types of management services is not directly related to
accounting and finance functions?
31. A certified public accountant’s scope of management services is broad and covers all of
the following except
32. Which of the following is not classifiable as a management advisory service by CPAs?
33. Which of the following is not classifiable as a management advisory service by CPAs?
34. Management services of certified public accountant cover all of the following except
a. Project feasibility studies. c.
Organizational development and planning.
b. Systems design, development and implementation. d. Audit, tax and legal services.
35. Which of the following does not relate to management services by CPAs?
36. Which of the following is not an area related to the performance of management services
by independent accounting firms?
a. Introducing new ideas, concepts and methods to management.
b. Improving existing policies, methods and procedures
c. Performing special studies, preparing recommendations, and formulating plans and
programs
d. Performing management functions and making decisions
37. A management advisory services engagement involves the following activities in what
order?
I. Post-engagement follow-up.
II. Implementing the recommendation.
III. Conducting the engagement.
IV. Negotiating the engagement.
V. Preparing for and starting the engagement.
VI. Evaluating the engagement.
VII. Preparing and presenting report and recommendations.
a. VII, VI, V, IV, III, II and I. c. IV, III, V, VI, II, VII, and I.
b. III, IV, V, VI, VII, I and II. d. IV, V, III, VII, II, VI, and I.
38. The following statements refer to competence of CPA’s in management advisory services
except
a. In concept it refers to the technical qualification of the practitioner and his ability to
supervise and evaluate the quality of work of his staff assigned to the engagement so as to be
responsible for the successful completion of the project.
b. It is acquired by education, self study, attendance to professional development courses,
actual experience in MS work and research.
c. It is the ability to identify client’s needs, use analytical approach and process, apply
technical knowledge, communicate recommendations and assist in implementation.
d. It must be retained in the rendition of MAS work and it can be impaired if the CPA
performs decision-making for the client or acts as employee of the client.
a. Adequate training and experience in both the analytical approach and process in
the particular undertaking are requisites for the CPA to be involved in a management
service engagement.
b. A CPA with MBA and PhD degrees is automatically qualified to render management
services.
c. Competence as a standard in the rendition of management services by a CPA may be
equated to having excellent scholarly preparation to include the usual baccalaureate degree, an
MBA, and other post graduate studies.
d. A certified public accountant by virtue of having the necessary academic preparation and
by hurdling the licensure examinations required to have a CPA license can readily render
management services to the public.
a. Familiarity with the client’s financial accounting and internal control systems
b. Analytical experience in problem solving
c. Professional independence, objectivity and integrity
d. Auditor of the client
a. Exercise administrative control over the client’s staff to avoid unnecessary delays in
implementation.
b. Encourage dependence of client on the consultant’s staff so as to pinpoint clear
responsibility in implementing systems.
c. Not take responsibility for making decisions and policy judgments in MAS
engagements.
d. Conduct his engagement as if he is a member of the client’s organization.
43. The Revised Accountancy Law incorporates the Code of Professional Ethics for CPAs.
The provision of management advisory services is among the areas of public accounting. It is,
however, not exclusive to CPAs. Considering these premises, which of the following statements
is applicable?
a. Management advisory services as a field of practice is considered as an integral part
of public accounting thus, the Code of Professional Ethics for CPAs covers management
advisory services.
b. CPAs in the practice of audit and management consulting services may advertise and
charge contingent fees.
c. The practice of management advisory services should not be extended to existing audit
clients since this will adversely affect the CPA’s independence.
d. CPAs in the practice of management advisory services are not bound by the Board of
Accountancy but are bound by the said law in the practice of audit.
a. A CPA represents three major players in the industry in rationalizing the industry’s
incentive before the government public hearing.
b. A CPA shares with a new and substantial client information regarding another
client belonging to the same industry.
c. A CPA provides consulting services to an existing audit client.
d. A CPA offers and provides consulting services to two major competing client.
46. Mr. Rey Carlos, a CPA firm’s partner-in-charge of quality assurance and review is
arguing with Mr. Reuben Fortuna, the consulting partner regarding the question of independence
as Mr. Fortuna is presently rendering consulting services to T. Ang and Nga Co., an audit client
of the firm. Related to this issue of independence, all of the following statements are not valid
except
48. Which of the following will not impair the independence of a CPA in the rendition of
Management Services?
50. After preliminary audit arrangements have been made, an engagement confirmation letter
should be sent to the client. This letter usually should not include
a. An estimate of the time to be spent on the audit work by audit staff and management.
b. A reference to the auditor’s responsibility for the detection of errors and irregularities.
c. A statement that management advisory services would be available upon request.
d. A statement that management letter will be issued outlining comments and suggestions as
to any procedures requiring the client’s attention.
51. The controller of a company or other organization is
a. a staff manager.
b. an operating manager.
c. an accountant, not a manager.
d. a natural manager.
52. Which item is NOT an IMA Standard for Ethical Conduct?
a. Integrity.
b. Competence.
c. Loyalty.
d. Objectivity.
53. Which statement about the degree of detail in a report is true?
a. It depends on the level of the manager receiving the report.
b. It may depend on the frequency of the report.
c. It depends on the type of manager receiving the report.
d. All of the above.
54. Managerial accounting is similar to financial accounting in that
a. both are governed by generally accepted accounting principles.
b. both deal with economic events.
c. both concentrate on historical costs.
d. both classify reported information in the same way.
55. Managerial accounting differs from financial accounting in that it is
a. more concerned with the future.
b. more concerned with segments of a company.
c. less constrained by rules and regulations.
d. all of the above.
56. One of the ways managerial accounting differs from financial accounting
is that managerial accounting
a. is bound by generally accepted accounting principles.
b. classifies information in different ways.
c. does not use financial statements.
d. deals only with economic events.
57. Which activity is NOT normally performed by managerial accountants?
a. Assisting managers to interpret data in managerial accounting
reports.
b. Designing systems to provide information for internal and external
reports.
c. Gathering data from sources other than the accounting system.
d. Deciding the best level of inventory to be maintained.
58. Conventional and just-in-time manufacturers both
a. Maintain large inventories of their products.
b. Sell only to other manufacturing companies.
c. Desire to meet customers' deadlines.
d. Require about the same amount of space to operate.
59. Classifying costs by behavior is
a. associated primarily with financial accounting.
b. not relevant to a company that has only selling expenses.
c. common in reports prepared for external readers.
d. none of the above.
60. Which is NOT a common accounting classification of costs?
a. By the method of payment for the expenditure.
b. By the objective of expenditure.
c. By behavior.
d. By the function incurring the expenditure.
78. It involves the technical qualifications of the practitioner and the ability to supervise the
personnel assigned, to evaluate the quality of work performed and to accept responsibility to the
client for the successful completion of the engagement.
a. Competence per se
b. Competence in professional work
c. Competence in MAS
d. Competence in implementation and recommendation.
79. It refers to the ability of the practiotioner to maintain his role as an adviser or consultant
without making any attempt to make decisions for the management.
a. Objectivity
b. Competence
c. Independence in mental attitude
d. Due Care
80. How should a management consultant undertake to secure a consulting engagement when a
prospective client has inquired about the services he offers?
a. The consultant should call on the prospective client, listen to an explanation, and then
agree to do as the client wishes, provided the work lies on the field on the consultant’s
competence.
b. The consultant should present the value of his services as forcefully as he can because
the potential client will benefit from the use of his services.
c. The consultant should diagnose the existing problem by personal investigation,
help the client define it clearly, consider various methods of solutions, recommend the
approach that will best meet the requirements of the situation, and make sure that the
client understands what the purposes to do, how long will it take, how much will it cost,
and what probable benefits will result.
D. The consultant should recommend the technique or procedure which will solve the
client’s problem and should refer him to other clients who have used the same technique
successfully in the past.
81. In carrying out full scope engagements, the consultant should participate up to the
implementation stage, considering the ff., except:
a. The client understands the nature and implications of the recommended course of action.
b. The consultant has made a firm decision to proceed with the implementation of the
chosen course of action
c. Client-management accepts overall responsibility for the implementation of the chosen
course of action,
d. Sufficient expertise will be available in the client’s organization to fully comprehend the
significance of the changes being made during the implementation, when changes have been full
implemented, client personnel have the knowledge and ability to adequately maintain and
operate such systems as may be involved.
82. In the course of providing a particular type of service, a CPA is called upon by the client to
give informal advice on diverse questions, not necessarily related to the service being rendered.
The CPA’s opinion is sought in view of his knowledge of the particular client’s affairs and broad
exposure to other situations. Which of the ff. statements best expresses the CPA’s role under
these circumstances?
a. The CPA should inform the client that it would be improper for him to give any advice
until an extensive study has been performed.
b. The CPA tactfully reminds the client that advice sought is not covered by the terms of the
original agreement.
c. The CPA should withhold any advice that he has identified and considered the pertinent
facts and alternatives.
d. The CPA should respond as practicable at the moment and express the basis of his
response, that such is an informal advice, there is no presumption that an extensive study
has been performed to identify and consider pertinent facts and alternatives.
83. The CEO wants to know whether the purchasing function is properly meeting its charge to
“purchase right materials at the right time in the right quantities.” Which of the following types
of engagements addresses this request?
a. A financial engagement relating to the purchasing department
b. An operational engagement relating to the purchasing function
c. A compliance engagement relating to the purchasing function
d. A full scope engagement relating to the manufacturing operation.
84. Complaints from the public were received about processing automobile license applications
in the LTO. You were assigned by the legislative auditor to review this operation. Which of the
ff. should be your first audit step?
a. Send out questionnaires to recent license
b. Test the system by licensing a vehicle
c. Discuss the nature of complaints with the chief of license office.
d. Discuss the nature of complaints with the director of the LTO.
85. The most important factor in selecting an engagement team is to assign consultants:
a. With a combination of skills and experiences in various business and functional areas as
well as in different industries.
b. who are likely to employ different approaches to problem solving such as highly
imaginative thinking, or unusual skill in the interpretation and use of financial and statistical
data.
c. with prior experience in the client’s industry.
d. with the appropriate skills, experience and types of thinking to deal with the client’s
problem.
86. In performing MAS, a practitioner must act with integrity and objectivity and be independent
in mental attitude, this statement falls under:
a. Competence
b. Client Benefit
c. Due Care
d. Personal Characteristics
88. The MAS Practice Standards include the ff. attributes of practice except:
a. competence, confidentiality, integrity
b. Personal characteristics, competence and due care
c. Client benefits, understanding with the client, and planning, supervision and control
d. Sufficient relevant data and communication of results.
89. All except one are advantages of a CPA over management consultants of other professions:
a. The CPA is a specialist in accounting and taxes.
b. The CPA is known to the client and enjoys his confidence
c. The CPA is already familiar with the client’s business
d. The CPA is a member of a profession wit recognized standing.
90. The CPA should not undertake a MAS engagement that includes a continued participation
through implementation, unless;
a. The CPA accepts overall responsibility for implementation of the chosen course of
action.
b. The CPA acquires overall knowledge of the client’s business that is equivalent to
that of possessed by management.
c. upon implementation, the client’s personnel will have the knowledge and ability to
adequately maintain and operate such systems involved.
d. upon implementation, a new study and evaluation of the system’s internal control.
91. People who make information-based decision go through a series of fundamental steps in
their decision making process.
I. Evaluate alternative IV. Gather appropriate information
II. Identify constraints V. Choose the most acceptable alternative
III. Set objectives VI. Identify alternative
a. IV, II, III ,VI, I, V
b. II, II, IV, VI,I, V
c. III, II, IV. VI, I, V
d. II, III, IV, VI, I, V
92. A CPA should reject a MAS engagement if:
a. It would require him to make management decision for an audit client.
b. The proposed management id not accounting related.
c. His recommendations are to be subjected by a review by the client.
d. He audits the financial statements of a subsidiary of the prospective client.
98. A CPA’s scope of management services is broad and covers all of the ff. except:
a. Change in management engagements,
b. Computerization engagements
c. Audit engagements
d. Re-engineering engagements
99. A MAS engagement generally involves the ff. activities in what order?
I. Post management follow-up VI. Evaluating the engagement
II. Implementing the recommendation VII. Preparing and representing the report
III. Determining standards of performance and recommendations.
IV. Negotiating the engagement
V. Preparing for and starting the
engagement
a. VII, VI, V, IV, II, II, I
b. II. IV, V, VI, VII, I, II
c. IV, III, V, VI, II, VII, I
d. IV, V, II, VII, II, VI, I
100. The activities in managements system’s control process can be grouped into four:
I. Measurement of actual performance
II. Deciding and implementing corrective action
III. Determining standards of performance.
IV. Comparing actual performance vs. standards and analyzing results.
102. Which of the ff. is not an idea related to the performance of management services by
independent accounting firms?
a. Introducing new ideas, concepts and methods to the management
b. Improving existing policies, methods and procedures.
c. Performing special studies, preparing recommendations and formulating plans and
programs.
d. Performing management functions and making decisions.
110. Which of the ff. will not impair the independence of a CPA in the rendition of management
services?
a. The CPA performs decision-making services for his client
b. The CPA performs wherein he is in effect acting as an employee of the client.
c. The CPA losses his objectivity and acts in a manner as if he is advocating for the interest
of his client.
d. The CPA does not extend his services beyond the presentation of recommendations
of giving advice.
113. After preliminary audit arrangements have been made, an engagement confirmation letter
should be sent to the client. The letter would usually not include
a. An estimate of the time to be spent on the audit work by audit staff and management.
b. A reference to the auditor’s responsibility for the detection of errors or irregularities.
c. A statement of MAS would be made available upon request.
d. A statement that management letter will be issued outlining comments and suggestions as
to any procedures requiring the client’s attention.
114. This consists of identifying alternatives, selecting from among alternatives the one that is
best for the organization, and specifying what actions will be taken to implement the chosen
alternative.
a. Controlling
b. Planning
c. Directing
d. Motivating
115. The accounting and other reports coming to management that are used in controlling the
organization are called
a. Feedback
b. Performance report
c. Budget
d. Financial Accounting
116. The delegation of decision-making authority throughout an organization by allowing
managers at various operating levels to make key decisions relating to their area of responsibility
is called
a. Planning
b. Directing
c. Control
d. Decentralization
117. A position on the organization chart that is directly related to achieving the basic objectives
of an organization is called
a. line position
b. staff position
c. chief financial officer
d. controller
118. It provides a service or assistance to other parts of the organization and does not directly
achieve the basic objectives of the organization
a. line position
b. staff position
c. chief financial officer
d. controller
119. A detailed report to management comparing budgeted data to actual data for a specific time
period is called
a. budget
b. planning report
c. performance report
d. controller’s report
120. A member of the top management team who is responsible for providing timely and
relevant data to support planning and control activities and for preparing financial statements for
external users.
a. chief financial officer
b. controller
c. Management accountant
d. Treasurer
121. Managerial counting places less emphasis on ____________ and more emphasis on
______________ than financial accounting
a. Planning; Nonmonetary data
b. Budgets; Estimated data
c. Precision; Nonmonetary data
d. Estimates; Actual data
125. The phase of accounting concerned with providing information to managers for use in
planning and controlling operations and in decision-making
a. Financial accounting
b. Managerial accounting
c. Cost accounting
d. Corporate accounting
126. An activity that consumes resources or takes time but does not add value for which
customers are willing to pay
a. Constraint
b. Non-value added activity
c. Non-constraint
d. Value-added activity
127. A visual diagram of a firm’s organizational structure that depicts formal lines of reporting,
communication, and responsibility between managers.
a. Performance report
b. Budget
c. Cycle diagram
d. Organization chart.
129. Jam is a financial manager who has discovered that her company is violating environmental
regulations. In her immediate superior is involved, her appropriate action is to
a. Do nothing
b. Consult the audit committee
c. Present the matter to the next higher managerial level
d. Confront her immediate superior
132. A common argument against corporate involvement in social responsible behavior is that
a. It encourages government intrusion in decision making
b. As a legal person, a corporation is accountable for this conduct
c. It creates goodwill.
d. In a competitive market, such behavior incurs costs that place the company at a
disadvantage.
133. The Code of Ethics for Management Accountants requires a financial manager to allow the
established policies of the organization when faced with an ethical conflict. If these policies do
not resolve the conflict, the financial accountant should:
a. Consult the BOD immediately
b. Discuss the problem with the immediate superior if he/she is involved in conflict.
c. Communicate the problem to authorities outside the organization
d. Contact the next higher managerial level if initial presentation to the immediate
superior does not resolve the conflict.
134. Financial managers are obliged to maintain the highest standards of ethical conduct.
Accordingly, the Code of Ethics for MAs explicitly requires that they,
a. Obtain sufficient competent evidence when expressing opinion
b. Not to condone violations of others.
c. Comply with GAAS
d. Adhere to GAAS
135. Integrity is an ethical requirement for all financial managers. One aspect of integrity
requires
a. Performance of professional duties in accordance with applicable laws.
b. Avoidance of conflict of interest.
c. Refrain from improper use of inside information
d. Maintenance of appropriate level of professional competence.
136. Under the express terms of the Code of Ethics for Management Accountants, a financial
manager may not
a. Advertise
b. Encroach on the practice of another financial manager
c. Disclose confidential information unless authorized or legally obliged.
d. Accept other employment while serving as a financial accountant.
137. A financial manager/management accountant discovers a problem that could mislead users
of the firm’s financial data and has informed his/her immediate superior (S)he should report the
circumstances to the audit committee and/or BOD only if
a. The immediate superior, who reports to the CEO, knows about the situation but refuses to
correct it.
b. The immediate superior assures the financial manager that the problem will be resolved
c. The immediate superior reports the situation to his superior
d. The immediate superior, the firm’s CEO, knows about the situation, but refuses to
correct it
139. The Code of Ethics for Management Accountants includes integrity standard, which
requires the financial manager to
a. Identify and make known anything that may hinder his judgment or prevent
satisfactory completion of duties.
b. Report any relevant information that could influence users of financial statements.
c. Disclose confidential information when authorized by firm or required under the law.
d. Refuse gifts from anyone.
140. The Code of Ethics for Management Accountants includes competence standard, which
requires the financial manager to
a. Report information, whether favorable or unfavorable
b. Develop his/her professional proficiency on continual basis.
c. Discuss ethical conflicts and possible courses of actions with an unbiased counselor.
d. Discuss with subordinates, their responsibilities regarding the disclosure of information
about the firm.
142. A series of steps are followed to carry out some task in the business is
a. Business process
b. Controlling
c. Decentralization
d. Directing and motivating
144. Anything that prevents an organization or individual from getting more of what it wants
a. constraint
b. Non-value added activity
c. Value-added activity
d. Governance
145.It consist of business functions that adds value to a company’s products and services such as
research and development, product design, marketing, distribution and customer service.
a. Value-added activity
b. Value chain
c. Business process
d. Decentralization
147. the process used by the company to help identify the risks that it faces and to develop
responses to those risks that enable the company to be reasonably assured of meeting its goals.
a. Enterprise risk management
b. Feedback
c. Planning and control cycle
d. Strategy.
148. Accounting and other reports that help managers monitor performance and focus on
problems and opportunities that might otherwise go unnoticed.
a. Financial statements
b. Feedback
c. Budget
d. Segment reports
149. The phase of accounting concerned with providing information to stockholders, creditors
and others outside the organization.
a. Management accounting
b. Financial accounting
c. Tax accounting
d. Bookkeeping
150. Selecting a course of action and specifying how the action will be implemented
a. Planning
b. Controlling
c. Organizing
d. Directing
151. Any part of an organization that can be evaluated independently of other parts and which
the managers seek financial data
a. Segment
b. Investment center
c. Profit center
d. Cost center
152. Management Accounting is an integral part of the management process. As such, it provides
essential information for the following objectives except
a. Maintaining the current level of resources utilization as well as internal and external
communication.
b. Measuring are evaluating performances
c. Planning strategies and controlling activities of the organization
d. Enhancing objectivity in decision-making.
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154. Management accounting information is developed for all of the following constituents
EXCEPT:
a. workers
b. bondholders
c. managers
d. executives
157.Front line workers/operators should see all of the following types of financial and
nonfinancial information EXCEPT:
a. Cost of resources used in their production or service process.
b. Financial statements of customers and suppliers.
c. Quality and yield of the production or service process.
d. Time required to perform their production or service process.
158.Senior executives of organizations should see all of the following types of financial and
nonfinancial information EXCEPT:
a. Market share among targeted customer and market segments.
b. Hourly quality and yield statistics for all manufacturing and service
processes.
c. Profit and cash flow statements of the enterprise.
d. Monthly customer satisfaction and retention statistics.
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164.The major users of accounting information are:
172.The functions of planning for control, evaluating and consulting, and governmental
reporting are typically assumed within organizations by:
a. tax administration
b. evaluating and consulting
c. investor relations
d. economic appraisal
174. Trends that are causing changes in management accounting today include:
a advances in technology
b. increased global competition
c. a shift from a manufacturing to a service-based economy
d. a., b.
e. a., b., c.
175.The most dominant influence on management accounting over the past decade is:
177.In the Standards of Ethical Conduct for Management Accountants, which of the
following is an example of Competence:
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MULTIPLE CHOICE QUESTIONS
179. The day-to-day work of management teams will typically comprise all of the following
activities except:
A. decision making.
B. planning.
C. cost minimizing.
D. directing operational activities.
E. controlling.
180. Which of the following functions is best described as choosing among available
alternatives?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Budgeting.
181. Which of the following managerial functions involves a detailed financial and operational
description of anticipated operations?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Measuring.
182. Which of the following involves the coordination of daily business functions within an
organization?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Motivating.
183. Titan Company has set various goals, and management is now taking appropriate action
to ensure that the firm achieves these goals. One such action is to reduce outlays for
overhead, which have exceeded budgeted amounts. Which of the following functions
best describes this process?
A. Decision making.
B. Planning.
C. Coordinating.
D. Controlling.
E. Organizing.
186. Employee empowerment involves encouraging and authorizing workers to take initiatives
to:
A. improve operations.
B. reduce costs.
C. improve product quality.
D. improve customer service.
E. all of the above.
187. The process of encouraging and authorizing workers to take appropriate initiatives to
improve the overall firm is commonly known as:
A. planning and control.
B. employee empowerment.
C. personnel aggressiveness.
D. decision making.
E. problem recognition and solution.
188. .Which of the following business models considers financial, customer, internal operating,
and other measures in the evaluation of performance?
A. Deterministic simulation.
B. Balanced scorecard.
C. Payoff matrix.
D. Decision tree.
E. Chart of operating performance (COP).
192. Which of the following would likely be considered an internal user of accounting
information rather than an external user?
A. Stockholders.
B. Consumer groups.
C. Lenders.
D. Middle-level managers.
E. Government agencies.
193. All of the following entities would have a need for managerial accounting information
except:
A. Dell Computer.
B. The Los Angeles Dodgers baseball club.
C. Office Depot.
D. The Federal Bureau of Investigation (FBI).
E. None of the above responses is correct, as all of these entities would use
managerial accounting information.
194. Which of the following choices correctly depicts whether Bank of America, Microsoft,
and Florida State University would have a need for managerial accounting?
Bank Florida State
of Microsoft University
America
A. Yes Yes No
B. Yes No Yes
C. Yes Yes Yes
D. No Yes No
E. No Yes Yes
195. Financial accounting focuses primarily on reporting:
A. to parties outside of an organization.
B. to parties within an organization.
C. to an organization's board of directors.
D. to financial institutions.
E. for financial institutions.
196. Which of the following statements represents a similarity between financial and
managerial accounting?
A. Both are useful in providing information for external users.
B. Both are governed by GAAP.
C. Both draw upon data from an organization's accounting system.
D. Both rely heavily on published financial statements.
E. Both are solely concerned with historical transactions.
197. Which of the following employees at American Airlines would not be considered as
holding a line position?
A. Pilot.
B. Chief financial officer (CFO).
C. Flight attendant.
D. Ticket agent.
E. Baggage handler.
198. Which of the following employees would be considered as holding a line position?
A. The controller of Exxon Corporation.
B. The vice-president for government relations of Microsoft.
C. The manager of food and beverage services at Disney's Magic Kingdom.
D. A secretary employed by Hewlett-Packard.
E. None of the above.
199. Which of the following employees at Starbucks would likely be considered as holding a
staff position?
A. The company's chief operating officer (COO).
B. The manager of a store located in Kansas City, Missouri.
C. The company's lead, in-house attorney.
D. The company's chief financial officer (CFO).
E. Both the company's lead, in-house attorney and the chief financial officer.
201. Which of the following typically does not relate to the role of a controller?
A. A controller supervises the accounting department.
B. A controller safeguards an organization's assets.
C. A controller oversees the preparation of reports required by governmental authorities.
D. A controller normally assumes a narrow role within the organization, often
preventing the individual's rise to top management ranks.
E. Choices "B" and "D" above.
202. A controller is normally involved with:
A. preparing financial statements.
B. managing investments.
C. raising capital.
D. safeguarding assets.
E. managing the firm's credit policy.
210. Which of the following statement(s) about just-in-time (JIT) inventory management is
(are) true?
A. I only.
B. II only.
C. III only.
D. II and III.
E. I, II, and III.
211. Ohio Corporation recently implemented a just-in-time (JIT) production system along with
a series of continuous improvement programs. If the firm is now considering adopting a
total quality management (TQM) program, it would likely find that TQM:
A. is consistent with both JIT and continuous improvement.
B. is consistent with JIT but inconsistent with continuous improvement.
C. is consistent with continuous improvement but inconsistent with JIT.
D. is inconsistent with both JIT and continuous improvement.
E. is an antiquated management technique.
213. The value chain of a manufacturer would tend to include activities related to:
A. manufacturing.
B. research and development.
C. product design.
D. marketing.
E. all of the above.
214. Which of the following choices correctly depicts activities that would be included in a
manufacturer's value chain?
Research
and Marketing Distribution
Developme
nt
A. Yes Yes No
B. Yes No Yes
C. Yes Yes Yes
D. No Yes No
E. No Yes Yes
215.Which of the preceding activities would likely not be considered part of The Gap clothing
company’s value chain?
A. Designing a new product line.
B. Locating and then negotiating terms with a clothing manufacturer.
C. Marketing an existing product line.
D. Distributing goods from regional warehouses to local stores.
E. All of the above activities would be an element in the company’s value chain.
216. The activities performed by a manufacturing organization could be categorized as pre-
production (such as research and development and product design), production-related,
and post-production (such as marketing and customer service). Which activities should
the firm focus on if management understands the value chain concept and desires to meet
organizational goals?
A. Pre-production activities.
B. Production-related activities.
C. Post-production activities.
D. Pre-production, production-related, and post-production activities.
E. Pre-production and production-related activities.
217. In order for a company to achieve a sustainable competitive advantage, it must perform
value chain activities:
A. at the same quality level as competitors, at the same cost.
B. at the same quality level as competitors, but at a lower cost.
C. at a higher quality level than competitors, at a higher cost.
D. at a higher quality level than competitors, but at no greater cost.
E. at either the same quality level as competitors, but at a lower cost, or at a higher
quality level than competitors, but at no greater cost.
218. The process of managing the various activities in the value chain, along with the
associated costs, is commonly known as:
A. activity-based costing.
B. strategic cost management.
C. total quality management.
D. computer-integrated costing.
E. sound management practices (SMP).
219. A company has a bottleneck operation that slows production. Which of the following
tools or approaches could the firm use to determine the most cost-effective ways to
eliminate this problem?
A. Linear programming.
B. Theory of constraints.
C. Decision-tree diagrams.
D. Payoff matrices.
E. Strategic path analysis (SPA).
220. Which of the following can be linked to the relatively recent wave of corporate scandals?
A. Greedy corporate executives.
B. Managers who make over-reaching business deals.
C. Lack of oversight by companies' audit boards and boards of directors.
D. Shoddy work by external auditors.
E. All of the above.
221.Which of the following acts strives to improve corporate governance and the quality of
corporate accounting/reporting?
A. Robinson-Patman.
B. Taft-Hartley.
C. Sarbanes-Oxley.
D. Bush-Cheney.
E. Franks-Ashcroft.
222. Which of the following statements about the ethical climate of business is false?
A. Greedy corporate executives are, in part, to blame for the relatively recent rash of
corporate scandals.
B. Unethical business behavior can have a negative impact on our economy.
C. The Sarbanes-Oxley Act strives to improve the overall quality of corporate reporting.
D. The Robinson-Patman Act strives to improve the overall quality of corporate
reporting.
E. Corporate scandals have served as the accounting profession’s wake-up call to pay
increased attention to ethical issues in the conduct of business.
228. I. Managerial accounting internal reports are prepared more frequently than are classified
financial statements.
II. The management function of organizing and directing is mainly concerned with
setting goals and objectives for the entity.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
231 I. Manufacturing costs that cannot be classified as direct materials or direct labor are
classified as manufacturing overhead.
II. Raw materials are equal to direct materials minus indirect materials.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
232. I. Raw materials that can be conveniently and directly associated with a finished product
are called materials overhead.
II. The total cost of a finished product does not generally contain equal amounts of
materials, labor, and overhead costs.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
233. I. Direct materials costs and indirect materials costs are manufacturing overhead.
II. Period costs include selling and administrative expenses.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
234. I. Indirect materials and indirect labor are both inventoriable costs.
II. Direct materials and direct labor are the only product costs.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
235. I. Total period costs are deducted from total cost of work in process to calculate cost of
goods manufactured.
II. . Period costs are not inventoriable costs.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
236. I. Ending finished goods inventory appears on both the balance sheet and the income
statement of a manufacturing company.
II. The beginning work in process inventory appears on both the balance sheet and the cost
of goods manufactured schedule of a manufacturing company.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
237. I. In calculating gross profit for a manufacturing company, the cost of goods
manufactured is deducted from net sales.
II. Finished goods inventory does not appear on a cost of goods manufactured schedule.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
238.I. If the ending work in process inventory is greater than the beginning work in process
inventory, then the cost of goods manufactured will be less than total manufacturing costs
for the period.
II. Finished goods inventory for a manufacturing company is equivalent to merchandise
inventory for a merchandising company.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
239. I. Raw materials inventory is not an asset until it is used to make a product.
II. Raw materials inventory shows the cost of completed goods available for sale to
customers.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
240. I. The supply chain is all the activities associated with providing a product or service.
II. Many companies have significantly lowered inventory levels and costs using just-in-time
inventory methods.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
241. I. The theory of constraints is used to measure performance.
II. The focus of a TQM system is to reduce defects in finished products.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
242.I. The balanced scorecard approach attempts to maintain as little inventory on hand as
possible.
II. In preparing closing entries for a manufacturing company, all revenue and
expense account balances are closed to a Manufacturing Summary account.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
243.I. To balance the Cost of Goods Manufactured columns of a worksheet for a manufacturing
company, an entry must be made in the income statement debit column.
II. Managerial accounting is primarily concerned with managers and external users.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
244. I. Planning involves coordinating the diverse activities and human resources of a company
to produce a smooth running operation.
II. When the physical association of raw materials with the finished product is too small to trace
in terms of cost, they are usually classified as indirect materials.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
245. I. Product costs are also called inventoriable costs.
II. Direct materials become a cost of the finished goods manufactured when they are
acquired, not when they are used.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
246.I. The sum of the direct materials costs, direct labor costs, and beginning work in process is
the total manufacturing costs for the year.
II. In a manufacturing company balance sheet, manufacturing inventories are reported in the
current assets section in the order of their expected use in production.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
248. I. Economic events are the raw data for both financial and managerial accounting.
II. Internal financial statements must be prepared using generally accepted accounting principles.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
249. I. The form and content of reports can influence decisions made by managers.
II. Management-by-objectives and management-by-exception are two names for the same
general management principle.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
250. I. . "Pro forma" is the name given to an income statement that classifies costs by function.
II. . Some managerial accounting reports contain costs not incorporated in the basic accounting
system.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
251.I. . A professional examination exists to test the competence of financial accountants, but
not of managerial accountants.
II. Managerial accountants should, but have no obligation to, maintain their professional skills.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
252. In order to be useful to managers, management accounting reports should possess all of
the following characteristics EXCEPT:
a.provide objective measures of past operations and subjective estimates about future decisions
b.be prepared in accordance with generally accepted accounting principles
c.be provided at any time management needs information
d.be prepared to report information for any unit of the business to support decision making
253. What is the primary criterion for the preparation of managerial accounting reports?
a.Relevance of the reports
b.Meet the manager needs
c.Timing of the reports
d.Cost of the reports
257. In most business organizations, the chief management accountant is called the:
a.chief accounting officer
b.controller
c.chairman of the board
d.chief executive officer
258.All of the following employees hold line positions in Anthea Electric EXCEPT:
a.vice president of production
b.vice president of finance
c.manager of the Valhalla Plant
d.vice president of sales
259.. The controller's staff often consists of several management accountants. All of the
following would most likely be on the controller's staff EXCEPT:
a.general accountants
b.budgets and budget analysts
c.investments and shareholder relations managers
d.cost accountants
260.9. Managerial accounting
a.is prepared according to GAAP.
b.is prepared according to management needs.
c.is prepared periodically only.
d.is related to the entire business entity only.
261.10. Who are the individuals charged with the responsibility for directing the
day-to-day operations of a business?
a.Investors
b.Managers
c.Employees
d.Customers
262.11. Which of the following are the basic functions of management?
a.Supervising and directing
b.Decision making and supervising
c.Organizing and directing
d.Planning and controlling
265.14. Which of the following is the principle reason for preparing managerial
accounting reports?
a.Usefulness to management
b.Cost of preparation
c.Clarity
d.GAAP
267.16. Compute conversion costs given the following data: Direct Materials,
$352,700; Direct Labor, $196,300; Factory Overhead, $177,600.
a.$549,000
b.$726,600
c.$373,900
d.$530,300
268.17. Which of the following is false in regards to direct materials for an auto
manufacturer?
a.Steel would probably be a direct material.
b.Upholstery fabric would probably be a direct material
c.Oil to lubricate factory machines would not be a direct material.
d.Small plastic clips to hold on door panels, because they become part of the auto, must be
accounted for as direct materials.
270.19. The cost of materials entering directly into the manufacturing process is
classified as:
a.direct labor cost
b.factory overhead cost
c.burden cost
d.direct materials cost
272.21. If the cost of direct materials is a small portion of total production cost, it
may be classified as part of:
a.direct labor cost
b.selling and administrative costs
c.miscellaneous costs
d.factory overhead cost
274.23. Which of the following is an example of direct labor cost for an airplane
manufacturer?
a.Cost of oil lubricants for factory machinery
b.Cost of wages of assembly worker
c.Salary of plant supervisor
d.Cost of jet engines
279.28. What term is used to refer to the cost of changing direct materials into a
finished manufactured product?
a.Factory overhead cost
b.Period cost
c.Conversion cost
d.Direct labor cost
280.29. Which of the following items would not be classified as part of factory
overhead?
a.Direct labor used
b.Amortization of manufacturing patents
c.Production supervisors' salaries
d.Factory supplies used
290. Which of the following accounts will be found on the income statement?
a.inventory
b.work in process
c.finished goods
d.cost of merchandise sold
291. All of the following are ways that managers use managerial information except
a.to evaluate the company’s stock performance
b.to evaluate the performance of a company’s operations
c.to support long-term planning decisions
d.to determine the cost of manufacturing a product
292 Accounting is an information system that provides essential data about the economic
activities of an entity to various users to aid them in making informed judgments and
decisions.
293. Managerial accounting information includes both historical and estimated data.
ANS: T DIF: Easy OBJ: 16(1)-01
NAT: AACSB Analytic | IMA-Cost Management
Since there are few rules to restrict how an organization chooses to arrange its own internal data
for decision making, managerial accounting provides ample opportunity for creativity and
change.
ANS: T DIF: Easy OBJ: 16(1)-01
NAT: AACSB Analytic | IMA-Cost Management
295. In most business organizations, the chief accountant is called the controller.
A staff department or unit is one that provides services, assistance, and advice to the
departments with line or other staff responsibilities.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
296. The vice presidents of production and sales and the controller hold line positions in most
large organizations.
297. The controller's staff consists of management accountants responsible for systems and
procedures, general accounting, budgets, taxes, and cost accounting.
298. Planning is the process of directing operations to achieve the organization’s goals and
plans.
Planning is the process of setting goals for the use of an organization’s resources and of
developing ways to achieve these goals.
299. Control is the process of directing operations to achieve the organization’s goals and
plans.
The cost of materials entering directly into the manufacturing process is classified as factory
overhead cost.
302. The cost of wages paid to employees directly involved in converting materials to finished
product is classified as direct labor cost.
If the cost of employee wages is not a significant portion of the total product cost, the wages are
classified as direct materials cost.
303. For a construction contractor, the wages of carpenters would be classified as factory
overhead cost.
For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
304. Costs other than direct materials cost and direct labor cost incurred in the manufacturing
process are classified as factory overhead cost.
Depreciation on factory plant and equipment is an example of factory overhead cost.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
305. Cost of oil used to lubricate factory machinery and equipment is an example of a direct
materials cost.
If the cost of materials is not a significant portion of the total product cost, the materials may
be classified as part of factory overhead cost.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
Conversion cost is the combination of direct labor cost and factory overhead cost.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
307. Conversion cost is the combination of direct materials cost and factory overhead cost.
309. The costs of materials and labor that do not enter directly into the finished product are
classified as cost of goods sold.
Prime costs are the combination of direct materials and direct labor costs.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
313. Conversion costs are the combination of direct labor and factory overhead costs.
315. On the balance sheet for a manufacturing business, the cost of direct materials, direct
labor, and factory overhead are categorized as either materials inventory, work in process
inventory, or finished goods inventory.
Only the value of the inventory that is sold will appear in the income statement.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
316. The statement of cost of goods manufactured is an extension of the income statement for
a manufacturing company.
Managers use managerial information to evaluate performance of a company’s operation.
Which statement is true?
a. Statement I only
b. Statement 2 only
c. Both statements are true
d. Both statements are false
The following are some of the costs incurred by Cake Factory Company. Identify them as either:
328. Frosting
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
337. 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.
348. In an analogous sense, external user is to internal user as generally accepted accounting
principles are to
a. timely.
b. special-purpose.
c. relevance to decision.
d. SEC.
351. What activities and responsibilities are not associated with management's functions?
a. Planning
b. Accountability
c. Controlling
d. Directing
356. The management function that requires managers to look ahead and establish objectives
is
a. controlling.
b. directing.
c. planning.
d. constraining.
357. In determining whether planned goals are being met, a manager is performing the
function of
a. planning.
b. follow-up.
c. directing.
d. controlling.
361. The work of factory employees that can be physically and directly associated with
converting raw materials into finished goods is
a. manufacturing overhead.
b. indirect materials.
c. indirect labor.
d. direct labor.
362. Which one of the following would not be classified as manufacturing overhead?
a. Indirect labor
b. Direct materials
c. Insurance on factory building
d. Indirect materials
363. Manufacturing costs include
a. direct materials and direct labor only.
b. direct materials and manufacturing overhead only.
c. direct labor and manufacturing overhead only.
d. direct materials, direct labor, and manufacturing overhead.
366. A manufacturing process requires small amounts of glue. The glue used in the production
process is classified as a(n)
a. period cost.
b. indirect material.
c. direct material.
d. miscellaneous expense.
373. Cotter pins and lubricants used irregularly in a production process are classified as
a. miscellaneous expense.
b. direct materials.
c. indirect materials.
d. nonmaterial materials.
374. Which of the following is not another name for the term manufacturing overhead?
a. Factory overhead
b. Pervasive costs
c. Burden
d. Indirect manufacturing costs
376. The product cost that is most difficult to associate with a product is
a. direct materials.
b. direct labor.
c. manufacturing overhead.
d. advertising.
377. Manufacturing costs that cannot be classified as either direct materials or direct labor are
known as
a. period costs.
b. nonmanufacturing costs.
c. selling and administrative expenses.
d. manufacturing overhead.
380. Direct materials and direct labor of a company total $6,000,000. If manufacturing
overhead is $3,000,000, what is direct labor cost?
a. $3,000,000
b. $6,000,000
c. $0
d. Cannot be determined from the information provided
386. For inventoriable costs to become expenses under the matching principle,
a. the product must be finished and in stock.
b. the product must be expensed based on its percentage-of-completion.
c. the product to which they attach must be sold.
d. all accounts payable must be settled.
393. Hollern Combines, Inc. has $10,000 of ending finished goods inventory as of December
31, 2008. If beginning finished goods inventory was $5,000 and cost of goods sold was
$20,000, how much would Hollern report for cost of goods manufactured?
a. $22,500
b. $5,000
c. $25,000
d. $15,000
397. On the costs of goods manufactured schedule, the item raw materials inventory (ending)
appears as a(n)
a. addition to raw materials purchases.
b. addition to raw materials available for use.
c. subtraction from raw materials available for use.
d. subtraction from raw materials purchases.
398. The total raw materials available for use during 2008 for Carly Manufacturing Company
is
a. $810,000.
b. $260,000.
c. $450,000.
d. $760,000.
399. Carly Manufacturing Company's total manufacturing costs incurred in 2008 amounted to
a. $1,530,000.
b. $1,490,000.
c. $1,390,000.
d. $1,580,000.
400. If Carly Manufacturing Company's cost of goods manufactured for 2008 amounted to
$1,390,000, its cost of goods sold for the year is
a. $1,500,000.
b. $1,250,000.
c. $1,350,000.
d. $1,430,000.
401. What is work in process inventory generally described as?
a. Costs applicable to units that have been started in production but are only
partially completed
b. Costs associated with the end stage of manufacturing that are almost always complete
and ready for customers
c. Costs strictly associated with direct labor
d. Beginning stage production costs associated with labor costs dealing with bringing in
raw materials from the shipping docks
402. Utley Manufacturing Company reported the following year-end information: beginning
work in process inventory, $180,000; cost of goods manufactured, $516,000; beginning
finished goods inventory, $252,000; ending work in process inventory, $220,000; and
ending finished goods inventory, $264,000. Utley Manufacturing Company's cost of
goods sold for the year is
a. $504,000.
b. $528,000.
c. $476,000.
d. $252,000.
During 2008, Hopkins purchased $760,000 of raw materials, incurred direct labor costs of
$100,000, and incurred manufacturing overhead totaling $128,000.
404. How much is raw materials transferred to production during 2008 for Hopkins Manu-
facturing?
a. $992,000
b. $776,000
c. $760,000
d. $744,000
405. How much is total manufacturing costs incurred during 2008 for Hopkins?
a. $992,000
b. $1,004,000
c. $988,000
d. $1,000,000
406. Assume Hopkins Manufacturing’s cost of goods manufactured for 2008 amounted to
$960,000. How much would it report as cost of goods sold for the year?
a. $968,000
b. $1,000,000
c. $1,060,000
d. $952,000
During 2008, Modine purchased $1,140,000 of raw materials, incurred direct labor costs of
$150,000, and incurred manufacturing overhead totaling $192,000.
408. How much is total manufacturing costs incurred during 2008 for Modine?
a. $1,488,000
b. $1,506,000
c. $1,482,000
d. $1,500,000
409. How much would Modine Manufacturing report as cost of goods manufactured for 2008?
a. $1,464,000
b. $1,524,000
c. $1,518,000
d. $1,488,000
413. Assume your answer to question 121 above is $1,000,000. Total manufacturing costs
equal
a. $2,060,000.
b. $2,054,000.
c. $1,860,000.
d. $2,480,000.
414. Assume your answer to question 122 above is $2,000,000. Cost of goods manufactured
equals
a. $1,992,000.
b. $1,994,000.
c. $2,006,000.
d. $2,008,000.
415. Assume your answer to question 123 above is $2,040,000. The cost of goods sold is
a. $2,046,000.
b. $2,008,000.
c. $2,032,000.
d. $2,048,000.
417. Assume your answer to question 125 above is $1,500,000. Total manufacturing costs
equal
a. $3,090,000.
b. $3,081,000.
c. $2,790,000.
d. $3,720,000.
418.. Assume your answer to question 126 above is $3,000,000. Cost of goods manufactured
equals
a. $2,988,000.
b. $2,991,000.
c. $3,009,000.
d. $3,012,000.
419. Assume your answer to question 127 above is $3,060,000. The cost of goods sold is
a. $3,069,000.
b. $3,012,000.
c. $3,048,000.
d. $3,072,000.
420. Samson Company reported total manufacturing costs of $130,000, manufacturing
overhead totaling $26,000, and direct materials totaling $32,000. How much is direct
labor cost?
a. Cannot be determined from the information provided.
b. $188,000
c. $58,000
d. $72,000
421. Given the following data for Mehring Company, compute (A) total manufacturing costs
and (B) costs of goods manufactured:
Direct materials used $180,000 Beginning work in process $30,000
Direct labor 75,000 Ending work in process 15,000
Manufacturing overhead 225,000 Beginning finished goods 38,000
Operating expenses 263,000 Ending finished goods 23,000
(A) (B)
a. $465,000 $495,000
b. $480,000 $465,000
c. $480,000 $495,000
d. $495,000 $510,000
424. Which one of the following does not appear on the balance sheet of a manufacturing
company?
a. Finished goods inventory
b. Work in process inventory
c. Cost of goods manufactured
d. Raw materials inventory
425. The equivalent of finished goods inventory for a merchandising firm is referred to as
a. purchases.
b. cost of goods purchased.
c. merchandise inventory.
d. raw materials inventory.
426. What term describes all activities associated with providing a product or service?
a. The manufacturing chain
b. The product chain
c. The supply chain
d. The value chain
427. How have many companies significantly lowered inventory levels and costs?
a. They use activity-based costing.
b. They utilize an enterprise resource planning system.
c. They have a just-in-time method.
d. They focus on a total quality management system.
428. Which one of the following managerial accounting approaches attempts to allocate manu-
facturing overhead in a more meaningful fashion?
a. Theory of constraints
b. Just-in-time inventory
c. Activity-based costing
d. Total-quality management
429. What is one primary benefit of an enterprise resource planning (ERP) system?
a. It reduces inventory levels.
b. It permits companies to be more streamlined in production.
c. It replaces research and development in a company.
d. It requires an increased emphasis on product quality.
432. Which one of the following characteristics would likely be associated with a just-in-time
inventory method?
a. Ending inventory of work in process that would allow several production runs
b. A backlog of inventory orders not yet shipped
c. Minimal finished goods inventory on hand
d. An understanding with customers that they may come to the showroom and select
from inventory on hand
433. Which one of the following is a cost that would not likely be associated with computer-
integrated manufacturing?
a. Manufacturing overhead associated with allocation of equipment depreciation
b. Direct labor costs of a welder on the production floor
c. Manufacturing overhead associated with allocation of the plant lease to the latest
production run
d. Direct materials cost with several fuse plates for a new automobile
434. Which one of the following is an activity not associated with TQM?
a. Tightening the bolts on a chassis so that the frame will not drop out
b. Redesigning the gas tank after fuel efficiency standards are not being met
c. Verifying the 10 check points associated with producing the highest quality loaf of
bread
d. Ensuring that the mattress just manufactured meets the standard of comfort of a
random factory line worker
436. Some companies implement systems to reduce defects in finished products with the goal
of achieving zero defects. What are these systems called?
a. Activity-based costing systems
b. Enterprise resource planning systems
c. Value chain systems
d. Total quality management systems
437. Many companies now manufacture products that are untouched by human hands. What
do they use to achieve this?
a. Activity-based costing
b. Computer-integrated manufacturing
c. Enterprise resource planning systems
d. Total quality management systems
438. When a company prepares a worksheet for a manufacturing company, to which column is
the Indirect Labor account extended?
a. To the adjustment columns
b. To the income statement columns
c. To the cost of goods manufactured columns
d. To the balance sheet columns
439. When a worksheet is prepared for a manufacturing company, an offsetting entry must be
made to balance the cost of goods manufactured columns. Where does the offsetting entry
appear?
a. In the balance sheet debit column
b. In the income statement debit column
c. In the balance sheet credit column
d. In the income statement credit column
440. Which one of the following accounts would not appear in the cost of goods manufactured
columns of a worksheet?
a. Ending Work in Process Inventory
b. Ending Finished Goods Inventory
c. Raw Materials Inventory
d. Direct Labor
441. When making closing entries for a manufacturing company, to which account do all
accounts that appear on the cost of goods manufactured schedule get closed?
a. Income Summary
b. Materials, Labor, and Overhead
c. Manufacturing Summary
d. Finished Goods Inventory
443.. The function that pertains to keeping the activities of the enterprise on track is
a. planning.
b. directing.
c. controlling.
d. accounting.
445.For a manufacturing company, which of the following is an example of a period cost rather
than a product cost?
a. Depreciation on factory equipment
b. Wages of salespersons
c. Wages of machine operators
d. Insurance on factory equipment
446. For a manufacturing firm, cost of goods available for sale is computed by adding the
beginning finished goods inventory to
a. cost of goods purchased.
b. cost of goods manufactured.
c. net purchases.
d. total manufacturing costs.
447.If the cost of goods manufactured is less than the cost of goods sold, which of the following
is correct?
a. Finished Goods Inventory has increased.
b. Work in Process Inventory has increased.
c. Finished Goods Inventory has decreased.
d. Work in Process Inventory has decreased.
448. The principal difference between a merchandising and a manufacturing income statement
is the
a. cost of goods sold section.
b. extraordinary item section.
c. operating expense section.
d. revenue section.
449.If the total manufacturing costs are greater than the cost of goods manufactured, which of
the following is correct?
a. Work in Process Inventory has increased.
b. Finished Goods Inventory has increased.
c. Work in Process Inventory has decreased.
d. Finished Goods Inventory has decreased.
450. The sum of the direct materials costs, direct labor costs, and manufacturing overhead
incurred is the
a. cost of goods manufactured.
b. total manufacturing overhead.
c. total manufacturing costs.
d. total cost of work in process.
451.The inventory accounts that show the cost of completed goods on hand and the costs
applicable to production that is only partially completed are, respectively
a. Work in Process Inventory and Raw Materials Inventory.
b. Finished Goods Inventory and Raw Materials Inventory.
c. Finished Goods Inventory and Work in Process Inventory.
d. Raw Materials Inventory and Work in Process Inventory.
462. Which classification of costs is most relevant for income statements to be used internally?
a. Behavior.
b. Function.
c. Method of payment.
d. Object.
463. The set of processes that transform raw materials into finished products is known as a
a. differentiation strategy.
b. flexible manufacturing system.
c. lowest cost strategy.
d. value chain.
465. The period that begins with the arrival of materials and ends with the shipment of a
completed good is the
a. cycle time.
b. manufacturing cell.
c. computer-integrated manufacturing.
d. performance period.
470. The professional certification most relevant for managerial accountants is the
a. CMA.
b. CPA.
c. CSA.
d. MAS.
483. For the year, Redder Company has cost of goods manufactured of $600,000,
beginning finished goods inventory of $200,000, and ending finished goods inventory
of $250,000. The cost of goods sold is:
A. $450,000.
B. $500,000.
C. $550,000.
D. $600,000.
484. A cost of goods manufactured schedule shows beginning and ending inventories for:
A. raw materials and work in process only.
B. work in process only.
C. raw materials only.
D. raw materials, work in process, and finished goods.
485. A manufacturer may report three inventories on its balance sheet: (1) raw materials,
(2) work in process, and (3) finished goods. Indicate in what sequence these
inventories generally appear on a balance sheet.
A. (1), (2), (3)
B. (2), (3), (1)
C. (3), (1), (2)
D. (3), (2), (1)
489. Indirect materials may not physically become part of the finished product.
A. True
B. False
490. Manufacturing overhead consists of costs that are indirectly associated with the manufacture
of the finished product.
A. True
B. False
491. Product costs are costs that are a necessary and integral part of producing the finished
product.
A. True
B. False
492. Manufacturers compute cost of goods sold by adding the beginning finished goods inventory
to the cost of goods purchased and subtracting the ending finished goods inventory.
A. True
B. False
493. The costs assigned to beginning work in process inventory are based on the manufacturing
costs incurred in the prior period.
A. True
B. False
494. The cost of the beginning work in process plus the total manufacturing costs for the current
period is the cost of goods manufactured.
A. True
B. False
496. Under the just-in-time method, goods are manufactured or purchased just-in-time for use.
A. True
B. False
497. All of the following are distinguishing features of managerial accounting except:
A. internal users.
B. independent audits.
C. reports pertaining to subunits of the entity.
D. to provide special-purpose information.
498. The management function that requires management to look ahead and establish objectives
is:
A. controlling.
B. directing
C. evaluating.
D. planning.
499. The process of keeping the company's activities on track is:
A. controlling.
B. directing.
C. evaluating.
D. planning