Questions and Answers of Introduction To Managerial Accounting

Which of the following statements is false? (You may select more than one answer.)a. Under variable costing, only those manufacturing costs that vary with output are treated as product costs.b. Under
Smith Company produces and sells one product for $40 per unit. The company has no beginning inventories. Its variable manufacturing cost per unit is $18 and the variable selling and administrative
Smith Company produces and sells one product for $40 per unit. The company has no beginning inventories. Its variable manufacturing cost per unit is $18 and the variable selling and administrative
What is the amount of cost of goods sold under variable costing?a. $220,000.b. $161,000.c. $154,000.d. $230,000.
What is the amount of cost of goods sold under absorption costing?a. $189,000.b. $196,000.c. $179,000.d. $186,000.
When comparing Kelley’s absorption costing net operating income to its variable costing net operating income, which of the following will be true?a. Its absorption costing net operating income will
Which of the following statements is true? (You can select more than one answer.)a. A segment’s contribution margin minus its traceable fixed expenses equals the segment margin.b. A company’s
Dexter Corporation produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for two years are given
The business staff of the law firm Frampton, Davis & Smythe has constructed the following report that breaks down the firm’s overall results for last month into two business segments—family
The Excel worksheet form that appears below is to be used to recreate portions of Review Problem 1 relating to Dexter Corporation. Download the workbook containing this form from Connect, where you
Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions
Which of the following statements is false? (You may select more than one answer.)a. Control involves gathering feedback to ensure that the plan is being properly executed or modified as
March, April, and May sales are $100,000, $120,000, and $125,000, respectively.A total of 80% of all sales are credit sales and 20% are cash sales. A total of 60%of credit sales are collected in the
Referring to the facts in question 2 above, what is the accounts receivable balance at the end of May?a. $40,000b. $50,000c. $72,000d. $80,000
If a company has a beginning merchandise inventory of $50,000, a desired ending merchandise inventory of $30,000, and a budgeted cost of goods sold of$300,000, what is the amount of required
Budgeted unit sales for March, April, and May are 75,000, 80,000, and 90,000 units. Management desires to maintain an ending inventory equal to 30% of the next month’s unit sales. How many units
Which of the following statements is true? (You may select more than one answer.)a. The manufacturing overhead budget includes depreciation related to assets that support a company’s selling and
Mynor Corporation manufactures and sells a seasonal product that has peak sales in the third quarter.The following information concerns operations for Year 2—the coming year—and for the first two
Which of the following statements is true? (You may select more than one answer.)a. A planning budget is prepared before the period begins and it is based on the actual level of activity incurred
A five-star hotel buys bouquets of flowers to decorate its common areas and guest rooms. Its flexible budget for flowers is $325 per day of operations plus $7.20 per room-day. (A room-day is a room
Refer to the data in the above question. If the actual spending on flowers for the month was $61,978 and the hotel originally budgeted for 30 operating days and 7,500 room-days, what was the spending
Which of the following statements is true? (You may select more than one answer.)a. The standard quantity per unit defines the amount of direct materials that should be used for each unit of finished
The standard and actual prices per pound of raw material are $4.00 and $4.50, respectively. A total of 10,500 pounds of raw material was purchased and then used to produce 5,000 units. The quantity
Referring to the facts in question 5 above, what is the material quantity variance?a. $5,000 unfavorableb. $5,000 favorablec. $2,000 favorabled. $2,000 unfavorable
Harrald’s Fish House is a family-owned restaurant that specializes in Scandinavian-style seafood. Data concerning the restaurant’s monthly revenues and costs appear below (q refers to the number
Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit of product are as follows:During
Which of the following statements is false? (You may select more than one answer.)a. Under some circumstances, a sunk cost may be a relevant cost.b. Future costs that do not differ between
Assume that in October you bought a $450 nonrefundable airline ticket to Telluride, Colorado, for a 5-day/4-night winter ski vacation. You now have an opportunity to buy an airline ticket for a
Based on the facts in question 2 above, does a differential cost analysis favor Telluride or Stowe, and by how much?a. Stowe by $470.b. Stowe by $20.c. Telluride by $70.d. Telluride by $20.
Which of the following statements is true? (You may select more than one answer.)a. Common fixed costs should be allocated to business segments when making decisions because all of a company’s
A company has received a special order from a customer to make 5,000 units of a customized product. The direct materials cost per unit of the customized product is$15, the direct labor cost per unit
Refer to the facts from question 5; however, in answering this question assume that the company is operating at 100% of its capacity without the special order. If the company normally manufactures
When a company has a constraint and wishes to maximize profits, it should favor the products that have the highesta. Gross margin per unit.b. Gross margin per unit of the constraining resource.c.
It is profitable to continue processing a joint product after the split-off point so long asa. the incremental revenue from such processing exceeds the incremental processing costs incurred after the
1.) Charter Sports Equipment manufactures round, rectangular, and octagonal trampolines. Sales and expense data for the past month follow:Management is concerned about the continued losses shown by
Which of the following statements is true? (You may select more than one answer.)a. The time value of money recognizes that a dollar received today is worth more than a dollar received a year from
Which of the following statements is true? (You may select more than one answer.)a. The payback period increases as the cost of capital increases.b. The payback period is the length of time that it
Which of the following statements is false? (You may select more than one answer.)a. The total-cost and incremental-cost approaches to net present value analysis can occasionally lead to conflicting
If a $300,000 investment has a project profitability index of 0.25, what is the net present value of the project?a. $75,000b. $225,000c. $25,000d. $275,000
Which of the following statements is true? (You may select more than one answer.)a. The project profitability index is used to make screening decisions.b. The internal rate of return is the rate of
Lamar Company is considering a project that would have a five-year life and require a $2,400,000 investment in equipment. At the end of five years, the project would terminate and the equipment would
Which of the following statements is true about the basic equation for asset accounts?(You may select more than one answer.)a. Debits are added to the beginning balance.b. Debits are subtracted from
Which of the following is not a cash equivalent? (You may select more than one answer.)a. Accounts receivableb. Treasury billsc. Commercial paperd. Money market funds
Which of the following statements is true? (You may select more than one answer.)a. The direct method of preparing the operating activities section of the statement of cash flows starts with net
Which of the following statements is false? (You may select more than one answer.)a. Depreciation charges are subtracted from net income.b. An increase in inventory is subtracted from net income.c. A
Assume that a company’s beginning and ending balances in its Accumulated Depreciation account are $2,000 and $2,900, respectively. Also assume that the company sold a piece of equipment that had an
Refer to the data in question 5 above. Which of the following choices is true?a. The company should subtract a gain of $25 from net income.b. The company should add a gain of $25 to net income.c. The
Assume that a company’s beginning and ending balances in its Property, Plant, and Equipment account are $5,000 and $6,000, respectively. Also assume that the company sold a piece of equipment that
Which of the following statements is true with respect to earnings quality? (You may select more than one answer.)a. Managers generally perceive that earnings are of higher quality when earnings are
Rockford Company’s comparative balance sheets for this year and last year and the company’s income statement for this year follow:Additional data:1. This year Rockford paid a cash dividend.2. The
Jones Company’s sales are $1,000,000 and 80% of those sales are on credit. The beginning and ending accounts receivable balances are $100,000 and $140,000, respectively.What is the company’s
Jones Company’s sales are $1,000,000 and the gross margin percentage is 60%.The beginning and ending inventory balances are $240,000 and $260,000, respectively.What is the inventory turnover?a.
Based on the information in question 2, what is Jones Company’s average sale period?a. 152 daysb. 140 daysc. 228 daysd. 175 days
Based on the information in questions 1–3, what is Jones Company’s operating cycle?a. 295 daysb. 283 daysc. 243 daysd. 307 days
Total assets are $1,500,000 and stockholders’ equity is $900,000. What is the debt-to-equity ratio?a. 0.33b. 0.50c. 0.60d. 0.67
Orvil Company’s net profit margin percentage is 4.5%, its total asset turnover is 2.4, and its equity multiplier is 1.5. What is the company’s return on equity?a. 2.8%b. 7.2%c. 16.2%d. 10.7%
Mulligan Corporation’s financial statements are as follows:Required:1. Compute the return on total assets.2. Compute the return on equity.3. Is Mulligan’s financial leverage positive or negative?
Obtain the most recent annual report or SEC filing 10-K of a publicly traded company that interests you.It may be a local company or it may be a company in an industry that you would like to know
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts.The company sells its product to retailers throughout the northeastern quadrant of the
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 8. In addition to the budget schedules that you prepared in Integration Exercise 8, insert a
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 8. In addition to the budget schedules that you prepared in Integration Exercise 8, insert a
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 8. In addition to the budget schedules that you prepared in Integration Exercise 8, insert two
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 8 as well as the schedules that you prepared in answering Integration Exercises 8 through
Pick any large company and describe its strategy using one of the three customer value propositions defined in the prologue.
Pick three industries and describe how the risks faced by companies within those industries can influence their planning, controlling, and decision-making activities.
Which of the following statements is false? (You may select more than one answer.)a. Absorption costing assigns fixed and variable manufacturing overhead costs to products.b. Job-order costing
Assume that a company’s total estimated fixed overhead cost for the coming year is$100,000 and its estimated variable overhead cost is $3.00 per direct labor-hour. If the company estimates that it
Which of the following statements is true? (You may select more than one answer.)a. Manufacturing overhead is an indirect cost.b. Because manufacturing overhead includes fixed costs, the
What is Ryan’s predetermined overhead rate in the Machining Department?a. $33.75b. $8.75c. $6.25d. $31.25
What is Ryan’s predetermined overhead rate in the Assembly Department?a. $18.65b. $76.25c. $14.40d. $28.65
How much overhead cost would be applied to Job M assuming that it used five machine-hours in the Machining Department and 10 direct labor-hours in the Assembly Department?a. $188.25b. $210.25c.
Redhawk Company has two manufacturing departments—Assembly and Fabrication. The company considers all of its manufacturing overhead costs to be fixed costs. The first set of data shown below is
What is job-order costing?
Would you expect the amount of applied overhead for a period to equal the actual overhead costs of the period? Why or why not?
High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to
Which of the following statements is true? (You may select more than one answer.)a. Direct labor costs are debited to Work in Process and indirect labor costs are debited to Manufacturing Overhead.b.
Which of the following statements is true with respect to the Manufacturing Overhead clearing account? (You may select more than one answer.)a. Actual manufacturing overhead costs are debited to
Which of the following statements is false with respect to the schedule of cost of goods manufactured? (You may select more than one answer.)a. The beginning raw materials inventory plus raw
The estimated total manufacturing overhead cost is $200,000. The estimated total amount of the allocation base is 40,000 direct labor-hours. The actual total manufacturing overhead cost for the
The predetermined overhead rate is $50 per machine-hour, underapplied overhead is $5,000, and the actual amount of machine-hours is 2,000. What is the actual amount of total manufacturing overhead
Hogle Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:The company applies overhead cost to jobs on the basis of
Which of the following statements is false? (You may select more than one answer.)a. In recent years, most companies have experienced increasing manufacturing overhead costs in relation to direct
Which of the following statements is true? (You may select more than one answer.)a. The costs of a unit-level activity should be proportional to the number of units produced.b. Unit-level activities
Which of the following explain why activity-based costing improves product cost accuracy when compared to traditional methods? (You may select more than one answer.)a. Activity-based costing
Which of the following statements is false? (You may select more than one answer.)a. Activity-based costing systems usually shift costs from low-volume products to high-volume products.b.
Aerodec, Inc., manufactures and sells two types of wooden deck chairs: Deluxe and Tourist. Annual sales in units, direct labor-hours (DLHs) per unit, and total direct labor-hours per year are
A form for using Excel to recreate the Review Problem related to Aerodec, Inc., is shown below. For simplicity, the form excludes the Parts Administration and Material Receipts activities that were
Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an
Which of the following statements is true? (You may select more than one answer.)a. Job-order costing and process costing systems both use the same basic manufacturing accounts, including
Which of the following statements is false? (You may select more than one answer.)a. The activity in a processing department is performed uniformly on all units passing through the department.b. The
Beginning work in process includes 400 units that are 20% complete with respect to conversion and 30% complete with respect to materials. Ending work in process includes 200 units that are 40%
Assume the same facts as above in Concept Check
Luxguard Home Paint Company produces exterior latex paint, which it sells in one-gallon containers. The company has two processing departments—Base Fab and Finishing. White paint, which is used as
Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system. The company has two processing departments—Cleaning and
Which of the following statements is a common assumption underlying cost-volumeprofit analysis? (You may select more than one answer.)a. The variable cost per unit remains constant.b. The selling
Once a company hits its break-even point, net operating income willa. Increase by an amount equal to the selling price per unit multiplied by the number of units sold above the break-even point.b.
The contribution margin ratio always increases when (you may select more than one answer):a. Sales increase.b. Fixed costs decrease.c. Total variable costs decrease.d. Variable costs as a percent of
Assume the selling price per unit is $30, the contribution margin ratio is 40%, and the total fixed cost is $60,000. What is the break-even point in unit sales?a. 2,000b. 3,000c. 4,000d. 5,000
Assume a company produces one product that sells for $55, has a variable cost per unit of $35, and has fixed costs of $100,000. How many units must the company sell to earn a target profit of
Given the same facts as in question 5 above, if the company exactly meets its target profit, what will be its margin of safety in sales dollars?a. $110,000b. $127,500c. $137,500d. $150,000

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