Multiple Choice

1. Management accounting
A. focuses on estimating future revenues, costs, and other measures to forecast activities and their results.
B. provides information about the company as a whole.
C. reports information that has occurred in the past that is verifiable and reliable.
D. provides information that is generally available only on a quarterly or annual basis.

2. Cost behavior refers to
A. how costs react to a change in the level of activity.
B. whether a cost is incurred in a manufacturing, merchandising, or service company.
C. classifying costs as either inventoriable or period costs.
D. whether a particular expense has been ethically incurred.

3. Which of the following is NOT an assumption of CVP analysis?
A. Costs may be separated into separate fixed and variable components.
B. Total revenues and total costs are linear in relation to output units.
C. Unit selling price, unit variable costs, and unit fixed costs are known and remain constant.
D. Proportion of different products will remain constant when multiple products are sold.

4. Job costing
A. can only be used in manufacturing.
B. records the flow of costs for each customer.
C. allocates an equal amount of cost to each unit made during a time period.
D. is commonly used when each unit of output is identical.

5. The UNIQUE feature of an ABC system is the emphasis on
A. costing individual jobs.
B. department indirect-cost rates.
C. multiple-cost pools.
D. individual activities.

6. An unfavorable variance indicates that
A. actual costs are less than budgeted costs.
B. actual revenues exceed budgeted revenues.
C. the actual amount decreased operating income relative to the budgeted amount.
D. all of the above are true.

7. The flexible budget contains
A. budgeted amounts for actual output.
B. budgeted amounts for planned output.
C. actual costs for actual output.
D. actual costs for planned output

8. Which of the following is an equation of a variable cost function?
A. y = b
B. y = a + bX
C. y = bX
D. y = a

9. Operating budgets include all of the following EXCEPT:
A. the revenues budget
B. the budgeted income statement
C. the administrative costs budget
D. the budgeted balance sheet

10. For decision making, a listing of the relevant costs:
A. will help the decision maker concentrate on the pertinent data.
B. will only include future costs.
C. will only include costs that differ among alternatives.
D. All of these answers are correct.