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Managerial Accounting

JIT and TQM are not compatible philosophies since JIT relates to inventory and TQM is a management philosophy.
True
False

One shortcoming of traditional managerial accounting systems is that they focus too much on cost drivers and not enough on reducing costs.
True
False

Product costs are the costs of resources consumed as part of administrative and selling activities during a fiscal period.
True
False

Glues and screws are variable costs in a furniture company.
True
False

Markup is the difference between the unit cost and the selling price of a product.
True
False

Normal costing measures unit costs by adding the actual costs of direct materials and direct labor to an estimated overhead cost incurred in producing the units
True
False

A predetermined overhead rate is an estimate of the amount of overhead that management believes should be assigned to a unit of product.
True
False

Process costing assigns the costs associated with a particular job to the units produced in that job.
True
False

Equivalent units are the number of units that would have been produced during a period if all of the department's efforts had resulted in completed units.
True
False

In parallel processing the flow of products breaks off at some point so that different units go through different processing departments.
True
False

Cost-volume-profit (CVP) analysis is the use of an understanding of the relationship among costs, volume, and profits to make managerial decisions.
True
False

A company's margin of safety is the excess of the breakeven point over actual sales.
True
False

Direct labor, direct labor dollars, and machine hours are examples of activity bases.
True
False

The actual overhead rate is found using estimated overhead costs divided by the estimated activity level.
True
False

Plant supervision is a unit-level cost.
True
False

The direct materials budget identifies the amount of materials that will be required to support a company's total production needs.
True
False

A static budget enables a company to examine projected income over a range of sales levels.
True
False

Foreign currency exchange rates refer to the relative values of the currencies of different countries.
True
False

Low inflation rates are called hyperinflation.
True
False

Top-down budgets involve all levels of an organization working to achieve the organization's goal.
True
False

An unfavorable variance results when the actual price (or quantity) is less than the standard price (or quantity) for materials or labor.
True
False

Quality costs are limited to companies that manufacture tangible products.
True
False

Operating assets is Sales - (cost of goods sold + other operating expenses).
True
False

Cycle time is the number of minutes that pass between units leaving the final assembly area.
True
False

Operational capital investment decisions affect all or a considerable part of a company's operations, have uncertain lives, and require large investments.
True
False

The cost of capital is the interest rate that results in the present value of cash inflows from an investment.
True
False

The payback period is the average accounting income a project generates per period divided by the amount of the investment in the project.
True
False

Internal control systems are based on the theory that workers do not always behave in ways that are in the best interests of their company or its owners.
True
False

Which of the following trends in the new business environment is concerned with the length of time it takes to develop, manufacture, and deliver a product?
TQM
just-in-time (JIT)
time-based competition
flexible manufacturing

Internal auditors may have educational backgrounds or experience in which of the following fields?
accounting
finance
information systems
all of the above

Which of the following would be considered part of manufacturing overhead?
hourly wages for employees in the accounting department
monthly salary expense for factory maintenance personnel
monthly salary expense for finished good warehouse personnel
sales commissions paid to sales personnel directly related to product sales

When an employee circumvents an internal control procedure, which of the following is likely to take place?
management should be glad
(s)he almost always rationalizes the action
the employee should be fired immediately, regardless of the nature of the problem
all of the above

Which costs are sometimes found on the income statement and sometimes found on the balance sheet?
period costs
product costs
both period and product costs
neither period nor product costs

Which costs are always found on the income statement, but never on the balance sheet?
period costs
product costs
both period and product costs
neither period nor product costs

In some cases, managers may invest in long-term projects even though they may reduce ROI in the short run. Reasons a manager might make such an investment include
legal/regulatory requirements
good strategic fit
improved public relations
all of the above

Companies using a just-in-time production system
produce products based on sales forecasts
produce products based on customer demand
have mostly foreign customers
generally are small companies

A company with department names like fabrication, painting, and finishing is likely to use what type of costing to reflect its production operation?
job order
process
actual
normal

Solution Preview

Managerial Accounting and Finance
JIT and TQM are not compatible philosophies since JIT relates to inventory and TQM is a management philosophy.
True
False
False They are compatible

One shortcoming of traditional managerial accounting systems is that they focus too much on cost drivers and not enough on reducing costs.
True
False
True. Over head costs allocable to units are not identified and so not reduced.

Product costs are the costs of resources consumed as part of administrative and selling activities during a fiscal period.
True
False
False During manufacturing of units.

Glues and screws are variable costs in a furniture company.
True
False
True. Direct costs.

Markup is the difference between the unit cost and the selling price of a product.
True
False
True. This is the definition of markup
Normal costing measures unit costs by adding the actual costs of direct materials and direct labor to an estimated overhead cost incurred in producing the units
True
False
True.

A predetermined overhead rate is an estimate of the amount of overhead that management believes should be assigned to a unit of product.
True
False
True

Process costing assigns the costs associated with a particular job to the units produced in that job.
True
False
True
Equivalent units are the number of units that would have been produced during a period if all of the department's efforts had resulted in completed units.
True
False
True
In parallel processing the flow of products breaks off at some point so that different units go through different processing departments.
True
False
False. It is simultaneous processing by two or more processing ...

Solution Summary

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