Multiple Choice

Answer questions.

Answer Questions
1) _____ refers to accounting information developed for managers
within an organization.

a. Internal auditing
b. Managerial accounting
c. Financial accounting
d. Tax accounting

2)Which scorecard function is associated with making nonroutine decisions?

a. Scorekeeping is associated with making nonroutine decisions.
b. Attention directing is associated with making nonroutine decisions.
c. Problem solving is associated with making nonroutine decisions.
d. None of these answers is correct.

3) The greatest impact of the Foreign Corrupt Practices Act on the accounting system is that it _____.

a. forbids bribery
b. prohibits unethical practices by foreign investors
c. requires documentation of the adequacy of internal accounting controls
d. specifies how to account for transactions with foreign countries

4) Which of the following items should be considered in addition to simplicity by
managers when designing accounting systems?

a. Cost-benefit balances should be considered.
b. Behavior implications should be considered.
c. Cost-benefit balances and behavior implications should be considered.
d. None of these answers is correct.

5) A mortgage payment would most likely be identified as a ¬¬¬¬¬_____.

a. purely variable cost
b. discretionary fixed cost
c. committed fixed cost
d. mixed cost

6) Costs arising from the possession of facilities, equipment, and a basic organization are ¬¬¬¬¬_____.

a. capacity costs
b. discretionary costs
c. committed fixed costs
d. engineered costs

7) The fixed costs required to achieve a desired level of production or to provide a desired level of service, while maintaining product or service attributes (e.g., quality), are ¬¬¬¬¬_____.

a. committed costs
b. mixed costs
c. capacity costs
d. engineered costs

8) In the mixedâ?'cost function, Y = $77,000 + $9.70X, the X signifies ¬¬¬¬¬_____.

a. total fixed cost
b. total cost
c. variable cost per unit of cost driver
d. number of units of the cost driver

9) Sam Company makes metal signs for businesses and residences. These signs are made of sheet metal, which the owner paints by hand. The owner has a good sense of his labor and materials cost behavior, but he is concerned that he does not have good measure of other support costs. Currently, he predicts support costs to be 40% of the cost of materials. Close investigation of the business reveals that $8 per direct labor hour is a more plausible and reliable support cost relationship.

Consider estimated support costs of the following two signs that Sam Company makes.

Small Sign Large Sign

Materials cost $150 $500
Direct labor hours 5 7
Support costs 9 11

The amount of support costs assigned to a small sign using direct labor hours as the cost driver is ¬¬¬¬¬_____.

a. $80
b. $40
c. $200
d. $90

10) Hug Me Company produces dolls. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor. If the break-even volume in dollars is $1,446,000, then the total fixed costs for the period must be _____.

a. $433,800
b. $361,500
c. $516,425
d. $1,446,000

11) Zachary Company wishes to earn after-tax net income of $18,000. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Zachary's tax rate is 40%. The number of units that must be sold to breakeven is _____.

a. 14,000 units
b. 17,000 units
c. 19,000 units
d. 21,500 units

12) If fixed expenses were the same and contribution margin per unit was cut in half, then the breakâ?'even point would _____.

a. be cut in half
b. double
c. be the same
d. be undeterminable