1. A goal of managerial accounting is to provide information for planning, controlling and decision making for management.
A) True
B) False
2. Performance reports, like other managerial accounting reports, must follow GAAP.
A) True
B) False
3. Opportunity costs are the value of benefits foregone when one alternative is selected over another.
A) True
B) False
4. Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for internal users of accounting information.
A) True
B) False
5. Variable cost per unit remains the same even though there is a change in the number of units produced.
A) True
B) False
6. Which of the following is likely to be a noncontrollable cost of a department supervisor?
A) labor in the department
B) materials used in the department
C) insurance on the plant
D) overtime premium pay earned by those working in the department
7. Calculating the difference in revenue and the difference in cost between decision alternatives is called
A) budgeting production.
B) incremental analysis.
C) profit planning.
D) systems development.
8. A manager should be evaluated based on
A) noncontrollable costs.
B) opportunity costs.
C) controllable costs.
D) sunk costs.
9. Costs incurred in the past which are not relevant to present decisions are
A) fixed costs.
B) sunk costs.
C) opportunity costs.
D) indirect costs.
10. A cost which is directly traceable to a product, activity, or department is a
A) fixed cost.
B) managerial cost.
C) opportunity cost.
D) direct cost.
11. Which of the following is not likely to be a fixed cost?
A) direct materials used in production
B) rent
C) depreciation
D) salary of the human resources director
12. The principle that managers follow when they only investigate departures from the plan that appear to be significant is commonly known as
A) small amounts don’t matter.
B) management by exception.
C) only labor and materials deserve attention.
D) exceptional costs yield exceptional results.
13. Depreciation of factory equipment is part of manufacturing overhead.
A) True
B) False
14. Manufacturing costs include direct material, direct labor, and manufacturing overhead.
A) True
B) False
15. A company that builds custom homes would be likely to use a process costing system.
A) True
B) False
16. Period costs are identified with accounting periods rather than goods produced.
A) True
B) False
17. The wages of a factory assembly line worker would be classified as direct labor.
A) True
B) False
18. Sales commissions are considered a product cost.
A) True
B) False
19. Which of the following costs is not part of manufacturing overhead?
A) Electricity for the factory
B) Depreciation of factory equipment
C) Salaries for the production supervisors
D) Health insurance for sales staff
20. If the amount of underapplied overhead or overapplied overhead is not large, the Manufacturing Overhead account is closed to
A) Raw Materials Inventory.
B) Work in Process Inventory.
C) Finished Goods Inventory.
D) Cost of Goods Sold.
Essays/Problems
21. Classify each of the following costs as a product cost or a period cost. ‘ 5 points (1/2 point each)
______ a. Depreciation of production equipment
______ b. Sales commissions
______ c. Insurance on corporate office building
______ d. Direct materials
______ e. Rent for company headquarters building
______ f. Company president’s salary
______ g. Wages for production workers
______ h. Advertising expenses
______ i. Cost of shipping finished goods inventory to a customer
______ j. Plant managers Salary
30. The Seattle Company allocates overhead based on a predetermined overhead rate of $8.00 per direct labor hour. Job b 689 required 6 tons of direct material at a cost of $900.00 per ton and took employees who earn $15.00 per hour a total of 90 hours to complete. What is the total cost of Job b 689? Show all work. 10 points
31. A Krogers grocery store manager is being evaluated. Explain the difference between controllable costs and noncontrollable costs as they should be used in this evaluation. Provide examples of costs which are controllable and those which are noncontrollable. 5 points