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Acc 561 final exam (3rd set) 52 questions with answers
 

Acc 561 final exam (3rd set) 52 questions with answers

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    Acc 561 final exam (3rd set) 52 questions with answers Acc 561 final exam (3rd set) 52 questions with answers Document Transcript

    • ACC 561 Final EXAM (3rd set) 52 Questions with Answers Score 100% (A+) Grade1. _____ refers to accounting information developed for managers within an organization. a. Internal auditing b. Managerial accounting c. Financial accountingd. Tax accounting2. Ethical accountants are important to society because _____.a. they pay their taxesb. the information produced is reliablec. they will not go to prison and waste taxpayers’ moneyd. none of these answers is correct3. Performance reports _____. a. are quantitative expressions of action plansb. provide feedback by comparing results with plans and by highlighting deviations from plansc. are deviations from a plan d. ignore areas that are presumed to be running smoothly4. Output measures of both resources and activities are _____. a. cost drivers b. stages of production c. fixed activitiesd. variable activities5. An accountant may have difficulty classifying costs as fixed or variable because _____. a. costs may behave in a nonlinear way b. costs may be affected by more than one cost driver c. the decision situation may cause the costs to be fixed in the short term d. all of these answers are correct6. If the proportions in a sales mix change, the _____. a. contribution margin per unit increases b. break even point will remain the same c. cost volume profit relationship also changes d. net income will not be altered
    • 7. _____ will decrease a companys break-even point. a. Reducing its total fixed costs b. Decreasing contribution margin per unit c. Increasing variable cost per unit d. Decreasing the selling price per unit8. Costs that change abruptly at intervals of activity because the resources and their costscome in indivisible chunks are called ¬¬¬¬¬_____. a. mixed costs b. variable costs c. fixed costs d. step costs9. _____ arise as a result of strategic decisions about the scale and scope of an organizations activities. a. Capacity costs b. Discretionary costs c. Mixed costs d. Engineered costs10. _____ is the first step in estimating or predicting costs as a function of appropriate costdrivers. a. Cost measurement b. Cost determination c. Cost behavior investigationd. Cost driver identification11. The process of identifying appropriate cost drivers and their effects on the costs of makinga product or providing a service is called ¬¬¬¬¬_____. a. cost prediction b. cost measurement c. activity analysis d. budgeting12. _____ is not a primary purpose of a cost management system. a. Providing aggregate measures of inventory value and cost of goods sold b. Providing cost information for strategic management decisionsc. Providing cost information for operational controld. All of these answers are correct13. Where a specific product is the cost object, the materials used to manufacture theproduct
    • would probably be classified as a(n) _____. a. direct, variable cost b. direct, fixed cost c. indirect, variable costd. indirect, fixed cost14. _____ is a name for a system that first accumulates overhead costs for each of theactivities of an organization, and then assigns the costs of activities to the products, services,or other cost objects that caused that activity. a. Activity based costing b. Cost driver accounting c. Transaction based accounting d. Transaction costing15. _____ is the process of measuring products, services, and activities against the bestlevels of performance. a. Value-adding b. Activity-based costing c. Benchmarking d. Continuous improvement16. Couch Company can produce either product A or product B. If Couch Company producesproduct A, expected direct material cost would be $24,000. If Couch Company produces productB, expected direct material cost would be $24,000. In choosing between these alternatives, the$24,000 direct material cost is _____. a. relevant because it is an expected future cost b. relevant because it is a product cost c. irrelevant because it is an estimated cost d. irrelevant because it does not differ between alternatives17. The choice of the absorption or contribution approach affects the manufacturing costper unit because the manufacturing cost per unit is _____. a. higher if the absorption approach is used b. higher if the contribution approach is used c. the same regardless of the approach d. independent of the approach18. The product strategy in which companies first determine the price at which they can sell anew product and then design a product that can be produced at a low enough cost to providean adequate profit margin is referred to as _____. a. full costing b. target costing
    • c. predatory pricing d. discriminatory pricing19. Jack Bowers has paid off the mortgage on his house and continues to live in the house.The interest income forgone by not selling the house and investing the proceeds is an example ofa(n) _____. a. sunk cost b. detrimental cost c. opportunity cost d. outlay cost20. _____ would be a consideration in a make-or-buy decision. a. Excess capacity b. Variable factory overhead c. Rental income from unused facilitiesd. All of these answers are correct 21. In deciding whether to add or delete a product, service, or department, the salary of theplant manager is an _____. a. avoidable fixed cost b. avoidable variable cost c. unavoidable fixed cost d. unavoidable variable cost22. Depreciation is _____. a. the periodic cost of equipment spread over the future periods in which the equipment is expected to be used b. the decline in equipment value due to obsolescence c. the difference between the original cost and current market value d. All of these answers are correct23. Past costs that are unavoidable and unchangeable are known as _____ costs. a. fixed overhead b. operating c. product production d. sunk24. A major benefit of effective budgeting is that _____.a. it compels managers to think aheadb. it aids managers in communicating objectives to unitsc. it provides benchmarks to evaluate subsequent performanced. all of these answers are correct25. A sales forecast is _____.
    • a. a prediction of sales under a given set of conditions b. the result of decisions to create conditions c. the same as a sales budget that will generate a desired level of sales d. all of these answers are correct26. Which of the following is not a major benefit of budgeting? a. Budgeting compels managers to think ahead.b. Budgeting provides definite expectations that are the best framework for judgingsubsequent performance.c. Budgeting aids managers in coordinating their efforts so the objectives of the organizationas a whole match the objectives of its parts. d. Budgeting allows managers to operate day-to-day, reacting to current events rather thanplanning for the future.27. Preparing the master budget begins by establishing _____. a. a targeted balance sheet b. a targeted income statement c. the expected cash d. the expected sales28. Financial planning models _____. a. focus on the budgeted balance sheet b. allow managers to assess the predicted impacts of various alternatives before finaldecisions are selected c. attempt to answer “How come?” questions d. are extremely accurate, thus lessening the need for management judgment29. A variance is the difference between _____. a. a budgeted amount and a benchmark amount b. the required number of inputs for the number of outputs c. an actual result and a budgeted amountd. a budgeted amount and a stan¬dard amount30. Efficiency is indicated by _____. a. sales-activity variances b. static-budget variances c. flexible-budget variancesd. all of these answers are correct31. Flexible budgets help to measure the _____. a. differences between projected and actual activity levels b. efficiency of operations at the actual activity level c. amount by which standard quantity and expected prices differd. reasons why projected activity levels were not attained
    • 32. Identify which of the following statements about "perfection standards" is true. a. It is generally believed that they have a negative influence on employee morale. b. They are expressions of the most efficient performance possible. c. They usually result in unfavorable variances.d. All of these answers are correct.33. Identify which of the following is not a characteristic of a management control system. a. A management control system aids and coordinates the process of making decisions. b. A management control system encourages short term profitability. c. A management control system motivates individuals throughout the organization to actin concert.d. A management control system coordinates forecasting sales and cost driver activities,budgeting, and measuring and evaluating performance.34. Identify which of the following statements regarding responsibility centers is false. a. Responsibility centers usually have one objective. b. Management control systems monitor responsibility center objectives. c. Responsibility centers are usually classified according to theirfinancial responsibility. d. Cost centers, profit centers, and investments centers are all examples of responsibilitycenters.35. A management control system must _____ to achieve maximum benefits at minimum cost. a. look at the short term only b. motivate managers with quarterly bonuses based on performance c. foster goal congruence and managerial effort d. be the same as the financial accounting system36. An uncontrollable cost _____. a. should be ignored in evaluating the responsibility center managers performance b. is influenced by a managers decisions and actions c. tells a great deal about a manager’s decision-making abilities d. is the same as a sunk cost37. Improvements in the production process are examples of _____cost. a. prevention b. appraisal c. internal failure d. external failure
    • 38. Identify which of the following statements is a benefit of decentralization. a. Top level managers have the best information concerning local conditions. b. Managers acquire decision making ability and other management skills that help themmove upward in the organization, assuring continuity of leadership. c. Managers make decisions that enhance their segment’s performance. d. Managers save time dealing with managers from other segments regarding transferprices.39. Reciprocal services are services provided by a service department to _____. a. a producing departmentb. another service departmentc. external customersd. all of these answers are correct.40. Costs are accumulated in traditional and ABC systems by _____. a. activities and organizational units, respectivelyb. organizational units and activities, respectivelyc. activities and activities, respectivelyd. organizational units and organizational units, respectively41. _____ is not a cost driver representing an “ability to bear” philosophy. a. Revenue of each division b. Cost of goods sold by each division c. Total cost before central cost allocation in later division d. Usage42. _____ is least likely to be a cost driver as a basis for applying overhead costs. a. Direct-labor cost b. Indirect labor hours c. Machine hours d. Production setups43. The excess of actual overhead over the overhead applied to products is called _____. a. overapplied overhead b. underapplied overhead c. overestimated overhead d. prorated overhead44. _____ is (are) used for external reporting. a. Absorption costing b. Variable costing c. Direct costing d. Absorption costing and variable costing
    • 45. The fixed overhead rate is computed as_____. a. budgeted fixed manufacturing overhead / expected volume of production b. actual fixed manufacturing overhead / actual volume of production c. budgeted fixed manufacturing overhead / actual volume of production d. actual fixed manufacturing overhead / expected volume of production46. The _____ discloses the economic resources of the organization and the claims against these resources.a. balance sheetb. income statementc. statement of cash flowsd. statement of retained earnings47. Identify which one of the following statements is false.a. Owners’ equity solely represents the profits made by an organization in the current period.b. Assets are economic resources that are expected to benefit future cash inflows or reducefuture cash outflows.c. Liabilities are economic obligations or claims against the assets of an organization byoutsiders.d. Assets must always equal the sum of liabilities and owners’ equity.48. The accrual basis of accounting recognizes the impact of transactions on the financialstatements in the period when _____.a. revenues are earned and expenses are incurredb. cash is received or disbursedc. the transaction occursd. the accounting equation is decreased49. Cash collected from the customers before goods are delivered is known as_____.a. unearned revenueb. deferred revenuec. advances from customersd. all of these answers are correct50. The _____ is (are) largely responsible for developing generally accepted accounting
    • principles in the United States.a. FASBb. IASCc. SECd. FASB and IASC51. The _____ would result in an increase in income under the cash basis but not an increasein income under the accrual basis.a. credit sale of inventory at a sales price in excess of the inventorys costb. cash collection from a credit customerc. cash sale of inventory at a sales price in excess of the inventorys costd. return of defective inventory purchased on account to a supplier where a full credit wasgiven52. _____ is reported on the financial statements of publicly held companies in theUnited States.a. The current ratiob. Earnings per sharec. The price-earnings ratiod. All of these answers are correctPROBLEMS:1. Christina is considering leaving her current position to open a music store. Christina’s
    • current salary is $45,000. Annual music store revenue and costs are estimated at $250,000 and$210,000, respectively. If Christina decides to open the music store, the change in her annualincome would be _____. a. $85,000 b. ($5,000) c. $250,000 d. $40,000($250,000 - $210,000) - $45,000 = ($5,000)2. Deadwood Hospital has overall variable costs of 50% of total revenues and fixed costs of$40 million per year. There are 40,000 patient-days estimated for next year. The break-evenpoint expressed in total revenue is _____. a. $80 million b. $40 million c. $10 million d. none of these answers is correct$40 million / (1 - 0.50) = $80 million3. The following information is for Kinsner Corporation: Total fixed costs $313,500 Variable costs per unit $99 Selling price per unit $154 If management has a targeted net income of $46,200 (ignore income taxes), then the numberof units that must be sold is _____. a. 2,036 units b. 2,336 units c. 5,700 units d. 6,540 units($313,500 + $46,200) / ($154 - $99) = 6,540 units4. Illinois Company reported the following information about the production and sales of itsonly product during its first month of operations: Sales ($225 per unit) $405,000 Direct materials used $176,000 Direct labor $100,000 Variable factory overhead $44,000 Fixed factory overhead $80,000 Variable selling and administrative expenses $20,000
    • Fixed selling and administrative expenses $10,000 Ending inventories:Direct materials -0-WIP -0-Finished goods 400 units The cost of goods sold under variable costing is_____. a. $320,000 b. $360,000 c. $288,000 d. $272,000($176,000 + $100,000 + $44,000) / 2,000 = $160 per unit;$405,000 / $225 = 1,800 units sold;1,800 x $160 = $288,0005. Florida Companys overhead cost information is given below:Standard applied overhead $210,000Budgeted overhead based on standard machine hours allowed $230,000Budgeted overhead based on actual machine hours used $215,000Actual overhead $200,000Required: a. Compute the total overhead variance. b. Calculate the flexible budget variancec. Determine the production volume variance.a. $200,000 - $210,000 = $10,000 favorable b. $200,000 - $230,000 = $30,000 favorable c. $230,000 - $210,000 = $20,000 unfavorable6. Alabama Companys overhead cost information is given below:
    • Standard applied overhead $322,000Budgeted overhead based on standard machine hours allowed $332,000Budgeted overhead based on actual machine hours used $310,000Actual overhead $346,000Required: a. Compute the total overhead variance. b. Calculate the flexible budget variance. c. Determine the production volume variance.a. $346,000 - $322,000 = $24,000 unfavorableb. $346,000 - $332,000 = $14,000 unfavorablec. $332,000 - $322,000 = $10,000 unfavorable