24.    The cause and- effect relationship might arise as a result of which of the following:

A. knowledge of operations.

B. a contractual arrangement.

C. a physical relationship between the level of activity and costs.

D. All of the above.


25.    The ideal database contains:

A. reliably measured observations

B. numerous cost driver observations

C. cost driver observations spanning a wide range

D. All of these answers are correct.


26.    For a manufacturing-sector company, the cost of factory depreciation is classified as a:

A. period cost     B. direct manufacturing labor cost

C. direct material cost      D. manufacturing overhead cost


Answer the following questions using the information below:


For last year, Lewisburn Manufacturing reported the following:


Revenue $420,000
Beginning inventory of direct materials, January 1 22,000
Purchases of direct materials 146,000
Ending inventory of direct materials, December 31 16,000
Direct manufacturing labor 18,000
Indirect manufacturing costs 40,000
Beginning inventory of finished goods, January 1 35,000
Cost of goods manufactured 104,000
Ending inventory of finished goods, December 31 36,000
Operating costs 140,000


27.    How much of the above would be considered period costs for Lewisburn Manufacturing?

A. $390,000         B. $104,000          C. $246,000          D. $140,000


28.    Cost accounting provides all of the following EXCEPT:

A. nonfinancial information regarding the cost of operational efficiencies

B. pricing information from marketing studies

C. financial information regarding the cost of acquiring resources

D. information for management accounting and financial accounting


29.    Responsibilities of a CFO include all of the following EXCEPT:

A. preparing federal, state, and international tax returns

B. providing financial reports to shareholders

C. managing short-term and long-term financing

D. investing in new equipment


30.    For manufacturing firms, inventoriable costs include:

A. plant supervisor salaries

B. costs of dealing with customers after the sale

C. distribution costs

D. research and development costs


31.    Which of the following does NOT affect the direct/indirect classification of a cost?

A. the materiality of the cost in question

B. the level of budgeted profit for the next year

C. available technology to gather information about the cost

D. the design of the operation


32.    Product costs used for external reporting generally include:

A. design costs plus manufacturing costs                B. all costs incurred along the value chain

C. manufacturing costs only         D. All of these answers are correct.


33.    Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy?


A. Does the strategy comply with GAAP (Generally Accepted Accounting Principles)?

B. Will adequate cash be available to implement the strategy?

C. What substitute products exist in the marketplace?

D. Who are our most important customers?


TRUE/FALSE.  Mark ‘A’ on the Scantronif the statement is true and ‘B’ if the statement is false.

34.    Financial accounting is broader in scope than management accounting.


35.    Customers are demanding increased levels of performance in all aspects of the value chain and the supply chain.


36.    The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income.


37.    To perform cost-volume-profit analysis, a company must be able to separate costs into fixed and variable components.

38.    ABC systems always provide decision-making benefits that exceed implementation costs.


39.    Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.


40.    The weighted-average process costing method does NOT distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.


41.    If indirect-cost rates were based on actual short-term usage, periods of lower demand would result in lower costs per unit.

42.    In some variations of normal costing, organizations use budgeted rates to assign direct costs as well as indirect costs to jobs.

43.    A flat or slightly sloped regression line indicates a strong relationship.
44.     Inventoriable costs are reported as an expense when incurred and expensed on the income statement when the product is sold.


45.    Assigning direct costs poses more problems than assigning indirect costs.

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