ACC C605 - MAS OVERVIEW AND COST CONCEPT

(Prelim_Week 1_08-18-22)

1. The main purpose of management accounting is to

a) Evaluate past performance
b) Project future transaction
c) Help managers and make decisions
d) Help investors and creditors make decisions
2. Which of the following is not an objective of managerial accounting
a) Providing information for decision making and planning
b) Maximizing profits and minimizing costs
c) Assisting in directing and controlling operations
d) Measuring the performance of managers and subunits
3. The setting of objectives and the identification of methods to achieve those
objectives is called
a) Planning
b) Controlling
c) Decision making
d) Performance evaluation
4. The management function that involves overseeing day-to-day activities
a) Planning
b) Controlling
c) Directing and motivating
d) Rationalizing and estimating
5. What is the function of management that compares planned results against actual
results
a) Planning
b) Controlling
c) Organizing
d) Decision making
6. Taurus company has set various goals, and management is now taking appropriate
action to ensure that the firm achieves these goals. One such action is to reduce
outlays for overhead, which have exceeded budgeted amounts. Which of the
following functions best describes this process?
a) Decision making
b) Planning
c) Coordinating
d) Controlling
7. The process of choosing among competing alternatives is called
a) Controlling
b) Planning
c) Decision making
d) Performance evaluation
8. Decision making is required in which of the following management function(s)
a) Planning
b) Planning and control
c) Planning and directing
d) Planning, direct and control
9. Controllers are usually not concerned with
a) Preparation of tax returns
 b) Reporting to government
c) Protection of assets
d) Investor relation
10. Treasurers are usually not concerned with
a) Tax planning
b) Short-term financing
c) Cash custody and banking
d) Credit extension and collection of bad debts
11. A staff position is
a) The primary function of a company’s treasurer
b) Exercised downward in doing the command function
c) Directly involved in achieving the basic objectives of the organizations
d) Supportive in nature since it provides assistance to other company
segments
12. The controller primarily occupies
a) Line position
b) Staff position
c) Non-supervisory rank-and-file position
d) Position with very little influence in management decision-making
13. Which of the following is most likely a line position
a) VP for research and conglomerate firm
b) Store manager of a retail convenience outlet
c) Chief financial officer of a merchandising company
d) Human resources manager for an educational institution
14. The marketing director of a company or other organization is
a) A staff manager
b) A line manager
c) An accountant, not a manager
15. Which statement about the degree of detail in report (in Management Accounting)
is true?
a) It depends on the level of the manager receiving the report
b) It may depend on the frequency of the report
c) It depends on the type of manager receiving the report
d) All of the above
16. Managerial accounting is similar to financial accounting in that
a) Both account for opportunity cost
b) Both rely on cost accounting
c) Bont concentrate on future cost
d) Both classify reported information in the same way
17. The management function of controlling
a) Is performed only by the controller of a company
b) Is only applicable when the company sustain a loss
c) Is concerned mainly with operating a manufacturing segment
d) Includes performance evaluation by management
18. Which statement about the degree of detail in a report is true?
a) It depends on the level of the manager receiving the report
b) It may depend on the frequency of the report
c) It depends on the type of manager receiving the report
d) All of the above
19. Which of the following statements represents a similarity between financial and
managerial accounting?
a) Both are useful in providing information for external users
b) Both are governed by GAAP
c) Both rely heavily on published financial statements
d) Both draw upon data from an organization’s accounting system
20. Management accounting and cost accounting
a) Are required for record keeping as are financial accounting and tax
accounting
b) Provide cost information about products and services, as well as
information for internal decision making
c) Require an entirely separate group of accounts than financial accounting
d) Focus solely on the determination of costs to produce a product or provide a
service
21. Financial accounting information is used for reporting to:
a) External parties
b) Investors
c) Creditors
d) Managers
22. Financial statement for external users can be described as
a) User specific
b) General purpose
c) Special purpose
d) Management report
23. Management accounting information is generally prepared for
a) Stockholders
b) Creditors
c) Managers
d) Regulatory agencies
24. Internal reports must be communicated
a) Daily
b) Monthly
c) Annually
d) As needed
25. Statement 1 - Reports prepared in financial accounting are general-purpose
reports, whereas reports prepared in managerial accounting are usually special-
purpose reports.
Statement 2 - Controlling is the process of determining whether planned goals are
being met
Statement 3 - Managerial accounting information generally pertains to an entity
as a whole
a) True, true, true,
b) True, true, false
c) True, false, false
d) False, false, false
26. Statement 1 - Metal for the manufacture of golf clubs is classified as
manufacturing cost
Statement 2 - Wages of drivers delivering goods to customers is classified as
selling expense
Statement 3 - rent of factory building is classified as manufacturing cost
 a) True, true, true,
b) True, true, false
c) True, false, false
d) False, false, false
27. Statement 1 - Commission of salesmen is classified as selling expense
Statement 2 - Power to operate factory equipment is classified as manufacturing
cost
Statement 3 - Advertising is classified as selling expense
a) True, true, true,
b) True, true, false
c) True, false, false
d) False, false, false
28. What are the prime cost?
a) The first costs incurred on a job
b) Indispensable as distinguished from avoidance costs
c) Direct materials and direct labor
d) Costs incurred on joint products before the split off point
29. The prime cost and conversion cost share what common element of total cost?
a) Direct material
b) Direct labor
c) Variable overhead
d) Fixed overhead
30. Direct materials are
a) Prime costs and conversion cost
b) Conversion cost and manufacturing cost
c) Prime cost and manufacturing cost
d) Prime cost, conversion cost, and manufacturing cost
31. Which cost is most likely to be mixed for a manufacturer
a) Raw materials
b) Direct labor
c) Manufacturing overhead
d) Insurance, if the selling price per unit increases, the break-even point in units
will
32. All of the following would be considered manufacturing overhead costs by a book
publisher except
a) Depreciation on the printing equipment
b) Wages paid to the production supervisor
c) Rent on the warehouse containing the finished book inventory
d) Fire insurance on the printing facilities
33. Which of the following costs at a sofa manufacturing company would be treated
as a period cost under the variable costing method?
a) The cost of glue used to assemble the wood frame of each sofa produced
b) Depreciation on sales vehicle
c) The salary of a factory manager
d) Both b and c above
34. Sudden economic changes have forced the AutoFacsimile to alter its business
strategy. The company is considering eliminating product lines, laying off production
workers, reducing advertising, and closing one of its factories. In taking these actions,
which one of the following costs should be considered sunk costs?
a) The cost of selling or demolishing the factory
 b) The utility costs at the closed factory and real estate taxes
c) Production workers’, wages, severance, and advertising
d) Research and development costs of eliminated product lines
35. When the level of activity increases within the relevant range, how does each of
the following change?
Average Cost per Unit Unit VC Total FC
a) Increase Increase Increase
b) Decrease No change No change
c) Decrease No change Decrease
d) Decrease Increase Decrease

Numbers 36 to 38
Machine hours and electricity costs for Britney Industries for 2021 were as follows:
Months Machine Hours Utility Costs
January 4,800 22,080
February 5,568 25,200
March 3,648 16,200
April 5,952 27,600
May 7,296 33,900
June 6,336 26,400
July 7,872 29,700
August 6,720 27,300
September 3,840 18,600
October 7,104 31,200
November 9,024 37,200
December 8,064 33,300

36. Using the high-low method, determine the variable electricity cost per machine
hour
a) 3.87
b) 3.48
c) 3.91
d) 3.51
37. Using the high-low method, determine the estimated fixed electricity costs per
month
a) 2,277.12
b) 5,796.48
c) 1,9167.16
d) 5,525.76
38. Using the high-low method, estimate the electricity costs for a month in which
5,000 machine hours are worked
a) 23,075.76
b) 21,466.16
c) 23,296.48
d) 21,627.12