Question 1

List and describe the two types of long-run planning and the two types of short-run planning.

Accepted Answer

Long-run planning:
   Short-run planning:

Question 2

Miscellaneous materials used by sales managers should be accounted for as:

Accepted Answer

A)  Direct materials 
B)  Indirect materials 
C)  Manufacturing overhead 
D)  Selling expense 
A)  Direct materials 
B)  Indirect materials 
C)  Manufacturing overhead 
D)  Selling expense D

Question 3

You currently work as a machinist in a factory. Your salary is $15 per hour. You are thinking about quitting your job and going back to college. It will take you two years to obtain your college degree. Tuition and other costs of the education will total $21,000. You spent $9,000 preparing to be a machinist. In considering whether to go back to school, the $9,000 of prior training is a(n):

Accepted Answer

A)  Differential cost 
B)  Sunk cost 
C)  Variable cost 
D)  Opportunity cost 
A)  Differential cost 
B)  Sunk cost 
C)  Variable cost 
D)  Opportunity cost B

Question 4

Cherry Company manufactures electronic yard tools. Costs for May were direct labor, $84,000; indirect labor, $51,000; direct materials, $69,000; indirect materials, $9,000; factory utilities, $6,900; and insurance on manufacturing equipment, $2,100. Cherry Company's manufacturing overhead for May is:

Accepted Answer

A)  $18,000 
B)  $69,000 
C)  $138,000 
D)  $222,000 
A)  $18,000 
B)  $69,000 
C)  $138,000 
D)  $222,000

Question 5

The process of making decisions about future operations is called:

Accepted Answer

A)  Controlling 
B)  Planning 
C)  Evaluating performance 
D)  Implementing 
A)  Controlling 
B)  Planning 
C)  Evaluating performance 
D)  Implementing

Question 6

The only kind of costs that do NOT involve any outlay of cash are:

Accepted Answer

A)  Opportunity costs 
B)  Sunk costs 
C)  Indirect costs 
D)  Differential costs 
A)  Opportunity costs 
B)  Sunk costs 
C)  Indirect costs 
D)  Differential costs

Question 7

With regard to a particular company, which of the following groups generally has the widest variety of decisions to make?

Accepted Answer

A)  Managers 
B)  Creditors 
C)  Investors 
D)  Regulators 
A)  Managers 
B)  Creditors 
C)  Investors 
D)  Regulators

Question 8

The cost of milk used to manufacture ice cream would most likely be classified as a(n):

Accepted Answer

A)  Variable cost 
B)  Indirect cost 
C)  Sunk cost 
D)  Fixed cost 
A)  Variable cost 
B)  Indirect cost 
C)  Sunk cost 
D)  Fixed cost

Question 9

Which of the following would NOT be considered a manufacturing cost?

Accepted Answer

A)  Tires for an automobile manufacturer 
B)  Milk for an ice cream maker 
C)  Sales commissions for an automobile manufacturer 
D)  Property taxes on the factory for an ice cream maker 
A)  Tires for an automobile manufacturer 
B)  Milk for an ice cream maker 
C)  Sales commissions for an automobile manufacturer 
D)  Property taxes on the factory for an ice cream maker

Question 10

Which of the following would NOT usually be considered a product cost of a manufacturing company?

Accepted Answer

A)  Property taxes on factory building 
B)  Direct materials 
C)  Indirect labor 
D)  Advertising 
A)  Property taxes on factory building 
B)  Direct materials 
C)  Indirect labor 
D)  Advertising

Question 11

Which of the following is a short-run planning decision?

Accepted Answer

A)  Defining the organization's mission 
B)  Purchasing an industrial printing press 
C)  Performing a strategic market analysis 
D)  Preparing operational budgets 
A)  Defining the organization's mission 
B)  Purchasing an industrial printing press 
C)  Performing a strategic market analysis 
D)  Preparing operational budgets

Question 12

Which of the following reveals how profitability is affected by changes in revenues, costs and activity levels?

Accepted Answer

A)  Operational budgeting 
B)  Return on investment 
C)  C-V-P analysis 
D)  Production prioritizing 
A)  Operational budgeting 
B)  Return on investment 
C)  C-V-P analysis 
D)  Production prioritizing

Question 13

Which is usually conducted by executive level management?

Accepted Answer

A)  Evaluating 
B)  Strategic planning 
C)  Operational budgeting 
D)  Controlling 
A)  Evaluating 
B)  Strategic planning 
C)  Operational budgeting 
D)  Controlling

Question 14

Materials used in production are classified as "direct materials" if they are:

Accepted Answer

A)  Controllable by managers 
B)  Traceable to specific products 
C)  Fixed costs 
D)  Not a significant part of production 
A)  Controllable by managers 
B)  Traceable to specific products 
C)  Fixed costs 
D)  Not a significant part of production

Question 15

Manufacturing costs are also considered:

Accepted Answer

A)  Selling costs 
B)  Fixed costs 
C)  Product costs 
D)  Period costs 
A)  Selling costs 
B)  Fixed costs 
C)  Product costs 
D)  Period costs

Question 16

Rhododendron Company offers yard maintenance services for residential clients. Costs for the year were direct labor, $80,000 and indirect labor, $5,000. Additional expenses for the year were supplies $6,000; depreciation of lawn maintenance equipment, $1,000; advertising expense, $500; receptionist payroll, $13,000 and fuel, $2,500. Which amount is Rhododendron's total service costs?

Accepted Answer

A)  $14,500 
B)  $80,000 
C)  $94,500 
D)  $11,000 
A)  $14,500 
B)  $80,000 
C)  $94,500 
D)  $11,000

Question 17

Which of the following is NOT true of period costs?

Accepted Answer

A)  They cannot be assigned to a product 
B)  The most common are selling and administrative costs 
C)  They are recognized as an expense 
D)  They may appear on the balance sheet as inventory 
A)  They cannot be assigned to a product 
B)  The most common are selling and administrative costs 
C)  They are recognized as an expense 
D)  They may appear on the balance sheet as inventory

Question 18

Costs that are NOT classified as direct materials or direct labor but are essential to the production of goods and services are:

Accepted Answer

A)  Differential costs 
B)  Manufacturing overhead costs 
C)  Fixed costs 
D)  Sunk costs 
A)  Differential costs 
B)  Manufacturing overhead costs 
C)  Fixed costs 
D)  Sunk costs

Question 19

Direct labor is most often considered which of the following?

Accepted Answer

A)  Manufacturing overhead 
B)  Fixed cost 
C)  Indirect cost 
D)  Product cost 
A)  Manufacturing overhead 
B)  Fixed cost 
C)  Indirect cost 
D)  Product cost

Question 20

Which of the following is NOT used in the evaluation of a business segment?

Accepted Answer

A)  Variable costs 
B)  Opportunity costs 
C)  Sunk costs 
D)  Direct costs 
A)  Variable costs 
B)  Opportunity costs 
C)  Sunk costs 
D)  Direct costs

Exam 15: Management Accounting and Cost Concepts

List and describe the two types of long-run planning and the two types of short-run planning.

Miscellaneous materials used by sales managers should be accounted for as:

The process of making decisions about future operations is called:

The only kind of costs that do NOT involve any outlay of cash are:

With regard to a particular company, which of the following groups generally has the widest variety of decisions to make?

The cost of milk used to manufacture ice cream would most likely be classified as a(n):

Which of the following would NOT be considered a manufacturing cost?

Which of the following would NOT usually be considered a product cost of a manufacturing company?

Which of the following is a short-run planning decision?

Which of the following reveals how profitability is affected by changes in revenues, costs and activity levels?

Which is usually conducted by executive level management?

Materials used in production are classified as "direct materials" if they are:

Manufacturing costs are also considered:

Which of the following is NOT true of period costs?

Costs that are NOT classified as direct materials or direct labor but are essential to the production of goods and services are:

Direct labor is most often considered which of the following?

Which of the following is NOT used in the evaluation of a business segment?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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