ACT 205 final

Choose the answer that is not a distinguishing characteristic of financial accounting information
A. It is global information that reflects the performance of the whole company.
B. It is focused primarily on the future
C. It is more concerned with financial data than physical or economic data.
D. It is more highly regulated than managerial accounting information
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Terms in this set (38)
Choose the answer that is not a distinguishing characteristic of financial accounting information
A. It is global information that reflects the performance of the whole company.
B. It is focused primarily on the future
C. It is more concerned with financial data than physical or economic data.
D. It is more highly regulated than managerial accounting information
B
Managerial accounting systems consider economic and non-financial data as well as financial statement data.
True
fasle
true
Which of the following best represents a characteristic of managerial accounting?
A. Information is historically based and reported annually.
B. Information is based on estimates and is bounded by relevance and timeliness.
C. Information is regulated by the Securities and Exchange Commission.
D. Information is characterized by reliability and objectivity.
B
Product costs include materials, labor, and selling and administrative costs.
True
False
fasle
Product costs are immediately recorded in expense accounts when the products are manufactured.
True
False
fasle
Which of the following statements concerning manufacturing costs is incorrect?
A. All salaries incurred by the sales department are expensed as incurred.
B. Direct labor costs are recorded initially in an inventory account.
C. Depreciation on manufacturing equipment is a period cost.
D. The cost of direct materials can be readily traced to products.
c
Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.
A. True
B. False
Fasle
Which of the following items would be reported directly on the income statement as a period cost?
A. Selling and administrative salaries
B. Cost of lubricant for oiling machinery
C. Wages paid to machine operators
D. All of these.
A
Which of the following correctly computes cost of goods manufactured?
A. Beg work in process + Direct materials used + Direct labor + Overhead − Ending work in process
B. Beginning work in process + Cost of goods sold − Ending finished goods
C. Beginning work in process + Direct materials used + Direct labor + Overhead
D. None of These
A
Cost of goods sold is equal to the cost of goods
:A. manufactured minus ending finished goods.
B. available for sale minus beginning finished goods.
C. available for sale minus ending finished goods.
D. manufactured minus beginning finished goods.
C
At the end of the period, the balance remaining in work in process is reported on the balance sheet. A. True B. FalseTrueWhich of the following is a false statement regarding assumptions of CVP analysis? a. Total fixed costs remain constant over the relevant range. b. Unit selling prices are constant. c. Changes in volume or level of activity increase variable costs per unit. d. All units produced are sold.CMixed costs may be separated into fixed costs and variable costs by using a. the relevant range method. b. the high-low method. c. the contribution margin method. d. all the above.BIf the unit selling price is $500, the unit variable cost is $300, and the total monthly fixed costs are $300,000, then the contribution margin ratio is a. 30%. b. 40%. c. 50%. d. 60%.BIf activity level increases 25% and a specific cost increases from $40,000 to $50,000, this cost would be classified as a a. variable cost. b. mixed cost. c. fixed cost. d. none of the above.AIf total fixed costs are $900,000 and variable costs as a percentage of unit selling price are 40%, then the break-even point in dollars is a. $1,500,000. b. $360,000. c. $2,250,000. d. not determinable with the information given.AA mixed cost contains both selling and administrative cost elements. True FalseFasleVariable costs are costs that remain the same per unit at every level of activity. True FalseTrueIf revenue = $80 and variable cost = 40% of revenue, then contribution margin = $48. True FalsetrueIncremental analysis is the process of identifying the financial data that: a. do not change under alternative courses of action. b. change under alternative courses of action. c. are mixed under alternative courses of action. d. No correct answer is given.BIn making business decisions, management ordinarily considers: a. quantitative factors but not qualitative factors. b. financial information only. c. both financial and nonfinancial information. d. relevant costs, opportunity cost, and sunk costs.CA company is considering the following alternatives: a. Revenues, variable costs, and fixed costs.Alternative A Alternative BRevenues $50,000 $50,000Variable costs 24,000 24,000Fixed costs 12,000 15,000 Which of the following are relevant in choosing between these alternatives? b. Variable costs and fixed costs .c. Variable costs only. d. Fixed costs only.DIt costs a company $14 of variable costs and $6 of fixed costs to produce product Z200, which sells for $30. A foreign buyer offers to purchase 3,000 units at $18 each. If the special offer is accepted and produced with unused capacity, net income will: a. decrease $6,000. b. increase $6,000. c. increase $12,000. d. increase $9,000.CIt costs a company $14 of variable costs and $6 of fixed costs to produce product Z200. Product Z200 sells for $30. A buyer offers to purchase 3,000 units at $18 each. The seller will incur special shipping costs of $5 per unit. If the special offer is accepted and produced with unused capacity, net income will: a. increase $3,000. b. increase $12,000. c. decrease $12,000. d. decrease $3,000.DJobart Company is currently operating at full capacity. It is considering buying a part from an outside supplier rather than making it in-house. If Jobart purchases the part, it can use the released productive capacity to generate additional income of $30,000 from producing a different product. When conducting incremental analysis in this make-or-buy decision, the company should: a. ignore the $30,000. b. add $30,000 to other costs in the "Make" column. c. add $30,000 to other costs in the "Buy" column. d. subtract $30,000 from the other costs in the "Make" column.BIn a make-or-buy decision, relevant costs are: a. manufacturing costs that will be saved. b. the purchase price of the units. c. the opportunity cost. d. All of the answer choices are correct.DDerek is performing incremental analysis in a make-or-buy decision for Item X. If Derek buys Item X, he can use its released productive capacity to produce Item Z. Derek will sell Item Z for $12,000 and incur production costs of $8,000. Derek's incremental analysis should include an opportunity cost of: a. $12,000. b. $8,000. c. $4,000. d. $0.CAll of the capital budgeting methods use cash flow except the a. cash payback method. b. annual rate of return method. c. internal rate of return method. d. profitability index method.BThe cash payback period is computed by dividing the a. cost of the capital investment by the annual net income. b. cost of the capital investment by the present value of the cash flows. c. cost of the capital investment by the net annual cash flow. d. present value of the cash flows by the cost of the capital investment.CThe primary discounted cash flow technique is the a. Annual rate of return method. b. Cash payback method. c. Net present value method. d. None of the above.cA company is considering investing in a project that costs $780,000 and is expected to generate net annual cash flows of $315,000 each year for 3 years. The company has a required rate of return of 9%. The present value of an annuity of 1 for 3 periods at 9% is 2.531. The net present value of this project is a. $797,265. b. $465,000. c. $797,725. d. $17,265.dFor purposes of capital budgeting, estimated cash inflows and outflows are the preferred inputs. True FalsetrueThe cash payback technique is relatively easy to compute and considers the expected profitability of the project. True FalsefasleThe primary discounted cash flow technique is the net present value method. True FalsetrueA company's cost of capital is the rate that it must pay to obtain funds from creditors and stockholders. True FalsetrueIntangible benefits, such as increased quality or improved safety, should be ignored in capital budgeting decisions. True FalsefalseThe annual rate of return is computed by dividing net annual cash flow by the average investment. True FalsefalsePerforming a post-audit is important because if managers know their estimates will be compared to actual results they will be more likely to submit reasonable and accurate data when they make investment proposals. True Falsetrue