BUS 201 Principles of Managerial Accounting Exam 1 Spring 2011

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Pick the BEST answer to each multiple choice question. This is an open-book, opennotes test, but it must be solely your own work. Please be sure that your name appears on the document as well as in the filename of the document you submit. Submit your completed exam via the assignment collector on Blackboard. You will find it under the button Exam Drop. Due 2/6/2011, 11:59PM. Good luck 1. Managerial accounting information: A. Is used mainly by external users. B. Involves gathering information about costs for planning and control decisions. C. Is generally the only accounting information available to managers. D. Can be used for control purposes but not for planning purposes. E. Has little to do with controlling costs. 2. A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called: A. Continuous improvement. B. Customer orientation. C. Just-in-time. D. Theory of constraints. E. Total quality management. 3. An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: A. Continuous improvement. B. Customer orientation. C. Just-in-time manufacturing. D. Theory of constraints. E. Total quality management. 4. A direct cost is a cost that is: A. Identifiable as controllable. B. Variable with respect to the volume of activity. C. Fixed with respect to the volume of activity. D. Traceable to a cost object. E. Sunk with respect to a cost object.

5. An opportunity cost is: n y A. An uncontrollable cost. n B. A cost of potential benefit lost. t C. A change in th cost of a component. he c D. A direct cost. E. A sunk cost. 6. A fixed cost: f A. Re equires the future outlay of cash and is relevant for future de f y d ecision maki ing. B. Do not chan with chan oes nge nges in the volume of ac v ctivity within the relevan range. n nt C. Is directly trac ceable to a co object. ost D. Ch hanges with changes in the volume of activity w t o within the relevant range. . E. Ha already be incurred and cannot be avoided s it is irrele as een d so evant for dec cision makin ng. 7. La year, Smi Company sold 10,000 units of its only produ If sales in ast ith y s uct. ncrease by 15% in the curren year, how will unit va nt w ariable cost a unit fixed cost be aff and fected?

A. Ch hoice A B. Ch hoice B C. Ch hoice C D. Ch hoice D E. Ch hoice E 8. A primary diff p ference betw ween variable costs and fi e fixed costs is s: A. Va ariable costs per unit cha s ange in vary ying increme while fix costs per unit change ents xed r e in equ incremen over the relevant range of activit ual nts ty. B. Va ariable costs per unit fluctuate and fi s ixed costs pe unit remai constant o er in over the relevant range of activity. f C. Va ariable costs per unit are fixed and fi s e ixed costs pe unit are va er ariable over the relevant t range of activity. e D. Va ariable costs per unit cha s ange in equa increments while total fixed costs change in al s l propo ortion to the level of acti ivity over the company's relevant ran s nge. E. To variable costs are fix and fixed costs per u never ch otal xed d unit hange over th relevant he range of activity. e

9. Period costs for a manufacturing company would flow directly to: A. The current income statement. B. Factory overhead. C. The current balance sheet. D. Job cost sheet. E. The current manufacturing statement. 10. Costs that are first assigned to inventory are called: A. Period costs. B. Product costs. C. General costs. D. Administrative costs. E. Fixed costs. 11. Products that have been completed and are ready to be sold by the manufacturer are called: A. Finished goods inventory. B. Goods in process inventory. C. Raw materials inventory. D. Cost of goods sold. E. Factory supplies. 12. Goods a company acquires to use in making products are called: A. Cost of goods sold. B. Raw materials inventory. C. Finished goods inventory. D. Goods in process inventory. E. Conversion costs. 13. Products that are in the process of being manufactured but are not yet complete are called: A. Raw materials inventory. B. Conversion costs. C. Cost of goods sold. D. Goods in process inventory. E. Finished goods inventory. 14. Another title for goods in process inventory is: A. Indirect materials inventory. B. Work in process inventory. C. Conversion costs. D. Direct materials inventory. E. Raw materials inventory.

15. The cost of labor that is not clearly associated with specific units or batches of product is called: A. Unspecified labor. B. Direct labor. C. Indirect labor. D. Basic labor. E. Joint labor. 16. Factory overhead costs normally include all of the following except: A. Indirect labor costs. B. Indirect material costs. C. Selling costs. D. Machinery oil. E. Factory rent. 17. Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are: A. Sunk labor. B. Direct labor. C. Indirect labor. D. Finished labor. E. All of these. 18. Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called: A. Administrative expenses. B. Nonmanufacturing costs. C. Sunk costs. D. Factory overhead. E. Preproduction costs. 19. Materials that are used in support of the production process but are not clearly identified with units or batches of product are called: A. Secondary materials. B. General materials. C. Direct materials. D. Indirect materials. E. Materials inventory.

20. The salary paid to the supervisor of an assembly line would normally be classified as: A. Direct labor. B. Indirect labor. C. A period cost. D. A general cost. E. An assembly cost. 21. Which of the following items appears only in a manufacturing company's financial statements? A. Cost of goods sold. B. Cost of goods manufactured. C. Goods available for sale. D. Gross profit. E. Net income. 22. Which of the following is never included in direct materials costs? A. Invoice costs of direct materials. B. Outgoing delivery charges. C. Materials storage costs. D. Materials handling costs. E. All of these are direct material costs. 23. Raw materials that physically become part of the product and can be traced to specific units or batches of product are called: A. Raw materials sold. B. Chargeable materials. C. Goods in process. D. Indirect materials. E. Direct materials. 24. Which of the following costs would not be classified as factory overhead? A. Property taxes on maintenance machinery. B. Expired insurance on factory equipment. C. Wages of the factory janitor. D. Metal doorknobs used on wood cabinets produced. E. Small tools used in production. 25. The total cost of goods completed during the accounting period for a manufacturer is called: A. Ending finished goods inventory. B. Total manufacturing costs. C. Ending goods in process inventory. D. Cost of goods manufactured. E. Cost of goods sold.

26. The production activities for a customized product represent a(n): A. Operation. B. Job. C. Unit. D. Pool. E. Process. 27. A job order cost accounting system would best fit the needs of a company that makes: A. Shoes and apparel. B. Paint. C. Cement. D. Custom machinery. E. Pencils and erasers. 28. Target cost is calculated as A. direct costs + desired profit B. direct costs - desired profit C. expected selling price - direct costs D. expected selling price - desired profit E. expected selling price + desired profit 29. A job order production system would be appropriate for a company that produces which one of the following items? A. A landscaping design for a new hospital. B. Seedlings for sale in a nursery. C. Sacks of yard fertilizer. D. Packets of flower seeds. E. Small gardening tools, including rakes, shovels, and hoes. 30. A document in a job order cost accounting system that is used to record the costs of producing a job is a(n): A. Job cost sheet. B. Job lot. C. Finished goods summary. D. Process cost system. E. Units-of-production sheet. 31. A job cost sheet shows information about each of the following items except: A. The direct labor costs assigned to the job. B. The name of the customer. C. The costs incurred by the marketing department in selling the job. D. The overhead costs assigned to the job. E. The direct materials costs assigned to the job.

32. Which of the following characteristics applies to process cost accounting but not to job order cost accounting? A. Use of a predetermined overhead rate. B. Identifiable lots of production. C. Equivalent units of production. D. Labor time ticket for each employee. E. Use of a single Goods in Process account. 33. The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is: A. 40%. B. 50%. C. 80%. D. 200%. E. 220%. 34. Equivalent units of production are equal to: A. The number of units that could have been completed if all effort had been applied to units that were started and completed that period. B. The number of finished units actually produced that period. C. The number of units introduced into the process that period. D. The number of units still in process that period. E. Physical units that were completed this period from all effort being applied to them. 35. Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? A. In most manufacturing environments, it is not possible to conduct a physical count of units. B. Companies often use a combination of a process costing and job order costing systems. C. In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process. D. All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period. E. In most cases, there is no difference between physical units and equivalent units of production.