Test Bank For Managerial Accounting For Managers, 3rd Edition

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2-1QuestionTypeDifficultyLO1: DM, DL, Manuf. overheadLO2: Period and product costsLO3: Variable, fixed, and mixed costsLO4: High-low methodLO5: Income statement formatsLO6: Direct and indirect costsLO7: Decision-making costclassificationsProfessional Exam AdaptedIDOriginCMA/CPA origin1T/FExx8/e:ATB2-2David Keyes2T/FEx3/e:2-TF9Authors3T/FEx3/e:2-TF11Authors4T/FEx1/e:Exam#1-I10Authors5T/FMx3/e:2-TF5Authors6T/FHx3/e:2-TF13Authors7T/FMx1/e:Exam#1-I6Authors8T/FEx8/e:ATB2-1David Keyes9T/FEx3/e:2-TF4Authors10T/FEx8/e:ATB2-6David Keyes11T/FEx4/e:30Authors12T/FEx3/e: 5-7Authors13T/FMx3/e: 5-6Authors14T/FEx4/e: 5-251Authors15T/FMx2/e: 4-3Authors16T/FEx2/e: 4-1Authors17T/FEx3-15-2010 TF AE.N.18T/FHx8/e:ATB6-07David Keyes19T/FEx2/e: 4-9Authors

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2-220T/FEx3/14/2010 A1E.N.21T/FEx3/14/2010 C2E.N.22T/FEx3/14/2010 E1E.N.23T/FEx3/14/2010 G2E.N.24T/FEx3/14/2010 J1E.N.25T/FEx3/14/2010 L2E.N.26T/FMx4/6/97CE.N.27T/FHx4/6/97DE.N.28T/FHx4/6/97EE.N.29T/FEx8/e:ATB2-9David Keyes30ConceptualM/CHxxx8/e: ATB2-13David Keyes31ConceptualM/CMxx5/e: 2-58Authors32ConceptualM/CMxx5/e: 2-27Authors33ConceptualM/CMx5/e: 2-70Authors34ConceptualM/CMx4/e: 50Authors35ConceptualM/CEx3/e:2-MC8Authors36ConceptualM/CEx3/e: 2-MC7Authors37ConceptualM/CMxx8/e: ATB2-14David Keyes38ConceptualM/CEx4/e: 43Authors39ConceptualM/CEx4/e: 84Authors40ConceptualM/CMx4/e: 44Authors41ConceptualM/CEx3/e: 2-MC6Authors42ConceptualM/CExLD9e:CH02Q13Larry Deppe

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2-343ConceptualM/CMxCMACMA,6/96,Part3,Q18CMACMA,6/96,Part3,Q1844ConceptualM/CHx5/e: 2-29Authors45ConceptualM/CMx5/e: 2-36Authors46ConceptualM/CMx3-15-2010 TF BE.N.47ConceptualM/CHx8/e: ATB2-18David Keyes48ConceptualM/CEx3-15-2010 TF CE.N.49ConceptualM/CEx4/e: 5-295Authors50ConceptualM/CEx5/e: 5-16Authors51ConceptualM/CHx5/e: 5-17Authors52ConceptualM/CHx4/6/97BE.N.53ConceptualM/CMx2/e: 2-MC12Authors54ConceptualM/CEx3/e: 2-MC10Authors55ConceptualM/CExCMACMA,6/96,Part4,Q19CMACMA,6/96,Part4,Q1956M/CMxxNew,11/9/95,D9E.N.57M/CMxxNew,11/9/95,E9E.N.58M/CHxNew,11/9/95,C9E.N.59M/CHxNew,11/8/95,A8E.N.60M/CHxNew,11/9/95,B9E.N.61M/CMxLD9e:CH02Q11Larry Deppe62M/CHxxxEN 12-23-2002 SPI5E.N.63M/CMxxEN 12-23-2002 SPG5E.N.64M/CHxxEN 12-23-2002 SPB5E.N.65M/CHxxEN 12-23-2002 SPC5E.N.

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2-466M/CMxxEN 12-23-2002 SPE5E.N.67M/CMxxEN 12-23-2002 SPD5E.N.68M/CMxxEN 12-23-2002 SPH5E.N.69M/CMxxEN 12-23-2002 SPF5E.N.70M/CHxxEN12-23-2002 SPA5E.N.71M/CMxxLD9e:CH05Q7Larry Deppe72M/CHxx5/e: 5-35Authors73M/CMx11/e: ATB 5-30AntoinetteClegg74M/CHx1/e: Achievement-6Authors75M/CEx8/22/2004 Single MCK4E.N.76M/CEx5/e: 5-63Authors77M/CEx4/e: 5-266Authors78M/CEx8/22/2004 Single MC I4E.N.79M/CEx1/e: 5-9Authors80M/CEx1/e: Achievement-8Authors81M/CEx8/22/2004 Single MC J4E.N.82M/CEx08/21/2004 Single MCC4E.N.83M/CEx08/21/2004 Single MCA4E.N.84M/CEx11/e: ATB 5-25AntoinetteClegg85M/CEx3/e: 5-9Authors86M/CEx2/e: 4-5Authors87M/CEx08/21/2004 Single MCB4E.N.88M/CMxLD9e:CH05Q4Larry Deppe89M/CMxNew,11/9/95,H9E.N.90M/CExNew,11/9/95,G9E.N.2-191-93Multipart M/CMxx8/3/2004 Multi MC P4E.N.2-294-96Multipart M/CMxx8/3/2004 Multi MC O4E.N.2-397-98Multipart M/CEx8/3/2004 Multi MC E4E.N.

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2-52-499-100Multipart M/CEx8/3/2004 Multi MC M4E.N.2-5101-103Multipart M/CMxxxEN 12-23-2002 MPC5E.N.2-6104-106Multipart M/CMxxEN 12-23-2002 MPB4E.N.2-7107-109Multipart M/CHxxEN 12-23-2002 MPA5E.N.2-8110-111Multipart M/CEx8/22/2004 Multi MC L4E.N.2-9112-113Multipart M/CEx8/22/2004Multi MC K4E.N.2-10114-115Multipart M/CEx8/3/2004 Multi MC U4E.N.2-11116-117Multipart M/CEx8/3/2004 Multi MC R4E.N.2-12118-119Multipart M/CEx8/3/2004 Multi MC S4E.N.2-13120-121Multipart M/CEx8/3/2004 Multi MC T4E.N.2-14122-123Multipart M/CEx8/22/2004 Multi MC J4E.N.2-15124-125Multipart M/CEx8/20/2004 Multi MC B4E.N.2-16126-127Multipart M/CEx8/21/2004 Multi MC C4E.N.2-17128-129Multipart M/CEx8/20/2004 Multi MC A4E.N.2-18130-132Multipart M/CM-HxLD9e:CH05Q14-16Larry Deppe2-19133-134Multipart M/CEx3-15-2010 Multi MC C1E.N.2-20135-136Multipart M/CMx3-15-2010 Multi MC A1E.N.2-21137-138Multipart M/CMx3-15-2010 Multi MC B1E.N.2-22139-140Multipart M/CEx3-15-2010 Multi MC D1E.N.2-23141-142Multipart M/CEx8/3/2004 Multi MC N4E.N.2-24143-144Multipart M/CE-Mx8/3/2004 Multi MC AA4E.N.2-25145-146Multipart M/CE-Mx8/3/2004 Multi MC Z4E.N.2-26147-149Multipart M/CEx8/3/2004 Multi MC W4E.N.2-27150-152Multipart M/CEx8/3/2004 Multi MC V4E.N.153ProblemMxxxx1/e:Exam #1-IIIAuthors154ProblemMxxx2/e:2-P2-2Authors155ProblemMx8/3/2004 Problem F4E.N.156ProblemMx8/3/2004 Problem E4E.N.157ProblemEx5/e:5-56Authors158ProblemEx8/22/2004 Problem L4E.N.159ProblemEx8/22/2004 Problem M4E.N.

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2-6160ProblemEx8/4/2004 Problem N3E.N.161ProblemEx8/4/2004 Problem M4E.N.162ProblemEx8/21/2004 Problem B4E.N.163ProblemEx8/21/2004 Problem A4E.N.164ProblemEx8/21/2004 Problem C4E.N.165ProblemEx8/3/2004 Problem D4E.N.166ProblemMx3-15-2010 Problem B1E.N.167ProblemEx3-15-2010 Problem D1E.N.168ProblemEx3-15-2010 Problem C1E.N.169ProblemMx3-15-2010 Problem A1E.N.170ProblemEx8/4/2004 Problem O4E.N.

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2-7Chapter 02Managerial Accounting and Cost ConceptsTrue / False Questions1.Direct material costs are generally variable costs.TrueFalse2.Property taxes and insurance premiums paid on a factorybuilding are examples of manufacturingoverhead.TrueFalse3.Manufacturing overhead combined with direct materials is known as conversion cost.TrueFalse4.All costs incurred in a merchandising firm are considered to be period costs.TrueFalse5.Depreciation is always considered a product cost for external financial reporting purposes in amanufacturing firm.TrueFalse6.In external financial reports, factory utilities costs may be included in an assetaccount on thebalance sheet at the end of the period.TrueFalse7.Advertising costs are considered product costs for external financial reports because they areincurred in order to promote specific products.TrueFalse8.Selling and administrative expenses are product costs under generally accepted accountingprinciples.TrueFalse

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2-89.A variable cost is a cost whose cost per unit varies as the activity level rises and falls.TrueFalse10.When the level of activity increases, total variable cost will increase.TrueFalse11.A decrease in production will ordinarily result in an increase in fixed production costs per unit.TrueFalse12.Automation results in a shift away from variable costs toward more fixed costs.TrueFalse13.In order for a cost to be variable it must vary with either units produced or units sold.TrueFalse14.The concept of the relevant range does not apply to fixed costs.TrueFalse15.Indirect costs, such as manufacturing overhead, are always fixed costs.TrueFalse16.Discretionary fixed costs arise from annual decisions by management to spend in certain fixedcost areas.TrueFalse17.Even if operations are interrupted or cut back, committed fixed costs remain largely unchanged inthe short term because the costs of restoring them later are likely to be far greater than any short-run savings that might be realized.TrueFalse18.Committed fixed costs are fixed costs that are not controllable.TrueFalse19.A mixed cost is partially variable and partially fixed.TrueFalse

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2-920.Traditional format income statements are prepared primarily for external reporting purposes.TrueFalse21.In a contribution format income statement, sales minus cost of goods sold equals the grossmargin.TrueFalse22.In a traditional format income statement for a merchandising company, the cost of goods soldreports the product costs attached to the merchandise sold during the period.TrueFalse23.Although the contribution format income statement is useful for external reporting purposes, it hasserious limitations when used for internal purposes because it does not distinguish between fixedand variable costs.TrueFalse24.In a contribution format income statement for a merchandising company, cost of goods sold is avariable cost that gets included in the "Variable expenses"portion of the income statement.TrueFalse25.The traditional format income statement is used as an internal planning and decision-making tool.Its emphasis on cost behavior aids cost-volume-profit analysis, management performanceappraisals, and budgeting.TrueFalse26.The following would typically be considered indirect costs of manufacturing a particular Boeing747 to be delivered to Singapore Airlines: electricity to run production equipment, the factorymanager's salary, and the cost of the General Electric jet engines installed on the aircraft.TrueFalse27.The following costs should be considered direct costs of providing delivery room services to aparticular mother and her baby: the costs of drugs administered in the operating room, theattending physician's fees, and a portion of the liability insurance carried by the hospital to coverthe delivery room.TrueFalse

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2-1028.The following costs should be considered by a law firm to be indirect costs of defending aparticular client in court: rent on the law firm's offices, the law firm's receptionist's wages, thecosts of heating the law firm's offices, and the depreciation on the personal computer in the officeof the attorney who has been assigned the client.TrueFalse29.In any decision making situation, sunk costs are irrelevant and should be ignored.TrueFalseMultiple Choice Questions30.For a lamp manufacturing company, the cost of the insurance on its vehicles that deliverlamps tocustomers is best described as a:A.prime cost.B.manufacturing overhead cost.C.period cost.D.differential (incremental) cost of a lamp.31.The cost of leasing production equipment is classified as:A.Option AB.Option BC.Option CD.Option D

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2-1132.The wages of factory maintenance personnel would usually be considered to be:A.Option AB.Option BC.Option CD.Option D33.Manufacturing overhead consistsof:A.all manufacturing costs.B.indirect materials but not indirect labor.C.all manufacturing costs, except direct materials and direct labor.D.indirect labor but not indirect materials.34.Which of the following should NOT beincluded as part of manufacturing overhead at a companythat makes office furniture?A.sheet steel in a file cabinet made by the company.B.manufacturing equipment depreciation.C.idle time for direct labor.D.taxeson a factory building.35.Which of the following costs would not be included as part of manufacturing overhead?A.Insurance on sales vehicles.B.Depreciation of production equipment.C.Lubricants for production equipment.D.Direct labor overtime premium.

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2-1236.Conversion cost consists of which of the following?A.Manufacturing overhead cost.B.Direct materials and direct labor cost.C.Direct labor cost.D.Direct labor and manufacturing overhead cost.37.The advertising costs that Pepsi incurred to air its commercials during the Super Bowl can bestbe described as a:A.variable cost.B.fixed cost.C.product cost.D.prime cost.38.Each of the following would be a periodcost except:A.the salary of the company president's secretary.B.the cost of a general accounting office.C.depreciation of a machine used in manufacturing.D.sales commissions.39.Which of the following costs is an example of aperiod rather than a product cost?A.Depreciation on production equipment.B.Wages of salespersons.C.Wages of production machine operators.D.Insurance on production equipment.40.Which of the following would beconsidered a product cost for external financial reportingpurposes?A.Cost of a warehouse used to store finished goods.B.Cost of guided public tours through the company's facilities.C.Cost of travel necessary to sell themanufactured product.D.Cost of sand spread on the factory floor to absorb oil from manufacturing machines.

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2-1341.Which of the following would NOT be treated as a product cost for external financial reportingpurposes?A.Depreciation on a factory building.B.Salaries of factory workers.C.Indirect labor in the factory.D.Advertising expenses.42.The salary of the president of a manufacturing company would be classified as which of thefollowing?A.Product costB.Period costC.Manufacturing overheadD.Direct labor43.Conversion costs do NOT include:A.depreciation.B.direct materials.C.indirect labor.D.indirect materials.44.Lastmonth, when 10,000 units of a product were manufactured, the cost per unit was $60. At thislevel of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured nextmonth and cost behavior patterns remain unchanged the:A.total variable cost will remain unchanged.B.fixed costs will increase in total.C.variable cost per unit will increase.D.total cost per unit will decrease.45.Variable cost:A.increaseson a per unit basis as the number of units produced increases.B.remains constant on a per unit basis as the number of units produced increases.C.remains the same in total as production increases.D.decreaseson a per unit basis as the number of units produced increases.

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2-1446.Which of the following statements regarding fixed costs is incorrect?A.Expressing fixed costs on a per unit basis usually is the best approach for decision making.B.Fixed costs expressed on a per unit basis will decrease with increases in activity.C.Total fixed costs are constant within the relevant range.D.Fixed costs expressed on a per unit basis will increase with decreases in activity.47.Thesalary paid to the production manager in a factory is:A.a variable cost.B.part of prime cost.C.part of conversion cost.D.both a variable cost and a prime cost.48.Within the relevant range, variable cost per unit will:A.increase as the level of activity increases.B.remain constant.C.decrease as the level of activity increases.D.none of these.49.The term "relevant range" means the range of activity over which:A.relevantcosts are incurred.B.costs may fluctuate.C.production may vary.D.the assumptions about fixed and variable cost behavior are reasonably valid.50.An example of a committed fixed cost is:A.atraining program for salespersons.B.executive travel expenses.C.property taxes on the factory building.D.new product research and development.

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2-1551.In describing the cost formula equation Y = a + bX, which of the following statements is correct?A."X" is the dependent variable.B."a" is the fixed component.C.In the high-low method, "b" equals change in activity divided by change incosts.D.As "X" increases "Y" decreases.52.Which one of the following costs should NOT be considered a direct cost of serving a particularcustomer who orders a customized personal computer by phone directly from the manufacturer?A.thecost of the hard disk drive installed in the computer.B.the cost of shipping the computer to the customer.C.thecost of leasing a machine on a monthly basis that automatically tests hard disk drivesbefore they are installed in computers.D.the cost of packaging the computer for shipment.53.The term differential cost refers to:A.adifference in cost which results from selecting one alternative instead of another.B.the benefit forgone by selecting one alternative instead of another.C.a cost which does not involve any dollar outlay but which is relevant to the decision-makingprocess.D.a cost which continues to be incurred even though there is no activity.54.Which of the following costs is often important in decision making, but is omitted fromconventional accounting records?A.Fixed cost.B.Sunkcost.C.Opportunity cost.D.Indirect cost.55.When a decision is made among a number of alternatives, the benefit that is lost by choosing onealternative over another is the:A.realized cost.B.opportunity cost.C.conversion cost.D.accrued cost.

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