Test 1 Study Guide with Complete Solutions, Exams of Nursing

Download Test 1 Study Guide with Complete Solutions and more Exams Nursing in PDF only on Docsity! Test 1 Study Guide with Complete Solutions 2 Accounting Strategies - Answer Financial & Managerial Managerial Accounting - Answer internal, does not need to use GAAP, influences workers, emphasize on future Financial Accounting - Answer external, must use GAAP, reports to outside 3 Decision making guidelines - Answer 1)cost benefit 2)technical and behavioral 3)different costs for different purchases 4 Ethical Standards - Answer competence, confidentiality, integrity, credibility 5 key success factors - Answer cost and efficiency, quality, time, innovation, sustainability Direct Costs - Answer Costs that can be specifically identified with a particular project or activity. (traced) Test 1 Study Guide with Complete Solutions indirect costs - Answer Costs that cannot be easily and accurately traced to a cost object. (allocated) variable costs - Answer costs that vary with the quantity of output produced fixed costs - Answer costs that remain constant as output changes inventoriable costs - Answer all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold Period Costs - Answer Costs that are matched with the revenue of a specific time period and charged to expense as incurred. direct materials cost - Answer acquisition costs of all materials that eventually become part of the cost object (work in process and then finished goods) and can be traced to the cost object in an economically feasible way. Test 1 Study Guide with Complete Solutions 1. Why do most companies adhere to GAAP for their basic internal financial statements? a. GAAP is required by law for publicly held companies. b. To use GAAP and another system of reporting would be too costly for most companies. c. Accountants are required by their code of ethics to use GAAP accounting. d. Accrual accounting provides a uniform method to measure an organization's financial performance. - Answer D 2. Which of the following is not true about strategy? a. It involves matching its capabilities with the opportunities in the marketplace to accomplish its objective. b. It has a short-term focus. c. It can be implemented through price competition or product differentiation. d. It involves the use of strategic cost management. - Answer B 3. The value chain Test 1 Study Guide with Complete Solutions a. involves external companies as well as internal activities. b. is the sequence of business functions in which customer usefulness is added to products or services. c. applies only to manufacturing companies. d. is not relevant in today's cost accounting environment - Answer B 4. Which of the following is not a key success factor in a company's effort to deliver increased levels of performance to the customer? a. Time b. Innovation c. Quality d. Price reduction - Answer D 5. The five-step decision process a. includes planning and control activities. b. is performed exclusively by management accountants. c. is not often used, as the costs exceed the benefits. d. must be performed following GAAP guidelines. - Answer A Test 1 Study Guide with Complete Solutions 6. In supporting managers, management accountants have three guidelines. These guidelines are: a. Cost-benefit analysis, performance reporting, behavioral considerations, and technical considerations. b. Cost-benefit analysis, behavioral considerations and technical considerations, and different costs for different purposes. c. Financial statement preparation, technical considerations, strategic direction, and budgeting. d. Following functional lines of authority, cost-benefit analysis, behavior - Answer B 7. _____ management exists to provide advice and assistance to those responsible for attaining the objectives of the organization. a. Line b. Functional c. Staff d. Risk - Answer C Test 1 Study Guide with Complete Solutions 3. I only is corr - Answer 3 Year 1 financial data for the ABC Company is as follows: Sales $5,000,000 Direct materials 850,000 Direct manufacturing labor 1,700,000 Variable manufacturing overhead 400,000 Fixed manufacturing overhead 750,000 Variable SG&A 150,000 Fixed SG&A 250,000 Under the absorption method, Year 1 Cost of Goods sold will be: a. $2,550,000 c. $3,100,000 b. $2,950,000 d. $3,700,000 - Answer D 850,000+1,700,000+400,000+750,000=3,700,000 The following information was extracted from the accounting records of Roosevelt Manufacturing Company: Test 1 Study Guide with Complete Solutions Direct materials purchased 80,000 Direct materials used 76,000 Direct manufacturing labor costs 10,000 Indirect manufacturing labor costs 12,000 Sales salaries 14,000 Other plant expenses 22,000 Selling and administrative expenses 20,000 What was the cost of goods manufactured? 1. $124,000 3. $154,000 2. $120,000 4. $170,000 - Answer 2 76,000+10,000+12,000+22,000 manufacturing-sector companies - Answer purchase materials and components and convert them into various finished goods Test 1 Study Guide with Complete Solutions Merchandising-sector companies - Answer purchase and then sell tangible products without changing their basic form service-sector companies - Answer companies that provide services or intangible products to their customers 1. Galway Co. management desires cost information regarding its Celtic brand. The Celtic brand is a(n) a. cost object. b. cost driver. c. cost assignment. d. actual cost. - Answer A 2. The cost of printer paper on a college campus would be a direct cost to the college but would need to be allocated as an indirect cost to a. departments. b. buildings. c. schools. Test 1 Study Guide with Complete Solutions a. only purchased goods for resale. b. a category of costs used only for manufacturing companies. c. recorded as expenses when incurred and later reclassified as assets. d. recorded as assets when incurred. - Answer D 8. Period costs are a. all costs in the income statement other than cost of goods sold. b. defined as manufacturing costs incurred this period on the schedule of cost of goods manufactured. c. always recorded as assets when first incurred. d. those costs that benefit future periods - Answer A 9. The cost of a product can be measured as any of the following except as one a. gathered from all areas of the value chain. b. identified as period cost. c. designated as manufacturing cost only. d. explicitly defined by contract. - Answer B Test 1 Study Guide with Complete Solutions 10. The primary focus of cost management is to a. help managers make different decisions. b. calculate product costs. c. aid managers in budgeting. d. distinguish between relevant and irrelevant information - Answer A 11. If the activity level increases but remains within the relevant range, which of the following statements is true of cost behavior? a. Total fixed costs will increase. b. Variable cost per unit will increase. c. Total variable costs will remain the same. d. Fixed cost per unit will decrease. - Answer D` Four approaches to estimating a cost function are - Answer Industrial engineering method. 2. Conference method. 3. Account analysis method. 4. Quantitative analysis of current or past cost relationships Test 1 Study Guide with Complete Solutions HL Co. uses the high-low method to derive a total cost formula. Using a range of units produced from 1,500 to 7,500, and a range of total costs from $21,000 to $45,000, producing 2,000 units will cost HL: a. $8,000 b. $12,000 c. $23,000 d. $29,000 - Answer C (45,000-21,000)/(7,500-1,500)=4 45,000=a+4*7,500 a=15,000 Y=15,000+2,000*4=23,000 A firm uses simple linear regression to forecast the costs for its main product line. If fixed costs are equal to $235,000 and variable costs are $10 per unit, how many units does it need to sell at $15 per unit to make a $300,000 profit? a. 21,400 b. 47,000 c. 60,000 d. 107,000 - Answer D 300,000= 15x - (235,000+10x) Test 1 Study Guide with Complete Solutions 40,000/200=200 2. Of the following methods, the one that would not be appropriate for analyzing how a specific cost behaves is a. the scatter graph method. b. the industrial engineering approach. c. linear programming. d. statistical regression analysis. - Answer C 3. When the high-low method is used to estimate a cost function, the variable cost per unit is found by a. performing regression analysis on the associated cost and cost driver database. b. subtracting the fixed cost per unit from the total cost per unit based on either the highest or lowest observation of the cost driver. c. dividing the difference between the highest and lowest observations of the cost driver by the difference between costs associated with the highest and lowest observations o - Answer D Test 1 Study Guide with Complete Solutions Tory Company derived the following cost relationship from a regression analysis of its monthly manufacturing overhead cost. y = $80,000 + $12X where: y = monthly manufacturing overhead cost X = machine-hours The standard error of estimate of the regression is $6,000. The standard time required to manufacture one six-unit case of Tory's single product is four machine-hours. Tory applies manufacturing overhead to production on the basis of machine-hours, and its normal annual production is 50,0 - Answer B 10,000*4hrs=40,000 40,000*12=480,000 6. Three criteria to use in identifying cost drivers from the potentially large set of independent variables that can be included in a regression model are a. goodness of fit, size of the intercept term, and specification analysis. Test 1 Study Guide with Complete Solutions b. independence between independent variables, economic plausibility, and specification analysis. c. economic plausibility, goodness of fit, and significance of independent variable. d. spurious correlation, expense of gathering data, and multicollinearity. - Answer C 7. Companies that take advantage of quantity discounts in purchasing their materials have a. decreasing cost functions. b. linear cost functions. c. nonlinear cost functions. d. stationary cost functions - Answer C 8. With the cumulative average-time learning model a. the cumulative time per unit declines by a constant percentage when production doubles. b. the time needed to produce the last unit declines by a constant percentage when production doubles. Test 1 Study Guide with Complete Solutions Three major source documents used in job-costing systems - Answer Job cost sheet, Materials requisition record, and labor time sheet job cost sheet - Answer records the materials, labor, and manufacturing overhead costs charged to that job materials requisition form - Answer A document that specifies the type and quantity of materials to be drawn from the storeroom and that identifies the job that will be charged for the cost of those materials. labor-time sheet - Answer contains info about the amount of labor time used for a specific job in a specific department 4-16 Which of the following does not accurately describe the application of job- order costing? a. Finished goods that are purchased by customers will directly impact cost of goods sold. b. Indirect manufacturing labor and indirect materials are part of the actual manufacturing costs incurred. Test 1 Study Guide with Complete Solutions c. Direct materials and direct manufacturing labor are included in total manufacturing costs. d. Manufacturing overhead costs incurred is used to determine total manufacturing costs. - Answer D Sturdy Manufacturing Co. assembled the following cost data for job order #23: (see pic) What are the total manufacturing costs for job order #23 if the company uses normal job-order costing? a. $191,500 b. $193,500 c. $194,500 d. $195,500 - Answer Add it all For which of the following industries would job-order costing most likely not be appropriate? a. Small business printing. b. Cereal production. Test 1 Study Guide with Complete Solutions c. Home construction. d. Aircraft assembly. - Answer B 1. A cost-allocation base may be any of the following except a a. cost driver. b. cost pool. c. way to link indirect costs to a cost object. d. nonfinancial quantity. - Answer B 2. A company that manufactures dentures for use by local dentists would use a. process costing. b. personal costing. c. operations costing. d. job costing. - Answer D 3. The first step in the seven-step approach to job costing is to a. select the cost-allocation base to use in assigning indirect costs to the job. b. identify the direct costs of the job. Test 1 Study Guide with Complete Solutions If their manufacturing overhead was overallocated by $8,000 and Precision Widget adjusts their accounts using a proration based on total ending balances, the revised ending balance for Cost of Goods Sold would be a. $192,880. b. $200,00. c. $207,120. d. $208,000. - Answer A 9. Liberty Box Company calculated an indirect-cost rate of $12.50 per labor hour for fringe benefits for use in their normal costing system. At the end of the year, the actual cost of fringe benefits was $980,000. The total of labor hours worked for the year was the same amount as budgeted, 70,000 hours. If Job #640 required the use of 15 labor hours and the company used the adjusted allocation rate approach, by what amount would the cost of Job #640 change? a. $560.00 b. $281.25 c. $22.50 d. $2 - Answer C Test 1 Study Guide with Complete Solutions 10. If each professional in a service company is paid on an annual salary basis, why might the firm want to use a predetermined or budgeted rate for direct or professional labor? a. A predetermined or budgeted rate is easier to justify to a client who might question a billing rate. b. Professional staff persons do not keep accurate records of the jobs on which they work. c. Professional staff incurs more client costs, such as travel, lodging, and out-of- town meals, while working on a job. d. Yea - Answer D activity-based approach - Answer allocates overhead to production activities, and then from production activities to products 4 levels of cost hierarchy - Answer unit, batch, production, facility Output unit-level costs - Answer cost of activities performed on each individual unit of a product or service (can't find key words) Test 1 Study Guide with Complete Solutions batch-level costs - Answer costs of activities related to a group of units of a product or service rather than each individual unit of product or service (machine setup & order) Product-sustaining costs - Answer the cost of activities undertaken to support individual products regardless of the number of units or batches in which the units are produced (product) Facility-sustaining costs - Answer are the costs of activities that managers cannot trace to individual products or services but that support the organization as a whole (plant, rent) Conroe Company is reviewing the data provided by its management accounting system. Which of the following statements is/are correct? I. A cost driver is a causal factor that increases the total cost of a cost object. II. Cost drivers may be volume based or activity based. III. Cost drivers are normally the largest cost in the manufacturing process. 1. I, II, and III are correct. Test 1 Study Guide with Complete Solutions Shipments received 12 12 Hours used per shipment * 5 3 *These data were accumulated after a careful activity analysis. Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refin - Answer A 4. Advertising of a specific product is an example of a. unit-level costs. b. batch-level costs. c. product-sustaining costs. d. facility-sustaining costs. - Answer C 5. The allocation of indirect costs in an activity-based costing system a. may require other costs to be allocated to activities before the costs of the activities can be allocated to the products. b. is simplified because more costs are identified as direct costs. c. requires the use of heterogeneous cost pools. Test 1 Study Guide with Complete Solutions d. is simplified because a limited number of activities are identified as cost objects. - Answer A `Jackson Enterprises manufactures two products—a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three activities for allocation of indirect costs. Activity Cost Driver Cost-Allocation Rate Materials receiving Number of parts $2.00 per part Production setup Number of setups $500.00 per setup Quality inspection Inspection time $90 per hour A production run for the basic model is 250 units, for the advanced model, 100 units. - Answer B 7. The total cost of an advanced model would be a. $162. b. $65. c. $200. Test 1 Study Guide with Complete Solutions d. $285. - Answer D 8. A significant limitation of activity-based costing is the a. attention given to indirect cost allocation. b. many necessary calculations. c. operations staff's attitude toward the accounting staff. d. use it makes of technology. - Answer C 9. Evaluating customer reaction of the tradeoff of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? a. Pricing and product-mix decisions b. Cost reduction decisions c. Design decisions d. Discretionary decisions - Answer C 10. Which of the following statements is more representative of activity-based costing in comparison to a department costing system?