WorksheetsManagement Accounting 2023
Total questions: 35
Worksheet time: 26mins
Name
Class
Date
1.
A variance is:
a)
the difference between actual fixed cost per unit and standard variable cost per unit
b)
the standard units of inputs for one output
c)
the difference between an actual result and a budgeted performance
d)
the difference between actual variable cost per unit and standard fixed cost per unit
2.
1) The flexible budget contains:
a)
A) budgeted amounts for actual output
b)
B) static budget amounts for planned output
c)
C) actual costs for actual output
d)
D) actual costs for planned output
3.
An unfavorable sales-volume variance could result from:
a)
A) an inappropriate assignment of labor or machines to specific jobs
b)
B) competitors taking market share
c)
C) an inefficiency of a purchasing manager in bargaining with suppliers
d)
D) a decrease in actual selling price compared to anticipated selling price
4.
The flexible-budget variance for direct cost inputs can be further subdivided into a:
a)
A) static-budget variance and a sales-volume variance
b)
B) sales-volume variance and an efficiency variance
c)
C) price variance and an efficiency variance
d)
D) static-budget variance and a price variance
5.
Which of the following can be a reason for a favorable price variance for direct materials?
a)
A) a decrease in the price of materials due to an oversupply of materials
b)
B) an unexpected increase in the price of materials
c)
C) less amount of material used during production than planned for actual output
d)
D) workers taking less time to produce the products than was expected
6.
Which of the following could be a reason for a favorable material price variance?
a)
A) the purchasing manager bargaining effectively with suppliers
b)
B) the purchasing manager giving orders for small quantity to reduce storage cost
c)
C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material
d)
D) the personnel manager hiring under skilled workers
7.
Benchmarking is a process:
a)
A) in which overhead costs are absorbed into units of output, or 'jobs'
b)
B) in which a firm's performance levels are compared against the best levels of performance in competing companies or in companies having similar processes
c)
C) which is based on calculating the breakeven point and analyzing the consequences of changes in various factors calculating the breakeven point
d)
D) in which the underlying processes of an organization is optimized using a systematic approach to achieve more efficient goals
8.
Fixed overhead costs include:
a)
A) the cost of sales commissions
b)
B) leasing of machinery used in a factory
c)
C) energy costs
d)
D) indirect materials
9.
Which of the following mathematical expression is used to calculate budgeted variable overhead cost rate per output unit?
a)
A) Budgeted output allowed per input unit × Budgeted variable overhead cost rate per input unit
b)
B) Budgeted input allowed per output unit ÷ Budgeted variable overhead cost rate per input unit
c)
C) Budgeted output allowed per input unit ÷ Budgeted variable overhead cost rate per input unit
d)
D) Budgeted input allowed per output unit × Budgeted variable overhead cost rate per input unit
10.
When machine-hours are used as an overhead cost-allocation base and annual leasing costs for equipment unexpectedly increase, the most likely result would be to report a(n):
a)
A) unfavorable variable overhead spending variance
b)
B) favorable variable overhead efficiency variance
c)
C) unfavorable fixed overhead flexible-budget variance
d)
D) favorable production-volume variance
11.
Which of the following statements is true of variable overhead costs?
a)
A) Variable overhead costs always have unused capacity.
b)
B) Variable overhead costs have no production-volume variance.
c)
C) Variable overhead costs have no spending variance.
d)
D) Variable overhead costs have no efficiency variance.
12.
An unfavorable production-volume variance:
a)
A) is not a good measure of a lost production opportunity
b)
B) indicates that the company had reduced its per unit fixed overhead cost to improve sales
c)
C) measures the amount of extra fixed costs planned for but not used
d)
D) takes into account the effect of additional revenues due to maintaining higher prices
13.
Place the following steps from the five-step decision process in order:
A = Obtain information including historical costs
B = Evaluate performance to provide feedback
C = Make decisions choosing among alternatives
D = Make predictions about the future
E = Identify the problem and uncertainties
a)
A) A, E, D, B, C
b)
B) E, A, D, B, C
c)
C) E, A, D, C, B
d)
D) D, C, B, A, E
14.
Which of the following is NOT true with regards to relevant costs and relevant revenues?
a)
A) They are sunk costs and historical revenues.
b)
B) They are expected costs and expected revenues.
c)
C) They occur in the future.
d)
D) The differ among alternative courses of action.
15.
In a make-or-buy decision, which of the following would NOT be relevant?
a)
A) the quality of the product
b)
B) the portion of fixed costs that could be eliminated by outsourcing
c)
C) a lease that could be discontinued upon accepting the ""buy proposal""
d)
D) property taxes on the plant that will still be necessary even if the product is outsourced
16.
Determining which products should be produced when the plant is operating at full capacity is referred to as a(n):
a)
A) outsourcing analysis
b)
B) total alternative approach
c)
C) product-mix decision
d)
D) short-run focus decision
17.
The theory of constraints (TOC) defines throughput margin as:
a)
A) operating income minus the direct material costs of the goods sold
b)
B) operating income minus the direct labor costs of the goods sold
c)
C) revenues minus the direct material costs of the goods sold
d)
D) revenues minus the full costs of the goods sold
18.
Which of the following is true of depreciation cost?
a)
A) Depreciation cost on equipment is irrelevant in decision making because depreciation on equipment that has already been purchased is a past cost.
b)
B) Depreciation cost on equipment is relevant in decision making because depreciation on equipment that has already been purchased is an opportunity cost.
c)
C) Depreciation cost on equipment is irrelevant in decision making because there is no cash transaction.
d)
D) Depreciation cost on equipment is irrelevant in decision making because depreciation on equipment that has already been purchased is an opportunity cost.
19.
Book value is defined as the:
a)
A) sum of the original cost of an asset and the accumulated depreciation
b)
B) difference between the market value of an asset and the accumulated depreciation
c)
C) difference between the original cost of an asset and the accumulated depreciation
d)
D) sum of the market value of an asset and the accumulated depreciation
20.
The company's performance evaluation system rewards managers for meeting profitability targets. Which of the following actions could be considered unethical?
a)
A) A manager makes a decision to replace old machines with an energy efficient machines but over the short-run profits will suffer.
b)
B) A senior manager design performance evaluation models that are inconsistent with the personal goals of the middle managers.
c)
C) Same facts as part B but the lower-level managers will be evaluated on the expectation that the first year would be poor and the next year would be much better.
d)
D) Lower level managers refuse to upgrade machinery because the first year will show lower than expected profits despite significant long-term savings.
21.
Which of the following is a part of the formal management control system?
a)
A) mutual commitments among the members of the organization
b)
B) the accounting information system provides metrics about costs, revenues, and contribution margins
c)
C) shared values and loyalties among the members of the organization
d)
D) general understanding about acceptable behavior for managers
22.
Which of the following is an advantage of decentralization?
a)
A) leads to gains from rapid decision making by subunit managers
b)
B) focuses manager's attention on the organization as a whole
c)
C) does not result in a duplication of activities
d)
D) reduces the cost of gathering information
23.
A product may be passed from one subunit to another subunit in the same organization. The product is known as a(n):
a)
A) interdepartmental product
b)
B) intermediate product
c)
C) subunit product
d)
D) transfer product
24.
To reduce the excessive focus of subunit managers on their own subunits, many companies compensate subunit managers on the basis of:
a)
A) both the operating income earned by their respective subunits and the company as a whole
b)
B) both the investing income earned by their respective subunits and the company as a whole
c)
C) only the investing income earned by their respective subunits
d)
D) both the net income and earned by their respective subunits and the company as a whole
25.
A company should use cost-based transfer prices:
a)
A) when a company's product is specialized
b)
B) the market for the intermediate product is perfectly competitive
c)
C) the interdependencies of subunits are minimal
d)
D) there is no benefit from market-based transfer price
26.
An advantage of a negotiated transfer price of a product to be transferred between divisions is the:
a)
A) close relationship between the negotiated price and the market price
b)
B) negotiated transfer price preserves divisional autonomy
c)
C) negotiations usually do not require much time and energy
d)
D) simplicity of its computations and close approximation to market price
27.
Which of the following transfer-pricing methods always achieves goal congruence?
a)
A) a market-based transfer price
b)
B) a cost-based transfer price
c)
C) a negotiated transfer price
d)
D) full-cost plus a standard profit margin
28.
Global Giant, a multinational corporation, has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country. If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to:
a)
A) stop producing in the low tax rate country
b)
B) stop marketing in the high tax rate country
c)
C) establish a low transfer price when the producing unit sells to the marketing unit
d)
D) establish a high transfer price when the producing unit sells to the marketing unit
29.
A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n):
a)
A) balanced scorecard
b)
B) financial report scorecard
c)
C) goal-congruence report
d)
D) investment success report
30.
The return on investment is usually considered the most popular approach to measure performance because:
a)
A) it blends all the ingredients of profitability into a single percentage
b)
B) once determined, there is no need to use it with other measures of performance
c)
C) it throws light on the company's working capital
d)
D) it measures the cash balance of the company in the most efficient manner
31.
For ROI or RI, companies frequently choose to define investment as total assets available. EVA® users would normally use total assets employed minus:
a)
A) long-term debt
b)
B) current liabilities
c)
C) stockholders' equity
d)
D) retained earnings
32.
When managers set and measure target levels of performance and feedback:
a)
A) the historical-cost-based accounting measures are usually adequate for evaluating economic returns on new investments
b)
B) the historical-cost ROIs cannot be used to evaluate current performance
c)
C) the timing of feedback is not dependent on the sophistication of the organization's information technology
d)
D) how critical the information is for success of the organization and the management level receiving the feedback
33.
Which of the following statements is true?
a)
A) The economic, legal, political, social, and cultural environments differ across countries.
b)
B) The import quotas and tariffs remain the same across all countries according to the standards set by United Nations.
c)
C) The advances in telecommunications and transportation, the availability of materials and skilled labor does not differ significantly across countries.
d)
D) The fixed rate policy is followed across all countries to avoid price fluctuations and inflation.
34.
Which of the following describes a situation in which an employee prefers to exert less effort than the effort the owner desires because the employee's effort cannot be accurately monitored and enforced?
a)
A) goal incongruence
b)
B) moral hazard
c)
C) performance report variance
d)
D) incentive report variance
35.
Which of the following best describes interactive control systems?
a)
A) it articulates the mission, purpose, and core values of a company
b)
B) it articulates standards of behavior and codes of conduct expected of all employees and help in achieving the maximum benefit
c)
C) they are formal information systems managers use to focus the company's attention and learning on key strategic issues
d)
D) it describes the geographic limits of a company and help organize its layout
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