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WorksheetsManagement Accounting Quiz
Total questions: 40
Worksheet time: 20mins
Variance analysis is an example of
controlling and planning.
controlling, directing, and planning.
controlling
directing and controlling.
The senior manager of Mashle Consulting Inc. reported the following information about the sales budget for the period ending December 31, 2023: Observe the Sales Budget and determine which primary responsibility the managerial accountant uses to determine which quarter generated the most per-unit product sales data in order to adjust the marketing strategy?
Analyzing.
Controlling.
Directing.
Planning.
Which of the following statements is false?
Management accounting is most concerned with meeting the needs of internal users.
Managerial accounting is highly regulated by rules and regulations.
Financial accounting is most concerned with addressing the needs of the firm as a whole.
Management accounting is mostly concerned with addressing the needs of individual departments of the firm.
Which of the following organization would most likely advertise that focuses on public relations?
A bus company
A water utility company
A hotel and restaurant chain
A car manufacturer
A position in the organization chart that is directly related to achieving the basic objectives of an organization is called:
a staff position.
a line position.
chief finance officer.
controller.
The average variable cost curve always sloped parallel to the x-axis because
Total fixed costs always decrease.
Marginal costs are below average fixed costs.
Average variable costs are constant within the relevant range
Total fixed costs do not change as output increases.
When cost relationships are linear, total variable prime costs will vary in proportion to changes in
direct labor hours.
total overhead cost.
total material cost.
production volume.
The Mugawara Corporation used regression analysis to predict the annual cost of indirect materials. The results were as follows: The linear cost function is _____
Y = 19,885 - 3.75X
Y = 9,560 + 2.56X
Y = 9,560 + 3.75X
Y – 3.75X = 19,885
In regression analysis, which of the following coefficient of correlation (r) represents the strongest direct relationship between variables?
0.60
0.25
1.02
- 0.85
Which of the following is not true regarding break-even point?
Intersection of revenue and cost line in a revenue-cost graph
Intersection of the profit line with the y-axis in a profit graph
Under CVP Analysis, breakeven point is assumed constant
Always higher than the shutdown point
Which of the following represents operating leverage?
represents the extent of the use of fixed costs of a specific entity in its operations.
measures the sensitivity of an entity’s profit to changes in sales volume.
measures the sensitivity of a company's earnings per share to fluctuations in its operating income, because of changes in its capital structure
represents the extent of use of borrowed money to finance the purchase of assets.
All of the following describe activity-based management, except
consists of organization-wide efforts to install and make permanent climate where employees continuously improve their ability to achieve customer satisfaction.
the ideal standard quantity for non-value-added activities is zero
application of activity-based costing and value-chain analysis in analyzing and evaluating business activities
an approach used by an entity to achieve competitive advantage
Value engineering
Is a systematic approach to reaching targeted cost levels during value chain analysis without reducing customer satisfaction
Is a basis for cost planning and product costing
Is a way of understanding how a company generates output
Determines what is done, by whom, at what costs and the value added by each activity
Which of the following statements about activity-based costing is not true?
Activity-based costing differs from traditional costing systems in that products are cross-subsidized
Activity-based costing is useful for allocating marketing and distribution costs.
Activity-based costing is more likely to result in minor differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
In activity-based costing, cost drivers are what cause costs to be incurred.
Value-added activities
Involve usage of resources that customers are willing to pay for
Shall be removed or eliminated
Cannot be distinguished from non-value added activities
Cause additional costs to a product without affecting the selling price
Process value analysis is a key component of activity-based management that links product costing and
Continuous improvement
Activity pools
Accumulation of heterogenous cost pools
External financial reporting
Which of the following statements is true for a company that uses variable costing?
Income is greatest in periods when production is highest.
Net operating income moves in the same direction as sales.
Both variable selling costs and variable production costs are included in the unit product cost.
The unit product cost changes as a result of changes in the number of units manufactured.
had a net income of P90,000 using full costing and P84,000 using direct costing. The fixed overhead application rate was P6 per unit. There were no ending inventories. If 22,000 units were produced last year, then sales for last year were:
15,000 units.
21,000 units.
23,000 units.
28,000 units.
When comparing absorption costing with variable costing, which of the following statements is true?
Direct costing enables managers to increase operating profits in the short run by increasing inventories.
When sales volume is less than production volume, variable costing will result in higher operating profit.
A manager who is evaluated based on full costing operating profit would be tempted to increase production at the end of a period in order to get a more favorable review.
Under absorption costing, operating profit is a function of both sales volume only.
Many firms have made significant strides in reducing their inventories. Which of the following would be least likely to encourage managers to reduce inventory?
Using variable costing.
Using absorption costing.
Using throughput costing.
Instituting a charge against the budget for managers based on the size of the inventory.
What was the company's finished goods inventory cost at December 31 under the absorption costing method?
P14,400
P15,300
P19,400
P26,300
Which of the following is TRUE of budgets when they are administered thoughtfully?
They eliminate subjectivity in performance evaluation.
They can eliminate the uncertainty faced by a company.
They promote coordination within the subunits of a company.
They are a substitute to the planning and coordination functions of management
Budgeting supports the planning process by encouraging all of the following activities except:
requiring all organizational units to establish their goals for the upcoming period
increasing the motivation of managers and employees by providing agreed-upon expectations
directing and coordinating operations during the period
improving overall decision making by considering all viewpoints, options, and cost reduction possibilities
When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing:
budgetary slack
padding
goal conflict
cushions
What is the budgeted production (in units) for 2012?
77,500
71,000
78,500
71,500
The best characteristics of a standard cost system is
all significant unfavorable variances should be reviewed
all variances from standard, significant or not, should be investigated
standard can pinpoint responsibility and help motivation
standard cost involves cost control which is cost reduction
A difference between standard costs used for cost control and budgeted costs
Can exist because standard costs must be determined after the budget is prepared.
Can exist because standard costs represent what costs should have been while budgeted costs represent expected actual costs.
Can exist because budgeted costs should be verified first by actual activities while standard costs are based on projected costs.
Can exist because establishing budgeted costs involves employee participation and standard costs do not
A product-line or department should be dropped if
It has negative incremental profit.
It has a negative contribution margin.
It is not essential to the company’s product line.
Dropping it will increase the total profit of the company.
Which of the following is a disadvantage of a focus on return on investment?
It can encourage managers to cut inventories and reduce over-all investment.
It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm.
It can encourage managers to focus on the long run at the expense of the short run.
It can encourage managers to focus on cost cutting efforts.
The budgetary unit of an organization which is led by a manager who has both the authority over and responsibility for the unit's performance is known as a:
control center
budgetary area
responsibility center
managerial department
Which is the best example of a decentralized operation?
One owner who prepares plans and makes decisions for the entire company.
Each unit is responsible for their own operations and decision making.
In a major company, operating decisions are made by top management.
None of the above. All are examples of a centralized management.
Which of the following is not a commonly used approach to setting transfer prices?
Market price approach
Revenue price approach
Negotiated price approach
Cost price approach
When is it appropriate to use the market price approach when two related companies are providing services or products to each other?
The production for the selling company is falling under full capacity and it needs to increase its sales.
The purchasing company is currently purchasing a product at a price from an outside supplier as it would from its related company that is operating at full capacity.
The purchasing company is considered a cost center and is not concerned with maximizing profits for the company.
The policy of the parent company is that when a product is sold by an outside supplier and by a related party, purchases must be made within the company.
In order to enhance wealth of stockholders and to send positive signals to the market, corporations generally raise funds using the following order:
Debt, retained earnings, equity.
Equity, retained earnings, debt.
Retained earnings, debt, equity.
Retained earnings, equity, debt.
Which of the following actions would reduce its need to issue new common stock?
Increase the proposed capital budget.
Increase the dividend payout ratio for the upcoming year.
Increase the percentage of debt in the target capital structure.
Reduce the amount of short-term bank debt in order to increase the current ratio.
The internal rate of return method assumes that project funds are reinvested at the
cost of debt capital.
cost of equity capital.
hurdle rate.
rate of return earned on the project.
In capital budgeting, sensitivity analysis is used
to determine whether an investment is profitable.
To see how a decision would be affected by changes in variables.
To test the relationship of the IRR and NPV.
To evaluate mutually exclusive investments.
A capital budgeting tool management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as
the accrual accounting rate-of-return method.
the net present value method.
sensitivity analysis
the payback method.
All other things being equal, as cost of capital increases
more capital projects will probably be acceptable.
Fewer capital projects will probably be acceptable.
The number of capital projects that are acceptable will change but the direction of the change is not determinable just by knowing the direction of the change in cost of capital.
The company will probably want to borrow money rather than issue stock.
Capital rationing
Is not a problem for firms that have a high cost of capital.
Is the process of selecting the more desirable projects from all those available.
Is another term for Capital Budgeting
Is not necessary when interest rates are low.
