173 test bank for managerial accounting 4th edition by wild

173 Test Bank for Managerial Accounting 4th Edition by
Wild
True False Questions - Free Text Questions Multiple Choice Questions - Page 1
An attitude of constantly seeking ways to improve company operations,
including customer service, product quality, product features, the production
process, and employee interactions, is called:
1.

A. Continuous improvement.

2.

B. Customer orientation.

3.

C. Just-in-time.

4.

D. Theory of constraints.

5.

E. Total quality measurement.

Managerial accounting is different from financial accounting in that:
1.

A. Managerial accounting is more focused on the organization as a whole and financial
accounting is more focused on subdivisions of the organization.

2.

B. Managerial accounting never includes nonmonetary information.

3.

C. Managerial accounting includes many projections and estimates whereas financial
accounting has a minimum of predictions.

4.

D. Managerial accounting is used extensively by investors, whereas financial
accounting is used only by creditors.

5.

E. Managerial accounting is mainly used to set stock prices.


A company reports raw materials used of $42,750 for a year, with beginning
raw materials inventory of $4,000 and an ending raw materials inventory of
$4,500. Compute days’ sales in raw materials inventory based on this data.
1.

A. 10.52 days.

2.

B. 34.15 days

3.

C. 10.06 days

4.

D. 38.42 days

5.

E. 9.35 days

Goods a company acquires to use in making products are called:
1.

A. Cost of goods sold.

2.

B. Raw materials inventory.

3.

C. Finished goods inventory.

4.

D. Goods in process inventory.

5.

E. Conversion costs.

A fixed cost:
1.

A. Requires the future outlay of cash and is relevant for future decision making.

2.

B. Does not change with changes in the volume of activity within the relevant range.

3.

C. Is directly traceable to a cost object.

4.

D. Changes with changes in the volume of activity within the relevant range.

5.

E. Has already been incurred and cannot be avoided so it is irrelevant for decision
making.


The Malcolm Baldrige Award was established by:
1.

A. The United Nations.

2.

B. The U. S. Chamber of Commerce.

3.

C. The Malcolm Baldrige Foundation.

4.

D. The U. S. Congress.

5.

E. The SEC.

Which of the following costs would not be classified as factory overhead?
1.

A. Property taxes on maintenance machinery.

2.

B. Expired insurance on factory equipment.

3.

C. Wages of the factory janitor.

4.

D. Metal doorknobs used on wood cabinets produced.

5.

E. Small tools used in production.

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:
1.

A. Continuous improvement.

2.

B. Customer orientation.

3.

C. Just-in-time.

4.

D. Theory of constraints.

5.

E. Total quality management.


Which of the following costs is not included in factory overhead?
1.

A. Payroll taxes on the wages of supervisory factory workers.

2.

B. Indirect labor.

3.

C. Depreciation of manufacturing equipment.

4.

D. Manufacturing supplies used.

5.

E. Direct materials.

Continuous improvement:
1.

A. Is a measure of profits.

2.

B. Is a measure of costs.

3.

C. Rejects the notion of "good enough."

4.

D. Is not applicable to most businesses.

5.

E. Is possible only in service businesses.

The Institute of Management Accountants has developed a code of ethics that
requires management accountants to behave in certain ways. Which of the
following behaviors is not required?
1.

A. Competence.

2.

B. Integrity.

3.

C. Maintenance of confidentiality.

4.

D. Communication of information in credible manner.

5.

E. Timeliness.


Costs that flow directly to the current income statement are called:
1.

A. Period costs.

2.

B. Product costs.

3.

C. General costs.

4.

D. Balance sheet costs.

5.

E. Capitalized costs.

The following are all examples of product costs:
1.

A. Direct material, direct labor and indirect labor.

2.

B. Direct labor, VP of sales salary, and insurance on the factory.

3.

C. Depreciation on the factory equipment, depreciation on the office building, and
depreciation on the factory building.

4.

D. Factory insurance, interest expense, and property taxes on the factory.

5.

E. Office supplies, sales commissions, and maintenance costs on office copier.

The cost of labor that is not clearly associated with specific units or batches
of product is called:
1.

A. Unspecified labor

2.

B. Direct labor

3.

C. Indirect labor

4.

D. Basic labor

5.

E. Joint labor


Which of the following is never included in direct materials costs?
1.

A) Invoice costs of direct materials.

2.

B) Outgoing delivery charges.

3.

C) Materials storage costs.

4.

D) Materials handling costs.

5.

E) Insurance on stored material.

Which of the following statements regarding fraud is true?
1.

A. Fraud is a deliberate act.

2.

B. Fraud can be deliberate or unintentional.

3.

C. A company with a strong code of ethics can eliminate fraud.

4.

D. A company with strong internal controls can eliminate fraud.

5.

E. The most common type of fraud is financial statement fraud.

An opportunity cost is:
1.

A. An uncontrollable cost.

2.

B. A cost of potential benefit lost.

3.

C. A change in the cost of a component.

4.

D. A direct cost.

5.

E. A sunk cost.


Assuming production needs can be met, companies usually prefer:
1.

A. A lower number of days’ sales in raw materials inventory.

2.

B. A higher number of days’ sales in raw materials inventory.

3.

C. That days’ sales in inventory be higher than the days in the accounting period.

4.

D. That days’ sales in inventory be greater than the operating cycle

5.

E. That days’ sales in inventory be equal to the days in the accounting period

The following costs are included in a recent summary of data for a company:
advertising expense, $85,000; depreciation expense – factory building,
$133,000; direct labor, $250,000; direct material used, $300,000; factory
utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar
amount of prime costs.
1.

A. $1,023,000

2.

B. $550,000

3.

C. $488,000

4.

D. $235,000

5.

E. $238,000

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:
1.

A. Administrative expenses

2.

B. Nonmanufacturing costs


3.

C. Sunk costs

4.

D. Factory overhead

5.

E. Preproduction costs

A direct cost is a cost that is:
1.

A. Identifiable as controllable.

2.

B. Recorded as part of manufacturing overhead.

3.

C. Fixed with respect to the volume of activity.

4.

D. Traceable to a cost object.

5.

E. Sunk with respect to a cost object.

Flexibility of practice when applied to managerial accounting means that:
1.

A. The information must be presented in electronic format so that it is easily changed.

2.

B. Managers must be willing to accept the information as the accountants present it to
them, rather than in the format they ask for.

3.

C. The managerial accountants need to be on call 24 hours a day.

4.

D. The design of a company's managerial accounting system largely depends on the
nature of the business and the arrangement of the internal operations of the company.

5.

E. Managers must be flexible with information provided in varying forms and using
inconsistent measures.

Period costs for a manufacturing company would flow directly to:
1.

A, The current income statement.

2.

B, Factory overhead.


3.

C, The current balance sheet.

4.

D, Job cost sheet.

5.

E, The current manufacturing statement.

The following costs are included in a recent summary of data for a company:
advertising expense, $85,000; depreciation expense – factory building,
$133,000; direct labor, $250,000; direct material used, $300,000; factory
utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar
amount of conversion costs.
1.

A. $1,023,000

2.

B. $550,000

3.

C. $488,000

4.

D. $235,000

5.

E. $238,000

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:
1.

A. Sunk labor

2.

B. Direct labor

3.

C. Indirect labor

4.

D. Finished labor

5.

E. Supervisory labor


Another title for goods in process inventory is:
1.

A. Indirect materials inventory.

2.

B. Work in process inventory.

3.

C. Conversion costs.

4.

D. Direct materials inventory.

5.

E. Raw materials inventory.

Products that have been completed and are ready to be sold by the
manufacturer are called:
1.

A. Finished goods inventory.

2.

B. Goods in process inventory.

3.

C. Raw materials inventory.

4.

D. Cost of goods sold.

5.

E. Factory supplies.

Costs classified by controllability are useful for:
1.

A. The balance sheet

2.

B. The income statement

3.

C. The budgeting process

4.

D. Evaluation reports

5.

E. Determining product cost

Product costs:
1.

A. Are expenditures necessary and integral to finished products.

2.

B. Are expenditures identified more with a time period rather than with finished
products.

3.

C. Include selling and administrative expenses.

4.

D. Are only costs that vary with the volume of activity.

5.

E. Are only costs that do not vary with the volume of activity.

A management concept that applies quality improvement to all aspects of
business activities is called:
1.

A. Continuous operations.

2.

B. Customer orientation.

3.

C. Just-in-time.

4.

D. Managerial accounting.

5.

E. Total quality management.

Days’ sales in raw materials inventory is a measure of:
1.

A. How much raw materials are needed for the company to earn a profit.

2.

B. How long it takes the company to pay for raw materials..

3.

C. How many times a company turns over its raw materials during a period.

4.

D. How long it takes raw materials to be used in production.

5.

E. The product costs a company has incurred during a period.


Materials that are used in support of the production process but that do not
become a part of the product and are not clearly identified with units or
batches of product are called:
1.

A. Secondary materials

2.

B. General materials

3.

C. Direct materials

4.

D. Indirect materials

5.

E. Materials inventory

Managerial accounting information:
1.

A. Is used mainly by external users.

2.

B. Involves gathering information about costs for planning and control decisions.

3.

C. Is generally the only accounting information available to managers.

4.

D. Can be used for control purposes but not for planning purposes.

5.

E. Has little to do with controlling costs.

Which of the following statements is true?
1.

A. The IMA’s Statement of Ethical Professional Practice requires management
accountants to be incompetent, maintain confidentiality, act with integrity, and
communicate information in a fair and credible manner.

2.

B. The IMA’s Statement of Ethical Professional Practice requires management
accountants to be competent, maintain confidentiality, eliminate all fraud, and
communicate information in a fair and credible manner.


3.

C. The IMA’s Statement of Ethical Professional Practice requires management
accountants to be incompetent, maintain confidentiality, act with integrity, and
miscommunicate information in a credible manner.

4.

D. The IMA’s Statement of Ethical Professional Practice requires management
accountants to be competent, maintain confidentiality, act with integrity, and
communicate information in a fair and credible manner.

5.

E. The IMA’s Statement of Ethical Professional Practice requires management
accountants to perform certain checks for fraud, act with integrity, and communicate
information in a fair and credible manner.

Which of the following is not a characteristic of all fraud?
1.

A. It is done to provide direct or indirect benefit to the employee.

2.

B. It violates the employee’s duties to his employer.

3.

C. It costs the employer money.

4.

D. It is secret.

5.

E. Can be intentional or unintentional.

The way of doing business whose goal is to eliminate waste while satisfying
the customer and providing a positive return to the company is:
1.

A. Total quality management.

2.

B. Managerial accounting.

3.

C. Customer orientation.

4.

D. Continuous improvement.

5.

E. Lean business model.


The three major cost components of a manufactured product are:
1.

A. Marketing, selling, and administrative costs.

2.

B. Indirect labor, indirect materials, and miscellaneous factory expenses.

3.

C. Direct materials, direct labor, and factory overhead.

4.

D. Differential costs, opportunity costs, and sunk costs.

5.

E. General, selling, and administrative costs.

Products that are in the process of being manufactured but are not yet
complete are called:

1.

A. Raw materials inventory.

2.

B. Conversion costs.

3.

C. Cost of goods sold.

4.

D. Goods in process inventory.

5.

E. Finished goods inventory.

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:
1.

A. Continuous improvement.

2.

B. Customer orientation.

3.

C. Just-in-time manufacturing.

4.

D. Theory of constraints.

5.

E. Total quality management.


Raw materials that physically become part of the product and can be traced to
specific units or batches of product are called:
1.

A. Raw materials sold

2.

B. Chargeable materials

3.

C. Goods in process

4.

D. Indirect materials

5.

E. Direct materials

Classifying costs by behavior involves:
1.

A. Identifying fixed cost and variable cost.

2.

B. Identifying cost of goods sold and operating costs.

3.

C. Identifying all costs.

4.

D. Identifying costs in a physical manner.

5.

E. Identifying both quantitative and qualitative cost factors.

Costs that are first assigned to inventory are called:
1.

A. Period costs

2.

B. Product costs

3.

C. General costs

4.

D. Administrative costs

5.

E. Fixed costs


The salary paid to the supervisor of an assembly line would normally be
classified as:
1.

A. Direct labor

2.

B. Indirect labor

3.

C. A period cost

4.

D. A general cost

5.

E. An assembly cost

78 Free Test Bank for Managerial Accounting 4th Edition
by Wild Multiple Choice Questions - Page 2
Use the following information to compute the cost of goods manufactured:
Beginning finished goods inventory $ 9,250; Beginning goods in process
inventory 8,700; Beginning raw materials 7,500; Depreciation on factory
equipment 6,000; Direct labor 75,000; Ending finished goods inventory 8,750;
Ending goods in process inventory 9,300; Ending raw materials 8,500; Factory
Supervisor’s salary 50,000; Raw material purchases 14,000
1.

A. $143,400

2.

B. $13,000

3.

C. $143,000

4.

D. $144,500

5.

E. $93,400

A manufacturing statement is also known as a schedule or listing of the:
1.

A. Raw materials processed.


2.

B. Factory supplies used.

3.

C. Cost of goods manufactured.

4.

D. Total finished goods.

5.

E. Cost of goods sold.

What is the correct amount of cost of goods manufactured?
1.

A. $398,500.

2.

B. $386,000.

3.

C. $309,000.

4.

D. $306,000.

5.

E. $296,500.

Which one of the following items is normally not a manufacturing cost?
1.

A. Direct materials.

2.

B. Factory overhead.

3.

C. General and administrative expenses.

4.

D. Direct labor.

5.

E. Conversion cost.

The total cost of goods manufactured for the year was:
1.

A. $13,000

2.

B. $44,500


3.

C. $57,500

4.

D. $94,500.

5.

E. $52,000

Compute cost of goods manufactured for this period given the following
amounts. Ending finished goods inventory $66,000; Cost of goods sold
54,000; Beginning finished goods inventory 60,000
1.

A. $72,000

2.

B. $48,000

3.

C. $60,000

4.

D. $66,000

5.

E. $180,000.

Use the following information to compute the cost of goods sold for the
period: Beginning raw materials $ 5,500; Ending raw materials 4,000; Direct

labor 12,250; Raw material purchases 7,400; Depreciation on factory
equipment 6,500; Factory repairs and maintenance 3,300; Beginning finished
goods inventory 10,200; Ending finished goods inventory 8,900; Beginning
goods in process inventory 5,700; Ending goods in process inventory 6,300
1.

A. $36,650

2.

B. $30,950

3.

C. $30,650

4.

D. $30,350

5.

E. $31,650


Ajax Company accumulated the following account information for the year:
Beginning raw materials inventory $6,000; Indirect materials cost 2,000;
Indirect labor cost 5,000; Maintenance of factory equipment 2,800; Direct labor
cost 7,000. Using the above information, total factory overhead costs would
be:

1.

A. $9,800

2.

B. $16,800

3.

C. $15,800

4.

D. $13,000

5.

E. $7,800

Current information for the Austin Company follows: Beginning raw materials
inventory $15,200; Beginning goods in process inventory 22,400; Ending raw
materials inventory 16,600; Ending goods in process inventory 28,000; Direct
labor 42,800; Total factory overhead 30,000; Raw material purchases 60,000.
All raw materials used were traceable to specific batches of product. Austin
Company's cost of goods manufactured for the year is:
1.

A. $125,800

2.

B. $128,600

3.

C. $131,400

4.

D. $137,000

5.

E. $139,000

Factory overhead costs normally include all of the following except:
1.

A. Indirect labor costs


2.

B. Indirect material costs

3.

C. Selling costs

4.

D. Factory machinery oil

5.

E. Factory rent

Which of the following items appears only in a manufacturing company's
financial statements?
1.

A. Cost of goods sold.

2.

B. Cost of goods manufactured.

3.

C. Goods available for sale.

4.

D. Gross profit.

5.

E. Net income.

The total cost of goods completed during the accounting period for a
manufacturer is called:
1.

A, Ending finished goods inventory.

2.

B, Total manufacturing costs.

3.

C, Ending goods in process inventory.

4.

D, Cost of goods manufactured.

5.

E, Cost of goods sold.


Use the following information to compute the total manufacturing costs
incurred during the period: Beginning raw materials $ 5,500; Ending raw
materials 4,000; Direct labor 12,250; Raw material purchases 7,400;
Depreciation on factory equipment 6,500; Factory repairs and maintenance
3,300; Beginning finished goods inventory 10,200; Ending finished goods
inventory 8,900; Beginning goods in process inventory 5,700; Ending goods
in process inventory 6,300

1.

A. $36,650

2.

B. $30,950

3.

C. $30,650

4.

D. $30,350

5.

E. $31,650

Juliet Corporation has accumulated the following accounting data for the
year: Finished goods inventory, January 1 $3,200; Finished goods inventory,
December 31 4,000; Total cost of goods sold 4,200. The cost of goods
manufactured for the year is:
1.

A. $200

2.

B. $1,000

3.

C. $5,000

4.

D. $6,400

5.

E. $8,200

The total manufacturing costs incurred during the year were:
1.

A. $13,000


2.

B. $44,500

3.

C. $57,500

4.

D. $94,500

5.

E. $89,000

Use the following data to determine the cost of goods manufactured:
Beginning finished goods inventory $10,800; Direct labor 30,600; Beginning
goods in process inventory 7,200; General and administrative expenses
13,500; Direct materials used 40,500; Ending goods in process inventory
9,000; Indirect labor 6,300; Ending finished goods inventory 9,500; Indirect
materials 13,500; Depreciation – factory equipment 7,500
1.

A. $102,000

2.

B. $110,100

3.

C. $ 96,600

4.

D. $113,700

5.

E. $100,200

Use the following information to compute the cost of goods manufactured:
Beginning finished goods inventory $65,000; Beginning goods in process
inventory 81,000; Beginning raw materials 73,000; Depreciation on factory
equipment 7,000; Direct labor 25,000; Ending finished goods inventory 67,000;
Ending goods in process inventory 79,000; Ending raw materials 60,000;
Factory repairs and maintenance 12,000; Raw material purchases 50,000
1.

A. $63,000

2.

B. $105,000

3.

C. $107,000


4.

D. $90,000

5.

E. $109,000

A manufacturing company has a beginning finished goods inventory of

$14,600, raw material purchases of $18,000, cost of goods manufactured of
$32,500, and an ending finished goods inventory of $17,800. The cost of
goods sold for this company is:
1.

A. $21,200

2.

B. $29,300

3.

C. $32,500

4.

D. $47,100

5.

E. $27,600

Which of the following accounts would appear on a manufacturing
statement?
1.

A. Raw materials, factory insurance expired, indirect labor.

2.

B. Raw materials, goods in process, finished goods.

3.

C. Factory buildings, delivery equipment, and depreciation on factory equipment.

4.

D. Direct labor, indirect labor, sales salaries.

5.

E. Direct labor, factory repairs and maintenance, wages payable.


The beginning and ending finished goods inventories of the Prize Ring
manufacturing company were $75,000 and $73,000 respectively. If cost of
goods sold equaled $66,000, what is the amount of cost of goods
manufactured for this period?
1.

A. $2,000

2.

B. $64,000

3.

C. $68,000

4.

D. $82,000

5.

E. $214,000

Use the following information to compute the cost of goods manufactured:
Beginning raw materials $ 5,500; Ending raw materials 4,000; Direct labor
12,250; Raw material purchases 7,400; Depreciation on factory equipment
6,500; Factory repairs and maintenance 3,300; Beginning finished goods
inventory 10,200; Ending finished goods inventory 8,900; Beginning goods in
process inventory 5,700; Ending goods in process inventory 6,300
1.

A. $36,650

2.

B. $30,950

3.

C. $30,650

4.

D. $30,350

5.

E. $31,650


The following costs are included in a recent summary of data for a company:
advertising expense, $85,000; depreciation expense – factory building,
$133,000; direct labor, $250,000; direct material used, $300,000; factory
utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar
amount of overhead costs.
1.

A. $1,023,000

2.

B. $550,000

3.

C. $488,000

4.

D. $235,000

5.

E. $238,000

Total manufacturing costs incurred during the year do not include:
1.

A. Direct materials used.

2.

B. Factory supplies used.

3.

C. Goods in process inventory, beginning balance.

4.

D. Direct labor.

5.

E. Depreciation of factory machinery.

The following information is available for the year ended December 31:
Beginning raw materials inventory $2,500; Raw materials purchases 4,000;
Ending raw materials inventory 3,000; Office supplies expense 1,000. The
amount of raw materials used in production for the year is:
1.

A. $4,100

2.

B. $5,100