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Test Bank For Managerial Accounting For Managers, 3rd Edition

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    2 - 1 Question Type Difficulty LO1: DM, DL, Manuf. overhead LO2: Period and product costs LO3: Variable, fixed, and mixed costs LO4: High - low method LO5: Income statement formats LO6: Direct and indirect costs LO7: Decision - making cost classifications Professional Exam Adapted ID Origin CMA/CPA origin 1 T/F E x x 8/e:ATB2 - 2 David Keyes 2 T/F E x 3/e:2 - TF9 Authors 3 T/F E x 3/e:2 - TF11 Authors 4 T/F E x 1/e:Exam#1 - I10 Authors 5 T/F M x 3/e:2 - TF5 Authors 6 T/F H x 3/e:2 - TF13 Authors 7 T/F M x 1/e:Exam#1 - I6 Authors 8 T/F E x 8/e:ATB2 - 1 David Keyes 9 T/F E x 3/e:2 - TF4 Authors 10 T/F E x 8/e:ATB2 - 6 David Keyes 11 T/F E x 4/e:30 Authors 12 T/F E x 3/e: 5 - 7 Authors 13 T/F M x 3/e: 5 - 6 Authors 14 T/F E x 4/e: 5 - 251 Authors 15 T/F M x 2/e: 4 - 3 Authors 16 T/F E x 2/e: 4 - 1 Authors 17 T/F E x 3 - 15 - 2010 TF A E.N. 18 T/F H x 8/e:ATB6 - 07 David Keyes 19 T/F E x 2/e: 4 - 9 Authors

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    2 - 2 20 T/F E x 3/14/2010 A1 E.N. 21 T/F E x 3/14/2010 C2 E.N. 22 T/F E x 3/14/2010 E1 E.N. 23 T/F E x 3/14/2010 G2 E.N. 24 T/F E x 3/14/2010 J1 E.N. 25 T/F E x 3/14/2010 L2 E.N. 26 T/F M x 4/6/97C E.N. 27 T/F H x 4/6/97D E.N. 28 T/F H x 4/6/97E E.N. 29 T/F E x 8/e:ATB2 - 9 David Keyes 30 Conceptual M/C H x x x 8/e: ATB2 - 13 David Keyes 31 Conceptual M/C M x x 5/e: 2 - 58 Authors 32 Conceptual M/C M x x 5/e: 2 - 27 Authors 33 Conceptual M/C M x 5/e: 2 - 70 Authors 34 Conceptual M/C M x 4/e: 50 Authors 35 Conceptual M/C E x 3/e: 2 - MC8 Authors 36 Conceptual M/C E x 3/e: 2 - MC7 Authors 37 Conceptual M/C M x x 8/e: ATB2 - 14 David Keyes 38 Conceptual M/C E x 4/e: 43 Authors 39 Conceptual M/C E x 4/e: 84 Authors 40 Conceptual M/C M x 4/e: 44 Authors 41 Conceptual M/C E x 3/e: 2 - MC6 Authors 42 Conceptual M/C E x LD9e:CH02Q13 Larry Deppe

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    2 - 3 43 Conceptual M/C M x CMA CMA,6/96,Part3,Q18 CMA CMA,6/96,Part3,Q18 44 Conceptual M/C H x 5/e: 2 - 29 Authors 45 Conceptual M/C M x 5/e: 2 - 36 Authors 46 Conceptual M/C M x 3 - 15 - 2010 TF B E.N. 47 Conceptual M/C H x 8/e: ATB2 - 18 David Keyes 48 Conceptual M/C E x 3 - 15 - 2010 TF C E.N. 49 Conceptual M/C E x 4/e: 5 - 295 Authors 50 Conceptual M/C E x 5/e: 5 - 16 Authors 51 Conceptual M/C H x 5/e: 5 - 17 Authors 52 Conceptual M/C H x 4/6/97B E.N. 53 Conceptual M/C M x 2/e: 2 - MC12 Authors 54 Conceptual M/C E x 3/e: 2 - MC10 Authors 55 Conceptual M/C E x CMA CMA,6/96,Part4,Q19 CMA CMA,6/96,Part4,Q19 56 M/C M x x New,11/9/95,D9 E.N. 57 M/C M x x New,11/9/95,E9 E.N. 58 M/C H x New,11/9/95,C9 E.N. 59 M/C H x New,11/8/95,A8 E.N. 60 M/C H x New,11/9/95,B9 E.N. 61 M/C M x LD9e:CH02Q11 Larry Deppe 62 M/C H x x x EN 12 - 23 - 2002 SPI5 E.N. 63 M/C M x x EN 12 - 23 - 2002 SPG5 E.N. 64 M/C H x x EN 12 - 23 - 2002 SPB5 E.N. 65 M/C H x x EN 12 - 23 - 2002 SPC5 E.N.

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    2 - 4 66 M/C M x x EN 12 - 23 - 2002 SPE5 E.N. 67 M/C M x x EN 12 - 23 - 2002 SPD5 E.N. 68 M/C M x x EN 12 - 23 - 2002 SPH5 E.N. 69 M/C M x x EN 12 - 23 - 2002 SPF5 E.N. 70 M/C H x x EN 12 - 23 - 2002 SPA5 E.N. 71 M/C M x x LD9e:CH05Q7 Larry Deppe 72 M/C H x x 5/e: 5 - 35 Authors 73 M/C M x 11/e: ATB 5 - 30 Antoinette Clegg 74 M/C H x 1/e: Achievement - 6 Authors 75 M/C E x 8/22/2004 Single MC K4 E.N. 76 M/C E x 5/e: 5 - 63 Authors 77 M/C E x 4/e: 5 - 266 Authors 78 M/C E x 8/22/2004 Single MC I4 E.N. 79 M/C E x 1/e: 5 - 9 Authors 80 M/C E x 1/e: Achievement - 8 Authors 81 M/C E x 8/22/2004 Single MC J4 E.N. 82 M/C E x 08/21/2004 Single MC C4 E.N. 83 M/C E x 08/21/2004 Single MC A4 E.N. 84 M/C E x 11/e: ATB 5 - 25 Antoinette Clegg 85 M/C E x 3/e: 5 - 9 Authors 86 M/C E x 2/e: 4 - 5 Authors 87 M/C E x 08/21/2004 Single MC B4 E.N. 88 M/C M x LD9e:CH05Q4 Larry Deppe 89 M/C M x New,11/9/95,H9 E.N. 90 M/C E x New,11/9/95,G9 E.N. 2 - 1 91 - 93 Multipart M/C M x x 8/3/2004 Multi MC P4 E.N. 2 - 2 94 - 96 Multipart M/C M x x 8/3/2004 Multi MC O4 E.N. 2 - 3 97 - 98 Multipart M/C E x 8/3/2004 Multi MC E4 E.N.

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    2 - 5 2 - 4 99 - 100 Multipart M/C E x 8/3/2004 Multi MC M4 E.N. 2 - 5 101 - 103 Multipart M/C M x x x EN 12 - 23 - 2002 MPC5 E.N. 2 - 6 104 - 106 Multipart M/C M x x EN 12 - 23 - 2002 MPB4 E.N. 2 - 7 107 - 109 Multipart M/C H x x EN 12 - 23 - 2002 MPA5 E.N. 2 - 8 110 - 111 Multipart M/C E x 8/22/2004 Multi MC L4 E.N. 2 - 9 112 - 113 Multipart M/C E x 8/22/2004 Multi MC K4 E.N. 2 - 10 114 - 115 Multipart M/C E x 8/3/2004 Multi MC U4 E.N. 2 - 11 116 - 117 Multipart M/C E x 8/3/2004 Multi MC R4 E.N. 2 - 12 118 - 119 Multipart M/C E x 8/3/2004 Multi MC S4 E.N. 2 - 13 120 - 121 Multipart M/C E x 8/3/2004 Multi MC T4 E.N. 2 - 14 122 - 123 Multipart M/C E x 8/22/2004 Multi MC J4 E.N. 2 - 15 124 - 125 Multipart M/C E x 8/20/2004 Multi MC B4 E.N. 2 - 16 126 - 127 Multipart M/C E x 8/21/2004 Multi MC C4 E.N. 2 - 17 128 - 129 Multipart M/C E x 8/20/2004 Multi MC A4 E.N. 2 - 18 130 - 132 Multipart M/C M - H x LD9e:CH05Q14 - 16 Larry Deppe 2 - 19 133 - 134 Multipart M/C E x 3 - 15 - 2010 Multi MC C1 E.N. 2 - 20 135 - 136 Multipart M/C M x 3 - 15 - 2010 Multi MC A1 E.N. 2 - 21 137 - 138 Multipart M/C M x 3 - 15 - 2010 Multi MC B1 E.N. 2 - 22 139 - 140 Multipart M/C E x 3 - 15 - 2010 Multi MC D1 E.N. 2 - 23 141 - 142 Multipart M/C E x 8/3/2004 Multi MC N4 E.N. 2 - 24 143 - 144 Multipart M/C E - M x 8/3/2004 Multi MC AA4 E.N. 2 - 25 145 - 146 Multipart M/C E - M x 8/3/2004 Multi MC Z4 E.N. 2 - 26 147 - 149 Multipart M/C E x 8/3/2004 Multi MC W4 E.N. 2 - 27 150 - 152 Multipart M/C E x 8/3/2004 Multi MC V4 E.N. 153 Problem M x x x x 1/e:Exam #1 - III Authors 154 Problem M x x x 2/e:2 - P2 - 2 Authors 155 Problem M x 8/3/2004 Problem F4 E.N. 156 Problem M x 8/3/2004 Problem E4 E.N. 157 Problem E x 5/e:5 - 56 Authors 158 Problem E x 8/22/2004 Problem L4 E.N. 159 Problem E x 8/22/2004 Problem M4 E.N.

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    2 - 6 160 Problem E x 8/4/2004 Problem N3 E.N. 161 Problem E x 8/4/2004 Problem M4 E.N. 162 Problem E x 8/21/2004 Problem B4 E.N. 163 Problem E x 8/21/2004 Problem A4 E.N. 164 Problem E x 8/21/2004 Problem C4 E.N. 165 Problem E x 8/3/2004 Problem D4 E.N. 166 Problem M x 3 - 15 - 2010 Problem B1 E.N. 167 Problem E x 3 - 15 - 2010 Problem D1 E.N. 168 Problem E x 3 - 15 - 2010 Problem C1 E.N. 169 Problem M x 3 - 15 - 2010 Problem A1 E.N. 170 Problem E x 8/4/2004 Problem O4 E.N.

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    2 - 7 Chapter 02 Managerial Accounting and Cost Concepts True / False Questions 1. Direct material costs are generally variable costs. True False 2. Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead. True False 3. Manufacturing overhead combined with direct materials is known as conversion cost. True False 4. All costs incurred in a merchandising firm are considered to be period costs. True False 5. Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm. True False 6. In external financial reports, factory utilities costs may be included in an asset account on the balance sheet at the end of the period. True False 7. Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products. True False 8. Selling and administrative expenses are product costs under generally accepted accounting principles. True False

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    2 - 8 9. A variable cost is a cost whose cost per unit varies as the activity level rises and falls. True False 10. When the level of activity increases, total variable cost will increase. True False 11. A decrease in production will ordinarily result in an increase in fixed production costs per unit. True False 12. Automation results in a shift away from variable costs toward more fixed costs. True False 13. In order for a cost to be variable it must vary with either units produced or units sold. True False 14. The concept of the relevant range does not apply to fixed costs. True False 15. Indirect costs, such as manufacturing overhead, are always fixed costs. True False 16. Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas. True False 17. Even if operations are interrupted or cut back, committed fixed costs remain largely unchanged in the short term because the costs of restoring them later are likely to be far greater than any short - run savings that might be realized. True False 18. Committed fixed costs are fixed costs that are not controllable. True False 19. A mixed cost is partially variable and partially fixed. True False

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    2 - 9 20. Traditional format income statements are prepared primarily for external reporting purposes. True False 21. In a contribution format income statement, sales minus cost of goods sold equals the gross margin. True False 22. In a traditional format income statement for a merchandising company, the cost of goods sold reports the product costs attached to the merchandise sold during the period. True False 23. Although the contribution format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs. True False 24. In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement. True False 25. 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 performance appraisals, and budgeting. True False 26. The following would typically be considered indirect costs of manufacturing a particular Boeing 747 to be delivered to Singapore Airlines: electricity to run production equipment, the factory manager's salary, and the cost of the General Electric jet engines installed on the aircraft. True False 27. The following costs should be considered direct costs of providing delivery room services to a particular mother and her baby: the costs of drugs administered in the operating room, the attending physician's fees, and a portion of the liability insurance carried by the hospital to cover the delivery room. True False

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    2 - 10 28. The following costs should be considered by a law firm to be indirect costs of defending a particular client in court: rent on the law firm's offices, the law firm's receptionist's wages, the costs of heating the law firm's offices, and the depreciation on the personal computer in the office of the attorney who has been assigned the client. True False 29. In any decision making situation, sunk costs are irrelevant and should be ignored. True False Multiple Choice Questions 30. For a lamp manufacturing company, the cost of the insurance on its vehicles that deliver lamps to customers 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 A B. Option B C. Option C D. Option D

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    2 - 11 32. The wages of factory maintenance personnel would usually be considered to be: A. Option A B. Option B C. Option C D. Option D 33. Manufacturing overhead consists of: 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 be included as part of manufacturing overhead at a company that 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. taxes on 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 - 12 36. 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 best be described as a: A. variable cost. B. fixed cost. C. product cost. D. prime cost. 38. Each of the following would be a period cost 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 a period 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 be considered a product cost for external financial reporting purposes? 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 the manufactured product. D. Cost of sand spread on the factory floor to absorb oil from manufacturing machines.

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    2 - 13 41. Which of the following would NOT be treated as a product cost for external financial reporting purposes? 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 the following? A. Product cost B. Period cost C. Manufacturing overhead D. Direct labor 43. Conversion costs do NOT include: A. depreciation. B. direct materials. C. indirect labor. D. indirect materials. 44. Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month 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. increases on 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. decreases on a per unit basis as the number of units produced increases.

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    2 - 14 46. 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. The salary 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. relevant costs 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. a training 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 - 15 51. 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 in costs. D. As "X" increases "Y" decreases. 52. Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer? A. the cost of the hard disk drive installed in the computer. B. the cost of shipping the computer to the customer. C. the cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers. D. the cost of packaging the computer for shipment. 53. The term differential cost refers to: A. a difference 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 - making process. 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 from conventional accounting records? A. Fixed cost. B. Sunk cost. C. Opportunity cost. D. Indirect cost. 55. When a decision is made among a number of alternatives, the benefit that is lost by choosing one alternative over another is the: A. realized cost. B. opportunity cost. C. conversion cost. D. accrued cost.

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