Managerial Accounting Questions and Answers
1. Which of the following statements about managerial accountants is false?
A. Managerial accountants more and more are considered "business partners."
B. Managerial accountants often are part of cross-functional teams.
C. An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments.
D. In a number of companies, managerial accountants make significant business decisions and resolve operating problems.
E. The role of managerial accountants has changed considerably over the past decade.
2. The day-to-day work of management teams will typically comprise all of the following activities except:
A. decision making.
B. planning.
C. cost minimizing.
D. directing operational activities.
E. controlling.
3. Which of the following functions is best described as choosing among available alternatives?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Budgeting.
4. Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Measuring.
5. Which of the following involves the coordination of daily business functions within an organization?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Motivating.
6. Taurus Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process?
A. Decision making.
B. Planning.
C. Coordinating.
D. Controlling.
E. Organizing.
7. Which of the following is not an objective of managerial accounting?
A. Providing information for decision making and planning.
B. Assisting in directing and controlling operations.
C. Maximizing profits and minimizing costs.
D. Measuring the performance of managers and subunits.
E. Motivating managers toward the organization's goals.
8. The role of managerial accounting information in assisting management is a(n):
A. financial-directing role.
B. attention-directing role.
C. planning and controlling role.
D. organizational role.
E. problem-solving role.
9. Employee empowerment involves encouraging and authorizing workers to take initiatives to:
A. improve operations.
B. reduce costs.
C. improve product quality.
D. improve customer service.
E. All of these.
10. The process of encouraging and authorizing workers to take appropriate initiatives to improve the overall firm is commonly known as:
A. planning and control.
B. employee empowerment.
C. personnel aggressiveness.
D. decision making.
E. problem recognition and solution.
Chapter 2
11. Which of the following statements is true?
A. The word "cost" has the same meaning in all situations in which it is used.
B. Cost data, once classified and recorded for a specific application, are appropriate for use in any application.
C. Different cost concepts and classifications are used for different purposes.
D. All organizations incur the same types of costs.
E. Costs incurred in one year are always meaningful in the following year.
12. Product costs are:
A. expensed when incurred.
B. inventoried.
C. treated in the same manner as period costs.
D. treated in the same manner as advertising costs.
E. subtracted from cost of goods sold.
13. Which of the following is a product cost?
A. Glass in an automobile.
B. Advertising.
C. The salary of the vice president-finance.
D. Rent on a factory.
E. Both "A" and "D."
14. Which of the following would not be classified as a product cost?
A. Direct materials.
B. Direct labor.
C. Indirect materials.
D. Insurance on a manufacturing plant.
E. Sales commissions.
15. The accounting records of Georgia Company revealed the following costs: direct materials used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and administrative expenses, $220,000. Georgia's product costs total:
A. $1,050,000.
B. $830,000.
C. $895,000.
D. $1,270,000.
E. some other amount.
16. Costs that are expensed when incurred are called:
A. product costs.
B. direct costs.
C. inventoriable costs.
D. period costs.
E. indirect costs.
17. Which of the following is a period cost?
A. Direct material.
B. Advertising expense.
C. Indirect Labor.
D. Miscellaneous supplies used in production activities.
E. Both "B" and "C."
18. Which of the following is not a period cost?
A. Legal costs.
B. Public relations costs.
C. Sales commissions.
D. Wages of assembly-line workers.
E. The salary of a company's chief financial officer (CFO).
19. The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds's period costs total:
A. $250,000.
B. $440,000.
C. $375,000.
D. $255,000.
E. $185,000.
20. Yang Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Yang's income statement should reveal operating expenses of:
A. $35,000.
B. $420,000.
C. $455,000.
D. $567,000.
E. $602,000.
Chapter 3
21. Which of the following statements about materials is false?
A. Acquisitions of materials are normally charged to the Purchases account.
B. The use of direct materials gives rise to a debit to Work-in-Process Inventory.
C. The use of indirect materials gives rise to a debit to Manufacturing Overhead.
D. The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory.
E. Direct materials are accounted for in a different manner than indirect materials.
22. Summers Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities. The journal entries reflecting these transactions would include:
A. a debit to Manufacturing Overhead for $9,000.
B. a debit to Manufacturing Overhead for $84,000.
C. a debit to Raw-Material Inventory for $75,000.
D. a debit to Work-in-Process Inventory for $84,000.
E. a credit to Manufacturing Overhead for $9,000.
23. A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000. If all procedures were performed in the correct manner, this means that the firm:
A. also recorded a credit to Raw-Material Inventory.
B. also recorded a credit to Manufacturing Supplies Inventory.
C. was accounting for the usage of direct materials.
D. was accounting for the usage of indirect materials.
E. Both A and C are correct
24. Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for:
A. $0 because Work in Process should be credited.
B. $0 because Work in Process is not affected.
C. $11,000.
D. $106,000.
E. $117,000.
25. The following information relates to October:
Production supervisor's salary: $3,500
Factory maintenance wages: 250 hours at $10 per hour
the journal entry to record the preceding information is:
A.
B.
C.
D.
E.
26. Electricity costs that were incurred by a company's production processes should be debited to:
A. Utilities Expense.
B. Accounts Payable.
C. Cash.
D. Manufacturing Overhead.
E. Work-in-Process Inventory.
27. The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:
A. a debit to Advertising Expense.
B. a credit to Advertising Expense.
C. a debit to Manufacturing Overhead.
D. a credit to Manufacturing Overhead.
E. a debit to Projects-in-Process.
28. Reynardo Company incurred $90,000 of depreciation for the year. Eighty percent relates to the firm's production facilities, and 20% relates to sales and administrative offices. If all items are handled in the proper manner, a review of the company's accounting records should reveal a:
A. debit to Depreciation Expense for $90,000.
B. debit to Manufacturing Overhead for $90,000.
C. debit to Manufacturing Overhead for $72,000.
D. debit to Work-in-Process Inventory for $18,000.
E. credit to Cash for $90,000.
29. The process of assigning overhead costs to the jobs that are worked on is commonly called:
A. service department cost allocation.
B. overhead cost distribution.
C. overhead application.
D. transfer costing.
E. overhead cost apportionment.
30. Which of the following is the correct method to calculate a predetermined overhead rate?
A. Budgeted total manufacturing cost ¸ budgeted amount of cost driver.
B. Budgeted overhead cost ¸ budgeted amount of cost driver.
C. Budgeted amount of cost driver ¸ budgeted overhead cost.
D. Actual overhead cost ¸ budgeted amount of cost driver.
E. Actual overhead cost ¸ actual amount of cost driver.
Chapter 4
31. Process costing is used to account for:
A. large numbers of identical products that are produced in a continuous manufacturing environment.
B. small numbers of products that are produced in batches.
C. raw materials that are converted directly to finished goods.
D. finished goods that are refined and processed further.
E. large numbers of products that are produced in a non-repetitive process.
32. Which of the following manufacturers would most likely not use a process-cost accounting system?
A. A producer of computer monitors.
B. A paint manufacturer.
C. A producer of frozen orange juice.
D. A builder of customized yachts.
E. A lumber mill.
33. Process costing would likely be used in all of the following industries except:
A. petroleum refining.
B. chemicals.
C. truck tire manufacturing.
D. wood pulp production.
E. automobile repair.
34. Which of the following companies would likely use a process-costing system?
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
35. Which of the following statements about similarities between process costing and job-order costing are true?
I. Both systems assign production costs to units of output.
II. Both systems require extensive knowledge of financial accounting.
III. The flow of costs through the manufacturing accounts is essentially the same.
A. I only.
B. I and III.
C. II and III.
D. III only.
E. I, II, and III.
36. Companies that use a process-cost accounting system would:
A. establish a separate Work-in-Process Inventory account for each manufacturing department.
B. establish a separate Finished-Goods Inventory account for each manufacturing department.
C. pass completed production directly to Cost of Goods Sold.
D. charge goods produced with actual overhead amounts rather than applied overhead amounts.
E. eliminate the need for the Finished-Goods Inventory account.
37. Which of the following statements is false?
A. In job-order costing, costs are accumulated by job order.
B. In process costing, costs are accumulated by department.
C. In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production activity.
D. In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed.
E. In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.
38. In a process-costing system, manufacturing costs are accumulated by:
A. batch.
B. batch and time period.
C. department.
D. department and time period.
E. department or process, and time period.
39. Which of the following choices correctly shows how costs are accumulated in a process-costing system?
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
40. Masterson, Inc., which uses a process-cost accounting system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:
A. a debit to Work-in-Process Inventory and a credit to Finished-Goods Inventory.
B. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory.
C. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory: Department A
D. a debit to Work-in-Process Inventory: Department A and a credit to Work-in-Process Inventory: Department B.
E. a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.
16. Griswold, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?
A. Cost of Goods Transferred.
B. Finished-Goods Inventory: Department no. 1.
C. Finished-Goods Inventory: Department no. 2.
D. Work-in-Process Inventory: Department no. 1.
E. Work-in-Process Inventory: Department no. 2.
17. Barnett, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be credited to record this transfer?
A. Cost of Goods Transferred.
B. Finished-Goods Inventory: Department no. 1.
C. Finished-Goods Inventory: Department no. 2.
D. Work-in-Process Inventory: Department no. 1.
E. Work-in-Process Inventory: Department no. 2.
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Chapter01.The Changing Role of Managerial Accounting in a Dynamic Business Environment. (2016).Coursehero.com. Retrieved 6 March 2016, from https://www.coursehero.com/file/6318117/Chapter01The-Changing-Role-of-Managerial-Accounting-in-a-Dynamic-Business-Environment/
Chapter04 Process Costing and Hybrid Product Costing Systems. (2016). Scribd. Retrieved 6 March 2016, from https://www.scribd.com/doc/212230625/Chapter04-Process-Costing-and-Hybrid-Product-Costing-Systems
Managerial Accounting ch. 5 flashcards | Quizlet. (2016). Quizlet.com. Retrieved 6 March 2016, from https://quizlet.com/5923878/managerial-accounting-ch-5-flash-cards/
A. Managerial accountants more and more are considered "business partners."
B. Managerial accountants often are part of cross-functional teams.
C. An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments.
D. In a number of companies, managerial accountants make significant business decisions and resolve operating problems.
E. The role of managerial accountants has changed considerably over the past decade.
2. The day-to-day work of management teams will typically comprise all of the following activities except:
A. decision making.
B. planning.
C. cost minimizing.
D. directing operational activities.
E. controlling.
3. Which of the following functions is best described as choosing among available alternatives?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Budgeting.
4. Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Measuring.
5. Which of the following involves the coordination of daily business functions within an organization?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Motivating.
6. Taurus Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process?
A. Decision making.
B. Planning.
C. Coordinating.
D. Controlling.
E. Organizing.
7. Which of the following is not an objective of managerial accounting?
A. Providing information for decision making and planning.
B. Assisting in directing and controlling operations.
C. Maximizing profits and minimizing costs.
D. Measuring the performance of managers and subunits.
E. Motivating managers toward the organization's goals.
8. The role of managerial accounting information in assisting management is a(n):
A. financial-directing role.
B. attention-directing role.
C. planning and controlling role.
D. organizational role.
E. problem-solving role.
9. Employee empowerment involves encouraging and authorizing workers to take initiatives to:
A. improve operations.
B. reduce costs.
C. improve product quality.
D. improve customer service.
E. All of these.
10. The process of encouraging and authorizing workers to take appropriate initiatives to improve the overall firm is commonly known as:
A. planning and control.
B. employee empowerment.
C. personnel aggressiveness.
D. decision making.
E. problem recognition and solution.
Chapter 2
11. Which of the following statements is true?
A. The word "cost" has the same meaning in all situations in which it is used.
B. Cost data, once classified and recorded for a specific application, are appropriate for use in any application.
C. Different cost concepts and classifications are used for different purposes.
D. All organizations incur the same types of costs.
E. Costs incurred in one year are always meaningful in the following year.
12. Product costs are:
A. expensed when incurred.
B. inventoried.
C. treated in the same manner as period costs.
D. treated in the same manner as advertising costs.
E. subtracted from cost of goods sold.
13. Which of the following is a product cost?
A. Glass in an automobile.
B. Advertising.
C. The salary of the vice president-finance.
D. Rent on a factory.
E. Both "A" and "D."
14. Which of the following would not be classified as a product cost?
A. Direct materials.
B. Direct labor.
C. Indirect materials.
D. Insurance on a manufacturing plant.
E. Sales commissions.
15. The accounting records of Georgia Company revealed the following costs: direct materials used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and administrative expenses, $220,000. Georgia's product costs total:
A. $1,050,000.
B. $830,000.
C. $895,000.
D. $1,270,000.
E. some other amount.
16. Costs that are expensed when incurred are called:
A. product costs.
B. direct costs.
C. inventoriable costs.
D. period costs.
E. indirect costs.
17. Which of the following is a period cost?
A. Direct material.
B. Advertising expense.
C. Indirect Labor.
D. Miscellaneous supplies used in production activities.
E. Both "B" and "C."
18. Which of the following is not a period cost?
A. Legal costs.
B. Public relations costs.
C. Sales commissions.
D. Wages of assembly-line workers.
E. The salary of a company's chief financial officer (CFO).
19. The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds's period costs total:
A. $250,000.
B. $440,000.
C. $375,000.
D. $255,000.
E. $185,000.
20. Yang Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Yang's income statement should reveal operating expenses of:
A. $35,000.
B. $420,000.
C. $455,000.
D. $567,000.
E. $602,000.
Chapter 3
21. Which of the following statements about materials is false?
A. Acquisitions of materials are normally charged to the Purchases account.
B. The use of direct materials gives rise to a debit to Work-in-Process Inventory.
C. The use of indirect materials gives rise to a debit to Manufacturing Overhead.
D. The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory.
E. Direct materials are accounted for in a different manner than indirect materials.
22. Summers Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities. The journal entries reflecting these transactions would include:
A. a debit to Manufacturing Overhead for $9,000.
B. a debit to Manufacturing Overhead for $84,000.
C. a debit to Raw-Material Inventory for $75,000.
D. a debit to Work-in-Process Inventory for $84,000.
E. a credit to Manufacturing Overhead for $9,000.
23. A review of a company's Work-in-Process Inventory account found a debit for materials of $67,000. If all procedures were performed in the correct manner, this means that the firm:
A. also recorded a credit to Raw-Material Inventory.
B. also recorded a credit to Manufacturing Supplies Inventory.
C. was accounting for the usage of direct materials.
D. was accounting for the usage of indirect materials.
E. Both A and C are correct
24. Othello Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for:
A. $0 because Work in Process should be credited.
B. $0 because Work in Process is not affected.
C. $11,000.
D. $106,000.
E. $117,000.
25. The following information relates to October:
Production supervisor's salary: $3,500
Factory maintenance wages: 250 hours at $10 per hour
the journal entry to record the preceding information is:
A.
B.
C.
D.
E.
26. Electricity costs that were incurred by a company's production processes should be debited to:
A. Utilities Expense.
B. Accounts Payable.
C. Cash.
D. Manufacturing Overhead.
E. Work-in-Process Inventory.
27. The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:
A. a debit to Advertising Expense.
B. a credit to Advertising Expense.
C. a debit to Manufacturing Overhead.
D. a credit to Manufacturing Overhead.
E. a debit to Projects-in-Process.
28. Reynardo Company incurred $90,000 of depreciation for the year. Eighty percent relates to the firm's production facilities, and 20% relates to sales and administrative offices. If all items are handled in the proper manner, a review of the company's accounting records should reveal a:
A. debit to Depreciation Expense for $90,000.
B. debit to Manufacturing Overhead for $90,000.
C. debit to Manufacturing Overhead for $72,000.
D. debit to Work-in-Process Inventory for $18,000.
E. credit to Cash for $90,000.
29. The process of assigning overhead costs to the jobs that are worked on is commonly called:
A. service department cost allocation.
B. overhead cost distribution.
C. overhead application.
D. transfer costing.
E. overhead cost apportionment.
30. Which of the following is the correct method to calculate a predetermined overhead rate?
A. Budgeted total manufacturing cost ¸ budgeted amount of cost driver.
B. Budgeted overhead cost ¸ budgeted amount of cost driver.
C. Budgeted amount of cost driver ¸ budgeted overhead cost.
D. Actual overhead cost ¸ budgeted amount of cost driver.
E. Actual overhead cost ¸ actual amount of cost driver.
Chapter 4
31. Process costing is used to account for:
A. large numbers of identical products that are produced in a continuous manufacturing environment.
B. small numbers of products that are produced in batches.
C. raw materials that are converted directly to finished goods.
D. finished goods that are refined and processed further.
E. large numbers of products that are produced in a non-repetitive process.
32. Which of the following manufacturers would most likely not use a process-cost accounting system?
A. A producer of computer monitors.
B. A paint manufacturer.
C. A producer of frozen orange juice.
D. A builder of customized yachts.
E. A lumber mill.
33. Process costing would likely be used in all of the following industries except:
A. petroleum refining.
B. chemicals.
C. truck tire manufacturing.
D. wood pulp production.
E. automobile repair.
34. Which of the following companies would likely use a process-costing system?
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
35. Which of the following statements about similarities between process costing and job-order costing are true?
I. Both systems assign production costs to units of output.
II. Both systems require extensive knowledge of financial accounting.
III. The flow of costs through the manufacturing accounts is essentially the same.
A. I only.
B. I and III.
C. II and III.
D. III only.
E. I, II, and III.
36. Companies that use a process-cost accounting system would:
A. establish a separate Work-in-Process Inventory account for each manufacturing department.
B. establish a separate Finished-Goods Inventory account for each manufacturing department.
C. pass completed production directly to Cost of Goods Sold.
D. charge goods produced with actual overhead amounts rather than applied overhead amounts.
E. eliminate the need for the Finished-Goods Inventory account.
37. Which of the following statements is false?
A. In job-order costing, costs are accumulated by job order.
B. In process costing, costs are accumulated by department.
C. In process costing, the cost per unit in a department is found by spreading the period's manufacturing costs over the production activity.
D. In process costing, the total cost of each unit is found by dividing the total factory costs by the number of units completed.
E. In job-order costing, the unit cost is found by dividing the job's total cost by the job's total units.
38. In a process-costing system, manufacturing costs are accumulated by:
A. batch.
B. batch and time period.
C. department.
D. department and time period.
E. department or process, and time period.
39. Which of the following choices correctly shows how costs are accumulated in a process-costing system?
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
40. Masterson, Inc., which uses a process-cost accounting system, passes completed production from Department A to Department B for further manufacturing. The journal entry to record completed production in Department A requires:
A. a debit to Work-in-Process Inventory and a credit to Finished-Goods Inventory.
B. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory.
C. a debit to Finished-Goods Inventory and a credit to Work-in-Process Inventory: Department A
D. a debit to Work-in-Process Inventory: Department A and a credit to Work-in-Process Inventory: Department B.
E. a debit to Work-in-Process Inventory: Department B and a credit to Work-in-Process Inventory: Department A.
16. Griswold, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?
A. Cost of Goods Transferred.
B. Finished-Goods Inventory: Department no. 1.
C. Finished-Goods Inventory: Department no. 2.
D. Work-in-Process Inventory: Department no. 1.
E. Work-in-Process Inventory: Department no. 2.
17. Barnett, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be credited to record this transfer?
A. Cost of Goods Transferred.
B. Finished-Goods Inventory: Department no. 1.
C. Finished-Goods Inventory: Department no. 2.
D. Work-in-Process Inventory: Department no. 1.
E. Work-in-Process Inventory: Department no. 2.
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References
Accounting 202 Home. (2016). Acct202.tripod.com. Retrieved 6 March 2016, from http://acct202.tripod.com/Chapter%204%20Exam.htm Chapter01.The Changing Role of Managerial Accounting in a Dynamic Business Environment. (2016).Coursehero.com. Retrieved 6 March 2016, from https://www.coursehero.com/file/6318117/Chapter01The-Changing-Role-of-Managerial-Accounting-in-a-Dynamic-Business-Environment/
Chapter04 Process Costing and Hybrid Product Costing Systems. (2016). Scribd. Retrieved 6 March 2016, from https://www.scribd.com/doc/212230625/Chapter04-Process-Costing-and-Hybrid-Product-Costing-Systems
Managerial Accounting ch. 5 flashcards | Quizlet. (2016). Quizlet.com. Retrieved 6 March 2016, from https://quizlet.com/5923878/managerial-accounting-ch-5-flash-cards/
