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Principles of Accounting, Volume 2: Managerial Accounting

Multiple Choice

Principles of Accounting, Volume 2: Managerial AccountingMultiple Choice
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Table of contents
  1. Preface
  2. 1 Accounting as a Tool for Managers
    1. Why It Matters
    2. 1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
    3. 1.2 Distinguish between Financial and Managerial Accounting
    4. 1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
    5. 1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
    6. 1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Thought Provokers
  3. 2 Building Blocks of Managerial Accounting
    1. Why It Matters
    2. 2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
    3. 2.2 Identify and Apply Basic Cost Behavior Patterns
    4. 2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
    5. Key Terms
    6. Summary
    7. Multiple Choice
    8. Questions
    9. Exercise Set A
    10. Exercise Set B
    11. Problem Set A
    12. Problem Set B
    13. Thought Provokers
  4. 3 Cost-Volume-Profit Analysis
    1. Why It Matters
    2. 3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
    3. 3.2 Calculate a Break-Even Point in Units and Dollars
    4. 3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
    5. 3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
    6. 3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  5. 4 Job Order Costing
    1. Why It Matters
    2. 4.1 Distinguish between Job Order Costing and Process Costing
    3. 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
    4. 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
    5. 4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
    6. 4.5 Compute the Cost of a Job Using Job Order Costing
    7. 4.6 Determine and Dispose of Underapplied or Overapplied Overhead
    8. 4.7 Prepare Journal Entries for a Job Order Cost System
    9. 4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
    10. Key Terms
    11. Summary
    12. Multiple Choice
    13. Questions
    14. Exercise Set A
    15. Exercise Set B
    16. Problem Set A
    17. Problem Set B
    18. Thought Provokers
  6. 5 Process Costing
    1. Why It Matters
    2. 5.1 Compare and Contrast Job Order Costing and Process Costing
    3. 5.2 Explain and Identify Conversion Costs
    4. 5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
    5. 5.4 Explain and Compute Equivalent Units and Total Cost of Production in a Subsequent Processing Stage
    6. 5.5 Prepare Journal Entries for a Process Costing System
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  7. 6 Activity-Based, Variable, and Absorption Costing
    1. Why It Matters
    2. 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
    3. 6.2 Describe and Identify Cost Drivers
    4. 6.3 Calculate Activity-Based Product Costs
    5. 6.4 Compare and Contrast Traditional and Activity-Based Costing Systems
    6. 6.5 Compare and Contrast Variable and Absorption Costing
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  8. 7 Budgeting
    1. Why It Matters
    2. 7.1 Describe How and Why Managers Use Budgets
    3. 7.2 Prepare Operating Budgets
    4. 7.3 Prepare Financial Budgets
    5. 7.4 Prepare Flexible Budgets
    6. 7.5 Explain How Budgets Are Used to Evaluate Goals
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  9. 8 Standard Costs and Variances
    1. Why It Matters
    2. 8.1 Explain How and Why a Standard Cost Is Developed
    3. 8.2 Compute and Evaluate Materials Variances
    4. 8.3 Compute and Evaluate Labor Variances
    5. 8.4 Compute and Evaluate Overhead Variances
    6. 8.5 Describe How Companies Use Variance Analysis
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  10. 9 Responsibility Accounting and Decentralization
    1. Why It Matters
    2. 9.1 Differentiate between Centralized and Decentralized Management
    3. 9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
    4. 9.3 Describe the Types of Responsibility Centers
    5. 9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  11. 10 Short-Term Decision Making
    1. Why It Matters
    2. 10.1 Identify Relevant Information for Decision-Making
    3. 10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
    4. 10.3 Evaluate and Determine Whether to Make or Buy a Component
    5. 10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
    6. 10.5 Evaluate and Determine Whether to Sell or Process Further
    7. 10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
    8. Key Terms
    9. Summary
    10. Multiple Choice
    11. Questions
    12. Exercise Set A
    13. Exercise Set B
    14. Problem Set A
    15. Problem Set B
    16. Thought Provokers
  12. 11 Capital Budgeting Decisions
    1. Why It Matters
    2. 11.1 Describe Capital Investment Decisions and How They Are Applied
    3. 11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
    4. 11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
    5. 11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
    6. 11.5 Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  13. 12 Balanced Scorecard and Other Performance Measures
    1. Why It Matters
    2. 12.1 Explain the Importance of Performance Measurement
    3. 12.2 Identify the Characteristics of an Effective Performance Measure
    4. 12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
    5. 12.4 Describe the Balanced Scorecard and Explain How It Is Used
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  14. 13 Sustainability Reporting
    1. Why It Matters
    2. 13.1 Describe Sustainability and the Way It Creates Business Value
    3. 13.2 Identify User Needs for Information
    4. 13.3 Discuss Examples of Major Sustainability Initiatives
    5. 13.4 Future Issues in Sustainability
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Thought Provokers
  15. A | Financial Statement Analysis
  16. B | Time Value of Money
  17. C | Suggested Resources
  18. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
  19. Index
1.

LO 8.1Why does a company use a standard costing system?

  1. to identify variances from actual cost that assist them in maintaining profits
  2. to identify nonperformers in the workplace
  3. to identify what vendors are unreliable
  4. to identify defective materials
2.

LO 8.1This standard is set at a level that may be reached with reasonable effort.

  1. ideal standard
  2. attainable standard
  3. unattainable standard
  4. variance from standard
3.

LO 8.1This standard is set at a level that could be achieved if everything ran perfectly.

  1. ideal standard
  2. attainable standard
  3. unattainable standard
  4. variance from standard
4.

LO 8.1This variance is the difference involving spending more or using more than the standard amount.

  1. favorable variance
  2. unfavorable variance
  3. no variance
  4. variance
5.

LO 8.1This variance is the difference involving spending less, or using less than the standard amount.

  1. favorable variance
  2. unfavorable variance
  3. no variance
  4. variance
6.

LO 8.2What are some possible reasons for a material price variance?

  1. substandard material
  2. labor rate increases
  3. labor rate decreases
  4. labor efficiency
7.

LO 8.2When is the material price variance unfavorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
8.

LO 8.2When is the material price variance favorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
9.

LO 8.2What are some reasons for a material quantity variance?

  1. building rental charges increase
  2. labor rate decreases
  3. more qualified workers
  4. change in the actual cost of materials
10.

LO 8.2When is the material quantity variance favorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
11.

LO 8.2When is the material quantity unfavorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
12.

LO 8.3What are some possible reasons for a labor rate variance?

  1. hiring of less qualified workers
  2. an excess of material usage
  3. material price increase
  4. utilities usage change
13.

LO 8.3When is the labor rate variance unfavorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
14.

LO 8.3When is the labor rate variance favorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price is greater than the standard price
  4. when the actual price is less than the standard price
15.

LO 8.3What are some possible reasons for a direct labor time variance?

  1. utility usage decrease
  2. less qualified workers
  3. office supplies spending
  4. sales decline
16.

LO 8.3When is the direct labor time variance favorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
17.

LO 8.3When is the direct labor time variance unfavorable?

  1. when the actual quantity used is greater than the standard quantity
  2. when the actual quantity used is less than the standard quantity
  3. when the actual price paid is greater than the standard price
  4. when the actual price is less than the standard price
18.

LO 8.4A flexible budget ________.

  1. predicts estimated revenues and costs at varying levels of production
  2. gives actual figures for selling price
  3. gives actual figures for variable and fixed overhead
  4. is not used in overhead variance calculations
19.

LO 8.4The variable overhead rate variance is caused by the sum between which of the following?

  1. actual and standard allocation base
  2. actual and standard overhead rates
  3. actual and budgeted units
  4. actual units and actual overhead rates
20.

LO 8.4The variable overhead efficiency variance is caused by the difference between which of the following?

  1. actual and budgeted units
  2. actual and standard allocation base
  3. actual and standard overhead rates
  4. actual units and actual overhead rates
21.

LO 8.4The fixed factory overhead variance is caused by the difference between which of the following?

  1. actual and standard allocation base
  2. actual and budgeted units
  3. actual fixed overhead and applied fixed overhead
  4. actual and standard overhead rates
22.

LO 8.5Which of the following is a possible cause of an unfavorable material price variance?

  1. purchasing too much material
  2. purchasing higher-quality material
  3. hiring substandard workers
  4. buying substandard material
23.

LO 8.5Which of the following is a possible cause of an unfavorable material quantity variance?

  1. purchasing substandard material
  2. hiring higher-quality workers
  3. paying more than should have for workers
  4. purchasing too much material
24.

LO 8.5Which of the following is a possible cause of an unfavorable labor efficiency variance?

  1. hiring substandard workers
  2. making too many units
  3. buying higher-quality material
  4. paying too much for workers
25.

LO 8.5Which of the following is a possible cause of an unfavorable labor rate variance?

  1. hiring too many workers
  2. hiring higher-quality workers at a higher wage
  3. making too many units
  4. purchasing too much material
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