1.

One major difference between financial and management accounting is that

A. financial accounting reports are prepared primarily for users external to the company.
B. management accounting is not under the jurisdiction of the Securities and Exchange Commission.
C. government regulations do not apply to management accounting.
D. all of the above are true.
2.
Financial accounting and cost accounting are both highly concerned with A.
preparing budgets.
B. determining product cost.
C. providing managers with information necessary for control purposes.
D. determining performance standards.
3.
Which of the following statements is true?
A. Management accounting is a subset of cost accounting.
B. Cost accounting is a subset of both management and financial accounting.
C. Management accounting is a subset of both cost and financial accounting.
D. Financial accounting is a subset of cost accounting.
4.
Financial accounting
A. is primarily concerned with internal reporting.
B. is more concerned with verifiable, historical information than is cost accounting.
C. focuses on the parts of the organization rather than the whole.
D. is specifically directed at management decision-making needs.
5.
In comparing financial and management accounting, which of the following more accurately
describes management accounting information?
A. historical, precise, useful
B. required, estimated, internal
C. budgeted, informative, adaptable
D. comparable, verifiable, monetary
6.
Which of the following statements about management or financial accounting is false? A.
Financial accounting must follow GAAP.
B. Management accounting is not subject to regulatory reporting standards.
C. Both management and financial accounting are subject to mandatory recordkeeping
requirements.
D. Management accounting should be flexible.
7.
Financial accounting and managerial accounting are both highly concerned with A.
preparing budgets.
B. determining product cost.
C. providing managers with information necessary for control purposes.
D. determining performance standards.
8.
Which of the following best describes the difference between financial and managerial
accounting?
A. Managerial accounting provides information to support decisions, while financial accounting
does not.
B. Managerial accounting is not restricted to generally accepted accounting principles, while
financial accounting is restricted to GAAP.
C. Managerial accounting does not result in financial reports, while financial accounting
does result in financial reports.
D. Managerial accounting is concerned solely with the future and does not record events from the
past, while financial accounting records only events from past transactions.
9.
Which of the following is not one of the five basic phases of the management process? A.
Controlling
B. Operating
C. Planning
D. Decision making
10.
Which of the following is not considered a cost of manufacturing a product? A.
Direct materials cost
B. Sales salaries
C. Factory overhead cost
D. Direct labor cost
11.
Which of the following costs would be included as part of the factory overhead costs of the
microcomputer manufacturer?
A. The cost of the memory chips
B. Wages of microcomputer assemblers
C. Depreciation of testing equipment
D. The cost of disk drives.
12.
Identify the following costs as direct materials for a magazine publisher:
A. Staples used to bind magazines
B. Wages of printing machine employees
C. Maintenance on printing machines
D. Paper used in the magazine
13.
Identify the following costs as a product cost for a magazine publisher:
A. Sales salaries
B. Maintenance on printing machines
C. Depreciation expense - corporate headquarters
D. Property tax – showroom
14.
CVP analysis requires costs to be categorized as
A. either fixed or variable.
B. fixed, mixed, or variable.
C. product or period.
D. standard or actual.
15.
With respect to fixed costs, CVP analysis assumes total fixed costs
A. per unit remain constant as volume changes.
B. remain constant from one period to the next.
C. vary directly with volume.
D. remain constant across changes in volume.
16.
CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable.
Consistent with these assumptions, as volume decreases total
A. fixed costs decrease.
B. variable costs remain constant.
C. costs decrease.
D. costs remain constant.
17.
According to CVP analysis, a company could never incur a loss that exceeded its total
A. variable costs.
B. fixed costs.
C. costs.
D. contribution margin.
18.
CVP analysis is based on concepts from
A. standard costing.
B. variable costing.
C. job order costing.
D. process costing.
19.
In CVP analysis, linear functions are assumed for
A. contribution margin per unit.
B. fixed cost per unit.
C. total costs per unit.
D. Total mixed costs
20.
Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering
only
A. fixed and mixed costs.
B. relevant fixed costs.
C. relevant variable costs.
D. a relevant range of volume.
21.
After the level of volume exceeds the break-even point
A. the contribution margin ratio increases.
B. the total contribution margin exceeds the total fixed costs.
C. total fixed costs per unit will remain constant.
D. the total contribution margin will turn from negative to positive.
22.
At the break-even point, fixed costs are always A.
less than the contribution margin.
B. equal to the contribution margin.
C. more than the contribution margin.
D. more than the variable cost.
23.
The method of cost accounting that lends itself to break-even analysis is
A. variable.
B. standard.
C. absolute.
D. absorption.
24.
If a firm's net income does not change as its volume changes, the firm('s)
A. must be in the service industry.
B. must have no fixed costs.
C. sales price must equal $0.
D. sales price must equal its variable costs.
25.
Break-even analysis assumes over the relevant range that
A. total variable costs are linear.
B. fixed costs per unit are constant.
C. total variable costs are nonlinear.
D. total revenue is nonlinear.
26.
To compute the break-even point in units, which of the following formulas is used? A.
FC/CM per unit
B. FC/CM ratio
C. CM/CM ratio D. (FC+VC)/CM ratio
27.
A firm's break-even point in dollars can be found in one calculation using which of the following
formulas?
A. FC/CM per unit
B. VC/CM
C. FC/CM ratio
D. D. VC/CM ratio
28.
The contribution margin ratio always increases when the
A. variable costs as a percentage of net sales increase.
B. variable costs as a percentage of net sales decrease.
C. break-even point increases.
D. break-even point decreases.
29.
In a multiple-product firm, the product that has the highest contribution margin per unit will A.
generate more profit for each $1 of sales than the other products.
B. have the highest contribution margin ratio.
C. generate the most profit for each unit sold.
D. have the lowest variable costs per unit.
30.
A budget aids in
A. communication.
B. motivation.
C. coordination.
D. all of the above.
31.
Measuring the firm's performance against established objectives is part of which of the following
functions?
A. Planning
B. Controlling
C. Organizing
D. Staffing
32.
The preparation of an organization's budget
A. forces management to look ahead and try to see the future of the organization.
B. requires that the entire management team work together to make and carry out the yearly plan.
C. makes performance review possible at all levels of management.
D. all of the above.
33.
A budget is
A. a planning tool.
B. a control tool.
C. a means of communicating goals to the firm's divisions.
D. all of the above.
34.
Strategic planning is
A. planning activities for promoting products for the future.
B. planning for appropriate assignments of resources.
C. setting standards for the use of important but hard-to-find materials.
D. stating and establishing long-term plans.
35.
Which of the following statements is true?
A. All organizations have the same set of budgets.
B. All organizations are required to budget.
C. Budgets are a quantitative expression of an organization's goals and objectives.
D. Budgets should never be used to evaluate performance.
36.
Which of the following is not an "operating" budget?
A. sales budget
B. production budget
C. purchases budget
D. capital budget
37.
The master budget is a static budget because it
A. is geared to only one level of production and
sales.
B. never changes from one year to the next.
C. covers a preset period of time.
D. always contains the same operating and financial budgets.
38.
The master budget is a
A. static budget.
B. flexible budget.
C. qualitative expression of a prior goal.
D. qualitative expression of a future goal.
39.
The master budget usually includes A.
an operating budget.
B. a capital budget.
C. pro forma financial statements.
D. all of the above.
40.
Chronologically, the first part of the master budget to be prepared would be the
A. sales budget.
B. production budget.
C. cash budget.
D. pro forma financial statements.
41.
An example of a recurring short-term plan is
A. a probable product line change.
B. expansion of plant and facilities.
C. a unit sales forecast.
D. a change in marketing strategies.
42.
If the chief accountant of a firm has to prepare an operating budget for the coming year, the
first budget to be prepared is the
A. sales budget.
B. cash budget.
C. purchases budget.
D. capital budget.
43.
Budgeted production for a period is equal to
A. the beginning inventory + sales - the ending inventory.
B. the ending inventory + sales - the beginning inventory.
C. the ending inventory + the beginning inventory - sales.
D. sales - the beginning inventory + purchases.
44.
Chronologically, in what order are the sales, purchases, and production budgets prepared?
A. sales, purchases, production
B. sales, production, purchases
C. production, sales, purchases
D. purchases, sales, production 45.
The material purchases budget tells a manager all of the following except the
A. quantity of material to be purchased each period.
B. quantity of material to be consumed each period.
C. cost of material to be purchased each period.
D. cash payment for material each period.
46.
The amount of raw material purchased in a period may be different than the amount of material
used that period because
A. the number of units sold may be different from the number of units produceD.
B. finished goods inventory may fluctuate during the perioD.
C. the raw material inventory may increase/decrease during the perioD.
D. companies often pay for material in the period after it is purchaseD.
47.
Which of the following equations can be used to budget purchases?(BI = beginning inventory, EI
= ending inventory desired, CGS = budgeted cost of goods sold, P = budgeted purchases)
A. P = CGS + BI - EI
B. P = CGS + BI
C. P = CGS + EI + BI
D. P = CGS + EI - BI
48.
Both the budgeted quantity of material to be purchased and the budgeted quantity of material to
be consumed can be found in the
A. material purchases budget.
B. production budget.
C. pro forma income statement.
D. cash budget.
49.
Depreciation on the production equipment would appear in which of the following budgets?
A. cash budget
B. production budget
C. selling and administrative expense budget
D. manufacturing overhead budget 50.
The selling, general, and administrative expense budget is based on the _______________
budget.
A. production
B. sales
C. cash
D. purchases
51.
The budgeted amount of selling and administrative expense for a period can be found in the A.
sales budget.
B. cash budget.
C. income statement.
D. balance sheet.
52.
Which of the following represents a proper sequencing in which the budgets below are
prepared?
A. Direct Material Purchases, Cash, Sales
B. Production, Sales, Income Statement
C. Sales, Balance Sheet, Direct Labor
D. Sales, Production, Manufacturing Overhead
53.
The budgeted payment for labor cost each period would be found in the
A. labor budget.
B. pro forma income statement.
C. selling, general, and administrative expense budget.
D. cash budget.
54.
The cash budget ignores all
A. dividend payments.
B. sales of capital assets.
C. noncash accounting accruals.
D. sales of common stock.
55.
Which of the following items would not be found in the financing section of the cash budget?
A. cash payments for debt retirement
B. cash payments for interest
C. dividend payments
D. payment of accounts payable
56.
Chronologically, the last part of the master budget to be prepared would be the
A. financial statements.
B. cash budget.
C. capital budget
D. production budget.
57.
A financial statement is
A. a financial statement for past periods.
B. a projected or budgeted financial statement.
C. presented for the form but contains no dollar amounts.
D. a statement of planned production.
58.
The budgeted cost of goods sold in a future period would be found in the
A. production budget.
B. sales budget.
C. purchases budget.
D. income statement.
59.
A budget that includes a 12-month planning period at all times is called a ____________ budget.
A. pro forma
B. flexible
C. master
D. continuous
60.
The difference between what was paid for inputs and what should have been paid for inputs is
referred to as a __________________________.
A. price variance
B. quantity variance
C. hours variance D. controllable variance 61.
The difference between standard quantity allowed and quantity used for a unit of output is
known as an _______________________.
A. rate variance
B. quantity variance
C. time variance D. price variance 62.
The difference between actual variable overhead and budgeted variable overhead based upon
actual hours is referred to as the _____________________________________.
A. fixed volume variance
B. quantity variance
C. variable overhead variance D. rate variance
63.
The difference between actual and budgeted fixed factory overhead is referred to:
A. fixed overhead variance
B. time variance
C. variable overhead variance D. quantity variance 64.
Standards that provide for no human limitations or operating delays are referred to as ideal
standards
TRUE
FALSE
65.
A primary purpose of using a standard cost system is
A. to make things easier for managers in the production facility.
B. to provide a distinct measure of cost control.
C. to minimize the cost per unit of production.
D. b and c are correct.
66.
The standard cost card contains quantities and costs for
A. direct material only.
B. direct labor only.
C. direct material and direct labor only.
D. direct material, direct labor, and overhead.
67.
Standard costs may be used for
A. product costing.
B. planning.
C. controlling.
D. all of the above.
68.
The difference between the actual wages paid to employees and the standard wages for all hours
worked is the labor rate variance.
TRUE
FALSE
69.
The difference between the actual wages paid to employees and the standard wages for all hours
worked is the labor efficiency variance.
TRUE
FALSE
70.
A flexible budget is an effective tool for budgeting factory overhead.
TRUE
FALSE
71.
The difference between actual variable overhead and budgeted variable overhead based upon
actual hours is referred to as the variable overhead spending( chi tieu )variance.
TRUE
FALSE
72.
The difference between actual variable overhead and budgeted variable overhead based upon
actual hours is referred to as the variable overhead efficiency( chi phi ) variance.
TRUE
FALSE
73.
The difference between actual and budgeted fixed factory overhead is referred to as a fixed
overhead spending variance.
TRUE
FALSE
74.
The difference between actual and budgeted fixed factory overhead is referred to as a fixed
overhead volume variance.
TRUE
FALSE
75.
A fixed overhead volume variance is a controllable variance.
TRUE
FALSE
76.
A budget variance is a controllable variance.
TRUE
FALSE
77.
Financial accounting is most concerned with meeting the needs of internal ( external) users.
TRUE
FALSE
78.
Managerial accounting is most concerned with meeting the needs of internal users.
TRUE
FALSE
79.
Managerial accounting is highly regulated by rules and regulations.
TRUE
FALSE
80.
Financial accounting is most concerned with addressing the needs of the firm as a whole
TRUE
FALSE
81.
Managerial accounting is most concerned with addressing the needs of individual departments
of the firm.
TRUE
FALSE
82.
Financial accounting is most concerned with meeting the needs of external users.
TRUE
FALSE
83.
Financial accounting is most concerned with meeting the needs of external users.
TRUE
FALSE
84.
Financial accounting is highly regulated by rules and regulations.
TRUE
FALSE
85.
Managerial accounting is most concerned with addressing the needs of the firm as a whole.
TRUE
FALSE
86.
Financial accounting is most concerned with addressing the needs of individual departments of
the firm.
TRUE
FALSE
87.
Managerial accounting is most concerned with addressing the needs of individual departments
of the firm.
TRUE
FALSE
88.
Absorption costing is commonly used for external reporting.
TRUE
FALSE
89.
Absorption costing is commonly used for internal reporting.
TRUE
FALSE
90.
Variable costing is commonly used for internal reporting.
TRUE
FALSE
91.
Variable costing is commonly used for external reporting.
TRUE
FALSE
92.
When using the high-low method, fixed costs are computed before the variable component is
computed.
TRUE
FALSE
93.
When using the high-low method, the variable cost component is computed before the fixed costs
are computed.
TRUE
FALSE
94.
Absorption costing conforms with generally accepted accounting principles.
TRUE
FALSE
95.
Variable costing conforms with generally accepted accounting principles.
TRUE
FALSE
96.
Sales minus cost of goods sold is referred to as variable contribution margin.
TRUE
FALSE
97.
If production exceeds sales, absorption costing net income exceeds variable costing net income.
TRUE
FALSE
98.
If production exceeds sales, absorption costing net income is less than variable costing net
income.
TRUE
FALSE
99.
If sales exceed production, absorption costing net income is less than variable costing net income.
TRUE
FALSE
100.
If sales exceed production, absorption costing net income exceeds variable costing net income.
TRUE
FALSE

CHAPTER 1: INTRODUCTION TO MANGARIAL ACCOUNTING

The statement of cost of goods manufactured is prepared using the following three steps:
▪ Step 1. Determine the cost of direct materials used during the period.
➔ Beg material inv + Purchase – End material inv
▪ Step 2. Determine the total manufacturing costs incurred during the period.
➔ Direct material cost + Direct labor cost + Factory overhead cost ▪ Step 3.
Determine the cost of goods manufactured during the period.
➔ COGM = WIPbeg + Total manufacturing costs – WIPend Determine cost of
goods sold.
➔ COGS = FGbeg + COGM – FGend

CHAPTER 2: COST-VOLUME-PROFIT ANALYSIS

COST BEHAVIOR
- Variable cost
- Fixed cost
- Mixed cost (High-Low method)
CVP Relationship
- Contribution margin = S – VC
- Contribution margin ratio = CM/S = ucm/p = (p-uvc)/p
- Unit contribution margin = p – uvc
CVP Analysis
- Break-even Point = FC/ucm (in units) ; = FC/Rcm (in dollars)
- Target Profit = (FC + OI)/ucm
- CVP chart: cost line, sales line, selling price, fixed cost, unit variable cost, BEP, income …
SPECIAL RELATIONSHIPJ AND ANALYSES
- Sales mix -> BEP more than one product
- Operating leverage = CM/OI
 - Margin of safety = S – SBEP (in $); = (S – SBEP)/S (in %)

CHAPTER 3: VARIABLE COSTING FOR MANAGERMENT ANALYSIS

ABSORPTION COSTING
Sales
Cost of goods sold (<- Beg inv <-> COGM <-> End inv)
Gross profit
SG&A
Operating income
VARIABLE COSTING
Sales
Variable cost of goods sold (<- Beg inv <-> COGM <-> End inv)
Manufacturing margin
Variable SG&A
Contribution margin
Fixed cost
Fixed manufacturing cost
Fixed SG&A
Operating income

CHAPTER 4: BUDGETING
Sales budget:
➔ Total sales = Volume * price Production budget:
➔ Units sales + end – beg Direct material purchase budget:
➔…
Direct labor budget:
➔…
Factory overhead budget:
➔…
Cost of goods sold:
➔…
Income statement budget:
➔…
Cash budget:
- Receipt
- Payment
CHAPTER 5: STANDARD COSTING AND VARIANCES DIRECT
MATERIAL:
- Price variance: (AP – SP) * AQ
- Quantity variance: (AQ – SQ) * SP
- Total variance: AC – SQ = AQ*AP – SQ*SP DIRECT LABOR:
- Rate variance: (AR – SR) * AT
- Time variance: (AT – ST) * SR
- Total variance: AC – SQ = AT*AR – ST*SR FACTORY OVERHEAD:
- Variable controllable variance = Actual variable FOH – budget variable FOH o Budget
variable FOH = Standard hours for Actual units produced x Variable rate
- Fixed volume variance = (SH 100% - SH actual) x Fixed rate
- Total FOH = Total actual cost – Applied FOH o Applied FOH = SH actual x Total rate
CHAPTER 6: DECENTRALIZED OPERATIONS
- Cost centers
- Profit centers
- Investment centers:
o ROI = OI/IA
o Dupont formular: ROI = Profit margin x Investment turnover o Profit margin = OI/S o
Investment turnover = S/IA
o Residual income = OI – minimum acceptable ROI