The following are all product costs except: a. Direct materials b. Factory overhead c. Direct labor d. Sales and administrative expenses

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1 1 MULTIPLE CHOICE 1-2 I certify that I am taking this assessment alone and that I am receiving no help with it except through the use of my textbook and notes. I have not been given the questions in advance. (Either answer will be marked as correct). a. False b. True 2 MULTIPLE CHOICE 2-58 Costs that are added to the cost of inventories instead of being immediately expensed are called a. conversion costs b. product costs c. selling expenses d. period costs 3 MULTIPLE CHOICE 1-35 The following are all product costs except: a. Direct materials b. Factory overhead c. Direct labor d. Sales and administrative expenses 4 MULTIPLE CHOICE 3-42 The number of equivalent units produced with respect to conversion costs is: a. 51,200 b. 51,000 c. 56,000 d. 50,200 5 MULTIPLE CHOICE 3-36 The beginning inventory balance was $12,000, the cost per equivalent unit for materials cost production in June was $1, and the cost per equivalent unit for conversion cost production in June was $2. Determine the cost of the 3,000 units that were left in the June ending WIP inventory, assuming that the first-in, first-out method is used to cost inventories and materials were added at the beginning of the process. a. $5,600 b. $9,000 c. $6,600 d. $12,000 6 MULTIPLE CHOICE 2-17 Which of the following would most likely be a period cost? a. Depreciation on factory lunchroom furniture. 7 MULTIPLE CHOICE 2-1 b. Salary of a security guard for the factory parking lot. c. Computer chips used in the product by a computer manufacturer. d. Salary of telephone receptionist in the sales office. Which of the following are the two main types of cost accounting systems for manufacturing operations? a. Job order cost and process cost systems c. Job order and general accounting systems b. Process cost and general accounting systems d. Process cost and replacement cost systems PAGE 1

2 8 MULTIPLE CHOICE 3-66 From the selections offered below, select the one journal entry that properly presents the application of Factory Overhead to Work in Process if the driver is number of Drop-Forge cycles and the rate is $1.75 per cycle. The Drop Forge meter read 1,780 cycles at the start of the day and 2,890 at the end of the day. a. c. b. d. 9 MULTIPLE CHOICE 5-24 A business operated at 100% of capacity during its first month and incurred the following costs: If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a. $68,000 b. $56,000 c. $64,000 d. $66, MULTIPLE CHOICE If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage? a. 0 b. 2.2 c d MULTIPLE CHOICE 4-39 If sales are $820,000, variable costs are 62% of sales, and operating income is $260,000, what is the contribution margin ratio? a. 62% b. 53.1% c. 32% d. 38% 12 MULTIPLE CHOICE The difference between the current sales revenue and the sales at the break-even point is called the: a. margin of safety b. price factor c. operating leverage d. contribution margin 13 MULTIPLE CHOICE 4-23 Given the following cost and activity observations for Johnson Company's utilities, use the high-low method to calculate Johnson's fixed costs per month. a. $2,600 b. $50,000 c. $12,500 d. $5, MULTIPLE CHOICE The Zucker Company reports the following data. Zucker Company's operating leverage is: a. 2.0 b. 3.0 c. 1.0 d. 1.5 PAGE 2

3 15 MULTIPLE CHOICE 4-67 If fixed costs increased and variable costs per unit decreased, the break-even point would: a. increase, decrease, or remain the same, depending upon the amounts of increase in fixed cost and decrease in variable cost b. decrease c. increase d. remain the same 16 MULTIPLE CHOICE 4-3 Costs that remain constant in total dollar amount as the level of activity changes are called: a. opportunity costs b. variable costs c. mixed costs d. fixed costs 17 MULTIPLE CHOICE 7-4 Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs? a. Used to value inventory. 18 MULTIPLE CHOICE 7-6 b. Used to indicate where changes in technology and machinery need to be made. c. Used to plan direct materials, direct labor, and factory manufacturing cost. Several people play an essential part in setting standards. Which of the following is incorrect as to setting standards? a. Engineers identify material, labor, and machine requirements. d. Used to control costs. c. Quality managers provide quality measures that will be used to evaluate rejects. b. Human resource managers provide personnel information. 19 MULTIPLE CHOICE 7-10 d. Accountants expresses judgement in dollars and cents. A favorable cost variance occurs when a. Actual costs are more than standard costs. c. Standard costs are more than actual costs. b. Standard costs are less than actual costs. d. None of these choices is correct. 20 MULTIPLE CHOICE 7-14 The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: The amount of the direct materials quantity variance is: a. $800 unfavorable b. $800 favorable c. $875 favorable d. $875 unfavorable PAGE 3

4 21 Atlas Corporation manufactures office desks. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred in the production of 10,000 desks were as follows: <align="center" Standard Costs <align="center" Actual Costs Direct Materials 30,000 units at $10 22,000 units at $9 Direct Labor 40,000 hours at $20 38,000 hours at $21 Factory Overhead Variable $1 per standard hour $42,000 Fixed $2 per standard hour $79,000 Each desk requires 4 standard hours of labor time and the budgeted fixed overhead cost is $80,000 for all levels of activity. The overhead application rates were based on 100% of normal capacity, 10,000 desks with 40,000 standard direct labor hours. What are the direct labor rate and time variances? a. Labor rate variance = $38,000 (F). Labor time variance = $40,000 (U) 22 MULTIPLE CHOICE 8-41 b. Labor rate variance = $40,000 (U). Labor time variance = $42,000 (F) c. Labor rate variance = $38,000 (U). Labor time variance = $40,000 (F) d. Labor rate variance = $40,000 (F). Labor time variance = $42,000 (U) Espinosa Corporation had $220,000 in invested assets, sales of $242,000, income from operations amounting to $48,400, and a desired minimum rate of return of 3%. The rate of return on investment for Espinosa is: a. 6.4% b. 3% c. 22% d. 4% 23 MULTIPLE CHOICE 8-54 The investment turnover is the: a. ratio of assets to liabilities c. ratio of income from operations to invested assets b. ratio of sales to invested assets d. ratio of income from operations to sales 24 MULTIPLE CHOICE 8-58 The profit margin for Division E is 28% and the investment turnover is 2.8. What is the rate of return on investment for Division E? a. 78.4% b. 20% c. 14% d. 28% 25 MULTIPLE CHOICE 9-7 A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $180,000 cost decrease 26 MULTIPLE CHOICE 9-19 b. $60,000 cost increase c. $60,000 cost decrease d. $180,000 cost increase If fixed costs will not change upon acceptance of the order, what is the differential income from the acceptance of the offer? a. $70,000 b. $30,000 c. $140,000 d. $160,000 PAGE 4

5 27 MULTIPLE CHOICE 9-72 Niva Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: 55; 78; and 32, respectively. The variable costs for each product are: 20; 50; and 15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. If demand is unlimited for each product, which product should be produced? a. Wales, because it has the highest contribution margin per machine hour. c. Tales, because its production and sale contributes the greatest amount to net income. b. All three of the products should be processed in proportion to the demand for them. 28 MULTIPLE CHOICE 8-28 d. Bales, because it has the highest contribution margin per unit. Both divisons have $100,000 of invested fixed assets, and the corporation has a minimum required ROI of 15%. Calculate the residual income for each division. a. $33, MULTIPLE CHOICE 7-34 b. Residual income for the Software Division is $20,600, and residual income for the Hardware Division is $13,240. c. Residual income for the Software Division is $( 79,400), and residual income for the Hardware Division is $(86,760). d. Residual income for the Software Division is $5,600, and residual income for the Hardware Division is $(1,760). What is the direct labor rate variance? a. $30,800 favorable b. $28,000 unfavorable c. $30,800 unfavorable d. $28,000 favorable 30 MULTIPLE CHOICE 7-60 What is the amount of the factory overhead controllable variance? a. $14,000 unfavorable b. $12,000 favorable c. $12,000 unfavorable d. $26,000 unfavorable 31 MULTIPLE CHOICE 9-3 A cost that will not be affected by later decisions is termed a(n): a. sunk cost b. replacement cost c. historical cost d. differential cost 32 MULTIPLE CHOICE Gossman Corporation is analyzing a capital expenditure that will involve a cash outlay of $104,904. Estimated cash flows are expected to be $36,000 annually for four years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%, 14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of return for this investment is: a. 2.4% b. 2% c. 3% d. 14% PAGE 5

6 33 MULTIPLE CHOICE Investing activities include a. obtaining capital from owners. 34 MULTIPLE CHOICE b. collecting cash on loans made. c. repaying money previously borrowed. d. obtaining cash from creditors. Which of the following is not an advantage of the average rate of return method? a. It is easy to use. 35 MULTIPLE CHOICE b. It takes into consideration the time value of money. c. It emphasizes accounting income. d. It includes the amount of income earned over the entire life of the proposal. A ten-year bond was issued at par for $150,000 cash. This transaction should be shown on a statement of cash flows under a. operating activities 36 MULTIPLE CHOICE b. noncash investing and financing activities c. investing activities d. financing activities Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a. $110,000. b. $105,000. c. $115,000. d. $150, MULTIPLE CHOICE Mega Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $3,000. The value of this transaction in the Investing section of the statement of cash flows is: a. $2,750 b. $3,000 c. $250 d. $12, MULTIPLE CHOICE In capital rationing, alternative proposals that survive initial and secondary screening are normally evaluated in terms of: a. maximum cost b. present value c. non-financial factors d. net cash flow 39 MULTIPLE CHOICE 12-4 What do just-in-time (JIT) manufacturers demand from their vendors? a. High quality materials 40 MULTIPLE CHOICE b. Low cost materials c. On-time deliveries d. All of these choices are correct. Brady Corporation is considering an investment that costs $400,000 and provides annual cash returns of $100,000 througout its 5-year life. The company requires a rate of return of 10% on its investments, and the present value factor for an annuity of 5 payments of $1 each for 5 years is What is the investment's net present value? a. $5,513 b. 20,900 c. (20,900) d. $379, MULTIPLE CHOICE The present value index is computed using which of the following formulas? a. Total present value of net cash flow/amount to be invested b. Total present value of net cash flow/ Average rate of return c. Amount to be invested/average rate of return d. Amount to be invested/total present value of net cash flow PAGE 6

7 42 MULTIPLE CHOICE Mitchell Manufacturing operates in a just-in-time (JIT) manufacturing environment. Mitchell's actual conversion costs for the month of April follow: The journal entry to record April's conversion costs will include: a. a debit to Work in Process Inventory 43 MULTIPLE CHOICE 1-1 b. a credit to Raw and In Process Inventory c. a debit to Raw Materials Inventory d. a debit to Raw and In Process Inventory In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT: a. be provided at any time management needs information c. be prepared to report information for any unit of the business to support decision making b. be prepared in accordance with generally accepted accounting principles 44 MULTIPLE CHOICE 2-7 d. provide objective measures of past operations and subjective estimates about future decisions Which of the following is not a characteristic of a job order costing system? a. It accumulates cost for each department within the factory. c. It is best suited for industries that manufacture custom goods. b. It uses only one work in process account. 45 MULTIPLE CHOICE 2-59 d. It provides a separate record for the cost of each quantity of product that passes through the factory. The period costs of a textbook printer would include: a. utility costs of factory 46 MULTIPLE CHOICE 3-74 b. cost of paper used in the books The goal in just-in-time operations is to eliminate a. All inventories, in as much as that is possible. 47 MULTIPLE CHOICE 2-70 b. Finished Goods inventories. c. wages of a press operator c. Materials inventories. d. advertising expenses d. Work-In-Process Inventories Bar code scanners are now being used to track incoming materials and to electronically transmit this data. Scanners have replaced which of the following? a. materials requisition b. receiving report c. job cost sheet d. materials ledger 48 MULTIPLE CHOICE 1-27 Which of the following costs would be classified as conversion costs? a. Direct materials cost and factory overhead cost c. Direct materials cost and direct labor cost b. Factory overhead cost d. Direct labor cost and factory overhead cost 49 MULTIPLE CHOICE 1-3 Which of the following is a characteristic of managerial accounting? a. May rely on estimates and forecasts c. Is prepared for users outside the organization b. Always reports on the performance of the overall business d. Must follow GAAP PAGE 7

8 50 MULTIPLE CHOICE 3-63 Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead costs for Department 3 were $50,000, $60,000, and $70,000, respectively. The journal entry to record the flow of costs into Department 3 during the period for direct materials is: a. c. b. d. 51 MULTIPLE CHOICE 1-21 The cost of indirect materials used in production should be classified as part of a. selling and administrative costs b. miscellaneous period expense c. factory overhead cost d. direct labor cost PAGE 8

9 ANSWER KEY Copy of Master Managerial Assessment Exam Bank 1. a,b 2. b 3. d 4. d 5. c 6. d 7. a 8. d 9. b 10. d 11. d 12. a 13. a 14. d 15. a 16. d 17. b 18. c 19. c 20. a 21. c 22. c 23. b 24. a 25. b 26. b 27. a 28. d 29. c 30. b 31. a 32. d 33. b 34. b 35. d 36. c 37. b 38. c 39. d 40. c 41. a 42. d 43. b 44. a 45. d 46. a 47. b 48. d 49. a 50. b 51. c ANSWER KEY - Page 1