The following questions were extracted from past exams.

They are intended for you to become familiar with the types and the formats of questions that you will be asked on the upcoming exam. Studying ONLY these sample questions will not adequately prepare you for the exam. You should also read the textbook and review the problems that I presented in class. 1. Managerial accounting: A. has its primary emphasis on the future. B. is required by regulatory bodies such as the SEC. C. focuses on the organization as a whole, rather than on the organization's segments. D. Responses a, b, and c are all correct Financial accounting focuses on A. helping managers making decisions B. providing financial results of a company to the public C. only certain segments of a company D. financial reporting to the public by ALL businesses in the United States For internal uses, managers are more concerned with receiving information that is: A. completely objective and verifiable. B. completely accurate and precise. C. relevant, flexible, and immediately available. D. relevant, completely accurate, and precise. The manager in charge of the accounting department is generally known as A. the chief financial officer B. the treasurer C. the internal auditor D. the controller The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management states that significant ethical issues should be discussed first with an immediate superior unless the superior is involved. If satisfactory resolution cannot be achieved when the problem is initially presented, then the issues should be: A. submitted to the next higher managerial level. B. submitted to the chief executive officer of the firm. C. submitted to the audit committee, executive committee, board of directors, or owners. D. submitted to outside legal counsel. Jack in the Boxs motto, We dont make it til you order it, connotes which of the following? A. The quality of food served at the restaurant. B. Just-in-time philosophy. C. Decentralization. D. Process reengineering.

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The plans of management are expressed formally in: A. the annual report to shareholders. B. Form 10-Q submitted to the Securities and Exchange Commission. C. performance reports. D. budgets. A staff position: A. relates directly to the carrying out of the basic objectives of the organization. B. is supportive in nature, providing service and assistance to other parts of the organization. C. is superior in authority to a line position. D. none of these. The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management contains a policy regarding confidentiality that requires that management accountants: A. refrain from disclosing confidential information acquired in the course of their work except when authorized by an outside attorney. B. refrain from disclosing confidential information acquired in the course of their work in all situations. C. refrain from disclosing confidential information acquired in the course of their work except when authorized by management or legally obligated to do so. D. refrain from disclosing confidential information acquired in the course of their work in all cases since the law requires them to do so.

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10. Which of the following involves studying the business processes of companies that are considered among the best in the world at performing a particular task? A. Benchmarking. B. Continuous improvement. C. Total quality management. D. Process reengineering. 11. The corporate presidents salary would be considered a(n): A. manufacturing cost. B. product cost. C. administrative cost. D. selling expense 12. Advertising expenses incurred by a manufacturing company would be classified as which of the following? A. Product cost B. Manufacturing overhead C. Period cost D. Administrative cost

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Costs that can be economically traced to cost objects are known as A. fixed costs B. non-value added costs C. direct costs D. indirect costs Monthly salary of a production supervisor is an example of Indirect Manufacturing cost Fixed cost A. No Yes B. No No C. Yes No D. Yes Yes

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15. Cost of direct material used in production is Direct Manufacturing cost Variable cost A. No Yes B. No No C. Yes No D. Yes Yes 16. Sales commission is an example of Period cost Product cost A. No Yes B. No No C. Yes No D. Yes Yes

THE FOLLOWING DATA APPLY TO ITEMS 17-21: Welton Manufacturing has the following operating results for the month ending August 31, 2009: Sales $500,000 Purchases of direct materials, net ......................................................... 95,000 Direct manufacturing labor ................................................................... 80,000 Indirect manufacturing labor .................................................................. 4,000 Factory supplies ....................................................................................... 1,000 Factory heat, light and power ................................................................. 3,000 Depreciation - plant building ................................................................... 1,500 Depreciation - plant equipment .............................................................. 4,000 Miscellaneous factory overhead ................................................................ 500 Marketing and administrative costs .................................................... 100,000 Inventory data August 1 Direct materials .......................................... $8,000 Work-in-process ........................................... 7,000 Finished goods............................................ 18,000
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August 31 $13,000 9,000 10,000

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The amount of direct materials used during the month is A. $90,000 B. $95,000 C. $100,000 D. $105,000 Total actual indirect manufacturing (factory overhead) costs incurred during the month is A. $114,000 B. $13,500 C. $135,000 D. $14,000 The amount of cost of goods manufactured during the month are A. $184,000 B. $182,000 C. $180,000 D. $177,000 The amount of cost of goods sold is A. $191,000 B. $182,000 C. $190,000 D. $210,000 Weltons operating income for the month is A. $500,000 B. $400,000 C. $210,000 D. $120,000 Direct labor and factory overhead costs combined is called A. Sunk cost B. Opportunity cost C. Prime cost D. Conversiton cost Montlhy rental of manufacturing equipment is which of the following cost categories? A. Fixed and selling costs. B. Variable and product costs. C. Fixed and manufacturing costs. D. Variable and prime costs. Which of the following would be appropriate for a process costing system? A. A custom yatch builder. B. A golf course designer. C. A potato chip manufacturer. D. A business consultant.
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Which of the following industries is most likely to employ a job-order- costing system? A. Dog collar manufacturer. B. Stuffed toy manufacturer. C. Customer-designed home builder. D. Soft-drink producer. When completed jobs are transferred out of work in process inventory account, which of the following accounts is increased? A. Materials Inventory B. Work in Process Inventory C. Finished Goods Inventory D. Manufacturing Overhead

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QUESTIONS 27 AND 28 ARE BASED ON THE FOLLOWING INFORMATION. The Teriyaki Manufacturing Company manufactures its products in two departments, Cutting and Assembling. Budgeted data relating manufacturing overhead for the coming year are as follows: Cutting Department Total manufacturing overhead .......................... $600,000 Direct labor cost ................................................. $100,000 Direct labor hours .................................................... 5,000 Machine hours ....................................................... 30,000 Assembling Department $1,000,000 $2,000,000 100,000 500

Manufacturing overhead is applied on the basis of machines hours in the Cutting Department and direct labor cost in the Assembling Department. 27. The predetermined manufacturing overhead rate in the Cutting Department is A. $10 per machine hour. B. $15 per machine hour. C. $20 per machine hour. D. $25 per machine hour. The predetermined manufacturing overhead rate in the Assembling Department is A. 20% of direct labor cost. B. 25% of direct labor cost. C. 40% of direct labor cost. D. 50% of direct labor cost

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Independent of Questions 27 and 28, assume that the manufacturing overhead application rate is $30 per machine hour in the Cutting Department and 100% of direct labor cost in the Assembling Department. During the first week of February, the job cost sheet for Job Number 106 contains the following cost data: Cutting Assembling Department Department Direct materials $10,000 $4,000 Direct labor $1,000 $8,000 Machine hours used 60 2 Direct labor hours worked 20 400 The total cost of Job Number 106 is A. $23,000 B. $32,800 C. $68,000 D. $42,000

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Precision Company used a predetermined overhead rate last year of $3 per direct labor hour. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred ............................................. $84,000 Actual direct labor hours worked ................................................................. 27,000 The under- or overapplied overhead for the year was: A. $3,000 underapplied. B. $3,000 overapplied. C. $12,000 underapplied. D. $12,000 overapplied.

QUESTIONS 31 THROUGH 36 ARE BASED ON THE INFORMATION CONTAINED IN THE T-ACCOUNTS SHOWN BELOW: Raw Materials Bal. 10,000 (a) 70,000 (b) 60,000 Work in Process Bal. 20,000 (f) 250,000 (b) 50,000 (c) 80,000 (e) 160,000 Finished Goods Bal. 30,000 (g) 270,000 (f) 250,000

Cost of Goods Sold (g) 270,000

Accounts Payable (a) 70,000 (d) 140,000

Manufacturing Overhead (b) 10,000 (c) 20,000 (d) 140,000 (e) 160,000

Wages Payable (c) 100,000

Accounts Receivable (k) 400,000

Sales (k) 400,000

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The amount of inventory of raw materials at the end of the period is A. $40,000 B. $60,000 C. $20,000 D. $30,000 The amount of direct materials used during the period is A. $40,000 B. $30,000 C. $50,000 D. $60,000 The amount of indirect labor cost incurred during the period is A. $80,000 B. $10,000 C. $20,000 D. $100,000

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Manufacturing overhead is A. $160,000 over applied B. $170,000 under applied C. $10,000 under applied D. $10,000 over applied. Under- or over-applied manufacturing overhead is closed to Cost of Goods Sold. What is the amount of cost of goods sold after the manufacturing overhead account has been closed? A. $270,000 B. $280,000 C. $290,000 D. $300,000 The amount of gross profit (margin) after adjustment for any over- or under-applied manufacturing overhead was A. $270,000 B. $120,000 C. $170,000 D. $50,000
An example of a discretionary fixed cost is A) Annual salary of the companys Chief Executive Officer. B) Annual budgeted cost for internships for students. C) Property tax on the office building with a 15 years remaining useful life. D) An annual budget for the companys public relations department. An example of a committed fixed cost is: A) Management training seminars. B) Real estate taxes. C) Research. D) Advertising.

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USE THE FOLLOWING TO ANSWER QUESTIONS 39 AND 40: The management of Casablanca Manufacturing Corporation believes that machine-hours are an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months: Machine-Hours 15,000 14,000 16,000 13,000 17,000 20,000 Overhead Cost $90,000 $85,000 $94,000 $81,000 $110,000 $123,000

July August September October November December

Assume that the relevant range includes all of the activity levels mentioned in this problem.

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Using the high-low method, what is Casablancas estimated variable overhead cost per machine hour? A) $6.00 B) $5.50 C) $6.20 D) $3.50 Using the high-low method, what is Casablancas estimated total fixed overhead cost? A) $2,000 B) $3,000 C) $4,000 D) $3,500

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USE THE FOLLOWING TO ANSWER QUESTIONS 41 AND 42: The management of Stadler Manufacturing Company wanted to know how the use of machine hours affects the overhead cost and had gathered the following information: Machine-Hours Used 15,000 14,000 16,000 13,000 17,000 20,000 Overhead Cost $90,000 $85,000 $94,000 $81,000 $110,000 $123,000

July August September October November December

Based on the data presented in the table, the following statistical values were obtained: Slope = 6.36 Intercept = 3566 R-square = .96 41. Based in these results, the total cost equation for overhead can be written as follows: A) $6.36 + ($3,566 X machine hours used) B) $0.96 + ($3,566 X machine hours used) C) $0.96 + ($6.36 X machine hours used) D) $3,566 + ($6.36 X machine hours used) The R-square value of 0.96 indicates that A) 96% of the data are not valid. B) 0.96% of the variation in the dependent variable (total overhead costs) can be explained by changes in the independent variable (machine hours). C) 96% of the variation in the dependent variable (total overhead costs) can be explained by changes in the independent variable (machine hours). D) the high-low method would provides better estimation of the fixed and variable costs.

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QUESTIONS 43 THROUGH 46 RELATE TO THE GRAPHS BELOW:

Graph 1

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Graph 3 43.

Graph 4

A mixed cost (total fixed cost + total variable cost) is depicted in A) Graph 1 B) Graph 2 C) Graph 3 D) Graph 4 Lease on land from the city where the agreement calls for a fixed fee payment unless 200,000 labor hours or more are worked in which case no rent need to be paid is depicted in A) Graph 1 B) Graph 2 C) Graph 3 D) Graph 4 Which of the above graphs depicts salary of supervisors where one supervisor is needed for every eight production workers or less (that is, 1 to 8 workers requires one supervisor, 9 to 16 workers requires two supervisors, and so on)? A) Graph 1 B) Graph 2 C) Graph 3 D) Graph 4 Which of the above graphs depicts total amount of depreciation on a factory building that is calculated using the straight-line method of depreciation? A) Graph 1 B) Graph 2 C) Graph 3 D) Graph 4

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SUGGESTED ANSWERS Q 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A A B C D A B D B C A C C C D D C A D B C C D C Q 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 A C C C C D B A C C C C B B B B A B D C C B D A

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