# The principle managers follow when they only investigate significant

1. The principle managers follow when they only investigate significant departures from the plan is commonly known as ?
A) small amounts don’t matter
B) only materials and labor deserve attention
C) management by exception
D) exceptional costs yield exception results 2.
A company has a cost that is \$2.00 per unit at a volume of 12,000 units and \$2.00 per unit at a volume of 16,000 units. What type of cost is this?
A) Fixed
B) Variable
C) Sunk
D) Incremental
3. Which of the following is not a manufacturing cost?
B) Direct materials
C) Direct labor
4. A form used to accumulate the cost of producing an item is called a(n)?
A) job-cost sheet
B) material requisition
C) balance sheet
D) invoice
5. Why do we compute equivalent units differently for raw materials and conversion costs?
A) Raw materials are more difficult to count
B) Conversion costs are more difficult to count
C) They are introduced into the process at different times
D) None of the above
6. The Freedom Corporation’s painting department had a beginning inventory of 580 units, which had direct material costs of \$22,715. During June, 9,290 units were started and costs of \$1,268,085 were incurred for direct material. Ending inventory consists of 1,000 units, which are 35% complete with respect to direct material. What is the cost per equivalent unit for direct material?
A) \$40.00
B) \$137.00
C) \$140.00
D) \$159.00
7. Regression analysis
A) uses all the available data points to estimate a cost equation
B) can be performed by many spreadsheet programs
C) provides an equation that can be used to estimate total costs at different levels
D) all of the above
8. Beaudreaux Motors is operating at its break-even point of 16,000 units. Which of the following statements is not true?
A) The amount of the company’s total costs equals the amount of its revenues.
B) The company’s fixed costs equal its variable costs.
C) The company’s profit equals zero.
D) Assuming no other changes, if the company sold more units, it would earn a profit.
9. Which of the following is treated as a product cost in variable costing?
A) Sales commissions
D) Direct labor
10. When the number of units sold is equal to the number of units produced, net income using full costing will be
A) greater than net income under variable costing
B) equal to net income using variable costing
C) less than income using variable costing
D) none of the above
11. A major problem with cost-plus contracts is that they?
A) are not acceptable under GAAP.
B) cause the supplier to take significant financial risks.
C) require the supplier to use variable costing.
D) create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract.
12. Which of the following is not generally true when a company compares ABC and traditional costing?
A) ABC uses more cost drivers
B) ABC allocates cost based solely on production volume
C) ABC is more expensive
D) ABC is less likely to undercost complex, low volume products
13. Which of the following is never considered in incremental analysis?
A) Incremental revenues
B) Sunk costs
C) Incremental profit
D) Differential costs
1. Two or more products that result from common inputs are called
A) split products
B) joint products
C) combination products
D) common products
2. Target costing
A) starts with the features a customer wants and what they will pay for them.
B) is used after the product is designed.
C) focuses on including all features in a product that a customer may want.
D) all of the above.
3. When deciding to accept or reject a special order, which of the following costs would most likely not be relevant?
A) The wages of direct labor to make the order.
B) Depreciation on the machinery used to make the order.
C) The raw material used to make the order.
D) The electricity used to run the machine to make the order.
4. Present value techniques:
A) ignore cash flows that will occur more than ten years in the future.
B) are a way of converting future dollars into equivalent current dollars.
C) provide more conservative results than similar time value of money computations.
D) treat dollars received today the same as dollars received in the future.
5. The internal rate of return
A) takes into account the time value of money.
B) is the rate of return that equates the present value of future cash flows to the initial investment.
C) both A and B
D) neither A nor B
6. A method of budget preparation that requires all budgeted amounts to be justified by the department, even if the amounts were supported in prior periods, is called?
A) variance budgeting.
B) flexible budgeting.
C) current period budgeting.
D) zero base budgeting.
7. The cash budget alerts management to all of the following except?
A) Stockouts will cause customer dissatisfaction
B) The cash balance will be very low
C) Excess cash will be available for investment
D) Significant capital acquisitions are planned
8. The standard cost is?
A) same as actual cost
B) the cost that should have been incurred to produce an item or service
C) useful only to manufacturing firms
D) calculated after production is completed
9. Which of the following are components of a direct labor variance?
A) Rate and efficiency
B) Attainable and ideal
C) Price and quantity
D) Volume and controllable
10. A subunit that has responsibility for controlling cost but not revenues is a(n) ?
A) profit center.
B) cost center.
C) investment center.
11. Which of the following is not an advantage of decentralization for a company?
A) Subunit managers have better information.
B) Subunit managers will act to benefit the organization as a whole.
C) Subunit managers can respond quicker to changing circumstances.
D) Subunit managers can receive training to move into top level management positions.
12. Asset turnover is a measure of
A) how quickly a company is moving its inventory.
B) how quickly a company is turning it accounts receivable into cash.
C) the overall efficiency with which the company uses its assets to generate revenues.
D) how rapidly the market believes the company will grow.

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