What is the difference between break even sales and break even per units?
CM Ratio is for break even units and CM Unit is for
break even sales
BE sales uses fixed costs BE units uses variable
costs
BE units uses fixed costs and BE sales uses
variable costs
No difference
In break even
sale Fixed Cost is divided by Contribution margin ratio ,And in Break even per
unit fixed cost is divided by unit contribution margin.
The difference between the budgeted sales and the break-even sales, is known as ....?
the margin of
safety
the actual variance
the gross profit margin
the contribution margin
the margin call
The contribution margin is calculated by ...?
deducting variable costs from gross profit
deducting all fixed costs from sales
deducting all costs from sales
deducting variable costs from total costs
deducting all
variable costs from sales
In a "Cost of Quality" report, which of the following is a nonconforming cost, as opposed to a conforming cost?
Appraisal costs
Internal Costs
External failure
reworking costs
Prevention Costs
Breakeven $ is calculated by which formula?
'Variable costs' ÷ 'Contribution margin ratio'
'Total costs' ÷ 'Contribution margin ratio'
'Fixed costs' ÷ 'Variable cost %'
'Fixed costs' ÷
'Contribution margin ratio'
Which of the following factors is irrelevant when using the payback method?
The incidence of cash flows arising from the
project
Initial investment
Cash flow arising from the project
Depreciation of
the initial asset acquired
A budget that is continuously updated by adding a new incremental period and dropping off the period just completed, is known as ...?
a rolling budget
a master budget
a static budget
a period budget
an operating budget
Which of the following is more a management accounting function than a financial accounting function?
Statutory compliance
Tax accounting
Financial statement preparation
Auditing
Cost accounting
The contribution margin (CM) is calculated by deducting all the .................... costs from sales?
Variable
Discretionary
Prime
Conversion
Fixed
Using Variable costing .IF fixed cost is 2500, variable cost is 3500, profit is 2000, what will be the sales price?
2500
5000
8000
9000
7000
SG&A is the acronym for ...?
Selling, Goods And Accruals
Selling, General
And Administration
Special Goods And Assets
Special Goals And Aims
Selling, General And Accounting
Under responsibility accounting, the bottling plant of a soft drink company will most likely be treated as .....?
a cost center
an investment center
a profit center
a revenue center
You are given the cost/volume information below: 1 unit/$ 15, 10 units/$150, 100 units/$1500. What type of a cost is being described?
mixed cost
variable cost
step cost
rent cost
fixed cost
True or False: Depreciation Expense can be ignored when computing the accounting rate of return.
False
True
If production increases, fixed cost per unit...
remains the same
decreases
increases
What is the formula for the contribution margin?
sales - variable
costs
sales - fixed costs - variable costs
sales - fixed cost
sales - expenses
fixed cost - variable cost
A Learning curve shows that as experience increases the amount of time taken to perform a function ________.
experience has no link with time
none of these
remains the same
decreases
increases
Which of the following reports would be a produced under the management accounting function rather than the financial accounting function?
Notes to the financial statements
Equity Statement
Income Statement
Balance sheet
Variance report
True or False: Depreciation Expense is a negative cash flow that needs to be discounted.
False
True
The time value of money focuses on:
cash flow
earnings per share
net income
current earnings
Which of the following is a monetary objective rather than a non-monetary objective?
to achieve a
targeted return on investment
to increase the production output per employee
to reduce product delivery times to customers
to reach a targeted % occupancy rate for a hospital
to conduct a specific number of inspections per
shift
A subsidiary ledger containing only those accounts related to manufacturing costs is known as ....?
Accounts receivable ledger
Fixed assets schedule
Factory ledger
Branch ledger
Accounts payable ledger
Which one of the following statements about budgeting is NOT true?
Budgeting is a key ingredient in good
decision-making.
Budgeting is an executive responsibility.
Budgeting is a
bookkeeping task.
Budgeting helps managers determine the resources
needed to meet their goals and objectives.
The focus of budgeting is planning.
True or False: Activity based costing is recommended for the allocation of SG&A expenses in order to determine the true profitability of a product or a customer.
False
True
True or False: Decreasing a company's fixed expenses should reduce the break-even point.
False
True
If sales are 100,000 variable costs are 40,000 and fixed costs are 10,000, what is contribution margin?
40,000
50,000
90,000
30,000
60,000
Marginal cost is:
None of these
The fixed cost of units
The variable cost of units
The cost of one
extra unit produced
What is the most important purpose of a balanced scorecard?
set priorities
develop cause-and-effect linkages
develop strategy
Measure
performance
True or False: The value of inventory under full costing is higher then variable costing.
True
False
The profit center's revenues and expenses are held separate from the main company's in order to determine their profitability?
False
True
Which of the following is more the management accounting function than a financial accounting function?
The information produced allows outsiders to judge
the overall past performance of a business
It is focused on producing a limited set of
specific prescribed financial statements in accordance with generally accepted
accounting principles
The information
produced is not made public and is used for internal decision making only
The central outputs are audited financial
statements
It is focused on producing the balance sheet and
income statement
Which statement best describes the current role of the managerial accountant?
Managerial
accountants facilitate the decision-making process within an organization.
Managerial accountants are primarily information
collectors.
Managerial accountants make the key decisions
within an organization.
Managerial Accountants are solely staff advisors in
an organization.
Managerial accountants prepare the financial
statements for an organization.
The comprehensive budget that covers all the activities of the organisation and which integrates the individual budgets that cover each of the subsidiary functions, is known as the ...?
master budget
operating expenses budget
cashflow budget
sales budget
capital expenditure budget
Sale is 100, variable cost is =? ,fixed cost is 20, profit is 25, what will the variable cost be using marginal costing?
45
35
75
65
55
Which of the following is NOT a type of internal benchmark?
Control charts
Pareto Diagrams
Cause and Effect (fishbone) diagram
Government
economic indicators
The most likely strategy to reduce the breakeven point would be to:
increase both fixed costs and the contribution
margin
Decrease fixed
costs and increase the contribution margin
decrease both fixed costs and the contribution
margin
increase fixed costs and decrease the contribution
margin
The time value of money primarily focuses on ...?
accrual net income.
earnings per share.
current earnings.
accounting net income.
future cash flow
predictions.
Opportunity cost in management accounting is best described as ...?
The economic value derived from the chosen
opportunity
All the financial and non-financial costs in
relation to sourcing and trialing new opportunities.
The economic
value of what is given up when a person chooses one option over another.
The cost of analyzing various opportunities.
The amount of money required to invest in an
opportunity
If marginal costing toal sales is $10000, total variable cost is $5000, and total fixed cost is $2500, what will the profit be?
2500
8500
7500
4500
5000
The project should be accepted if its Profitability index is greater then
3
1
0
2
4
A company is considering building a factory in Lahore. Which one of the following is a sunk cost to the decision?
The business rates of the factory
The cost of the
investigation so far
The wages rate of the workers
None of these.
True or False: The standard cost of direct materials is the cost the manufacturer should have used to make the good output.
True
False
True or False: If a company requires a profit of $30,000 (instead of breaking even), the $30,000 should be combined with the fixed expenses in order to compute the point at which the company will earn $30,000.
True
False
Variable costs do NOT include:
variable manufacturing overhead
direct materials
direct labor
rent
True or False: While depreciation does not result in a payment of cash, tax depreciation does reduce the cash payments for income taxes.
True
False
The Discounted Payback Period is the length of time required for an investment's discounted cash flows to equal its initial cost. True or False?
False
True
True or False: In zero base budgeting, each item is redefined from zero instead of using last year's budget as a base.
True
False
True or False: Activity-based costing can be used to allocate SG&A expenses in order to assist management with pricing and other marketing decisions.
False
True
Which of the following is not considered to be an appropriate form of finance for capital investment projects?
Issuance of share capital
Bank overdraft
Leasing
Issue of debenture
True of False: A general rule for profit maximization in the short run is: If the additional revenues exceed the additional expenses, do it.
False
True
Which of the mentioned payroll cost(s) represent direct labor?
Hourly pay to factory Cleaning employees
Hourly pay to administrative employees
Hourly pay to
production employees and Salaries to production managers
Hourly pay to security employees
Which is the correct set of equations for cost objects?
prime costs =
direct labor + direct materials, conversion cost = direct labor + manufacturing
overhead
prime costs = direct labor + manufacturing
overhead, conversion costs = direct labor + direct materials
prime costs = direct materials + manufacturing
overhead, conversion costs = direct labor + direct materials
Which cost remains constant in total, but vary per unit?
fixed costs
variable costs
period costs
product costs
Which of the following businesses would generally use job/order costing rather than process costing?
Manufacturing instant coffee
Baking bread
Building houses
Manufacturing bags of cement
Manufacturing canned fruit
Partly finished goods that a manufacturer may have on hand at the end of an accounting period is known as ...?
Merchandise inventory
Work in progress
Material on hand
Finished goods
True or False: Setup cost is an example of a batch-level cost.
False
True
What is the equation to calculate a difference in variance analysis?
Standard -
Actual = Difference
Standard + Actual = Difference
Standard = Actual + Difference
Standard = Actual - Difference
True or False: Break-even analysis is useful for companies that sell products, but it is not useful for companies that provide services.
True
False
True or False: If a company has mixed expenses, the fixed component can be combined with the company's fixed expenses and the variable component can be combined with the company's variable expenses.
True
False
Which of the following would NOT be classified as a production department?
assembly
painting
machining
stores
The break-even point is the level of sales that ....?
ensures a sustainable net profit
meets the expected sales target
will result in
no profit or loss.
is exactly equal to the fixed costs
is needed to pay the bank loans
Product and service costing information is prepared for...
manufacturing companies with inventory
manufacturing companies without inventory
all of these
service providers
merchandising companies
The project should be accepted if NPV of the Cash flow is...
Negative
1
Positive
0
Working capital is ...?
cash at bank
current assets
less current liabilities
the total of all the investments of the business
money held on the business premises
all the assets of the organisation
Manufacturing costs typically consist of ...?
production and shipping costs
direct materials, direct labor, and administrative
costs
direct
materials, direct labor, and manufacturing overhead
production and marketing costs
direct materials, direct labor, marketing and
administrative costs
If a product cost $50 and the required mark-up was 50%, what would the selling price be?
$25.00
$250.00
$100.00
$52.50
$75.00
Sunk cost is best defined as...
the cost which
has already been incurred in the past any future or present action could not
affect it
a cost which changes due to volume
a cost which is incurred due to increase in the
volume of production
a cost which remains fixed
a cost which will incurred in the future
Indirect costs that cannot be easily and economically traced to a finished product are known as ....?
product costs
material costs
factory
overheads
service costs
labor costs
True or False: Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.
False
True
The appropriate and careful selection of financial resources results in ...?
greater
profitability
a higher skilled workforce
improvement in the brand image
increased production
more efficient work groups
Which of the following is an example of qualitative data ...?
net income
inventory cost
customer
satisfaction
net worth
product cost
What order of inventory classification best describes the manufacturing process?
None of these
Raw
material-Work in process- Finished Goods
work in Process- Finished Goods
Raw material- Finished Goods work in process
Complete the sentence - Perpetuity is the annuity that lasts...?
3 years
1 years
Forever
10 years
5 years
True or False: In variable costing, variable costs are considered for product costing inventory valuation and other allied management decisions.
True
False
Costs that cannot be easily or economically traced accurately to the final product are known as ...?
Indirect costs
Product costs
Direct costs
Service costs
Manufacturing costs
Which of the following costs would NOT be an element of product (manufacturing) costs?
Factory overhead costs
Material costs
Financial costs
Labor costs
True or False: Actual Costing is the system of costing in which actual cost incurred during the period is charged to the product.
False
True
True or False: BOTH variable and fixed manufacturing overhead are included in the Absorption Costing Method
True
False
Which option below correctly completes the statement: Involvement in the budgeting process should _____.
be restricted to top-level management
include the
management and the people responsible for achieving the budgeted outcomes
be restricted to qualified accountants
be open to everyone in the organisation who thinks
they have some good ideas
never include people below tactical level
management
What is the name given to the difference between the actual cost of a product's inputs and the standard cost of one of the product's inputs?
Variance
Difference
True or False: In calculating the cash flow in capital budgeting, depreciation is added back in the net profit to arrive at the cash flow figure.
True
False
Which of the following is the best example of discretionary cost?
Research, Rent of Building
Advertising,
Research
Depreciation, Advertising
Deprecation, Rent of building
Net present value (NPV) is best defined as:
The difference
between the present value of cash inflows and the present value of cash
outflows
The difference between cash out flow and inflow
The different between the cash inflow and present
value of cash outflow
Fixed Expense + Target Income / Unit of Contribution Margin is the formula for:
Purchase volume in units required to pay target
expense
None of these
Sale volume in
units required to earn target income
Sale volume in Dollars Required to earn target
income
A company can accelerate its cash receipts by all of the following except:
writing off
receivables
selling receivables to a factor
accepting national credit cards for customer
purchases
offering discounts for early payment
How do you calculate the break even point?
fixed cost ÷ sales
variable costs ÷ fixed costs
fixed costs ÷ variable costs
sales ÷ variable costs
fixed cost ÷
contribution margin ratio
Should a project be accepted if the NPV is -632?
Yes - The project should be accepted
No - The project
should not be accepted
Which of the following would NOT be a labor-related cost?
Depreciation on
staff cafeteria equipment
Long-service leave
Payroll taxes
Workers accident insurance
Holiday leave
A company makes computers. Which one of the following is likely to be a Variable Cost?
The salary of the managing director
Salary of the accounts manager
The wages of
shop workers paid by piece rate
The salary of the factory manager
Salary of the Admin manager
The management accounting function produces a variety of financial reports set by the needs of management.
False
True
Contribution Margin/Net Income is the formula for
Operating
leverage
Break even point
If profit is 10000 Dollars ,and fixed cost is 25000 Dollars ,and variable cost is 40000 dollars what will be the sales price?
65000 dollars
85000 dollars
75000 dollars
80000 dollars
70000 dollars
Which of the following alternatives is generally chosen from a cost-benefit analysis? The one that shows the ...
lowest cost to benefit ratio
highest cost to benefit ratio
highest benefit, regardless of the cost
lowest benefit to cost ratio
highest benefit
to cost ratio
Break-even analysis assumes that over the relevant range:
Total fixed costs are nonlinear
Unit revenues are nonlinear
Unit variable
costs are unchanged
Total costs are unchanged
What is the formula for breakeven?
Variable cost ÷ contribution margin %
Fixed costs ÷ gross profit %
Total costs ÷ contribution margin %
Fixed costs ÷
contribution margin %
Fixed cost ÷ net profit %
True or False: The original cost of an asset presently in use is generally not relevant in the decision to replace the asset.
True
False
Management by exception means ...?
that management can delegate all responsibilities
that management
can concentrate on significant matters that require attention
that management can concentrate on investigating
areas not included in the reports
that management provides different reports for
different stakeholders
that management can report in a no-fault
environment
If profit under absorption costing is 4000, and profit under variable costing is 2000, and contribution margin is 5000 under variable costing, what will be the OPERATING LEVERAGE?
3
2.5
4.5
4
2
Which of the following statements regarding graphs of fixed and variable costs is true?
Fixed costs can be represented by a straight line
starting at the origin and continuing through each data point.
Variable costs can be represented by a straight
line where costs are the same for each data point.
Variable costs
are zero when production is equal to zero.
Fixed costs are zero when production is equal to
zero.
Fixed and Variable costs are curvilinear form above
zero on the “Y” axis.
Fixed expense+target income /Contribution margin ratio is the formula of
Sales volume in
dollars required to earn target income
Sales volume in units require to earn target in
income
If sales were $100,000, variable costs $70,000 and fixed costs $10,000: What is contribution margin?
$70,000
$30,000
$100,000
$20,000
$90,000
If sales were $100,000, contribution margin $60,000 and fixed costs $30,000: What would the variable costs be?
$30,000
$90,000
$40,000
$70,000
$10,000
How do you calculate the Contribution Margin?
sales - fixed costs
sales - (variable costs + fixed costs)
fixed costs - sales
sales - variable
costs
variable costs - sales
If the profitability index of the project is greater than 1 then this project should be...?
NOT accepted
Accepted
What is a hurdle rate?
In capital budgeting,
hurdle rate is the minimum rate that a company expects to earn when investing
in a project.
The rate which company earns after investing in
Stock Exchange in securities.
Bank interest rate is also called the hurdle rate.
How do you calculate breakeven in units?
fixed costs ÷ variable costs
fixed costs ÷
contribution margin per unit
fixed costs ÷ unit sales
variable costs ÷ contribution margin per unit
variable costs ÷ unit sales
The project with shorter payback period should be...
Accepted
Not accepted
How do you calculate the breakeven point in monetary value?
fixed costs ÷ sales
fixed costs ÷
contribution margin ratio
sales - variable costs
variable costs ÷ contribution margin ratio
variable costs ÷ sales
Which of the following is NOT generally treated as a fixed cost in management accounting?
Direct materials
Management salaries
Rent
Property rates
Depreciation on equipment
How do you calculate the margin of safety?
sales - fixed sales - break even sales
sales - fixed costs
break even sales - sales
sales - variable costs
sales - break
even sales
True or False: If a company's sales were to triple, some fixed expenses are likely to increase.
True
False
Which of the following BEST describes target costing?
Setting standard cost for the purpose of target
customer
None of these
Setting a cost
by subtracting a desired profit margin from a competitive market price
Setting a cost by adding desired profit margin from
a competitive market price
At the breakeven point, the contribution margin equals the total of the .........?
variable costs
fixed costs
sales revenues
selling and administrative costs
How do you calculate the Margin of Safety?
break even sales - fixed costs
fixed costs - variable costs
total sales - fixed costs
total sales -
break even sales
total sales - variable costs
Net terminal value is=
All of these
value after payment of interest amount
Repayment of
capital payment + interest due on it or surplus arising after the repayment of
capital amount with interest
value after payment of capital payment
True or False: Activity based costing is considered to be a traditional costing method.
True
False
Which of the following is NOT generally identified as a reporting center under responsibility accounting?
cost center
equity center
profit center
investment center
revenue center
How to you calculate breakeven in sales?
variable costs ÷ sales
fixed costs ÷ sales
fixed costs ÷
contribution margin ratio
contribution margin ÷ fixed costs
variable costs ÷ contribution margin ratio
Out of pocket cost requires
cash expenditure
expenditure of fixed cost
None of these
expenditure of variable cost
The best example of committed cost is...
Advertising, Research
Depreciation,
Rent of building
Depreciation, Research
Advertising, Rent of building
The Scattergraph method is...
relatively less accurate method of analyzing mixed
cost than the high and low method.
not an accurate method of analyzing mixed cost than
high and low method
a more accurate
method of analysing mixed costs than the high-low method
none of these.
Which of the following specialist information systems is management accounting least engaged?
Material requirement planning
Management information system
Cost accounting
Operational budgets
Double-entry
bookkeeping system
If the selling price was $100 per unit, the variable cost was $50 per unit and the fixed cost was $10,000 what would be the sales break even point in units?
300
200
400
100
500
Under responsibility accounting, reports that show the budget and actual figures along with the variances that may arise, is known as ......?
compliance reports
performance
reports
statutory reports
cost/benefit analysis reports
financial statements
Which of the following is NOT a job or process costing used in management accounting?
Operation costing
Accumulation costing
Job/order costing
Process costing
Joint or by-product costing
A business sells a product for $30 per unit. The variable cost of production per unit is $18 and the fixed cost has been calculated at $8 per unit. The contribution per unit is ...?
$4
$30
$12
$8
$22
Malik makes plastic windows and doors. Which one of the following is likely to be a Fixed Cost?
All of these
The cost of
heating the factory
Non of these
The labor cost of assembly
Sales commission
What is the flow of costs after direct materials, direct labor and manufacturing overhead is utilized?
work in process, cost of goods sold, finished goods
finished goods, work in process, cost of goods sold
cost of goods sold, finished goods, work in process
Work in Process,
finished goods, cost of goods sold
True or False: The most relevant amounts for making a decision are found in the general ledger.
True
False
Which of the following correctly completes the statement? "As production increases within the relevant range ..."
fixed and variable cost stay the same in total.
fixed costs will vary in total.
variable costs will vary on a per unit basis.
none of the other four answers is true.
variable costs
will vary in total.
If a budgeted expense for the month was $100 and the actual was $110, the variance would be ....?
+9.09% and unfavorable
-10% and unfavorable
+110% and favorable
+10% and
unfavorable
+10% and favorable
In capital budgeting using profitability index if Npv of the cash flow is 2000, and initial investment is 2500, what will be the profitability index?
.8
2.25
.825
1.25
.85
Which one of the following is a Period Cost?
Variable Overhead
Fixed Overhead
Direct labor
Raw material
Definition of cost accounting
The
establishment of budget standard cost and actual cost of operation process activities
or products and the analysis of the variance profitability or the social use of
funds.
Cost accounting deals in the cost of producing the
good
cost accounting deals in cost of the products,like
raw material ,labor and Factory overhead
all of the above
none of the above
True or False: A project whose future cash flows are discounted by 10% will have a larger net present value than the same cash flows discounted by 8%.
False
True
If the selling price was $200 and the cost price was $100, what is the Gross Profit %?
33.33%
50%
10%
25%
100%
if ending inventory under absorption costing is 2500, and under variable costing is 1000 what is the difference between the profit under variable costing and absorption costing?
The profit under variable costing will be higher
1500 from absorption costing
The profit under variable costing will be same
The profit under absorption costing will be lower
1500 from variable costing
The profit under
absorption costing will be higher 1500 from variable costing
Managment accounting is LEAST concerned with which of the following?
Internal controls.
focusing on particular products and cost centers
Preparing
financial statements for prior periods.
decisions about the day to day operations of a
business.
Preparing financial reports for future periods.
Which of the following does NOT describe 'Backflush Costing'?
A product costing system generally used in a
just-in-time inventory environment or where inventory is kept at a minimum.
A product costing system that usually eliminates
separate accounting for work-in-process
A product costing system also called delayed
costing, endpoint costing or post-deduct costing.
A costing system that delays recording changes in
the status of a product being produced until good finished units appear
A product
costing system that requires detailed tracking of costs throughout the
production process
A company used the net present value method for evaluating a project. The project requires an immediate cash outlay of $950,000. The company discounted the cash flows by 16% and determined that the net present value of the project was a negative $600. From this information it is likely that the project...
had an internal
rate of return that was slightly LESS than 16%
had negative internal rate of return
had positive internal rate of return
had an internal rate of return that was slightly
Greater than 16%
A company wishes to evaluate a division which has the following extracts from income statement and statement of financial position. Income statement: $’000 Sales 500 Gross profit 200 Net profit 120 Statement of financial position: $’000 Non current assets 750 Current assets 350 Current liabilities (450) Net assets 650 What is the residual income for the division if the company has a cost of capital of 18%?
5,000
4,000
1,000
2,000
3,000
True or False: Selling expenses should be allocated to the cost of goods sold for external financial reporting.
True
False
Which of the following would NOT be a feature of 'bottom up' budgeting?
management only provide structural budgetary
guidelines
goals are generally more realistic
determined by
senior management
budget outcomes are more flexible and less ridged
greater involvement by staff at all levels
A budget where past information is not considered relevant for future decisions, is known as a ...?
zero-sum budget
program budget
master budget
global budget
continuous budget
The costs involved in converting raw materials into finished products is known as ...?
Conversion costs
Prime costs
Direct manufacturing costs
Variable costs
Fixed costs
What expenses are NOT included in fixed factory overhead?
insurance and taxes
freight in
depreciation
indirect labor
fringe benefits
'Relevant range' in budgeting and cost accounting relates to the:
the span of
activity
the range of inventory valuation methods
the number of projects
the number of accounts
the types of expenses
In management accounting the terms 'cost' and 'expense' can be accurately used interchangeably?
False
True
Which component is included in BOTH prime and conversion costs?
factory overhead
direct materials
direct labor
Which of the following specifically describes an 'expense' rather than a 'cost'?
it is the
monetary value that was used up in the generation of revenue for an accounting
period
it is the sacrifice of resources where we cease to
have the ability to use that resource to buy something else.
it is a measured value that includes unused
economic benefit
it is the amount of cash or cash equivalents paid
to initially acquire an asset
What is the ideal transfer price that would satisfy both the supplying and receiving segment?
Market price
Fixed price plus variable price
opportunity cost
plus the Standard variable cost
Variable price plus profit
Which of the following is NOT a prime cost in management accounting?
Factory overhead
costs
Direct materials
Job subcontracting costs
Direct labor
Which of the following bases is a volume-based cost driver in relation to applying overheads?
number of design change orders
number of set-ups
number of inspections
actual units
made
number of materials requisitions
A system whereby actual results for each sub-unit is an organisation is measured against budgets and significant differences investigated, is known as...?
financial accounting
cost accounting
responsibility
accounting
tax accounting
bookkeeping
Engineered cost is best defined as:
Cost that does not have clear relationship between
the input and output of that process
Cost that is related to the newest technology used
in the production
Cost that has a
clear relationship between the input and output of that process
Which of the following correctly completes the statement: Capital budgets are ...?
prepared for production activities
only prepared by the top-level management
prepared for the
acquisition of capital items
prepared for operational activities
the detailed capital investments of the owners
In ABC the assumption is that __________________ use resources or cause costs.
Activites
Indirect cost
All of the above
Products
Direct cost
Which of the following bases is more an activity-based cost driver rather than a volume based cost driver in relation to applying overheads?
actual units made
direct labor costs
materials cost
number of
inspections
machine hours
According to full costing method, if cost of sale is 800, Gross profit is 200, and variable cost is 400, what is the contribution margin?
400
700
200
600
300
A company has a capital employed of $200,000. It has a cost of capital of 12% per year. Its residual income is $36,000 What is the company’s return on investment?
50%
40%
10%
30%
20%
Royalties paid are which type of cost?
Semi-variable
Variable
Fixed
Which of the following is NOT used as a treatment of fixed manufacturing costs in management accounting?
Direct costing
Margin costing
Absorption costing
In a manufacturing overhead variance, which is excluded from a two-way variance, as opposed to a three-way?
spending
variance
volume (uncontrollable) variance
budget (controllable) variance
What is net profit if the contribution margin was $100,000 fixed costs were $60,000 and variable costs were $30,000?
$10,000
$100,000
$40,000
$70,000
$30,000
Which of the following businesses would generally use process costing rather than job/order costing?
Dressmaking to order
Manufacturing
cars
Renovating kitchens
Public accountants
Quick printing/photocopying service
Which of the following cost classification methods is not relevant in decision-making?
Direct and
Indirect Cost
Controllable an Uncontrollable cost
Avoidable and unavoidable cost
Fixed and variable cost
The accumulation of the costs incurred in buying and/or making inventory items is known as ....?
Service costs
Direct costs
Product costs
Overheads
Merchandising
When more factory overheads are incurred than have been applied to the product costing, it is known as...?
over-applied overhead
under-applied
overhead
depreciation
amortization
under-utilized assets
Rolling budgets are useful when
Future event
cannot be forecast reliably
Future events can be forecast ed with assurance
Future events can be forecast reliably
Non of the above
All of the above
Which of the following would NOT be treated as a period cost in management accounting?
Selling and distribution costs
Interest and finance costs
Audit and accounting fees
Marketing costs
Material costs
What is the formula for operating leverage?
net income / contribution margin
Contribution
margin/net income
contribution margin / fixed expense
Contribution margin/variable expense
If sale is 1000, fixed cost is 200, and profit is 500, what is contribution margin ratio?
40%
50%
80%
30%
70%
Operating Leverage Indicates
how for an organization used fair cost for the
period
how for an organization used historical cost for
the period
how for an
organization used fixed cost for the period
how for an organization used variable cost for the
period
how for an organization used current cost for the
period
NIFO (Next-In First-Out) is an inventory valuation system where the cost of sale of the item is based on ...?
the cost flow on the chronological order purchases
are made
the cost flow in a reverse chronological order
the estimated selling price less any expense
incurred to dispose of the good
the cost flow based on a weighted average of unit
costs
the cost to
replace it rather than on historical cost.
Which of the following would NOT be a reason for setting up a standard cost system?
for management control of costs
for inventory valuation
for motivation of employees
for financial
statement auditing purposes
Which of the following asset accounts is NOT used to record and capture the flow of manufacturing costs?
Work in progress
Materials control
Cost of Goods
Sold
Finished goods
In throughput accounting if the sale is 100, fixed cost is 25, and variable material cost is 45, what is throughput ?
55
60
30
45
75
Which of the following is *NOT* a benefit likely to arise from the implementation of a ‘just in time’ cost approach?
Reduction in the ordering cost
Reduction in the inventory handling cost
A reduction in
production delays as a result of ‘stockouts’.
Reduction in the inventory carrying cost
Goal congruence best describes as
Employees working in the management's interest
Employees working in the organization's interest
help to meet the overall goal of the organization
All of these
Employees
working in their own personal interest help to meet the overall goal of the
organization
Which of the following models for evaluating capital expenditures considers the time value of money by discounting the future cash flows?
Internal Rate of
Return
Payback period
Profitability Index
Net present value
Accounting rate of return
A cost classification that identifies the degree to which a cost can be changed in the short term is known as ...?
Discretionary
costs
Historical costs
Conversion costs
Prime costs
If contribution margin is 10000 and fixed expense is 8000, net income is 2000 what is OPERATING LEVERAGE?
5
4
80%
20%
6
The total asset turnover ratio is calculated by which formula?
Total assets ÷ Net Annual Sales
Cost of sales ÷ Total assets
Total assets ÷ Cost of good sold
Net Annual Sales
÷ Total assets
Which of the following should you use 'process costing' rather than 'job/product' costing?
Brick and tile
manufacturing
producing movies
building yachts to customer specifications
law firms cases
accounting firm audit work
Find EVA (ECONOMIC VALUE ADDED) if operating profit is 10000, weighted averege cost of capital is 12%, and operating assets are 75000.
8500
1000
7500
12000
9500
True or False: A variable expense means that the per unit amount will vary with sales.
True
False
A manufacturing company benchmarks the performance of its accounts receivable department with that of a leading credit card company, what type of benchmarking is the company using?
Continuous benchmarking
None of these
Internal benchmarking
External benchmarking
Functional
benchmarking
True or False: If the net present value of a project is $0, the project should be rejected.
True
False
Total fixed costs 150000; contribution margin 60% of revenue per unit; unit price 125; What is break even in units?
2000
2500
cant be determined
250,000
1200
Which one of the following is not a technique used for capital investment appraisal?
Discounted cash flow technique
Net present value
Payback method
Accounting rate of return
Capital
budgeting.
Internal rate of return is the rate of return at which net present value becomes?
1
positive
negative
0
Which of the following is considered a financial statement budget?
Purchasing budget
Trading account
budget
Sales budget
Capital expenditure budget
Production budget
If profit before tax is 10 000, taxation is 35%, and depreciation for the year is 1 000, what will the cash flow be?
6 500
7 500
4 500
5 500
8 500
Which one of the following is not normally a characteristic of major capital expenditure projects?
The project is likely to involve considerable
expenditure.
The project is an important part of a company’s
strategic planning
The costs can be
estimated with a fair degree of certainty.
The benefits from the expenditure will rise over a
number of years.
Job/order costing is used when there is a continuous production of similar products. True or false?
False
True
What is break even point if profit is 10000,fixed cost is 25000, and the sale is 60000?
45000
42860
41900
52000
Which of the following is NOT a generally accepted method of valuing inventory for a business?
Standard cost
Liquidation
value
Weighted average
Specific identification
FIFO
Which of the following costs is likely to be the minimum price charged for a special order?
Variable cost
Material cost
Fixed cost
All of the above
Labor Cost
Total fixed cost 150000; CM 60% of revenue per unit; Price 125; What is break even in dollars?
1200
250000
120000
2500
Which of the following expense groups is deducted from Gross Profit to calculate the Net Contribution Margin?
Depreciation expense
Fixed factory overheads
Cost of Goods sold
Fixed administration costs
Variable
administration and sales expenses
Operating leverage shows...
how an organization used contribution margin
how an organization used variable cost for the
period
how an
organization used fixed cost for the period
how an organization used net profit for the period
Which of the following would be the appropriate cost driver for the cost Package and Wrapping?
staff hours worked
kilometers traveled
pallets delivered
customers served
machine hours worked
The factory overhead recovery rate is best set based on a ........ analysis?
yearly
monthly
fortnightly
weekly
daily
Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $100,000 and at the end of the year was $150,000. What was the receivables turnover ratio?
6.4
8.0
4.0
5.3
Which of the following models does NOT use cash flows?
Accounting Rate
of Return
Internal Rate of Return
Profitability Index
Net Present Value
Discounted Payback Period
Which of the following is NOT a method used to allocate costs in management accounting?
Normal costing
Indirect costing
Activity-based costing
Standard costing
The formula for material turnover ratio is...
Material consumed / Avg Stock
Gross Operating Profit / Average Operating Assets
Sales / Avg Stock
Average Operating Assets / Avg Stock
Cost of sale /
Avg Stock
Which of the following would NOT be classified as a service department in managerial accounting?
repairs
stores
assembly
cafeteria
In variable costing or marginal costing if sale is 100 per unit, material cost 20 per unit, labour cost 10 per unit, variable overhead 10 per unit, fixed overhead 10 per unit, variable selling is expense 10 per unit, what will be the CONTRIBUTION MARGIN?
70
50
80
40
60
