Final Exam On Managerial Accounting With Answers

Final Exam On Managerial Accounting With Answers Final Exam Managerial Accounting With Answers Instructions This exam consists of 50 multiplechoice questions Each question is worth 2 points Please select the best answer for each question Time Limit 2 hours Note This exam is designed to test your understanding of the key concepts and principles covered in the managerial accounting course Section 1 Cost Accounting 20 questions 1 What is the difference between direct costs and indirect costs a Direct costs are traceable to a specific cost object while indirect costs are not b Direct costs are fixed while indirect costs are variable c Direct costs are incurred for manufacturing while indirect costs are incurred for administrative purposes d Direct costs are always higher than indirect costs Answer a Direct costs are traceable to a specific cost object while indirect costs are not 2 What is the difference between fixed costs and variable costs a Fixed costs remain constant within a relevant range while variable costs change in proportion to changes in activity levels b Fixed costs are always higher than variable costs c Fixed costs are incurred for manufacturing while variable costs are incurred for administrative purposes d Fixed costs are always expressed in dollars while variable costs are expressed in units Answer a Fixed costs remain constant within a relevant range while variable costs change in proportion to changes in activity levels 3 What is the difference between product costs and period costs a Product costs are incurred for manufacturing while period costs are incurred for 2 administrative purposes b Product costs are expensed when products are sold while period costs are expensed in the period they are incurred c Product costs are fixed while period costs are variable d Product costs are traceable to a specific cost object while period costs are not Answer b Product costs are expensed when products are sold while period costs are expensed in the period they are incurred 4 What is the difference between job costing and process costing a Job costing is used for products that are customized while process costing is used for products that are massproduced b Job costing is used for manufacturing while process costing is used for service industries c Job costing is a more accurate costing method than process costing d Job costing is more expensive to implement than process costing Answer a Job costing is used for products that are customized while process costing is used for products that are massproduced 5 What is the difference between direct materials and indirect materials a Direct materials are traceable to a specific product while indirect materials are not b Direct materials are always more expensive than indirect materials c Direct materials are used in manufacturing while indirect materials are used in administrative activities d Direct materials are purchased from outside suppliers while indirect materials are made inhouse Answer a Direct materials are traceable to a specific product while indirect materials are not 6 What is the difference between direct labor and indirect labor a Direct labor is traceable to a specific product while indirect labor is not b Direct labor is always more expensive than indirect labor c Direct labor is used in manufacturing while indirect labor is used in administrative activities d Direct labor is paid hourly while indirect labor is paid on a salary basis Answer a Direct labor is traceable to a specific product while indirect labor is not 7 What is the difference between manufacturing overhead and nonmanufacturing overhead 3 a Manufacturing overhead is incurred for manufacturing activities while nonmanufacturing overhead is incurred for administrative activities b Manufacturing overhead is always higher than nonmanufacturing overhead c Manufacturing overhead is a fixed cost while nonmanufacturing overhead is a variable cost d Manufacturing overhead is traceable to a specific product while nonmanufacturing overhead is not Answer a Manufacturing overhead is incurred for manufacturing activities while non manufacturing overhead is incurred for administrative activities 8 What is the difference between actual overhead and applied overhead a Actual overhead is the actual amount of overhead incurred while applied overhead is the amount of overhead allocated to products b Actual overhead is always higher than applied overhead c Actual overhead is a fixed cost while applied overhead is a variable cost d Actual overhead is traceable to a specific product while applied overhead is not Answer a Actual overhead is the actual amount of overhead incurred while applied overhead is the amount of overhead allocated to products 9 What is the difference between overapplied overhead and underapplied overhead a Overapplied overhead occurs when applied overhead is less than actual overhead while underapplied overhead occurs when applied overhead is more than actual overhead b Overapplied overhead is always a bad thing while underapplied overhead is always a good thing c Overapplied overhead is a fixed cost while underapplied overhead is a variable cost d Overapplied overhead is traceable to a specific product while underapplied overhead is not Answer a Overapplied overhead occurs when applied overhead is less than actual overhead while underapplied overhead occurs when applied overhead is more than actual overhead 10 What is the difference between a predetermined overhead rate and an actual overhead rate a A predetermined overhead rate is calculated before the period begins while an actual overhead rate is calculated at the end of the period b A predetermined overhead rate is always higher than an actual overhead rate c A predetermined overhead rate is a fixed cost while an actual overhead rate is a variable cost 4 d A predetermined overhead rate is traceable to a specific product while an actual overhead rate is not Answer a A predetermined overhead rate is calculated before the period begins while an actual overhead rate is calculated at the end of the period 11 What is the difference between activitybased costing ABC and traditional costing a ABC uses multiple cost pools while traditional costing uses a single cost pool b ABC is more accurate than traditional costing c ABC is more complex to implement than traditional costing d All of the above Answer d All of the above 12 What is the difference between a cost driver and a cost object a A cost driver is a factor that causes a cost to change while a cost object is anything for which we want to measure cost b A cost driver is always a fixed cost while a cost object is always a variable cost c A cost driver is traceable to a specific product while a cost object is not d A cost driver is more important than a cost object Answer a A cost driver is a factor that causes a cost to change while a cost object is anything for which we want to measure cost 13 What is the difference between a cost center and a profit center a A cost center is responsible for controlling costs while a profit center is responsible for generating revenue b A cost center is always more important than a profit center c A cost center is always a manufacturing department while a profit center is always a sales department d A cost center is always a fixed cost while a profit center is always a variable cost Answer a A cost center is responsible for controlling costs while a profit center is responsible for generating revenue 14 What is the difference between a contribution margin and a gross margin a Contribution margin is sales revenue minus variable costs while gross margin is sales revenue minus cost of goods sold b Contribution margin is always higher than gross margin c Contribution margin is a fixed cost while gross margin is a variable cost d Contribution margin is traceable to a specific product while gross margin is not 5 Answer a Contribution margin is sales revenue minus variable costs while gross margin is sales revenue minus cost of goods sold 15 What is the difference between a breakeven point and a margin of safety a The breakeven point is the level of activity at which total revenue equals total costs while the margin of safety is the difference between actual sales and the breakeven point b The breakeven point is always higher than the margin of safety c The breakeven point is a fixed cost while the margin of safety is a variable cost d The breakeven point is traceable to a specific product while the margin of safety is not Answer a The breakeven point is the level of activity at which total revenue equals total costs while the margin of safety is the difference between actual sales and the breakeven point 16 What is the difference between a costvolumeprofit CVP analysis and a sensitivity analysis a A CVP analysis examines the relationship between costs volume and profit while a sensitivity analysis examines the impact of changes in variables on a particular outcome b A CVP analysis is always more complex than a sensitivity analysis c A CVP analysis is a fixed cost while a sensitivity analysis is a variable cost d A CVP analysis is traceable to a specific product while a sensitivity analysis is not Answer a A CVP analysis examines the relationship between costs volume and profit while a sensitivity analysis examines the impact of changes in variables on a particular outcome 17 What is the difference between a sales mix and a contribution margin mix a Sales mix refers to the relative proportions of different products sold while contribution margin mix refers to the relative proportions of contribution margins for different products b Sales mix is always higher than contribution margin mix c Sales mix is a fixed cost while contribution margin mix is a variable cost d Sales mix is traceable to a specific product while contribution margin mix is not Answer a Sales mix refers to the relative proportions of different products sold while contribution margin mix refers to the relative proportions of contribution margins for different products 18 What is the difference between a highlow method and a regression analysis a The highlow method uses two data points to estimate a cost function while regression analysis uses multiple data points b The highlow method is always more accurate than regression analysis 6 c The highlow method is a fixed cost while regression analysis is a variable cost d The highlow method is traceable to a specific product while regression analysis is not Answer a The highlow method uses two data points to estimate a cost function while regression analysis uses multiple data points 19 What is the difference between a flexible budget and a static budget a A flexible budget adjusts for changes in activity levels while a static budget remains fixed regardless of activity levels b A flexible budget is always more accurate than a static budget c A flexible budget is a fixed cost while a static budget is a variable cost d A flexible budget is traceable to a specific product while a static budget is not Answer a A flexible budget adjusts for changes in activity levels while a static budget remains fixed regardless of activity levels 20 What is the difference between a variance and a standard a A variance is the difference between actual results and planned results while a standard is a predetermined benchmark for performance b A variance is always higher than a standard c A variance is a fixed cost while a standard is a variable cost d A variance is traceable to a specific product while a standard is not Answer a A variance is the difference between actual results and planned results while a standard is a predetermined benchmark for performance Section 2 CostVolumeProfit Analysis and Decision Making 15 questions 21 What is the contribution margin ratio a It is the percentage of each sales dollar that contributes to covering fixed costs and generating profit b It is the difference between sales revenue and variable costs c It is the amount of revenue needed to cover all fixed costs d It is the percentage of sales revenue that is profit Answer a It is the percentage of each sales dollar that contributes to covering fixed costs and generating profit 22 What is the breakeven point in units a It is the number of units that must be sold to cover all fixed costs b It is the number of units that must be sold to generate a profit 7 c It is the number of units that must be sold to achieve a target profit d It is the number of units that must be sold to cover all variable costs Answer a It is the number of units that must be sold to cover all fixed costs 23 What is the margin of safety in dollars a It is the difference between actual sales and the breakeven point in dollars b It is the percentage of actual sales that represents profit c It is the amount of revenue needed to cover all fixed costs d It is the difference between sales revenue and variable costs Answer a It is the difference between actual sales and the breakeven point in dollars 24 What is the degree of operating leverage a It is a measure of how sensitive operating income is to changes in sales b It is the percentage of sales revenue that is profit c It is the amount of revenue needed to cover all fixed costs d It is the difference between sales revenue and variable costs Answer a It is a measure of how sensitive operating income is to changes in sales 25 What is the difference between a relevant cost and an irrelevant cost a A relevant cost is a cost that differs between alternatives while an irrelevant cost is a cost that does not differ between alternatives b A relevant cost is always higher than an irrelevant cost c A relevant cost is a fixed cost while an irrelevant cost is a variable cost d A relevant cost is traceable to a specific product while an irrelevant cost is not Answer a A relevant cost is a cost that differs between alternatives while an irrelevant cost is a cost that does not differ between alternatives 26 What is the difference between a sunk cost and an opportunity cost a A sunk cost is a cost that has already been incurred and cannot be recovered while an opportunity cost is the potential benefit that is lost by choosing one alternative over another b A sunk cost is always higher than an opportunity cost c A sunk cost is a fixed cost while an opportunity cost is a variable cost d A sunk cost is traceable to a specific product while an opportunity cost is not Answer a A sunk cost is a cost that has already been incurred and cannot be recovered while an opportunity cost is the potential benefit that is lost by choosing one alternative over another 8 27 What is the difference between a special order and a regular order a A special order is a onetime order that is not part of the companys regular business while a regular order is part of the companys regular business b A special order is always more profitable than a regular order c A special order is a fixed cost while a regular order is a variable cost d A special order is traceable to a specific product while a regular order is not Answer a A special order is a onetime order that is not part of the companys regular business while a regular order is part of the companys regular business 28 What is the difference between a makeorbuy decision and an outsourcing decision a A makeorbuy decision involves deciding whether to produce a good or service internally or to purchase it from an outside supplier while an outsourcing decision involves deciding whether to outsource a business function to an outside provider b A makeorbuy decision is always more complex than an outsourcing decision c A makeorbuy decision is a fixed cost while an outsourcing decision is a variable cost d A makeorbuy decision is traceable to a specific product while an outsourcing decision is not Answer a A makeorbuy decision involves deciding whether to produce a good or service internally or to purchase it from an outside supplier while an outsourcing decision involves deciding whether to outsource a business function to an outside provider 29 What is the difference between a sellorprocess further decision and a joint product decision a A sellorprocess further decision involves deciding whether to sell a product at its splitoff point or to process it further while a joint product decision involves deciding how to allocate joint costs to multiple products b A sellorprocess further decision is always more complex than a joint product decision c A sellorprocess further decision is a fixed cost while a joint product decision is a variable cost d A sellorprocess further decision is traceable to a specific product while a joint product decision is not Answer a A sellorprocess further decision involves deciding whether to sell a product at its splitoff point or to process it further while a joint product decision involves deciding how to allocate joint costs to multiple products 30 What is the difference between a capital budgeting decision and an operating budgeting decision 9 a A capital budgeting decision involves planning for longterm investments while an operating budgeting decision involves planning for shortterm operations b A capital budgeting decision is always more complex than an operating budgeting decision c A capital budgeting decision is a fixed cost while an operating budgeting decision is a variable cost d A capital budgeting decision is traceable to a specific product while an operating budgeting decision is not Answer a A capital budgeting decision involves planning for longterm investments while an operating budgeting decision involves planning for shortterm operations 31 What is the difference between a payback period and a net present value NPV a The payback period is a measure of how long it takes for an investment to generate enough cash flow to recover its initial cost while the NPV is a measure of the present value of an investments future cash flows minus its initial cost b The payback period is always higher than the NPV c The payback period is a fixed cost while the NPV is a variable cost d The payback period is traceable to a specific product while the NPV is not Answer a The payback period is a measure of how long it takes for an investment to generate enough cash flow to recover its initial cost while the NPV is a measure of the present value of an investments future cash flows minus its initial cost 32 What is the difference between an internal rate of return IRR and a profitability index PI a The IRR is the discount rate that makes the NPV of an investment equal to zero while the PI is the ratio of the present value of an investments future cash flows to its initial cost b The IRR is always higher than the PI c The IRR is a fixed cost while the PI is a variable cost d The IRR is traceable to a specific product while the PI is not Answer a The IRR is the discount rate that makes the NPV of an investment equal to zero while the PI is the ratio of the present value of an investments future cash flows to its initial cost 33 What is the difference between a sensitivity analysis and a scenario analysis a A sensitivity analysis examines the impact of changes in a single variable on a particular outcome while a scenario analysis examines the impact of multiple variables on a particular outcome 10 b A sensitivity analysis is always more complex than a scenario analysis c A sensitivity analysis is a fixed cost while a scenario analysis is a variable cost d A sensitivity analysis is traceable to a specific product while a scenario analysis is not Answer a A sensitivity analysis examines the impact of changes in a single variable on a particular outcome while a scenario analysis examines the impact of multiple variables on a particular outcome 34 What is the difference between a discounted cash flow DCF analysis and a real options analysis a A DCF analysis uses the present value of future cash flows to evaluate an investment while a real options analysis considers the flexibility and value of future decisions b A DCF analysis is always more complex than a real options analysis c A DCF analysis is a fixed cost while a real options analysis is a variable cost d A DCF analysis is traceable to a specific product while a real options analysis is not Answer a A DCF analysis uses the present value of future cash flows to evaluate an investment while a real options analysis considers the flexibility and value of future decisions 35 What is the difference between a capital rationing decision and a capital budgeting decision a A capital rationing decision involves deciding which investments to make when there are insufficient funds to fund all profitable projects while a capital budgeting decision involves deciding whether to invest in a particular project b A capital rationing decision is always more complex than a capital budgeting decision c A capital rationing decision is a fixed cost while a capital budgeting decision is a variable cost d A capital rationing decision is traceable to a specific product while a capital budgeting decision is not Answer a A capital rationing decision involves deciding which investments to make when there are insufficient funds to fund all profitable projects while a capital budgeting decision involves deciding whether to invest in a particular project Section 3 Performance Evaluation and Responsibility Accounting 10 questions 36 What is the difference between a responsibility center and a cost center a A responsibility center is a unit of an organization for which a manager is accountable while a cost center is a responsibility center that is responsible for controlling costs 11 b A responsibility center is always more important than a cost center c A responsibility center is always a manufacturing department while a cost center is always a sales department d A responsibility center is always a fixed cost while a cost center is always a variable cost Answer a A responsibility center is a unit of an organization for which a manager is accountable while a cost center is a responsibility center that is responsible for controlling costs 37 What is the difference between a revenue center and a profit center a A revenue center is a responsibility center that is responsible for generating revenue while a profit center is a responsibility center that is responsible for generating both revenue and profit b A revenue center is always more important than a profit center c A revenue center is always a sales department while a profit center is always a manufacturing department d A revenue center is always a fixed cost while a profit center is always a variable cost Answer a A revenue center is a responsibility center that is responsible for generating revenue while a profit center is a responsibility center that is responsible for generating both revenue and profit 38 What is the difference between a return on investment ROI and a residual income a ROI is a measure of profitability that is calculated by dividing operating income by average operating assets while residual income is the amount of operating income that exceeds a minimum acceptable return on operating assets b ROI is always higher than residual income c ROI is a fixed cost while residual income is a variable cost d ROI is traceable to a specific product while residual income is not Answer a ROI is a measure of profitability that is calculated by dividing operating income by average operating assets while residual income is the amount of operating income that exceeds a minimum acceptable return on operating assets 39 What is the difference between a balanced scorecard and a traditional performance measurement system a A balanced scorecard considers multiple perspectives of performance while a traditional performance measurement system typically focuses on financial measures only b A balanced scorecard is always more complex than a traditional performance measurement system 12 c A balanced scorecard is a fixed cost while a traditional performance measurement system is a variable cost d A balanced scorecard is traceable to a specific product while a traditional performance measurement system is not Answer a A balanced scorecard considers multiple perspectives of performance while a traditional performance measurement system typically focuses on financial measures only 40 What is the difference between a budget and a standard a A budget is a plan for future operations while a standard is a predetermined benchmark for performance b A budget is always more accurate than a standard c A budget is a fixed cost while a standard is a variable cost d A budget is traceable to a specific product while a standard is not Answer a A budget is a plan for future operations while a standard is a predetermined benchmark for performance 41 What is the difference between a favorable variance and an unfavorable variance a A favorable variance is a variance that is better than planned while an unfavorable variance is a variance that is worse than planned b A favorable variance is always a good thing while an unfavorable variance is always a bad thing c A favorable variance is a fixed cost while an unfavorable variance is a variable cost d A favorable variance is traceable to a specific product while an unfavorable variance is not Answer a A favorable variance is a variance that is better than planned while an unfavorable variance is a variance that is worse than planned 42 What is the difference between a static budget and a flexible budget a A static budget remains fixed regardless of activity levels while a flexible budget adjusts for changes in activity levels b A static budget is always more accurate than a flexible budget c A static budget is a fixed cost while a flexible budget is a variable cost d A static budget is traceable to a specific product while a flexible budget is not Answer a A static budget remains fixed regardless of activity levels while a flexible budget adjusts for changes in activity levels 43 What is the difference between a sales variance and a price variance 13 a A sales variance is the difference between actual sales and budgeted sales while a price variance is the difference between the actual price paid for a good or service and the budgeted price b A sales variance is always higher than a price variance c A sales variance is a fixed cost while a price variance is a variable cost d A sales variance is traceable to a specific product while a price variance is not Answer a A sales variance is the difference between actual sales and budgeted sales while a price variance is the difference between the actual price paid for a good or service and the budgeted price 44 What is the difference between a quantity variance and a usage variance a A quantity variance is the difference between the actual quantity of a good or service used and the budgeted quantity while a usage variance is the difference between the actual quantity used and the standard quantity allowed for the actual level of activity b A quantity variance is always higher than a usage variance c A quantity variance is a fixed cost while a usage variance is a variable cost d A quantity variance is traceable to a specific product while a usage variance is not Answer a A quantity variance is the difference between the actual quantity of a good or service used and the budgeted quantity while a usage variance is the difference between the actual quantity used and the standard quantity allowed for the actual level of activity 45 What is the difference between a labor rate variance and a labor efficiency variance a A labor rate variance is the difference between the actual labor rate paid and the standard labor rate while a labor efficiency variance is the difference between the actual labor hours worked and the standard labor hours allowed for the actual level of activity b A labor rate variance is always higher than a labor efficiency variance c A labor rate variance is a fixed cost while a labor efficiency variance is a variable cost d A labor rate variance is traceable to a specific product while a labor efficiency variance is not Answer a A labor rate variance is the difference between the actual labor rate paid and the standard labor rate while a labor efficiency variance is the difference between the actual labor hours worked and the standard labor hours allowed for the actual level of activity 46 What is the difference between a variable overhead rate variance and a variable overhead efficiency variance a A variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate while a variable overhead efficiency variance is 14 the difference between the actual variable overhead hours used and the standard variable overhead hours allowed for the actual level of activity b A variable overhead rate variance is always higher than a variable overhead efficiency variance c A variable overhead rate variance is a fixed cost while a variable overhead efficiency variance is a variable cost d A variable overhead rate variance is traceable to a specific product while a variable overhead efficiency variance is not Answer a A variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate while a variable overhead efficiency variance is the difference between the actual variable overhead hours used and the standard variable overhead hours allowed for the actual level of activity 47 What is the difference between a fixed overhead budget variance and a fixed overhead volume variance a A fixed overhead budget variance is the difference between actual fixed overhead costs and budgeted fixed overhead costs while a fixed overhead volume variance is the difference between the budgeted fixed overhead cost and the applied fixed overhead cost b A fixed overhead budget variance is always higher than a fixed overhead volume variance c A fixed overhead budget variance is a fixed cost while a fixed overhead volume variance is a variable cost d A fixed overhead budget variance is traceable to a specific product while a fixed overhead volume variance is not Answer a A fixed overhead budget variance is the difference between actual fixed overhead costs and budgeted fixed overhead costs while a fixed overhead volume variance is the difference between the budgeted fixed overhead cost and the applied fixed overhead cost 48 What is the difference between a controllable variance and an uncontrollable variance a A controllable variance is a variance that can be influenced by a manager while an uncontrollable variance is a variance that cannot be influenced by a manager b A controllable variance is always higher than an uncontrollable variance c A controllable variance is a fixed cost while an uncontrollable variance is a variable cost d A controllable variance is traceable to a specific product while an uncontrollable variance is not Answer a A controllable variance is a variance that can be influenced by a manager while an uncontrollable variance is a variance that cannot be influenced by a manager 15 49 What is the difference between a performance report and a variance analysis a A performance report summarizes actual results and compares them to planned results while a variance analysis investigates the reasons for differences between actual results and planned results b A performance report is always more detailed than a variance analysis c A performance report is a fixed cost while a variance analysis is a variable cost d A performance report is traceable to a specific product while a variance analysis is not Answer a A performance report summarizes actual results and compares them to planned results while a variance analysis investigates the reasons for differences between actual results and planned results 50 What is the difference between a management by exception MBE approach and a continuous improvement approach a MBE focuses on investigating variances that exceed a predetermined threshold while continuous improvement focuses on identifying and eliminating waste and inefficiencies in all aspects of operations b MBE is always more effective than continuous improvement c MBE is a fixed cost while continuous improvement is a variable cost d MBE is traceable to a specific product while continuous improvement is not Answer a MBE focuses on investigating variances that exceed a predetermined threshold while continuous improvement focuses on identifying and eliminating waste and inefficiencies in all aspects of operations Please submit your answers on the provided answer sheet