Accounting II Final Exam !!

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Accounting II Final Exam !!

  

1. The cash budget is especially important to a firm when:  A. there is not a lot of confidence in the sales forecast. B. it has a relatively large amount of operating cash. C. the P/E ratio has been trending downwards. D. it may have to negotiate a short-term bank loan.

   

2. Which of the following costs are included in the cost classification that is based on the relationship between total cost and volume of activity?  A. Variable cost and fixed cost. B. Direct cost and indirect cost. C. Product cost and period cost. D. Committed cost and discretionary cost.

   

3. Which of the following costs are included in the cost classification that is based on the time frame perspective?  A. Variable cost and fixed cost. B. Direct cost and indirect cost. C. Product cost and period cost. D. Committed cost and discretionary cost.

   

4. A cost that is incurred because of a long-range policy decision is known as a:  A. discretionary cost. B. committed cost. C. continuous cost. D. standard cost.

   

5. Which of the following is not an important factor to consider when preparing a sales forecast?  A. The state of the economy. B. Seasonal demand variations. C. A change in the management team. D. Competitors’ actions.

   

6. Which of the following is a plan for acquiring the resources needed to complete the manufacturing activities that will satisfy the organization’s sales forecast?  A. Sales budget B. Raw materials budget C. Production budget D. Direct labor budget

     

7. Which of the following lists the components of the master budget in correct chronological order?  A. Direct labor budget, production budget, cost of goods sold budget. B. Sales budget, production budget, cash budget. C. Sales budget, raw materials budget, production budget. D. Cash budget, production budget, manufacturing overhead budget.

   

8. The raw materials budgeted to be purchased for the period is equal to:  A. ending inventory + raw material used – beginning inventory. B. ending inventory + ending inventory – raw material used. C. beginning inventory – ending inventory + raw material used. D. beginning inventory + raw material used – ending inventory.

   

9. The operating expense budget is based on the:  A. sales budget. B. production budget. C. manufacturing overhead budget. D. cash budget.

     

10. Depreciation on the office equipment would appear in which of the following budgets?  A. Production budget. B. Manufacturing overhead budget. C. Operating expense budget. D. Cash budget.

     

11. Which of the following items would be included in the operating expense budget?  A. Sales commissions. B. Raw material purchases. C. Cash receipts. D. Cost of goods sold.

       

12. Which of the following would not appear in the operating expense budget? .

 

A. Sales commissions. B. Delivery expense. C. Advertising. D. Depreciation on the production equipment

     

13. What is the “key” to the entire operating budget?  A. The forecast of operating activity. B. The budgeted income statement. C. The budgeted balance sheet. D. The production/purchases budget.

   

 14. Which of the following is the last budgeted financial statement to be prepared?  A. Budgeted income statement. B. Budgeted balance sheet. C. Cash budget. D. It doesn’t matter which one is prepared last.

     

15. Which of the following lists the components of the master budget in correct chronological order?  A. Cash budget, budgeted income statement, budgeted balance sheet. B. Budgeted balance sheet, cash budget, budgeted income statement. C. Budgeted income statement, cash budget, budgeted balance sheet. D. It doesn’t matter in which order they are prepared.

   

16. Val’s travel budget for October was $720, based on her plan to drive 3,000 miles at a cost of $0.24 per mile. During October, she actually drove 2,800 miles at a total cost of $700. A flexed budget performance report would show a variance of:  A. $50 F B. $20 F C. $28 U D. $30 U

   

17. If it is to be most useful for control purposes, what variance should be reported to the supervisor responsible for the number of pounds of corn syrup used in the manufacture of a candy bar?  A. Raw material price variance, expressed in cents per pound. B. Raw material usage variance, expressed as a total cost for the month. C. Raw material usage variance, expressed in total pounds for the month. D. Raw material usage variance, expressed in total pounds for the week.

   

18. The purchasing agent of an organization acquired some raw materials at a bargain price, even though she knew that their quality was lower than that of the materials customarily used. This action resulted in a favorable raw materials purchase price variance that might very well have been more than offset by:  A. an unfavorable raw materials usage variance. B. a favorable direct labor efficiency variance. C. an unfavorable variable overhead spending variance. D. an unfavorable direct labor rate variance.

   

19. When an appropriately established and effective standard cost system is used to value inventory:  A. cumulative variances are deferred. B. a significant unfavorable net variance may be reported as an expense of the current period. C. a significant favorable net variance may be reported as an expense of the current period. D. the explanatory notes to the financial statements will explain the disposition of the net variance.

     

20. A performance report for direct labor shows a variance between the budget and actual amounts. This difference is a:  A. budget variance. B. direct labor efficiency variance. C. direct labor spending variance. D. direct labor rate variance.

     

21. If they are to be useful to managers, variances should be reported:  A. simultaneously to all managers within a week after the end of the month. B. in dollar amounts as soon as all costs are known. C. in physical terms or dollar amounts as promptly as feasible. D. in physical terms and dollar amounts if the variance exceeds 10% of the budget.

       

22. What should the decision rule be to determine what budget variances to investigate?  A. Investigate unfavorable variances only. B. Investigate favorable variances only. C. Investigate if the variance is significant. D. Investigate all variances.

   

23. Which of the following variances is not determined during an overhead variance analysis?  A. Volume variance. B. Budget variance. C. Spending variance. D. Price variance.

   

24. The fixed manufacturing overhead variance caused by actual activity being different from the estimated activity used in calculating the predetermined overhead application rate is called the:  A. spending variance. B. budget variance. C. efficiency variance. D. volume variance.

   

 25. The part of the variable overhead budget variance due to the difference between actual hours required and standard hours allowed for the work done is called the:  A. variable overhead spending variance. B. variable overhead budget variance. C. variable overhead efficiency variance. D. variable overhead volume variance.

     

26. The part of the variable overhead budget variance due to the difference between actual variable overhead cost and the standard cost allowed for the actual inputs used is called the:  A. variable overhead spending variance. B. variable overhead budget variance. C. variable overhead efficiency variance. D. variable overhead volume variance.

 

 27. If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:  A. assigned to cost of goods sold. B. allocated between work in process, finished goods, and cost of goods sold. C. carried forward to the next accounting period. D. none of the above.

   

28. If the net of all variances is immaterial relative to the total production costs incurred during the period, the net variance is:  A. treated as an adjustment to cost of goods sold. B. ignored. C. treated as an adjustment to work in process, finished goods, and cost of goods sold. D. treated as an adjustment to manufacturing overhead.

     

29. The preferred format for a segmented income statement emphasizes:  A. direct and common fixed costs. B. variable and fixed costs. C. operating expenses and fixed costs. D. variable costs and operating expenses.

     

30. Which of the following is a true statement pertaining to segment income statements?  A. Only present the individual segments’ net income, not total company net income. B. Only include variable costs. C. Do not present a segment margin. D. Do not include arbitrarily allocated common fixed expenses when calculating segment margin. E. All of the above.

   

31. How is performance evaluated for a cost center?  A. Actual costs incurred compared to budgeted costs. B. Actual segment margin compared to budgeted segment margin. C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment. D. None of the above.

   

32. How is performance evaluated for a profit center?  A. Actual costs incurred compared to budgeted costs. B. Actual segment margin compared to budgeted segment margin. C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment. D. None of the above.

   

33. The key to analyzing a sell as is or process further decision is to determine that:  A. opportunity costs exceed sunk costs. B. incremental revenues exceed incremental costs. C. differential costs do not exist. D. all allocated costs are included in the decision.

   

34. In a make or buy decision which of the following costs would be considered relevant?  A. Avoidable costs. B. Unavoidable costs. C. Sunk costs. D. Allocated costs.

   

35. Which of the following qualitative factors favors the buy option in the make or buy decision?  A. Production scheduling. B. Utilization of idle capacity. C. Ability to control quality. D. Technical expertise of supplier.

    

36. Product Z sells for $18 per unit as is but if it is enhanced it can be sold for $24 per unit. The enhancement process will cost $50,000 for 10,000 units. If the 10,000 units of Product Z are sold as is without further processing, the company:  A. will incur an incremental profit of $10,000. B. will incur an opportunity cost of $10,000. C. will incur an incremental profit of $1 per unit. D. will incur an incremental loss of $6 per unit.

   

37. A(n) _____________ is the minimum cost that can be incurred, which when subtracted from the selling price, allows for a desired profit to be earned.  A. relevant cost. B. opportunity cost. C. incremental cost. D. target cost. 

   

38. Product X sells for $80 per unit in the marketplace and ABC Company requires a 35% minimum profit margin on all product lines. In order to compete in this market, the target cost for Product X must be equal to or lower than:  A. $28 B. $45 C. $52 D. $80 

 

39. Which of the following costs are not relevant in a decision to continue or discontinue a segment of the organization?  A. Avoidable costs. B. Unavoidable costs. C. Opportunity costs. D. Differential costs.

     

40. The decision to continue or discontinue a segment of the business should focus on:  A. sales minus total variable expenses and total fixed expenses. B. sales minus total variable expenses and avoidable fixed expenses of the segment. C. sales minus total variable expenses and allocated fixed expenses of the business. D. none of the above.