Shortcoming of traditional managerial accounting systems

Question

Question 1: JIT and TQM are not compatible philosophies since JIT relates to inventory and TQM is a management philosophy.

• True
• False

Question 2: One shortcoming of traditional managerial accounting systems is that they focus too much on cost drivers and not enough on reducing costs.

• True
• False

Question 3: Product costs are the costs of resources consumed as part of administrative and selling activities during a fiscal period.

• True
• False

Question 4: Glues and screws are variable costs in a furniture company.

• True
• False

Question 5: Markup is the difference between the unit cost and the selling price of a product.

• True
• False

Question 6: Normal costing measures unit costs by adding the actual costs of direct materials and direct labor to an estimated overhead cost incurred in producing the units

• True
• False

Question 7: A predetermined overhead rate is an estimate of the amount of overhead that management believes should be assigned to a unit of product.

• True
• False

Question 8: Process costing assigns the costs associated with a particular job to the units produced in that job.

• True
• False

Question 9: Equivalent units are the number of units that would have been produced during a period if all of the department's efforts had resulted in completed units.

• True
• False

Question 10: In parallel processing the flow of products breaks off at some point so that different units go through different processing departments.

• True
• False

Question 11: Cost-volume-profit (CVP) analysis is the use of an understanding of the relationship among costs, volume, and profits to make managerial decisions.

• True
• False

Question 12: A company's margin of safety is the excess of the breakeven point over actual sales.

• True
• False

Question 13: Direct labor, direct labor dollars, and machine hours are examples of activity bases.

• True
• False

Question 14: The actual overhead rate is found using estimated overhead costs divided by the estimated activity level.

• True
• False

Question 15: Plant supervision is a unit-level cost.

• True
• False

Question 16: The direct materials budget identifies the amount of materials that will be required to support a company's total production needs.

• True
• False

Question 17: A static budget enables a company to examine projected income over a range of sales levels.

• True
• False

Question 18: Foreign currency exchange rates refer to the relative values of the currencies of different countries.

• True
• False

Question 19: Low inflation rates are called hyperinflation.

• True
• False

Question 20: Top-down budgets involve all levels of an organization working to achieve the organization's goal.

• True
• False

Question 21: An unfavorable variance results when the actual price (or quantity) is less than the standard price (or quantity) for materials or labor.

• True
• False

Question 22: Quality costs are limited to companies that manufacture tangible products.

• True
• False

Question 23: Operating assets is Sales - (cost of goods sold + other operating expenses).

• True
• False

Question 24: Cycle time is the number of minutes that pass between units leaving the final assembly area.

• True
• False

Question 25: Operational capital investment decisions affect all or a considerable part of a company's operations, have uncertain lives, and require large investments.

• True
• False

Question 26: The cost of capital is the interest rate that results in the present value of cash inflows from an investment.

• True
• False

Question 27: The payback period is the average accounting income a project generates per period divided by the amount of the investment in the project.

• True
• False

Question 28: Internal control systems are based on the theory that workers do not always behave in ways that are in the best interests of their company or its owners.

• True
• False

Question 29: Which of the following trends in the new business environment is concerned with the length of time it takes to develop, manufacture, and deliver a product?

• TQM
• just-in-time (JIT)
• time-based competition
• flexible manufacturing

Question 30: Internal auditors may have educational backgrounds or experience in which of the following fields?

• accounting
• finance
• information systems
• all of the above

Question 31: Which of the following would be considered part of manufacturing overhead?

• hourly wages for employees in the accounting department
• monthly salary expense for factory maintenance personnel
• monthly salary expense for finished good warehouse personnel
• sales commissions paid to sales personnel directly related to product sales

Question 32; When an employee circumvents an internal control procedure, which of the following is likely to take place?

• management should be glad
• (s)he almost always rationalizes the action
• the employee should be fired immediately, regardless of the nature of the problem
• all of the above

Question 33: Which costs are sometimes found on the income statement and sometimes found on the balance sheet?

• period costs
• product costs
• both period and product costs
• neither period nor product costs

Question 34: Which costs are always found on the income statement, but never on the balance sheet?

• period costs
• product costs
• both period and product costs
• neither period nor product costs

Question 35: In some cases, managers may invest in long-term projects even though they may reduce ROI in the short run. Reasons a manager might make such an investment include

• legal/regulatory requirements
• good strategic fit
• improved public relations
• all of the above

Question 36: Companies using a just-in-time production system

• produce products based on sales forecasts
• produce products based on customer demand
• have mostly foreign customers
• generally are small companies

Question 37: A company with department names like fabrication, painting, and finishing is likely to use what type of costing to reflect its production operation?

• job order
• process
• actual
• normal