Managerial Accounting Exam
Absorption Costing Abuse - ✔✔produce excessive goods in order to reduce COGS
For the third quarter of next year, it indicates the company will have a cash deficiency of $240,000 -
✔✔you will run out of money in the third quarter. please finance to cover that
If a manufacturing company produces fewer units than it sells during a period, then operating profit will
be ______ under Absorption Costing compared to Variable Costing. - ✔✔lower
just in time inventory - ✔✔company aims to have 0 inventory
total variance - ✔✔total variance = quantity variance + price variance
TRUE or FALSE?
The price variance tells us whether the company got a good price for the resource, while the quantity
variance tells us how well the resource was used. - ✔✔TRUE
TRUE or FALSE? A favorable variance is always a good thing for the company. - ✔✔FALSE
TRUE or FALSE? A good management team investigates the source of each variance. - ✔✔FALSE
TRUE or FALSE? A retail company doesn't need to create an Ending Inventory
Budget since it doesn't manufacture products. - ✔✔False
TRUE or FALSE? In the budgeting process, firms create budgeted financial statements. - ✔✔TRUE
TRUE or FALSE? The Degree of Operating Leverage is highest near the break-even point. - ✔✔TRUE
Absorption Costing Abuse - ✔✔produce excessive goods in order to reduce COGS
For the third quarter of next year, it indicates the company will have a cash deficiency of $240,000 -
✔✔you will run out of money in the third quarter. please finance to cover that
If a manufacturing company produces fewer units than it sells during a period, then operating profit will
be ______ under Absorption Costing compared to Variable Costing. - ✔✔lower
just in time inventory - ✔✔company aims to have 0 inventory
total variance - ✔✔total variance = quantity variance + price variance
TRUE or FALSE?
The price variance tells us whether the company got a good price for the resource, while the quantity
variance tells us how well the resource was used. - ✔✔TRUE
TRUE or FALSE? A favorable variance is always a good thing for the company. - ✔✔FALSE
TRUE or FALSE? A good management team investigates the source of each variance. - ✔✔FALSE
TRUE or FALSE? A retail company doesn't need to create an Ending Inventory
Budget since it doesn't manufacture products. - ✔✔False
TRUE or FALSE? In the budgeting process, firms create budgeted financial statements. - ✔✔TRUE
TRUE or FALSE? The Degree of Operating Leverage is highest near the break-even point. - ✔✔TRUE
