MBA 620 QUESTIONS AND ANSWERS
A main difference between managerial and financial accounting is that:
a. This class will focus on generating and interpreting financial accounting reports.
b. Financial accounting reports can include nonfinancial data.
c. Managerial accounting information is used only by people inside the organization for
decision making, planning, and control.
d. Managerial accounting reports provide information for investors and creditors to make
decisions. - Answers -Managerial accounting information is used only by people inside
the organization for decision making, planning, and control
Which of the following would describe the planning function of managers?
a. Measuring the performance of managers.
b. Assessing whether the company is achieving its goals.
c. Communicating the goals of managers to the employees.
d. Evaluating how well plans were implemented. - Answers -Communicating the goals
of managers to the employees
Which of the following would definitely be an example of a variable cost for Bikes
Unlimited (a company that produces and sells mountain bikes)?
a. Rent on the production facility.
b. Depreciation of production equipment.
c. The cost of pedals bought from a supplier.
d. The utilities cost (electricity). - Answers -The cost of pedals bought from a supplier
Why do companies use cost estimation tools?
a. To record product costs on the income statement.
b. To make cost projections based on the expected level of sales.
c. To allocate overhead costs to products, using a predetermined overhead rate.
d. To separate product costs from period costs for the budgeting process. - Answers -
To make cost projections based on the expected level of sales
Which cost estimation method will provide the most accurate (mathematically) cost
equation?
a. Scattergraph method
b. Regression analysis method
c. High-low method
d. Account analysis method - Answers -Regression analysis method
, All of the following are good reasons why managers allocate overhead costs to products
EXCEPT:
a. Because it is required by U.S. Generally Accepted Accounting Principles for external
financial reporting.
b. To give managers the information they need to make good decisions.
c. Because managers would otherwise have difficulty estimating the cost of direct
materials and labor.
d. To give managers incentive to efficiently use indirect manufacturing resources and
activities. - Answers -Because managers would otherwise have difficulty estimating the
cost of direct materials and labor
Activity based costing is different from the other approaches because:
a. It is simple, using a single overhead cost pool and overhead rate.
b. It separates out overhead costs into the different processes or procedures that incur
overhead costs.
c. It is easily replicated between companies and industries (all companies should have
the same activities).
d. It separates out overhead costs across the different departments. - Answers -It
separates out overhead costs into the different processes or procedures that incur
overhead costs
Why is process costing needed in some companies or industries?
a. Because in process costing companies, product costs are recorded as expenses (on
the income statement) as they are incurred.
b. To separate out the costs of partially completed items as they move across the
production process.
c. To separate out the selling, general and administrative costs from the production
process costs.
d. Because in process costing companies, a job cost sheet tracks each of the product
costs as they are incurred. - Answers -To separate out the costs of partially completed
items as they move across the production process
Which of the following would be considered a nonmanufacturing (period) cost?
a. The hourly wages of the workers who make the product.
b. The utilities cost for the factory where the product is made.
c. The cost of an advertising campaign to launch a new product.
d. The cost of materials used to make the product. - Answers -The cost of an
advertising campaign to launch a new product
A predetermined overhead rate:
a. Is the predicted growth rate of overhead costs.
A main difference between managerial and financial accounting is that:
a. This class will focus on generating and interpreting financial accounting reports.
b. Financial accounting reports can include nonfinancial data.
c. Managerial accounting information is used only by people inside the organization for
decision making, planning, and control.
d. Managerial accounting reports provide information for investors and creditors to make
decisions. - Answers -Managerial accounting information is used only by people inside
the organization for decision making, planning, and control
Which of the following would describe the planning function of managers?
a. Measuring the performance of managers.
b. Assessing whether the company is achieving its goals.
c. Communicating the goals of managers to the employees.
d. Evaluating how well plans were implemented. - Answers -Communicating the goals
of managers to the employees
Which of the following would definitely be an example of a variable cost for Bikes
Unlimited (a company that produces and sells mountain bikes)?
a. Rent on the production facility.
b. Depreciation of production equipment.
c. The cost of pedals bought from a supplier.
d. The utilities cost (electricity). - Answers -The cost of pedals bought from a supplier
Why do companies use cost estimation tools?
a. To record product costs on the income statement.
b. To make cost projections based on the expected level of sales.
c. To allocate overhead costs to products, using a predetermined overhead rate.
d. To separate product costs from period costs for the budgeting process. - Answers -
To make cost projections based on the expected level of sales
Which cost estimation method will provide the most accurate (mathematically) cost
equation?
a. Scattergraph method
b. Regression analysis method
c. High-low method
d. Account analysis method - Answers -Regression analysis method
, All of the following are good reasons why managers allocate overhead costs to products
EXCEPT:
a. Because it is required by U.S. Generally Accepted Accounting Principles for external
financial reporting.
b. To give managers the information they need to make good decisions.
c. Because managers would otherwise have difficulty estimating the cost of direct
materials and labor.
d. To give managers incentive to efficiently use indirect manufacturing resources and
activities. - Answers -Because managers would otherwise have difficulty estimating the
cost of direct materials and labor
Activity based costing is different from the other approaches because:
a. It is simple, using a single overhead cost pool and overhead rate.
b. It separates out overhead costs into the different processes or procedures that incur
overhead costs.
c. It is easily replicated between companies and industries (all companies should have
the same activities).
d. It separates out overhead costs across the different departments. - Answers -It
separates out overhead costs into the different processes or procedures that incur
overhead costs
Why is process costing needed in some companies or industries?
a. Because in process costing companies, product costs are recorded as expenses (on
the income statement) as they are incurred.
b. To separate out the costs of partially completed items as they move across the
production process.
c. To separate out the selling, general and administrative costs from the production
process costs.
d. Because in process costing companies, a job cost sheet tracks each of the product
costs as they are incurred. - Answers -To separate out the costs of partially completed
items as they move across the production process
Which of the following would be considered a nonmanufacturing (period) cost?
a. The hourly wages of the workers who make the product.
b. The utilities cost for the factory where the product is made.
c. The cost of an advertising campaign to launch a new product.
d. The cost of materials used to make the product. - Answers -The cost of an
advertising campaign to launch a new product
A predetermined overhead rate:
a. Is the predicted growth rate of overhead costs.
