A306 FINAL EXAM QUESTIONS &
ANSWERS(RATED A+)
An effective performance evaluation will do what? - ANSWERReward behavior that
benefits the company and will include multiple performance measures
A company provides the following info:Material price variance: 800F, Material spending
variance: 250FBudgeted material/unit: 1.5 ft, Budgeted material price: $6/ftActual units
produced: 100, Budgeted units produced: 120
What is the material quantity variance? - ANSWER$550 U
SQA: 100units*1.5ft = 150ft*$6=$900Mat Spending Var = Mat Qty Var + Mat Price
Var250F = X + 800FMat Qty Var = 550U
Disadvantage of NPV method. - ANSWERCan not compare projects with different initial
investments.
If fixed costs are $15,000 and variable costs are $4/unit, what are the break even units if
each unit sells for $10? - ANSWER2500 units
What is a disadvantage of using residual income as a performance indicator? -
ANSWERIt favors large divisions
Who uses management accounting and analysis? - ANSWERALL business students,
ALL managers
Managers use data to: - ANSWERPlan, control, and make decisions
How is management accounting more than just numbers? (6) - ANSWER-Ethics
-strategy: game plan
-risk management
-social responsibility: balance needs of all
-process management: value chain
- leadership
Management accounting - ANSWERthe process of analyzing business costs and
operations to prepare internal financial report, records, and account to aid managers'
decision making process in achieving business goals
Who are the decision makers outside the company (3) - ANSWER1. Investors
2. Banks/lenders/creditors
3. Govt agencies/regulators
4 audited stmts in financial accounting - ANSWER1. Balance sheet
2. Income statement
,3. Stmt cash flows
4. Retained earnings
Who are the decision makers inside the company: (3) - ANSWER1. Executives
2. Dept managers
3. Employees
Purpose of management accounting: - ANSWER1. Planning - set goals, how to achieve
2. Control - feedback
3. Decision making
Which of the following statements is false:
a. Creditors would be a user of financial accounting information
b. Management accounting information is used to develop budgets
c. Financial accounting information emphasizes decisions for the future
d. Reports based on management accounting information are created when required -
ANSWERC - that's managerial accounting
Which best describes management accounting?
A. Management accounting is mainly focused on past results
b. Management accounting reports are rules based using GAAP
c. The main users of mgmt acc info are outside the firm
d. Management accounting reports are prepared following the National management
accounting standards
E. Management account is primarily used for decision making - ANSWERE
Planning (2) - ANSWER- involves developing goals and
- preparing various budgets to achieve those goals
Control (3) - ANSWER- involves gathering feedback to ensure the plan is working
- making changes as needed
- verifying all parts of the organization are working together toward the goals
Make decisions - ANSWERHave a competitive advantage
NOI = - ANSWERREV - COSTS
Names for indirect costs - ANSWERShared, allocated, common costs
If he cost in the smallest circle is D... - ANSWERIt stays direct as you get bigger
If cost in smallest circle is indirect... - ANSWERIt flips to direct and will stay direct
Are mfg and non mfg costs only direct? - ANSWERCan be direct or indirect! Depends
on cost object
, What does the cost object determine - ANSWERIf a cost is direct or indirect
What is the purpose of prime and conversion costs? - ANSWERTo gauge efficiency!
Conversion costs - ANSWERGauge efficiency of production process (DL+MOH)
Prime costs - ANSWERHelps set selling price to achieve required profits (DM +DL)
To be a prime or conversion cost, it must be a... - ANSWERMANUFACTURING COST
Which of the following statements is false:
a. Prime costs are always direct costs
b. Manufacturing costs can be direct or indirect
c. Selling and admin costs are only indirect
d. Direct labor is both a prime cost and a conversion cost - ANSWERC
Manufacturing costs include manufacturing overhead which are all... - ANSWERIndirect
costs BUT selling and admin can be either
Balance sheets report only: - ANSWERPRODUCT COSTS (inventory)
Income stmt reports both: - ANSWERPRODUCT (COGS) AND PERIOD COSTS
(SG&A)
Manufacturing costs = - ANSWERProduct costs
Non manufacturing costs = - ANSWERPeriod costs
Are period costs inventoriable? - ANSWERNO! Only product costs are
Why do we need to know whether a cost is var/mix/fix - ANSWERNeed to know how
costs will change if there are changes to production/sales levels
What is the special type of fixed cost? - ANSWERSTEP COST
Mixed cost = - ANSWER(UVCxunits) + FC
What are the 2 ways companies primarily use to determine the fixed and variable
components of a mixed cost? - ANSWER1. High low regression
2. Regression analysis
What should the p-value be? - ANSWER.05 or less to give us confidence
What should the r^2 value be? - ANSWERAs close to 1 as possible
Relevant costs in decision making: - ANSWER1. Differential costs/revenues
ANSWERS(RATED A+)
An effective performance evaluation will do what? - ANSWERReward behavior that
benefits the company and will include multiple performance measures
A company provides the following info:Material price variance: 800F, Material spending
variance: 250FBudgeted material/unit: 1.5 ft, Budgeted material price: $6/ftActual units
produced: 100, Budgeted units produced: 120
What is the material quantity variance? - ANSWER$550 U
SQA: 100units*1.5ft = 150ft*$6=$900Mat Spending Var = Mat Qty Var + Mat Price
Var250F = X + 800FMat Qty Var = 550U
Disadvantage of NPV method. - ANSWERCan not compare projects with different initial
investments.
If fixed costs are $15,000 and variable costs are $4/unit, what are the break even units if
each unit sells for $10? - ANSWER2500 units
What is a disadvantage of using residual income as a performance indicator? -
ANSWERIt favors large divisions
Who uses management accounting and analysis? - ANSWERALL business students,
ALL managers
Managers use data to: - ANSWERPlan, control, and make decisions
How is management accounting more than just numbers? (6) - ANSWER-Ethics
-strategy: game plan
-risk management
-social responsibility: balance needs of all
-process management: value chain
- leadership
Management accounting - ANSWERthe process of analyzing business costs and
operations to prepare internal financial report, records, and account to aid managers'
decision making process in achieving business goals
Who are the decision makers outside the company (3) - ANSWER1. Investors
2. Banks/lenders/creditors
3. Govt agencies/regulators
4 audited stmts in financial accounting - ANSWER1. Balance sheet
2. Income statement
,3. Stmt cash flows
4. Retained earnings
Who are the decision makers inside the company: (3) - ANSWER1. Executives
2. Dept managers
3. Employees
Purpose of management accounting: - ANSWER1. Planning - set goals, how to achieve
2. Control - feedback
3. Decision making
Which of the following statements is false:
a. Creditors would be a user of financial accounting information
b. Management accounting information is used to develop budgets
c. Financial accounting information emphasizes decisions for the future
d. Reports based on management accounting information are created when required -
ANSWERC - that's managerial accounting
Which best describes management accounting?
A. Management accounting is mainly focused on past results
b. Management accounting reports are rules based using GAAP
c. The main users of mgmt acc info are outside the firm
d. Management accounting reports are prepared following the National management
accounting standards
E. Management account is primarily used for decision making - ANSWERE
Planning (2) - ANSWER- involves developing goals and
- preparing various budgets to achieve those goals
Control (3) - ANSWER- involves gathering feedback to ensure the plan is working
- making changes as needed
- verifying all parts of the organization are working together toward the goals
Make decisions - ANSWERHave a competitive advantage
NOI = - ANSWERREV - COSTS
Names for indirect costs - ANSWERShared, allocated, common costs
If he cost in the smallest circle is D... - ANSWERIt stays direct as you get bigger
If cost in smallest circle is indirect... - ANSWERIt flips to direct and will stay direct
Are mfg and non mfg costs only direct? - ANSWERCan be direct or indirect! Depends
on cost object
, What does the cost object determine - ANSWERIf a cost is direct or indirect
What is the purpose of prime and conversion costs? - ANSWERTo gauge efficiency!
Conversion costs - ANSWERGauge efficiency of production process (DL+MOH)
Prime costs - ANSWERHelps set selling price to achieve required profits (DM +DL)
To be a prime or conversion cost, it must be a... - ANSWERMANUFACTURING COST
Which of the following statements is false:
a. Prime costs are always direct costs
b. Manufacturing costs can be direct or indirect
c. Selling and admin costs are only indirect
d. Direct labor is both a prime cost and a conversion cost - ANSWERC
Manufacturing costs include manufacturing overhead which are all... - ANSWERIndirect
costs BUT selling and admin can be either
Balance sheets report only: - ANSWERPRODUCT COSTS (inventory)
Income stmt reports both: - ANSWERPRODUCT (COGS) AND PERIOD COSTS
(SG&A)
Manufacturing costs = - ANSWERProduct costs
Non manufacturing costs = - ANSWERPeriod costs
Are period costs inventoriable? - ANSWERNO! Only product costs are
Why do we need to know whether a cost is var/mix/fix - ANSWERNeed to know how
costs will change if there are changes to production/sales levels
What is the special type of fixed cost? - ANSWERSTEP COST
Mixed cost = - ANSWER(UVCxunits) + FC
What are the 2 ways companies primarily use to determine the fixed and variable
components of a mixed cost? - ANSWER1. High low regression
2. Regression analysis
What should the p-value be? - ANSWER.05 or less to give us confidence
What should the r^2 value be? - ANSWERAs close to 1 as possible
Relevant costs in decision making: - ANSWER1. Differential costs/revenues
