A306 FINAL EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
/. An effective performance evaluation will do what? - Answer-Reward 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. - Answer-Can 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? - Answer-2500 units
/.What is a disadvantage of using residual income as a performance indicator? -
Answer-It favors large divisions
/.Who uses management accounting and analysis? - Answer-ALL business students,
ALL managers
/.Managers use data to: - Answer-Plan, 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 - Answer-the 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) - Answer-1. Investors
2. Banks/lenders/creditors
3. Govt agencies/regulators
,/.4 audited stmts in financial accounting - Answer-1. Balance sheet
2. Income statement
3. Stmt cash flows
4. Retained earnings
/.Who are the decision makers inside the company: (3) - Answer-1. Executives
2. Dept managers
3. Employees
/.Purpose of management accounting: - Answer-1. 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 -
Answer-C - 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 - Answer-E
/.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 - Answer-Have a competitive advantage
/.NOI = - Answer-REV - COSTS
/.Names for indirect costs - Answer-Shared, allocated, common costs
/.If he cost in the smallest circle is D... - Answer-It stays direct as you get bigger
/.If cost in smallest circle is indirect... - Answer-It flips to direct and will stay direct
, /.Are mfg and non mfg costs only direct? - Answer-Can be direct or indirect! Depends
on cost object
/.What does the cost object determine - Answer-If a cost is direct or indirect
/.What is the purpose of prime and conversion costs? - Answer-To gauge efficiency!
/.Conversion costs - Answer-Gauge efficiency of production process (DL+MOH)
/.Prime costs - Answer-Helps set selling price to achieve required profits (DM +DL)
/.To be a prime or conversion cost, it must be a... - Answer-MANUFACTURING 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 - Answer-C
/.Manufacturing costs include manufacturing overhead which are all... - Answer-Indirect
costs BUT selling and admin can be either
/.Balance sheets report only: - Answer-PRODUCT COSTS (inventory)
/.Income stmt reports both: - Answer-PRODUCT (COGS) AND PERIOD COSTS
(SG&A)
/.Manufacturing costs = - Answer-Product costs
/.Non manufacturing costs = - Answer-Period costs
/.Are period costs inventoriable? - Answer-NO! Only product costs are
/.Why do we need to know whether a cost is var/mix/fix - Answer-Need to know how
costs will change if there are changes to production/sales levels
/.What is the special type of fixed cost? - Answer-STEP 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? - Answer-1. High low regression
2. Regression analysis
/.What should the p-value be? - Answer-.05 or less to give us confidence
COMPLETE SOLUTIONS
/. An effective performance evaluation will do what? - Answer-Reward 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. - Answer-Can 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? - Answer-2500 units
/.What is a disadvantage of using residual income as a performance indicator? -
Answer-It favors large divisions
/.Who uses management accounting and analysis? - Answer-ALL business students,
ALL managers
/.Managers use data to: - Answer-Plan, 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 - Answer-the 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) - Answer-1. Investors
2. Banks/lenders/creditors
3. Govt agencies/regulators
,/.4 audited stmts in financial accounting - Answer-1. Balance sheet
2. Income statement
3. Stmt cash flows
4. Retained earnings
/.Who are the decision makers inside the company: (3) - Answer-1. Executives
2. Dept managers
3. Employees
/.Purpose of management accounting: - Answer-1. 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 -
Answer-C - 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 - Answer-E
/.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 - Answer-Have a competitive advantage
/.NOI = - Answer-REV - COSTS
/.Names for indirect costs - Answer-Shared, allocated, common costs
/.If he cost in the smallest circle is D... - Answer-It stays direct as you get bigger
/.If cost in smallest circle is indirect... - Answer-It flips to direct and will stay direct
, /.Are mfg and non mfg costs only direct? - Answer-Can be direct or indirect! Depends
on cost object
/.What does the cost object determine - Answer-If a cost is direct or indirect
/.What is the purpose of prime and conversion costs? - Answer-To gauge efficiency!
/.Conversion costs - Answer-Gauge efficiency of production process (DL+MOH)
/.Prime costs - Answer-Helps set selling price to achieve required profits (DM +DL)
/.To be a prime or conversion cost, it must be a... - Answer-MANUFACTURING 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 - Answer-C
/.Manufacturing costs include manufacturing overhead which are all... - Answer-Indirect
costs BUT selling and admin can be either
/.Balance sheets report only: - Answer-PRODUCT COSTS (inventory)
/.Income stmt reports both: - Answer-PRODUCT (COGS) AND PERIOD COSTS
(SG&A)
/.Manufacturing costs = - Answer-Product costs
/.Non manufacturing costs = - Answer-Period costs
/.Are period costs inventoriable? - Answer-NO! Only product costs are
/.Why do we need to know whether a cost is var/mix/fix - Answer-Need to know how
costs will change if there are changes to production/sales levels
/.What is the special type of fixed cost? - Answer-STEP 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? - Answer-1. High low regression
2. Regression analysis
/.What should the p-value be? - Answer-.05 or less to give us confidence
