(Test Bank) Managerial Accounting Tools For Business Decision Making

Weygandt,Kimmel,Mitchell, 9

Business

Test Bank

9th Edition

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Test Bank for Managerial Accounting Tools For Business Decision Making, The downloadable file consists of 1075 pages, and the total size of the file is 6.28 MB. Purchase now only for highly discounted price.

Author(s): Weygandt, Kimmel, Mitchell

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Test Bank for Managerial Accounting Tools for Business Decision Making, 9e Jerry Weygandt, Paul Kimmel, Jill Mitchell (All Chapters) Item Type Item Type Item Type Item Type Item Type Item Type Item Type Learning Objective 1 1. TF 8. TF 41. MC 48. MC 55. MC 63. MC 187. C 2. TF 9. TF 42. MC 49. MC 56. MC 140. MC 188. C 3. TF 31. TF 43. MC 50. MC 57. MC 141. MC 189. C 4. TF 32. TF 44. MC 51. MC 58. MC 160. Ex 199. MA 5. TF 38. MC 45. MC 52. MC 59. MC 184. C 200. SA 6. TF 39. MC 46. MC 53. MC 60. MC 185. C 201. SA 7. TF 40. MC 47. MC 54. MC 61. MC 186. C Learning Objective 2 10. TF 20. TF 70. MC 80. MC 142. MC 164. Ex 203. SA 11. TF 33. TF 71. MC 81. MC 143. MC 165. Ex 204. SA 12. TF 34. TF 72. MC 82. MC 150. BE 166. Ex 206. SA 13. TF 63. MC 73. MC 83. MC 151. BE 167. Ex 14. TF 64. MC 74. MC 84. MC 152. BE 173. Ex 15. TF 65. MC 75. MC 85. MC 153. BE 190. C 16. TF 66. MC 76. MC 86. MC 154. BE 191. C 17. TF 67. MC 77. MC 87. MC 161. Ex 192. C 18. TF 68. MC 78. MC 88. MC 162. Ex 193. C 19. TF 69. MC 79. MC 89. MC 163. Ex 202. SA Learning Objective 3 21. TF 93. MC 106. MC 119. MC 132. MC 168. Ex 181. Ex 22. TF 94. MC 107. MC 120. MC 133. MC 169. Ex 182. Ex 23. TF 95. MC 108. MC 121. MC 144. MC 170. Ex 183. Ex 24. TF 96. MC 109. MC 122. MC 145. MC 171. Ex 194. C 25. TF 97. MC 110. MC 123. MC 146. MC 172. Ex 195. C 26. TF 98. MC 111. MC 124. MC 147. MC 173. Ex 196. C 27. TF 99. MC 112. MC 125. MC 148. MC 174. Ex 197. C 35. TF 100. MC 113. MC 126. MC 149. MC 175. Ex 198. C 36. TF 101. MC 114. MC 127. MC 155. BE 176. Ex 37. TF 102. MC 115. MC 128. MC 156. BE 177. Ex 90. MC 103. MC 116. MC 129. MC 157. BE 178. Ex 91. MC 104. MC 117. MC 130. MC 158. BE 179. Ex 92. MC 105. MC 118. MC 131. MC 159. BE 180. Ex Learning Objective 4 28. TF 30. TF 135. MC 137. MC 139. MC 29. TF 134. MC 136. MC 138. MC 205. SA CHAPTER 1 MANAGERIAL ACCOUNTING SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPETest Bank for Managerial Accounting, Ninth Editio n 1- 2 Note: TF = True- False BE = Brief Exercise C = Completion MC = Multiple Choice Ex = Exerci se MA = Matching SA = Short -Answer CHAPTER LEARNING OBJECTIVES 1. Identify the features of managerial accounting and the functions of management. The primary users of managerial accounting reports , issued as frequently as needed, are internal users, who a re officers, department heads, managers, and supervisors in the company. The purpose of these reports is to provide special -purpose information for a particular user for a specific decision. The content of managerial accounting reports pertains to subunits of the business. It may be very detailed, and may extend beyond the accrual accounting system. The reporting standard is relevance to the decision being made. No independent audits are required in managerial accounting. The functions of management are pl anning, directing, and controlling. Planning requires management to look ahead and to establish objectives. Directing involves coordinating the diverse activities and human resources of a company to produce a smooth -running operation. Controlling is the pr ocess of keeping the activities on track. 2. Describe the classes of manufacturing costs and the differences between product and period costs. Manufacturing costs ar e typically classified as either (1) direct materials, (2) direct labor, or (3) manufacturing overhead. Raw materials that can be physically and directly associated with the finished product during the manufactur ing process are called direct materials. The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is considered direct labor. Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the fini shed product. Manufacturing costs are typically incurred at the manufacturing facility. Produc t costs are costs that are a necessary and integral part of producing the finished product. Product costs are also cal led inventoriable costs. These costs do not become expenses until the company sells the finished goods inventory. Period costs are costs that are identified with a specific time period rather than with a salable product. These costs relate to nonmanufacturing costs and therefore are not inventoriable costs. They are expensed as incurred. 3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for a manufacturer. Companies add the cost of the beginning work in process inventory to the total manufacturing costs for the current year to arrive at the total cost of work in process for the year. They then subtract t he ending work in process inventory from the total cost of work in process to arrive at the cost of goods manufactured. The difference between a merchandising and a manufacturing balance sheet is in the current assets section. The current assets section o f a manufacturing company's balance sheet presents three inventory accounts: finished goods inventory, work in process inventory, and raw materials inventory. The difference between a merchandising and a manufacturing income statement is in the cost of goods sold section. A manufacturing cost of goods sold section shows beginning and ending finished goods inventories and the cost of goods manufactured. Managerial Accounting 1 - 3 4 Discuss trends in managerial accounting. Managerial accounting has experienced many changes in recent years, including a shift toward service companies as well as emphasis on ethical behavior. Improved practices include a focus on managing the value chain through techniques such as just -in-time inventory, total quality management, activity -based costing, and theory of constraints. The balanced scorecard is now used by many companies in order to attain a more comprehensiv e view of the company's operations , and comp anies are now evaluating their performance with regard to their corporate social responsibility. Finally, data analytics and data visualizations are important tools that help businesses identify problems and oppo rtunities, and then make informed decisions TRUE -FALSE STATEMENTS 1. Reports prepared in financial accounting are general -purpose reports while reports prepared in managerial accounting are usually special -purpose reports. Ans: T, LO: 1, Bloom: C, Diffi culty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: Communication, IMA: Reporting 2. Managerial accounting information generally pertains to an entity as a whole and is highly aggregated. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: Communication, IMA: Reporting 3. All forms of business organizations need managerial accounting information . Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: Co mmunication, IMA: Reporting 4. Determining the unit cost of manufacturing a product is an output of financial accounting. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: FSA 5. Managerial accounting internal reports are prepared more frequently than financial statements that are distributed externally . Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AAC SB: None, AICPA BB: None , AICPA FC: Reportin g, AICPA PC: Communication, IMA: Reporting 6. The management function of organizing and directing is mainly concerned with setting goals and objectives for the entity. Ans: F, LO: 1, Bloom: K, Difficulty: Easy , Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Leadership, IMA: Decision Analysis 7. The controller of a company is responsible for all of the accounting and finance issues a company faces. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1 , AACSB: Ethics, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 8. Controlling is the process of determining whether planned goals are being met. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Leadership, IMA: Internal Controls 9. Decision -making is an integral part of the planning, directing, and controlling functions. Ans: T, LO: 1, Bloom : K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic Perspective , AICPA FC: None , AICPA PC: Leadership, IMA: Decision Analysis 10. Direct materials costs and indirect materials costs are both included in manufacturing overhead. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management Test Bank for Managerial Accounting , Ninth Editio n 1- 4 11. Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 12. The balance in the r aw materials inventory account is equal to total direct materials minus total indirect materials. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 13. Raw materials th at can be conveniently and directly associat ed with a finished product are called materials overhead. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: C ost Management 14. The total cost of a fin ished product does not generally include equal amounts of materials, labor, and overhead costs. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Ma nagement 15. Both direct labor cost and indirect labor cost are product costs. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 16. Period costs include selling and administrative expenses. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: C ost Management 17. Indirect materials and indirect labor are both inventoriable costs. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Managemen t 18. Direct materials and direct labor ar e the only product costs. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 19. Total perio d costs are deducted from total cost of work in process to calculate cost of goods manufactured. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost M anagement 20. Period costs are not invento riable costs. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 21. Ending finished goods inventory appears on both the balance sheet and the income statement of a manufac turing company. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 22. The beginning work in process inventory appears on both t he balance sheet and the cost of goods manuf actured schedule of a manufacturing company. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 23. In calculating gross profit for a manufacturing company, the cost of goo ds manufactured is deducted from net sales. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Managerial Accounting 1 - 5 24. Finished goods inventory doe s not appear on a cost of goods manufactured schedule. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 25. If ending work in process inventory is greater than beginning work in process inventory, then cost of good s manufactured will be less than total manufacturing costs for the period. Ans: T, LO: 3, Bloom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 26. The finished goods inventory account for a manufacturing company is equivalent to the inventory account for a merchandising company. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Re porting 27. Raw materials inventory shows the cost of completed goods available for sale to customers. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 28. The balanced scorecard approach attempts to maintain minimal inventor ies on hand . Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Performance Measurement 29. The supply chain is all the activities associated with providing a product or service. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretati on, AICPA PC: None, IMA: Performance Measure ment 30. Many companies have significantly lowered inventory levels and costs using just -in-time inventory methods . Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 31. Managerial accounting is primarily concerned with managers and external users. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Repo rting, AICPA PC: None, IMA: Business Economi cs 32. Planning involves coordinating the diverse activities and human resources of a company to produce a smooth ly running operation. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: None t, IMA: Cost Management 33. When the physical association of raw materials with the finished product is too difficult to trace , these costs are usually classified as indirect mat erials. Ans: T, LO: 2, Bloom: C, Difficulty : Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 34. Product costs are also called inventoriable costs. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, A ICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 35. Direct materials become a cost of goods manufactured when the se items are acquired, not when the items are used. Ans: F, LO: 3, Bloom: K, Difficul ty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 36. The sum of the direct materials costs, direct labor costs, and the beginning work in process inventory is the total manufacturing costs for the year. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Test Bank for Managerial Accounting , Ninth Editio n 1- 6 37. In a manufacturing company balan ce sheet, manufacturing inventories are repo rted in the current assets section in the order of their expected use in production. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Repo rting MULTIPLE CHOICE QUESTIONS 38. Managerial accounting is used in each of the following types of businesses except a. service firms. b. merchandising firms. c. manufacturing firms. d. Managerial accounting is used i n all types of firms. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 39. Managerial accounting information is generally prepared for a. stockholders. b. creditors. c. managers. d. regulatory agencies. Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 40. Managerial accounting information a. pertains to the entity as a whole and is highly aggregated. b. pertains to subunit s of the entity and may be very detailed. c. is prepared only once a year. d. is constrained by the requirements of generally accepted accounting principles. Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None , AICPA BB: None , AICPA FC: Reporti ng, AICPA PC: None, IMA: Reporting 41. The major reporting standard for presenting managerial accounting information is a. relevance. b. generally accepted accounting principles. c. the cost principle. d. the current ta x law s. Ans: a, LO: 1, Bloom: C, D ifficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 42. Managerial accounting is also called a. management accounting. b. controlling. c. analytical accounting. d. inside reporting. Ans: a, LO: 1, Bl oom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 43. Which of the following is not an internal user? a. Creditor b. Department manager c. Controller d. Treasurer Ans: a, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: Professional Behavior, IMA: Business Economics Managerial Accounting 1 - 7 44. Managerial accounting does not encompass a. calculating product cost. b. calculating earnings per share. c. determining cost behavior. d. profit planning. Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: FSA 45. Managerial ac counting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. d. all of these. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None , IMA: Cost Managemen t 46. Management accountants would not a. assist in budget planning. b. prepare reports primarily for external users. c. determine cost behavior. d. be concerned with the impact of cost and volume on profits. Ans: b, LO: 1, Bloom: K, Difficulty: Moderat e, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Cost Management 47. Internal reports are prepared and distributed a. daily. b. monthly. c. annually. d. as needed. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACS B: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 48. Financial statements for external users can be described as a. user-specific. b. general -purpose. c. special -purpose. d. managerial reports. Ans: b, LO: 1, Bloom: K, Diffic ulty: Easy, Min: 1, AACSB: None, AI CPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 49. Managerial accounting reports can be described as a. general -purpose. b. macro -reports. c. special -purpose. d. classified financial statements. Ans: c, LO: 1, Bloom: K, Difficulty: Ea sy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 50. Which of the following statements about internal reports is not true? a. The content of internal reports may extend bey ond the accrual accounting system. b. Internal reports may show all amounts at market values. c. Internal reports may discuss prospective events. d. Internal reports are generally highly summarized rather than detailed. Ans: d, LO: 1, Bloom: C, Di fficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Test Bank for Managerial Accounting , Ninth Editio n 1- 8 51. While the preparation of financial statements for external users is guided by GAAP, the guideline for the preparation of managerial accoun ting reports for internal users is a. timel iness. b. special -purpose . c. relevance to decision. d. aggregation. Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None , IMA: Reporting 52. Internal managerial accounting reports are generall y a. aggregated. b. detailed. c. regulated. d. unreliable. Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 53. A distinguis hing feature of managerial accounting is that a. it is prepared for external users. b. it produces general -purpose reports. c. it generally results in very detailed reports. d. it publishes quarterly and annual reports. Ans: c, LO: 1, Bloom: K, Difficult y: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 54. What activities and responsibilities are not associated with manage rial function s? a. Planning b. Accountability c. Controlling d. Directing Ans: b, LO : 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB : None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: Professional Behavior, IMA: Reporting 55. Planning is a function that involves a. hiring the right people for a particular job. b. coordinating the accou nting information system. c. setting goals and objectives for an entity. d. analyzing financial statements. Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: None, IMA: Cost Management 56. The managerial function of controlling a. is performed only by the controller of a company. b. is only applicable when the company sustains a loss. c. is concerned mainly with operating a manufacturing segment. d. includes p erformance evaluation by management. Ans: d, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis 57. Which of the following is not a management function? a. Cons training b. Planning c. Controlling d. Directing Ans: a, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis Managerial Accounting 1 - 9 58. A manager that is establishing objectives is perfor ming which management function? a. Controlling b. Directing c. Planning d. Constraining Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis 59. The management functi on that requires managers to look ahead and establish objectives is a. controlling. b. directing. c. planning. d. constraining. Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Research Management , AICPA FC: None , AICP A PC: Project Management , IMA: Decision Analysis 60. In determining whether planned goals are being met, a manager is performing the function of a. planning. b. follow -up. c. directing. d. controlling. Ans: d, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis 61. Which of the following is not a separate management function? a. Planning b. Directing c. Decision -making d. Controlling Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis 62. Directing includes a. providing a framework for man agement to have criteria to terminate employees when needed. b. running a department under quality control standards universally accepted. c. coordinating a company's diverse activities and human resources t o produce a smooth -running operation. d. developi ng a complex performance ranking system to give certain high performers good raises. Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Process and Resource Management Perspectives , AICPA FC: None , AICPA PC: Project Management , IMA: Decision Analysis 63. Both direct materials and indirect materials are a. raw materials. b. manufacturing overhead. c. merchandise inventory. d. sold directly to customers by a manufacturing company. Ans: a, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, A ACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management Test Bank for Managerial Accounting , Ninth Editio n 1- 10 64. The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is a. manufacturing overhead. b. indirect materials. c. indirect labor. d. direct labor. Ans: d, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Inter pretation , AICPA PC: None, IMA: Cost Management 65. Which one of the following would not be classified as manufacturing overhead? a. Indirect labor b. Direct materials c. Insurance on factory building d. Indirect materials Ans: b, LO: 2, Bloom: C, Diffi culty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 66. Manufacturing costs include a. direct materials and direct labor only. b. direct materials and manufacturing ove rhead only. c. direct labor and manufacturing overhe ad only. d. direct materials, direct labor, and manufacturing overhead. Ans: d, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 67. Which one of the following is not a direct material? a. A tire used for a lawn mower b. Plastic used in the covered case for a n iPhone c. Steel used in the manufacturing of steel -radial tires d. Lubricant for a ba ll-bearing joint for a large crane Ans: d, LO: 2, B loom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 68. Which one of the following is not a cost eleme nt in manufacturing a product? a. Manufactu ring ov erhead b. Direct materials c. Office salaries d. Direct labor Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 69. A manufactur ing pro cess requires small amounts of glue. The glue used in the production process is classified as a(n) a. period cost. b. indirect material. c. direct material. d. miscellaneous expense. Ans: b, LO: 2, Blo om: C, Difficulty: Moderate , Min: 1, AACSB: Non e, AICP A BB : None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management Managerial Accounting 1 - 11 70. The wages of a janitor in the factory would be classified as a. a period cost. b. direct labor. c. indirect labor. d. compliance costs. Ans: c , LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 71. Which one of the following is not considered a raw material costs? a. Partially c omplete d mo tor engines for a motorcycle factory b. Bolts used in manufacturing the compressor of an engine c. Rivets for the wings of a new commercial jet aircraft d. Lumber used to build tables Ans: a, LO: 2 , Bloom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA B B: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 72. Which of the following is not a manufacturing cost category? a. Cost of goods sold b. Direct m aterials c. Direct labor d. Manufactur ing overhead Ans: a , LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 73. As technology changes manufact uring processes, it is likely that dir ect a. labor will in crease. b. labor will decrease. c. materials will increase. d. materials will decrease. Ans: b, LO: 4, Bloom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysi s and Interpretation , AICPA PC : None , IMA: Cost Management 74. For the work of factory employees to be considered as direct labor, the work must be conveniently and a. materially associated with raw materials conversion. b. periodically associated with r aw materials conversion. c. physically associa ted with raw materials conversion. d. promptly associated with raw materials conversion. Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Inter pretation , AICPA PC: None, IMA : Cost Managemen t 75. Whic h of the following is not classified as direct labor? a. Bottlers of beer in a brewery b. Copy machine operators at a copy shop c. Wages of supervisors d. Bakers in a bakery Ans: c, LO: 2, Bloom : C, Difficulty: Moderate , Min: 1, AACSB: None, A ICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management Test Bank for Managerial Accounting , Ninth Editio n 1- 12 76. Cotter pins and lubricants used irregularly in a production process are classified as a. miscel laneous expense. b. direc t materials. c. indirect materials. d. nonmaterial materials. Ans: c, LO: 2, Bloom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 77. Which of t he following is not anoth er name for the term manufacturing overhead? a. Factory overhead b. Pervasive costs c. Burden d. Indirect manufacturing costs Ans: b, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement An alysis and Interpretation , AICPA PC: None, IMA: Cost Management 78. Because of automation, which component of product cost is declining? a. Direct labor b. Direct materials c. Manufacturing overhead d. Advertising Ans: a, LO: 4, Bloom: C , Difficulty: Moderate , Min: 1, AACSB: No ne, AICPA BB: None , AICP A FC: Measurement Analysis and Interpretation , AICPA PC: None , IMA: Cost management 79. The product cost that is most difficult to associate with a product is a. direct materials. b. direct lab or. c. manufacturing overhead. d. advertising. Ans: c, LO: 2 , Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: Project Management, IMA: Cost Management 80. Manufacturing costs that cannot be classified as either direct materials or dire ct labor are known as a. period costs. b. nonmanufacturing costs. c. selling and administrative expenses. d. manufacturing overhead. Ans: d, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Non e, AICPA BB: None , AICPA FC: Measurem ent Analysis and Interpr etation , AICPA PC: None, IMA: Cost Management 81. Which one of the following is an example of a period cost? a. A change in benefits for the union workers who work in the New York factory of a Fortune 1000 manufacturer b. Workers' compensation insurance on factory workers' wages allocated to the factory c. Packaging materials for finished products d. Payroll accountant’s salary for work that is done in the corporate head office Ans: d, LO: 2, Bloom: C, Difficulty: Moderate , Min: 1 , AACSB: None, AICPA BB: None, AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management Managerial Accounting 1 - 13 82. Which one of the following costs would not be inventoriable? a. Period costs b. Factory i nsurance costs c. Indirect material s d. Indirect labor costs Ans: a, LO: 2, Bloom: C, Difficulty: Moderate , Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 83. Direct materia ls and direct labor of a company tota l $8,000,000. If manufacturing overhead is $4,000,000, what is direct labor cost? a. $4,000,000 b. $8,000,000 c. $0 d. Cannot be determined from the information provided Ans: d, LO: 2, Bloom: AP, Difficulty: Moderate, Min: 2 , AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement Analys is and Interpretation , AICPA PC: None , IMA: Cost Management 84. Which of the following are period costs? a. Raw materials b. Direct materials and direct labor c. Direct labor and manufa cturin g overhead d. Selling expenses Ans: d, LO: 2, Bloom: C, Diffic ulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 85. Sales commissions are classified as a. overh ead co sts b. period costs. c. product costs. d. indirect labor. Ans: b, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 86. Product costs con sist o f a. direct materials and direc t labor only. b. direct material s, direct labor, and manufacturing overhead. c. selling and administrative expenses. d. period costs. Ans: b, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AIC PA FC: Measurement Analysis and Interp retation , AICPA PC: None, IMA: C ost Management 87. Product costs are also called a. direct costs. b. overhead costs. c. inventoriable costs. d. capitalizable costs. Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Inter pretation , AICPA PC: None, IMA: Cost Management Test Bank for Managerial Accounting , Ninth Editio n 1- 14 88. In accordance with the matching principle, inventoriable costs are expense d when a. the product is finished and in stock. b. the product has been returned. c. the product to which the costs attach is sold. d. all accounts payable have been settled. Ans: c, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement Analysis and Interpretation , AICPA PC: None, IMA: Cost Management 89. When goods are sold, their inventoriable costs are transferred to a. selling expenses. b. gross profit. c. cost of goods sold. d. sales revenue. Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AI CPA BB: None , AICPA FC: Measurement An alysis and Interpretation , AICPA PC: None, IMA: Cost Management 90. A manufacturing company calculates cost of goods sold as follows: a. Beginning FG inventory + cost of goods purchased – ending FG inventory. b. Ending FG inventory – cost of goods manufa ctured + beginning FG inventory. c. Beginning FG inventory – cost of goods manufactured – ending FG inventory. d. Beginning FG inventory + cost of goods manufactured – ending FG inventory. Ans: d, LO: 3, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None , AICPA BB: None , AICPA FC: Meas urement Analysis and Interpretation , AICPA PC: None , IMA: Cost Management 91. A manufacturing company reports cost of goods manufactured as a(n) a. current asset on the balance sheet. b. administrative expense on the incom e statement. c. component in the calculation of cost of goods sold on the income statement. d. component of the raw materials inventory on the balance sheet. Ans: c, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: N one, AICPA BB: None , AICPA FC: Reporti ng, AICPA PC: None, IMA: Reporti ng 92. The subtotal, "Cost of goods manufactured" appears on a. a merchandising company's income statement. b. a manufacturing company's income statement. c. both a manufacturing and a merchandising company's income statem ent. d. neither a merchandising nor a manufacturing company's income statement. Ans: b, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting , AICPA PC: None, IMA: Reporting 93. Cost of goods manufactured in a manuf acturing company is analogous to a. ending inventory in a merchandising company. b. beginning inventory in a merchandising company. c. cost of goods available for sale in a merchandising company. d. cost of goods purch ased in a merchandising company. Ans: d, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting , AICPA PC: None, IMA: Reporting