(Test Bank) Managerial Accounting, Canadian Edition

Weygandt,Kimmel,Kieso,Aly, 5

Business

Test Bank

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Test Bank for Managerial Accounting, Canadian Edition, The downloadable file consists of 860 pages, and the total size of the file is 5.29 MB. Purchase now only for highly discounted price.

Author(s): Weygandt, Kimmel, Kieso, Aly

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CHAPTER 1 MANAGERIAL ACCOUNTING SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT True -False Statements 1. 1 C 9. 1 K 17. 2 C 25. 3 C 33. 2 C 2. 1 K 10. 2 K 18. 2 K 26. 3 C 34. 2 K 3. 1 K 11. 2 K 19. 2 K 27. 3 K 35. 2 K 4. 1 K 12. 2 K 20. 2 K 28. 4 K 36. 3 K 5. 1 K 13. 2 K 21. 3 K 29. 4 K 37. 3 K 6. 1 K 14. 2 C 22. 3 K 30. 4 K 7. 1 C 15. 2 C 23. 3 K 31. 1 K 8. 1 K 16. 2 K 24. 3 K 32. 1 K Multiple Choice Questio ns 38. 1 K 61. 1 C 84. 2 AP 107. 3 AP 130. 3 AP 39. 1 C 62. 1 K 85. 2 C 108. 3 AP 131. 3 AP 40. 1 K 63. 1 C 86. 2 C 109. 3 AP 132. 3 AP 41. 1 C 64. 2 C 87. 2 C 110. 3 AP 133. 3 AP 42. 1 K 65. 2 K 88. 2 C 111. 3 AP 134. 3 C 43. 1 C 66. 2 C 89. 2 K 112. 3 AP 135. 3 C 44. 1 K 67. 2 K 90. 2 C 113. 3 AP 136. 4 C 45. 1 C 68. 2 K 91. 2 K 114. 3 AP 137. 4 K 46. 1 C 69. 2 K 92. 3 K 115. 3 AP 138. 4 K 47. 1 K 70. 2 C 93. 3 C 116. 3 AP 139. 4 C 48. 1 K 71. 2 C 94. 3 C 117. 3 AP 140. 4 K 49. 1 K 72. 2 K 95. 3 C 118. 3 AP 141. 4 K 50. 1 K 73. 2 K 96. 3 C 119. 3 AP 142. 1 C 51. 1 C 74. 2 C 97. 3 AP 120. 3 AP 143. 1 K 52. 1 C 75. 2 K 98. 3 K 121. 3 AP 144. 2 K 53. 1 K 76. 2 C 99. 3 C 122. 3 AP 145. 2 K 54. 1 K 77. 2 K 100. 3 C 123. 3 AP st 146. 3 K 55. 1 K 78. 2 K 101. 3 K 124. 3 AP 147. 3 C 56. 1 K 79. 2 C 102. 3 AP 125. 3 AP st 148. 3 K 57. 1 C 80. 2 K 103. 3 AP 126. 3 AP 149. 3 K 58. 1 K 81. 2 K 104. 3 AP 127. 3 AP st 150. 3 K 59. 1 C 82. 2 C 105. 3 K 128. 3 AP 151. 3 K 60. 1 K 83. 2 C 106. 3 AP 129. 3 AP Brief Exercises 152. 2 K 154. 2 K 156. 2 C 158. 3 AP 160. 3 AP 153. 2 K 155. 2 K 157. 3 AP 159. 3 AP 161. 3 AP Exercises 162. 1 C 167. 2 AP 172. 3 AP 177. 3 AP 182. 3 AP 163. 2 C 168. 2 C 173. 3 AP 178. 3 AP 183. 3 AP 164. 2 C 169. 2 C 174. 3 AP 179. 3 AP 184. 3 C 165. 2 C 170. 3 AP 175. 2,3 AP 180. 3 AN 185. 3 AP 166. 2 AP 171. 3 C 176. 3 AN 181. 3 AN Test Bank for Managerial Accounting, Eighth Edition 1 - 2 Completion Statements 186. 1 K 189. 1 K 192. 2 K 195. 2 K 198. 3 K 187. 1 K 190. 1 K 193. 2 K 196. 3 K 199. 3 K 188. 1 K 191. 1 K 194. 2 K 197. 3 K 200. 3 K Matching Statements 201. 1 K Short -Answer Essay 202. 1 K 204. 2 K 206. 2 K 208. 2 K 203. 1 K 205. 2 K 207. 4 K st This question also appears in a self -test at the student companion website. SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE 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 62. MC 188. C 2. TF 9. TF 42. MC 49. MC 56. MC 63. MC 189. C 3. TF 31. TF 43. MC 50. MC 57. MC 142. MC 190. C 4. TF 32. TF 44. MC 51. MC 58. MC 143. MC 191. C 5. TF 38. MC 45. MC 52. MC 59. MC 162. Ex 201. MA 6. TF 39. MC 46. MC 53. MC 60. MC 186. C 202. SA 7. TF 40. MC 47. MC 54. MC 61. MC 187. C 203. SA Learning Objective 2 10. TF 20. TF 71. MC 81. MC 91. MC 165. Ex 204. SA 11. TF 33. TF 72. MC 82. MC 144. MC 166. Ex 205. SA 12. TF 34. TF 73. MC 83. MC 145. MC 167. Ex 206. SA 13. TF 64. MC 74. MC 84. MC 152. BE 168. Ex 208. SA 14. TF 65. MC 75. MC 85. MC 153. BE 169. Ex 15. TF 66. MC 76. MC 86. MC 154. BE 175. Ex 16. TF 67. MC 77. MC 87. MC 155. BE 192. C 17. TF 68. MC 78. MC 88. MC 156. BE 193. C 18. TF 69. MC 79. MC 89. MC 163. Ex 194. C 19. TF 70. MC 80. MC 90. MC 164. Ex 195. C Learning Objective 3 21. TF 95. MC 108. MC 121. MC 134. MC 170. Ex 183. Ex 22. TF 96. MC 109. MC 122. MC 135. MC 171. Ex 184. Ex 23. TF 97. MC 110. MC 123. MC 146. MC 172. Ex 185. Ex 24. TF 98. MC 111. MC 124. MC 147. MC 173. Ex 196. C 25. TF 99. MC 112. MC 125. MC 148. MC 174. Ex 197. C 26. TF 100. MC 113. MC 126. MC 149. MC 175. Ex 198. C 27. TF 101. MC 114. MC 127. MC 150. MC 176. Ex 199. C 35. TF 102. MC 115. MC 128. MC 151. MC 177. Ex 200. C 36. TF 103. MC 116. MC 129. MC 157. BE 178. Ex 37. TF 104. MC 117. MC 130. MC 158. BE 179. Ex 92. MC 105. MC 118. MC 131. MC 159. BE 180. Ex 93. MC 106. MC 119. MC 132. MC 160. BE 181. Ex 94. MC 107. MC 120. MC 133. MC 161. BE 182. Ex Managerial Accounting 1 - 3 Learning Objective 4 28. TF 30. TF 137. MC 139. MC 141. MC 29. TF 136. MC 138. MC 140. MC 207. SA Note: TF = True-False BE = Brief Exercise C = Completion MC = Multiple Choice Ex = Exercise CHAPTER LEARNING OBJECTIVES 1. Identify the features of managerial accounting and the functions of management. The primary users of m anagerial accounting reports issued as frequently as needed, are internal users, who are 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 double -entry accounting system. The reporting standard is relevance to the decision being made. No in dependent audits are required in managerial accounting. The functions of management are planning, 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 process 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 manufacturing 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. Product costs are costs that are a necessary and integral part of producing the finished product. Product costs are also called inventoriable costs. These costs do not become expenses until the company sells the finished goods inventory. Peri od 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. 3. Demonstrate how to compute cost of goods manufactured and pre pare financial statements for a manufacturer. Companies add the cost of the beginning work in process 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 the ending work in p rocess from the total cost of work in process to arrive at the cost of goods manufactured. 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 be ginning and ending finished goods inventories and 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 of a manufacturing company's balance she et presents three inventory accounts: finished goods inventory, work in process inventory, and raw materials inventory. 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 b alanced scorecard is now used by many companies in order Test Bank for Managerial Accounting, Eighth Edition 1 - 4 to attain a more comprehensive view of the company's operations. Finally, companies are now evaluating their performance with regard to their corporate social responsibility. TRUE -FALSE STATEMENTS 1. Reports prepared in financial accounting are general -purpose reports, whereas reports prepared in managerial accounting are usually special -purpose reports. Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: 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: Industry/Sector, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting 3. Managerial accounting applies to all forms of business organizations. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA P C: Communication, 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: Industry/Sector, AICPA FN: Measurement, AICPA PC: P roblem Solving, IMA: FSA 5. Managerial accounting internal reports are prepared more frequently than are classified financial statements. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICP A 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: Industry/Sector, A ICPA FN: Decision Modeling, 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: Legal/Regulatory, AICPA FN: 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: Industry/Sector, AICPA FN: Decision Modeling, 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/Critic al Thinking, AICPA FN: Decision Modeling, AICPA PC: Leadership, IMA: Decision Analysis 10. Direct materials costs and indirect materials costs are manufacturing overhead. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry /Sector, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 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, Mi n: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 12. Raw materials are equal to direct materials minus indirect materials. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None , AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management Managerial Accounting 1 - 5 13. Raw materials that can be conveniently and directly associated with a finished product are called materials overhead. Ans: F, LO: 2, Bloom: K, Diffic ulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 14. The total cost of a finished product does not generally contain equal amounts of materials, labor, and overhead costs. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: P roblem Solving, IMA: Cost Management 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: Industry/Sector, AICPA FN: Measurement, AICPA PC: Problem Solving, 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: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 17. Indirect materials and indirect labor are both inventoriable costs. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AIC PA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 18. Direct materials and direct labor are the only product costs. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 19. Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management 20. Period costs are not inventoriable costs. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 21. Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA F N: Reporting, AICPA PC: None, IMA: Reporting 22. The beginning work in process inventory appears on both the balance sheet and the cost of goods manufactured schedule of a manufacturing company. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 23. In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 24. Finished goods inventory does not appear on a cost of goods manufactured schedule. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 25. If the ending work in process inventory is greater than the beginning work in process inventory, then the cost of goods manufactured will be less than total manufacturing cost s for the period. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: P roblem Solving, IMA: Cost Management Test Bank for Managerial Accounting, Eighth Edition 1 - 6 26. Finished goods inventory for a manufacturing company is equivalent to inventory for a merchandising company. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: No ne, IMA: Reporting 27. Raw materials inventory shows the cost of completed goods availab le for sale to customers. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: No ne, IMA: Reporting 28. The balanced scorecard approach attempts to maintain as little inventory on han d as possible. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Performance Measurement 29. The supply chain is all the activities associated with providi ng a product or service. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Measurement, AICPA PC: N one, IMA: Global Business 30. Many companies have significantly lowered inventory levels and costs usin g just -in-time inventory methods . Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Risk Analysis, 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: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: None, IMA: Business Economics 32. Planning involves coordinating the diverse activities and human resource s of a company to produce a smooth running operation. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: None, IMA: Business Economics 33. When the physical association of ra w materials with the finished product is too small to trace in terms of cost, they are usually classified as indirect materials. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, 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, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management 35. Direct materia ls become a cost of the finished goods manufactured when they are acquired, not when they are used. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: Cost Management 36. The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AIC PA PC: None, IMA: Reporting 37. In a manufacturing company balance sheet, manufacturing inventories are reported 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: No ne, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting Answers to True -False Statements Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Managerial Accounting 1 - 7 1. T 7. F 13. F 19. F 25. T 31. F 37. F 2. F 8. T 14. T 20. T 26. T 32. F 3. T 9. T 15. T 21. T 27. F 33. T 4. F 10. F 16. T 22. F 28. F 34. T 5. T 11. T 17. T 23. F 29. F 35. F 6. F 12. F 18. F 24. T 30. T 36. F MULTIPLE CHOICE QUESTIONS 38. Managerial accounting applies to each of the following types of businesses except a. service firms. b. merchandising firms. c. manufacturing firms. d. Managerial accounting applies to all types of firms. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: 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: Industry/Sector, AICPA FN: 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 subunits 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: Industry/Sector, AICPA FN: Reporting, AICPA PC: Non e, IMA: Reporting 41. The major reporting standa rd for presenting managerial accounting information is a. relevance. b. generally accepted accounting principles. c. the cost principle. d. the current tax law. Ans: a, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AIC PA FN: 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, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: 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 B B: Industry/Sector, AICPA FN: Reporting, AICPA PC: Professional Demeanor, IMA: Business Economics Test Bank for Managerial Accounting, Eighth Edition 1 - 8 44. Managerial accounting does not encompass a. calculating product cost. b. calculating earnings per share. c. determining cost behavior. d. profit plannin g. Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: Pro fessional Demeanor, IMA: Business Economics Managerial Accounting 1 - 9 45. Managerial accounting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. d. all of these. Ans: d, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: Pro fessional Demeanor, IMA: Business Economics 46. Management accountants w ould 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: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: In dustry/Sector, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 47. Internal reports must be communicated a. daily. b. monthly. c. annually. d. as needed. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AIC PA FN: 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, Difficulty: Easy, Min: 1, AACSB: N one, AICPA BB: Legal/Regulatory, AICPA FN: 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: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 50. The reporting standard for external financial reports is a. industry -specific. b. company -specific. c. generally accepted accou nting principles. d. department -specific. Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: No ne, IMA: Reporting 51. Which of the following statements about internal reports is not true? a. The content of internal reports may extend beyond the double -entry accounting system. b. Internal reports may show all amounts at market values. c. Internal reports may discuss prospective events. d. Most internal reports are summarized rather th an detailed. Ans: d, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: Non e, IMA: Reporting Test Bank for Managerial Accounting, Eighth Edition 1 - 10 52. In an analogous sense, external user is to internal user as generally accepted accounting principles are to a. timely. b. special -purpose. c. relevance to decision. d. SEC. Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: Pro fessional Demeanor, IMA: Reporting 53. Internal reports are generally a. aggregated. b. detailed. c. regulated. d. unreliable. Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Reporting, AICPA PC: Non e, IMA: Reporting 54. A distinguishing feature o f managerial accounting is a. external users. b. general -purpose reports. c. very detailed reports. d. quarterly and annual reports. Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 55. What activities and responsibilities are not associated with management's functions? a. Planning b. Accountability c. Controlling d. Directing Ans: b, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/S ector, AICPA FN: Reporting, AICPA PC: Professional Demeanor, IMA: Reporting 56. Planning is a function that involves a. hiring the right people for a particular job. b. coordinating the accounting information system. c. setting goals and objectives for a n entity. d. analyzing financial statements. Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Professional Demeanor, IMA: Decision Analysis 57. The managerial function of c ontrolling 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 performance evaluation by management. Ans: d, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Professional Demeanor, IMA: Decision Analysis 58. Which of the following is not a management function? a. Constraining b. Planning c. Controlling d. Directing Ans: a, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Professional Demeanor, IMA: Decision Analysis Managerial Accounting 1 - 11 59. A manager that is establishing objectives is performing whi ch management function? a. Controlling b. Directing c. Planning d. Constraining Ans: c, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Decision Analysis 60. The management function 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: Industry/Sector, AICPA FN: Decis ion Modeling, AICPA PC: None, IMA: Decision Analysis 61. 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: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: None, IMA: Decision Analysis 62. Which of the following is not a separate management function? a. Planning b. Directing c. Decision -making d. Controlling Ans: c, LO: 1, B loom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: None, IMA: Decision Analysis 63. Directing includes a. providing a framework for management 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 to produce a smooth -running operation. d. developing 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: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: None, IMA: Decision Analysis 64. Both direct materials and indirect materials are a. raw mater ials. 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, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FS A Test Bank for Managerial Accounting, Eighth Edition 1 - 12 65. 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, Diffi culty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 66. 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, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: No ne, IMA: Reporting 67. Manufacturing costs include a. direct materials and direct labor only. b. direct materials and manufacturing overhead only. c. direct labor and manufacturing overhead only. d. direct materials, direct labor, and manufacturing overhead. Ans: d, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, A ICPA FN: Reporting, AICPA PC: None, IMA: Reporting 68. 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 home PC c. Steel used in the manufacturing of steel -radial tires d. Lubricant for a ball -bearing joint for a large crane Ans: d, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 69. Which one of the following is not a cost element in manufact uring a product? a. Manufacturing overhead b. Direct materials c. Office salaries d. Direct labor Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 70. A manufactur ing process 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, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, A ICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 71. The wages of a timekeeper 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: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting Managerial Accounting 1 - 13 72. Which one of the following is not considered as material costs? a. Partially completed motor engines for a motorcycle plant 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: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 73. Which of the following is not a manufacturing cost category? a. Cost of goods sold b. Direct materials c. Direct labor d. Manufacturing overhead Ans: a, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulato ry, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 74. As current technology changes manufacturing processes, it is likely that direct a. labor will increase. b. labor will decrease. c. materials will increase. d. materials will decrease. Ans: b, L O: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Proj ect Management, IMA: Business Economics 75. 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 raw materials conversion. c. physically associated 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: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Report ing 76. Which 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: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: No ne, IMA: Reporting 77. Cotter pins and lubricants used irregularly in a production process are classified as a. miscellaneous expense. b. direct materials. c. indirect materials. d. nonmaterial materials. Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA P C: None, IMA: Reporting 78. Which of the following is not another 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: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting Test Bank for Managerial Accounting, Eighth Edition 1 - 14 79. Because of automation, which component of product cost is declining? a. Direct labor b. Direct materials c. Manufacturing overhead d. Advertising Ans: a, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Project Management, IMA: Business Economics 80. The product cost that is most difficult to associate with a product is a. direct materials. b. direct labor. c. manufacturing overhead. d. advertising. Ans: c, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector, AICPA FN: Decision Modeling, AICPA PC: Project Management, IMA: Business Economics 81. Manufacturing costs t hat cannot be classified as either direct materials or direct 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: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting 82. 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 plant of a Fortune 1000 manufacturer b. Workers' compensation insurance on factory workers' wages allocated to the factory c. A box cost associated with computers d. A manager's salary for work that is done in the corporate head office Ans: d, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA 83. Which one of the following costs would not be inventoriable? a. Period costs b. Factory insurance costs c. Indirect materials d. Indirect labor costs Ans: a, LO: 2, Bl oom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reportin g 84. Direct materials and direct labor of a company total $8,000,000. If manufacturing overhead is $4,000,000, what is direct la bor 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: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AIC PA PC: Problem Solving, IMA: FSA 85. Which of the following are period costs? a. Raw materials b. Direct materials and direct labor c. Direct labor and manufacturing overhead d. Selling expenses Ans: d, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory , AICPA FN: Reporting, AICPA PC: None, IMA: Reporting Managerial Accounting 1 - 15