This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this study guide to check your answers.
Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week.
Week One: Fundamentals of Managerial and Cost Accounting
Objective: Identify key components and terminology utilized within cost accounting.
1.If a manufacturing company acquires raw materials, to what account is the cost of raw materials purchased debited? a.raw materials purchases
b.raw materials inventory
d.work in process
Objective: Compare and contrast process and job cost systems.
2.Harna, Inc. uses a job order cost system. During the year, the company decreased manufacturing overhead by $400,000. Which of the following most likely should be recorded at the same time? a.A debit to work in process inventory
b.A credit to raw materials inventory
c.A debit of cost of goods manufactured
d.A credit to finished goods inventory
Objective: Examine ethical issues in managerial accounting.
3.Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? a.Theory of constraints
d.Total quality management
Week Two: Cost Allocation
Objective: Assess the advantages and disadvantages of an activity-based costing system.
4.As compared to a high-volume product, a low-volume product a.usually requires less special handling
b.is usually responsible for more overhead costs per unit
c.requires relatively fewer machine setups
d.requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead
Objective: Identify cost drivers for manufacturing and service activities.
5.All of the following are examples of a value-added activity in a service company EXCEPT a.delivering packages by a delivery service
d.providing legal research for legal services
Objective: Calculate overhead rates using cost drivers.
6.The primary benefit of ABC is it provides
a.faster management decisions
b.enhanced control over overhead costs
c.more cost pools
d.more accurate product costing
Week Three: Cost-Volume-Profit
Objective: Distinguish among fixed, mixed, and variable costs.
7.It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 2,000 units at $18 each. Lannon has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? a.Decrease $4,000
Objective: Calculate a break-even point using the elements of cost-volume-profit.
8.Which one of the following is a cost that remains constant in total at various levels of activity? a.A variable cost
b.A mixed cost
c.A fixed cost
d.A contribution margin
Objective: Prepare income statements using variable and absorption costing.
9.Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unitary: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses.
Cost of goods sold under absorption costing is:
Week Four: Variance Analysis