Accounting 101

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Principles of Accounting II Exam 1 -2010 Version

1-16. Decentralization refers to: 
A. reporting for the company as a whole.
B. focusing reporting on parts of the company.
C. the delegation of decision-making authority throughout an organization. D. differences in organizations.

2-21. Dorra Corporation manufactures lawnmowers in five work stations. Dorra's weekly demand is 5,000 mowers but Dorra can only produce 4,200. According to the theory of constraints, to increase production output Dorra would benefit the most by concentrating improvement efforts on the:  A. first work station.

B. last work station.
C. largest work station.
D. fastest work station.
E. slowest work station. 

3-23. One of the steps in the lean thinking model is to organize work arrangements around the flow of the business process. This is often accomplished by:  A. automating the business process.
B. implementing an enterprise system.
C. instituting a six sigma program.
D. creating a manufacturing cell.

4-18. Managerial accounting: 
A. has its primary emphasis on the future.
B. is required by regulatory bodies such as the SEC.
C. focuses on the organization as a whole, rather than on the organization's segments. D. Responses a, b, and c are all correct.

5-20. Which of the following IS a characteristic of financial accounting?  A. not mandatory
B. must follow GAAP
C. emphasis on relevance of data, rather than precision
D. both A and C above

6-21. The corporate controller's salary would be considered a(n):  A. manufacturing cost.
B. product cost.
C. administrative cost.
D. selling expense.

7-22. The costs of direct materials are classified as:

A. Choice A
B. Choice B
C. Choice C
D. Choice D

8-24. The three basic elements of manufacturing cost are direct materials, direct labor, and:  A. cost of goods manufactured.
B. cost of goods sold.
C. work in process.
D. manufacturing overhead.

9-26. Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?

A. Choice A
B. Choice B
C. Choice C
D. Choice D

10-27. The cost of fire insurance for a manufacturing plant is generally considered to be a:  A. product cost.
B. period cost.
C. variable cost.
D. all of these.

11-29. Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?  A. Product cost
B. Manufacturing overhead
C. Period cost
D. Administrative cost

12-30. Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?  A. Product cost

B. Manufacturing overhead
C. Direct labor
D. Period cost

13-33. Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day?  A. variable cost and direct cost
B. fixed cost and direct cost
C. variable cost and indirect cost
D. fixed cost and indirect cost

14-34. Within the relevant range, the difference between variable costs and fixed costs is:  A. variable costs per unit fluctuate and fixed costs per unit remain constant. B. variable costs per unit are constant and fixed costs per unit fluctuate. C. both total variable costs and total fixed costs are constant. D. both total variable costs and total fixed costs fluctuate.

15-36. A lawnmower manufacturer computed a cost per unit of $53 by adding together last month's direct labor, direct materials, and manufacturing overhead and dividing that total by the 10,000 units produced last month. (There were no beginning or ending inventories.) If 9,000 units are going to be manufactured this month, we would expect that the:  A. cost per unit will remain the same.

B. cost per unit will decrease.
C. direction of change in unit costs cannot be determined.
D. cost per unit will increase....
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