Question 1

Which of the following best describes the primary difference between financial accounting and managerial accounting?

Accepted Answer

Financial accounting provides information to external users, while managerial accounting provides information to internal users.

Question 2

A manufacturing company has the following balances: Beginning WIP = $$80,000; Direct Materials Used = 355$$,000; Direct Labor = $$160,000; Manufacturing Overhead = 127$$,000; Ending WIP = $$66,000. What is the Cost of Goods Manufactured (COGM)?

Use the formula:
$$
	ext{COGM} = 	ext{Beginning WIP} + 	ext{Total Manufacturing Costs} - 	ext{Ending WIP}
$

Accepted Answer

$$\656$$,000$

Question 3

Which of the following is NOT included in the calculation of prime costs?

Accepted Answer

Manufacturing overhead

Question 4

A company uses a single plantwide overhead rate. If the estimated total manufacturing overhead is $$100,000 and the estimated total direct labor hours are 20,000, what is the predetermined overhead allocation rate?

$$
	ext{Predetermined Overhead Rate} = \frac{	ext{Estimated Total MOH}}{	ext{Estimated Total Allocation Base}}
$

Accepted Answer

$$\5$ per direct labor hour

Question 5

Which of the following journal entries correctly records the use of direct materials in a job order costing system?

Accepted Answer

Debit Work-in-Process Inventory; Credit Raw Materials Inventory

Question 6

A company completed 40,000 units and has 10,000 units in ending WIP that are 25% complete for conversion costs. What are the equivalent units of production (EUP) for conversion costs?

$$
	ext{EUP} = 	ext{Units Completed} + (	ext{Ending WIP} 	imes 	ext{Percent Complete})
$$

Accepted Answer

$$42,500$$

Question 7

Which costing system is most appropriate for a company that manufactures custom furniture?

Accepted Answer

Job order costing system

Question 8

If actual manufacturing overhead is $$120,000 and allocated overhead is 110$$,000, what is the correct journal entry to adjust for underallocated overhead at the end of the period?

Accepted Answer

Debit Cost of Goods Sold $$10,000; Credit Manufacturing Overhead 10$$,000

Question 9

A company uses activity-based costing (ABC). It estimates $$60,000 in machine setup costs for 300 setups. If Product A requires 40 setups, how much setup cost is allocated to Product A?

$$
	ext{Activity Rate} = \frac{	ext{Total Activity Cost}}{	ext{Total Activity Base}}$$

$$
	ext{Allocated Cost} = 	ext{Activity Rate} 	imes 	ext{Product Activity}
$

Accepted Answer

$$\8$$,000$

Question 10

Which of the following statements about the weighted-average and FIFO methods in process costing is correct?

Accepted Answer

The weighted-average method combines beginning inventory costs and current period costs into one cost pool.

Question 11

A company expects to sell its product for $$500 per unit. The company desires a profit of 100 $$per unit and estimates the full product cost at $$420 per unit. What is the target cost per unit?

$$
	ext{Target Cost} = 	ext{Target Price} - 	ext{Desired Profit}
$

Accepted Answer

$$\400$

Question 12

Which of the following is a period cost for a manufacturing company?

Accepted Answer

Sales salaries expense

Question 13

A company has the following data: Sales = $$100,000; Variable Costs = 60$$,000; Fixed Costs = $$30,000. What is the operating income?

$$
	ext{Operating Income} = 	ext{Sales} - 	ext{Variable Costs} - 	ext{Fixed Costs}
$

Accepted Answer

$$\10$$,000$

Question 14

Which of the following is an example of an external failure cost?

Accepted Answer

Cost of warranty repairs after delivery to customers

Question 15

A company produces more units than it sells during the period. Which costing method will report higher operating income, assuming some fixed overhead remains in inventory?

Accepted Answer

Absorption costing

Question 16

Which of the following best describes the flow of costs in a process costing system?

Accepted Answer

Raw materials → Work-in-Process → Finished Goods → Cost of Goods Sold

Question 17

A company has a contribution margin of $$40,000 and operating income of 10$$,000. What is the degree of operating leverage (DOL)?

$$
	ext{DOL} = \frac{	ext{Contribution Margin}}{	ext{Operating Income}}
$$

Accepted Answer

4

Question 18

Which of the following is a key assumption of cost-volume-profit (CVP) analysis?

Accepted Answer

Sales price per unit remains constant as volume changes.

Question 19

A company has expected sales of 10,000 units and a breakeven point of 7,500 units. What is the margin of safety in units?

$$
	ext{Margin of Safety (units)} = 	ext{Expected Sales} - 	ext{Breakeven Sales}
$$

Accepted Answer

2,500 units

Managerial and Cost Accounting: Core Concepts and Applications

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