Deck 19: Introduction to Managerial Accounting and the Master Budget

Question 1

Which of the following statements about managerial accounting is CORRECT?

A)Managerial accounting reports must follow accounting standards.
B)Managerial accounting reports provide detailed information on parts of a company.
C)Managerial accounting reports help investors make decisions.
D)Managerial accounting reports are audited annually by an independent CPA.

Answer 1

B

Question 2

Budget preparation is a part of the planning process.

Answer 2

True

Question 3

Which of the following statements is INCORRECT?

A)Managerial accounting is used to report the company's financial position and results of operations to creditors and investors.
B)Managerial accounting is used to plan and control business operations.
C)Managerial accounting is used to prepare budgets.
D)Managerial accounting is used to determine the cost of products and services.

Answer 3

A

Question 4

Managerial accounting is focused on which of the following objectives?

A)Providing summarised results of operations
B)Providing information that managers need to make operational decisions
C)Providing information to comply with laws and regulations of government bodies
D)Providing historical data to investors and creditors

Question 5

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

A)Creating detailed budgets
B)Evaluating results of operations
C)Comparing actual performance to previously budgeted amounts
D)Implementing operational plans

Question 6

Managerial accounting includes the controlling function. Which of the following items would be part of the controlling function of a business's managerial accounting?

A)Devising marketing and production plans
B)Setting product prices
C)Creating detailed budgets
D)Comparing actual performance to previously budgeted amounts

Question 7

Management accounting often requires forward- looking data because of the futuristic nature of many business decisions.

Question 8

Increased global competition has resulted in many companies moving their operations to other countries to be closer to new markets.

Question 9

Financial reporting is typically much more detailed than managerial accounting.

Question 10

Management accounting is influenced significantly by the Australian Accounting Standards.

Question 11

During the past century, many developed economies have shifted their focus from a service economy to a manufacturing economy.

Question 12

Management is accountable to its employees in which of the following ways?

A)Providing products that are safe and free of defects
B)Providing a return on the owners' investment
C)Providing a safe workplace
D)Ensuring the business is environmentally responsible for impacts on the community

Question 13

Which of the following statements is INCORRECT?

A)Management accounting information is required to comply with accounting standards.
B)Management accounting information does not require an external audit.
C)The primary users of management accounting are the company's managers.
D)Management accounting information is used to help managers plan and control their operations.

Question 14

Management is accountable to its suppliers and vendors in which of the following ways?

A)Providing products to customers that are safe and free of defects
B)Making timely payments and complying with contract terms
C)Providing a return on the owners' investment
D)Repaying loans in a timely manner

Question 15

Which of the following statements about financial accounting is CORRECT?

A)Financial accounting is focused on planning and controlling operations.
B)Financial accounting is forward- looking.
C)Financial accounting is focused on detailed reports on parts of the company.
D)Financial accounting is oriented towards helping investors make decisions.

Question 16

Financial accounting is focused on which of the following objectives?

A)Providing summarised information on operational results to investors and creditors
B)Providing information that managers need to make operational decisions
C)Providing highly detailed information on product lines, regions, divisions, etc.
D)Providing budgets for future periods

Question 17

Which of the following most accurately describes the term cost- benefit analysis?

A)Considering whether the cost of calculating certain types of information provides a commensurate economic benefit
B)Considering whether the cost of products exceeds the market selling price
C)Calculating the cost of holding fundraising benefits for charity
D)Considering whether employees should be entitled to certain fringe benefits

Question 18

Which of the following is NOT an objective of management accounting?

A)To provide information to shareholders to assist them with their investment decisions
B)To provide information to business managers to assist them in planning for their business
C)To provide information to business managers to assist them in controlling their business
D)To assist business managers with respect to providing a return to the owners of the business

Question 19

Managerial accounting's focus is to provide information for internal planning and control.

Question 20

Management is accountable to communities in which of the following ways?

A)Ensuring the company's environmental impact does not harm the community
B)Providing a return on the owners' investment
C)Obeying laws and paying taxes
D)Making timely payments to creditors

Question 21

Factory rent, taxes and insurance are inventoriable product costs.

Question 22

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Question 23

Accounting, legal and administrative costs are inventoriable product costs.

Question 24

Transportation costs to ship products to customers are inventoriable product costs.

Question 25

Repair and maintenance costs of vehicles used to deliver products to the customers are inventoriable product costs.

Question 26

Sales commissions are included in manufacturing overhead.

Question 27

The wages and benefits of the sales staff are inventoriable product costs.

Question 28

Which of the following is a philosophy of providing customers with superior products and services?

A)Total quality management
B)Just- in- time (JIT)inventory management
C)Enterprise resource planning (ERP)
D)Supply chain management

Question 29

The wages and benefits of the factory manager are included in manufacturing overhead.

Question 30

Repair and maintenance costs for factory equipment are inventoriable product costs.

Question 31

Advertising and marketing costs are inventoriable product costs.

Question 32

Factory rent, taxes and insurance are included in manufacturing overhead.

Question 33

Manufacturing businesses have inventory accounts, but service and retailing businesses do not.

Question 34

Repair and maintenance costs for factory equipment are included in manufacturing overhead.

Question 35

The wages and benefits of the factory manager are inventoriable product costs.

Question 36

Indirect materials costs like lubricants and cleaning fluids are included in manufacturing overhead.

Question 37

Which of the following costs do NOT go directly into the work in process account?

A)The purchase of raw materials
B)Factory cleaning costs
C)Indirect labour
D)Factory overhead

Question 38

Accounting, legal and administrative costs are included in manufacturing overhead.

Question 39

Advertising and marketing costs are included in manufacturing overhead.

Question 40

Inventoriable product costs, such as direct materials, are expensed during the period that they were incurred.

Question 41

The following information has been provided by Buffalo Company: • Direct labour: $100 000
• Direct materials used: $40 000
• Direct materials purchased: $67 000
• Cost of goods manufactured: $199 000
• Ending work in process: $46 000
• Corporate headquarters' property rates: $6 000
• Manufacturing overhead: $79 000
How much was Buffalo's beginning work in process?

A)$42 000
B)$26 000
C)$20 000
D)$66 000

Question 42

Which of the following are period costs?

A)Costs related to the manufacture of products
B)Costs incurred and expensed during the accounting period
C)Current liabilities on the balance sheet
D)Current assets on the balance sheet

Question 43

Which of the following is an example of a period cost?

A)Advertising expense
B)Property rates for the factory
C)Indirect materials
D)Depreciation on factory equipment

Question 44

The following information was obtained from Sizzler Company: • Advertising costs: $7 900
• Indirect labour: $9 000
• Direct labour: $31 000
• Indirect materials: $7 200
• Direct materials: $47 000
• Factory electricity and gas: $3 000
• Factory repair and maintenance: $700
• Factory cleaning costs: $1 900
• Manufacturing equipment depreciation: $1 600
• Delivery vehicle depreciation: $790
• Administrative wages and salaries: $19 000
How much was Sizzler's factory overhead?

A)$23 400
B)$1 600
C)$3 600
D)$24 190

Question 45

Which of the following is NOT a part of manufacturing overhead?

A)Factory insurance
B)Depreciation on delivery vehicles
C)Indirect labour
D)Indirect materials

Question 46

Which of the following describes the term cost object?

A)An object which costs money to purchase
B)Any cost which is treated as a period expense
C)Any type of cost which is incurred to produce a finished product
D)Anything which requires a detailed record of its component costs to be kept

Question 47

Budgeting is a technique that is used to plan for future cash inflows and outflows.

Question 48

For a manufacturing business, which of the following would be included in manufacturing overhead?

A)Fuel and maintenance for delivery vehicles
B)Sales commissions
C)Wages of the factory manager
D)Wages of the assembly line workers

Question 49

Manufacturing overhead includes which of the following?

A)Direct materials and direct labour
B)Delivery costs to ship goods to customers
C)Indirect labour and indirect materials
D)Salaries of salesmen

Question 50

For a manufacturing business, which of the following would not be considered an inventoriable product cost?

A)Sales commission
B)Direct labour
C)Factory electricity and gas
D)Indirect materials

Question 51

All of the following are examples of manufacturing overhead EXCEPT for:

A)indirect materials.
B)wages of assembly line workers.
C)electricity and gas incurred in the factory.
D)insurance on factory equipment.

Question 52

The cost of sales for Frye Manufacturing in 2013 was $233 000. The 1 January 2013 finished goods inventory balance was $31 600 and the 31 December 2013 finished goods inventory balance was $24 200. What was cost of goods manufactured during 2013?

A)$240 400
B)$288 800
C)$225 600
D)$233 000

Question 53

The following information was obtained from Sizzler Company: • Advertising costs: $7 900
• Indirect labour: $9 000
• Direct labour: $31 000
• Indirect materials: $7 200
• Direct materials: $47 000
• Factory electricity and gas: $3 000
• Factory repair and maintenance: $700
• Factory cleaning costs: $1 900
• Manufacturing equipment depreciation: $1 600
• Delivery vehicle depreciation: $790
• Administrative wages and salaries: $19 000
How much were Sizzler's inventoriable product costs?

A)$101 400
B)$129 090
C)$99 500
D)$102 190

Question 54

Which of the following applies to the raw materials used by a manufacturing company?

A)Finished goods inventory
B)Materials inventory
C)Inventory
D)Work in process inventory

Question 55

Which of the following costs would appear on the income statements for both a retailer and a manufacturer?

A)Direct materials
B)Direct labour
C)Cost of goods manufactured
D)Electricity and gas

Question 56

For a manufacturing business, which of the following would be included in manufacturing overhead?

A)Advertising
B)Direct materials cost
C)Direct labour
D)Indirect materials cost

Question 57

Which of the following applies to goods that are produced by a manufacturing company and ready to sell?

A)Inventory
B)Work in process inventory
C)Finished goods inventory
D)Materials inventory

Question 58

Which of the following would probably be considered an indirect material cost in a bakery?

A)Eggs
B)Milk
C)Spices
D)Flour

Question 59

Which of the following applies to goods that are partially completed?

A)Materials inventory
B)Finished goods inventory
C)Inventory
D)Work in process inventory

Question 60

The following information was obtained from Sizzler Company: • Advertising costs: $7 900
• Indirect labour: $9 000
• Direct labour: $31 000
• Indirect materials: $7 200
• Direct materials: $47 000
• Factory electricity and gas: $3 000
• Factory repair and maintenance: $700
• Factory cleaning costs: $1 900
• Manufacturing equipment depreciation: $1 600
• Delivery vehicle depreciation: $790
• Administrative wages and salaries: $19 000
How much were Sizzler's period costs?

A)$7 900
B)$27 690
C)$19 000
D)$19 790

Question 61

Which of the following is an example of the coordination and communication function of a budget?

A)Budget figures are used to evaluate the performance of managers.
B)The budget outlines a specific course of action for the coming period.
C)A budget requires integrated input from different business units and functions.
D)Employees are motivated to achieve the goals set by the budget.

Question 62

Which of the following is an example of the planning function of a budget?

A)A budget demands integrated input from different business units and functions.
B)Employees are motivated to achieve the goals set by the budget.
C)The budget outlines a specific course of action for the coming period.
D)Budget figures are used to evaluate the performance of managers.

Question 63

In preparing an operating budget, the sales budget is prepared first. Which of the following is prepared next?

A)Budgeted income statement
B)Capital expenditures
C)Inventory, purchases and cost of sales
D)Electricity and gas

Question 64

The master budget includes three components-the operating budget, the capital expenditures budget and the financial budget.

Question 65

Which of the following is NOT a characteristic of the budgeting process?

A)The budget process helps coordinate the activities of the organisation.
B)The budget process ensures that the business will make a profit.
C)The budget process forces management to plan ahead.
D)The budget process aids in performance evaluation.

Question 66

A budget focuses primarily on financial information, but does not reflect specific business strategies.

Question 67

A goal of the budgeting process is to assist managers with coordinating and implementing the business plan.

Question 68

The production budget must be prepared before any other component of the operating budget.

Question 69

The capital expenditures budget stands alone and is not part of either the operating budget or the financial budget.

Question 70

The starting point in the budgeting process is the preparation of the:

A)sales budget.
B)cash budget.
C)budgeted income statement.
D)budgeted cash flow statement.

Question 71

The capital expenditures budget is part of the operating budget.

Question 72

A budgeted income statement is based on estimated amounts and not actual amounts.

Question 73

Which of the following is an example of the benchmarking function of a budget?

A)Budgeting requires close cooperation between accountants and operational personnel.
B)The budget outlines a specific course of action for the coming period.
C)Budgeted amounts are compared to actual results.
D)A budget demands integrated input from different business units and functions.

Question 74

Management must get employees to accept the budget's goals in order to effectively use the budget as a benchmark for evaluating performance.

Question 75

Budgets are compared to actual results in order to incorporate better informed business strategies into their future planning decisions.

Question 76

In preparing an operating budget, the sales budget is prepared first. Which of the following is the last component of the operating budget?

A)Electricity and gas
B)Capital expenditures
C)Budgeted income statement
D)Inventory, purchases and cost of sales

Question 77

Which of the following statements about budgeting is INCORRECT?

A)Budgets help to coordinate the activities of the entire organisation.
B)Budgeting is an accounting function and does not need involvement of operations personnel.
C)Budgets promote communication and coordination between departments.
D)Budgeting is an aid to planning and control.

Question 78

Budgets provide benchmarks that help managers evaluate performance.

Question 79

Which of the following budgets focuses on the income statement and its supporting schedules?

A)Cash budget
B)Sales budget
C)Operating budget
D)Capital expenditures budget

Question 80

A goal of the budgeting process is to promote coordination and communication throughout.