Question 1

The business entity that converts purchased raw materials into finished goods by using labor,technology,and facilities is a:
A)Manufacturer.
B)Merchandiser.
C)Service business.
D)Not-for-profit service agency.

Accepted Answer

A manufacturer is a business entity that converts purchased raw materials into finished goods by using labor, technology, and facilities. Therefore, option A is the correct choice as it describes the business entity being discussed. Merchandisers buy and sell finished goods, service businesses provide intangible services, and not-for-profit service agencies provide services without making a profit.

Question 2

The process of establishing objectives or goals for the firm and determining the means by which they will be met is:
A)controlling.
B)analyzing profitability.
C)planning.
D)assigning responsibility.

Accepted Answer

The process of establishing objectives and determining the means by which they will be met is called planning. Planning is a crucial function of management that involves setting goals, developing strategies, and outlining the steps that need to be taken to achieve those goals. Controlling is the function of management that involves monitoring performance and making adjustments as necessary, and analyzing profitability is a specific aspect of financial management. Assigning responsibility involves delegating tasks and ensuring that individuals are properly assigned to carry them out, but does not encompass the process of establishing objectives and developing plans.

Question 3

Effective control of a company's operations is achieved through all of the following except:
A)periodically measuring and comparing company results.
B)assigning responsibility for costs to employees responsible for those costs.
C)constantly monitoring employees to ensure they do exactly as they are told.
D)taking necessary corrective action when variances suggest it is needed.

Accepted Answer

Constantly monitoring employees to ensure they do exactly as they are told is not an effective method of control as it can create a hostile work environment and decrease employee morale. Effective control involves measuring and comparing company results, assigning responsibility for costs, and taking corrective action when needed.

Question 4

Taylor Logan is an accountant with the Tanner Corporation.Taylor's duties include preparing reports that focus on both historical and estimated data needed to conduct ongoing operations and do long-range planning.Taylor is a(n)
A)certified financial planner.
B)management accountant.
C)financial accountant.
D)auditor.

Accepted Answer

Taylor's duties of preparing reports for ongoing operations and long-range planning indicate that they are a management accountant. Certified financial planners focus on personal financial planning for individuals, financial accountants focus on preparing financial statements and external reporting, and auditors focus on reviewing financial records for accuracy and compliance.

Question 5

Which of the following statements characterizes a performance report prepared for use by a production line department head?
A)The costs in the report should include only those controllable by the department head.
B)The report should be stated in dollars rather than in physical units so the department head knows the financial magnitude of any variances.
C)The report should include information on all costs chargeable to the department,regardless of their origin or control.
D)It is more important that the report be precise than timely.

Accepted Answer

A performance report prepared for use by a production line department head should highlight the costs that are controllable by the department head. This will enable the head to effectively manage the department's costs and take necessary corrective actions. Therefore, option A is the correct choice.

Question 6

A budget:
A)is a monthly financial statement issued to a company's shareholders.
B)is management's operating plan expressed in units and dollars.
C)documents the production department's schedule.
D)is the basis for the annual sales forecast.

Accepted Answer

A budget is a management tool that outlines a company's operating plan in financial terms, including units and dollars. It helps to guide spending decisions and measure financial performance. Options A, C, and D are not accurate definitions of a budget.

Question 7

Joshua Company prepares monthly performance reports for each department.The budgeted amounts of wages for the Finishing Department for the month of August and for the eight-month period ended August 31 were $12,000 and $100,000,respectively.Actual wages paid through July were $91,500,and wages for the month of August were $11,800.The month and year-to-date variances,respectively,for wages on the August performance report would be:
A)$200 F;$8,500 F
B)$200 F;$3,300 U
C)$200 U;$3,300 U
D)$200 U;$8,500 F

Accepted Answer

The answer of Joshua Company prepares monthly performance reports for...

Question 8

Examples of service businesses include:
A)Airlines,accountants,and hair stylists.
B)Department stores,poster shops,and wholesalers.
C)Aircraft producers,home builders,and machine tool makers.
D)None of these are correct.

Accepted Answer

Airlines, accountants, and hair stylists are all examples of service businesses as they provide services rather than physical products. Department stores, poster shops, wholesalers, aircraft producers, home builders, and machine tool makers are all examples of businesses that produce or sell tangible goods. Therefore, option A is the best choice.

Question 9

Which of the following costs would be least likely to appear on a responsibility accounting report for the supervisor of an assembly line in a large manufacturing situation?
A)Direct labor
B)Supervisor's salary
C)Materials
D)Repairs and maintenance

Accepted Answer

The supervisor's salary is a fixed cost that is not directly related to the production activities of the assembly line. Responsibility accounting focuses on controllable costs, and the supervisor's salary is typically considered an overhead or administrative expense, not directly controllable by the assembly line supervisor.

Question 10

Which of the following costs would be least likely to appear on a responsibility accounting report for the supervisor of an assembly line in a large manufacturing situation?
A)Direct labor
B)Indirect materials
C)Selling expenses
D)Repairs and maintenance

Accepted Answer

Selling expenses are typically not the responsibility of a supervisor of an assembly line in a manufacturing situation. Instead, these costs would be the responsibility of the sales or marketing department. Direct labor, indirect materials, and repairs and maintenance are all costs that would be more relevant to the supervisor's responsibility accounting report.

Question 11

Responsibility accounting would most likely hold a manager of a manufacturing unit responsible for:
A)cost of raw materials.
B)quantity of raw materials used.
C)the number of units ordered.
D)amount of taxes incurred.

Accepted Answer

Responsibility accounting holds managers accountable for items they can control. In a manufacturing unit, a manager can control the quantity of raw materials used, making it a relevant measure for responsibility accounting.

Question 12

The business entity that purchases finished goods for resale is a:
A)Manufacturer.
B)Merchandiser.
C)Service business.
D)Wholesaler.

Accepted Answer

A merchandiser purchases finished goods for resale, while a manufacturer produces the goods themselves. A service business does not typically purchase or resell finished goods, and a wholesaler typically sells to retailers rather than directly to consumers.

Question 13

Unit cost information is important for making all of the following marketing decisions except:
A)Determining the selling price of a product.
B)Bidding on contracts.
C)Determining the amount to spend on social media to promote the product.
D)Determining the amount of profit that each product earns.

Accepted Answer

Unit cost information is important for determining the selling price, bidding on contracts, and determining profit. However, it is not directly relevant to determining the amount to spend on social media promotion, as this decision is based on the overall marketing budget and promotional strategy rather than the cost of the product itself.

Question 14

As a result of recent accounting scandals involving companies such as Enron and World Com,the Sarbanes-Oxley Act of 2002 was written to protect shareholders of public companies by improving
A)management accounting.
B)corporate governance.
C)professional competence.
D)the corporate legal process.

Accepted Answer

The Sarbanes-Oxley Act of 2002 was written to improve corporate governance, which includes the oversight and management of a company's operations, by mandating stricter financial reporting requirements, strengthening the independence of audit committees, and increasing the penalties for fraudulent activity. While the Act may indirectly affect the other options, its primary focus is on corporate governance.

Question 15

ISO 9000 is a set of international standards for:
A)determining the selling price of a product.
B)cost control.
C)quality management.
D)delivering product,

Accepted Answer

ISO 9000 is a set of international standards that outlines the requirements for a quality management system. It provides a framework for companies to continuously improve their processes and ensure customer satisfaction. It is not related to determining selling price, cost control, or delivering product.

Question 16

Which of the following is not a key element of the Sarbanes Oxley Act?
A)The establishment of the Public Company Accounting Oversight Board
B)Requiring a company's annual report to contain an internal control report that includes management's opinion on the effectiveness of internal control
C)Severe criminal penalties for retaliation against "whistleblowers"
D)Requiring that the company's performance reports are prepared in accordance with generally accepted accounting principles

Accepted Answer

Requiring that the company's performance reports are prepared in accordance with generally accepted accounting principles is not a key element of the Sarbanes Oxley Act. However, the establishment of the Public Company Accounting Oversight Board, requiring a company's annual report to contain an internal control report that includes management's opinion on the effectiveness of internal control, and severe criminal penalties for retaliation against "whistleblowers" are all key elements of the Act.

Question 17

Dan Louis is the supervisor of the Assembly Department of Wiggerman Corporation.He has control over and is responsible for manufacturing costs traced to the department.The Assembly Department is an example of a(n):
A)cost center.
B)inventory center.
C)supervised work center.
D)worker's center.

Accepted Answer

The Assembly Department is a cost center because Dan Louis, as the department supervisor, is responsible for manufacturing costs traced to the department, indicating that the department's goal is to manage costs rather than generate revenue.

Question 18

The type of merchandiser who purchases goods from the producer and sells them to retailers that sell them to the consumer is a:
A)Manufacturer.
B)Retailer.
C)Wholesaler.
D)Service business.

Accepted Answer

This type of merchandiser is known as a wholesaler. They purchase goods from the producer in bulk and distribute them to retailers, who then sell them to the consumer. Wholesalers typically buy in large quantities and often sell to retailers at a lower price than the retail price.

Question 19

Cost accounting differs from financial accounting in that financial accounting:
A)Is mostly concerned with external financial reporting.
B)Is mostly concerned with individual departments of the company.
C)Provides the additional information required for special reports to management.
D)Puts more emphasis on future operations.

Accepted Answer

Financial accounting is primarily concerned with reporting financial information to external parties, such as investors and creditors, while cost accounting is focused on providing internal management with information related to the cost of producing goods or services. Cost accounting is used to help companies make decisions related to pricing, budgeting, and cost control. Financial accounting, on the other hand, is mostly focused on historical financial statements and compliance with accounting standards.

Question 20

The January performance report for cab no.52 of Teri's Taxi Service was as follows:  Possible reason(s)for the variance in the driver's wages could be:
A)A new driver was assigned to cab no.52 on January 5,replacing one who retired after 30 years of service.
B)The cab was in the shop for repairs for a few days.
C)Business was slow so cab no.52 was idled for two days.
D)All of the above are possible reasons.

Accepted Answer

All of the above reasons could potentially contribute to a variance in the driver's wages for cab no.52 in January. A new driver may have a different pay rate or work schedule than the previous driver, which could affect the wages earned. If the cab was in the shop for repairs or out of service for two days due to slow business, the driver may earn less due to a decrease in fares. Therefore, all three reasons, A, B, and C, could factor into the variance in the driver's wages.

Quiz 1: Introduction to Cost Accounting

The business entity that converts purchased raw materials into finished goods by using labor,technology,and facilities is a:

The process of establishing objectives or goals for the firm and determining the means by which they will be met is:

Effective control of a company's operations is achieved through all of the following except:

Taylor Logan is an accountant with the Tanner Corporation.Taylor's duties include preparing reports that focus on both historical and estimated data needed to conduct ongoing operations and do long-range planning.Taylor is a(n)

Which of the following statements characterizes a performance report prepared for use by a production line department head?

A budget:

Examples of service businesses include:

Which of the following costs would be least likely to appear on a responsibility accounting report for the supervisor of an assembly line in a large manufacturing situation?

Which of the following costs would be least likely to appear on a responsibility accounting report for the supervisor of an assembly line in a large manufacturing situation?

Responsibility accounting would most likely hold a manager of a manufacturing unit responsible for:

The business entity that purchases finished goods for resale is a:

Unit cost information is important for making all of the following marketing decisions except:

As a result of recent accounting scandals involving companies such as Enron and World Com,the Sarbanes-Oxley Act of 2002 was written to protect shareholders of public companies by improving

ISO 9000 is a set of international standards for:

Which of the following is not a key element of the Sarbanes Oxley Act?

Dan Louis is the supervisor of the Assembly Department of Wiggerman Corporation.He has control over and is responsible for manufacturing costs traced to the department.The Assembly Department is an example of a(n) :

The type of merchandiser who purchases goods from the producer and sells them to retailers that sell them to the consumer is a:

Cost accounting differs from financial accounting in that financial accounting:

The January performance report for cab no.52 of Teri's Taxi Service was as follows: Possible reason(s) for the variance in the driver's wages could be: