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STEPHEN G. KERR
ASSISTANT PROFESSOR, PhD. CMA (CANADA)
NAME: _______________________
Instructions:
1)
2)
3)
4)
5)
6)
Page 1 of 12
1. Managerial accounting:
a) is more future oriented than financial
accounting.
b) tends to summarize information more than
financial accounting
c) is primarily concerned with providing
information to external users.
d) is more concerned with precision than
timeliness.
Planning
Controlling
Directing and motivating
Compiling management accounting reports
budget.
performance report.
organization chart.
segment.
a)
b)
c)
d)
Prime cost.
Conversion cost.
Period cost.
Nonmanufacturing cost.
marginal cost.
indirect cost.
period cost.
sunk cost.
a)
b)
c)
d)
$33,000
$28,000
$69,000
$16,000
$21,000
$97,000
$167,000
$102,000
$61,000
fixed, decreasing
fixed, increasing
variable, decreasing
variable, increasing
Page 2 of 12
a)
b)
c)
d)
c) $196,000
d) $250,000
Variable.
Mixed.
Fixed.
Step-variable.
1,000
2,000
Direct materials
Direct labor
Manufacturing overhead
$15.20
$30.20
$54.10
BREAK-EVEN
POINT
decrease
decrease
no effect
no effect
$280,000
$21,000
70%
15
2.7
30
12
$74,800
$54,100
$99,800
$33,400
CONTRIBUTION
MARGIN RATIO
increase
decrease
increase
decrease
a)
b)
c)
d)
a)
b)
c)
d)
$15.20
$30.50
$37.40
a)
b)
c)
d)
6,000 units
3,750 units
15,000 units
10,000 units
Page 3 of 12
TOTAL
SALES
$50,000
$60,000
$40,000
$30,000
$24,640
$35,200
$31,560
$33,640
January
February
March
PRODUCTION
IN UNITS
18,000
19,000
16,000
a)
b)
c)
d)
14,500
15,500
15,000
17,000
28,800
22,200
24,000
25,800
19,600 pounds
20,400 pounds
18,400 pounds
18,600 pounds
a)
b)
c)
d)
MATERIALS MATERIAL
PRICE
QUANTITY
VARIANCE VARIANCE
no
no
yes
yes
yes
no
no
yes
Page 4 of 12
$0.20
$3.40
$3.20
$3.00
Labor Rate
Variance
$4,180F
$21,460F
$21,460F
$4,180F
Labor Efficiency
Variance
$14,804U
$17,280U
$14,804U
$17,280U
$113 U
$297 F
$1,707 F
$2,004 F
Page 5 of 12
$49,000
$52,000
$55,000
$58,000
a)
b)
c)
d)
a)
b)
c)
d)
a)
b)
c)
d)
$13.40
$13.00
$12.70
$12.00
a)
b)
c)
d)
a)
b)
c)
d)
a)
b)
c)
d)
$5,006
$5,456
$4,796
$5,246
Page 6 of 12
$0.45
$0.10
$0.55
none of the above.
I, II, III
I and II
I and III
II and III
Tuition costs
Salary of the full time job
Cost of books
Her monthly rent
END OF EXAMINATION
Page 7 of 12
BRADLEY UNIVERSITY
ATG 158: ACCOUNTING PRINCIPLES - MANAGERIAL
ANSWER KEY AND NOTES
STEPHEN G. KERR
ASSISTANT PROFESSOR, PhD. CMA (CANADA)
QUESTION
1.
2.
3.
4.
5.
6.
7.
8.
9.
ANSWER COMMENTS
A
The purpose of management accounting information is to help
managers make better decisions. In this context forward looking
information is more important. Financial accounting has a
stewardship function. That is to show external parties what
management did with the resources entrusted to them.
D
This is done by professional for managers. It is useful to have
clear idea of what the role of manager and management
accountant is. Preparing reports to aid in decision making does
not make one a decision maker.
A
Budgets are prepared to reflect the operational decisions made by
managers. Plans cannot be carried out without resources. The
budget is a reflection and manifestation of managements plans
when it is done well.
C
The underlying concept of Just In Time management is to make a
company responsive to customer needs by reducing the length of
the supply chain. One way to do that is to be so in touch with
customer needs that production matches customer needs
perfectly.
D
Provision of any service of product requires the use of resources.
At some level there is always a limit to those resources. The
theory of constraints help managers be aware of which resources
is the most restrictive in terms of productive capacity. In the short
run the company can then try to maximize returns from the
resources. In the longer run the company can attempt to increase
the availability of that resources to reduce the limitation on growth.
B
Labor refers to a production input. Indirect labor is included in
conversion costs as it is part of the production process but not
traceable to specific units of production.
C
Prime costs refer to the primary traceable production inputs.
D
A sunk cost is not relevant as the amount cannot be recovered or
changed by any current situation. While past costs are allocated
for financial accounting purposes a management accountant
recognizes that that past cannot be changed.
B
Prevention costs are part of the cost of quality framework that is
used to evaluate production systems. A prevention activity is any
investment made to reduce any failures in the design or production
of a product that will result in a defective product. Quality
inspection is not a prevention activity under this definition.
Debugging is only necessary if a faulty product is produced!
Page 8 of 12
10.
11.
A
A
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
C
C
Page 9 of 12
22.
23.
24.
25.
26.
A
D
27.
28.
29.
30.
31.
32.
33.
34.
35.
B
C
Page 10 of 12
36.
37.
38.
39.
40.
41.
A
B
42.
43.
44.
45.
Page 11 of 12
46.
47.
48.
49.
50.
Page 12 of 12