T OR F 14.

Although finance and accounting professionals

often work within verticals and other horizontals,
1. Factory overhead is an example of a product cost.
they do not normally report directly to the heads
T
of those units or departments. F

2. Planning is the process of monitoring results and

15. Operating profit is an example of nonfinancial
comparing actual results with the expected
information. F
results. F
16. Managerial accounting reports must be prepared
3. The high low method is generally more accurate
according to generally accepted accounting
than the least squares regression method in
principles. F
analyzing cost behavior. F
17. WALEY
4. A cost objects indicates how costs are related or
identified. T
18. Managerial accounting information includes both
historical and estimated data. T
5. Management accounting draws heavily on
economics, statistics, operations research and
19. A staff department or unit is one that provides
other disciplines as necessary in providing
services, assistance, and advice to the
accounting and financial information. T
departments with line or other staff
responsibilities. T
6. A report analyzing how many products need to
be sold to cover operating costs is not typically a
20. Managerial accounting reports are more detailed
managerial accounting report. F
rather than aggregated. T

7. Total fixed costs change as the level of activity

21. Which of the following would be least helpful for
changes. F
a top manager of a company
A. Number of customer complaints
8. Period costs can be found on both the balance
B. Operating expense summary reported by
sheet and the income statement. F
department
C. Information to monitor hourly and daily
9. For a construction contractor, the wages of
operations
carpenters would be classified as factory
D. Profitability report of the company
overhead cost. F
22. WALEY
10. The controller control operations. T
23. Managerial accountants could prepare all of the
11. For an automotive repair shop, the wages of
following reports except a (n)
mechanics would be classified as direct labor
A. Sales report targeting monthly sales and
cost. T
potential bonuses
B. Performance report identifying amounts of
12. The cost of oil used to lubricate factory
scrap
machinery and equipment is an example of a
C. Annual report for external regulators such as
factory overhead cost rather than a direct
SEC
material cost. T
D. Control report comparing direct material
usage over time
13. Only the value of inventory that is sold will
appear on the income statement. F
24. Which of the following is an example of direct
materials cost for an automobile furniture.
 A. Cost of oil lubricants for factory machinery B. Irrelevant costs
B. Salary of production supervisor C. Sunk costs
C. Salary of production supervisor D. Avoidable costs
D. Cost of interior upholstery
32. Which of the following is a staff position
25. Which of the following is most associated with A. Vice president marketing
managerial accounting B. Production manager
A. Always report on the entire entity C. Vice president for finance
B. May rely on estimates and forecasts D. Foreman
C. Must follow GAAP
D. Is prepared for users outside the organization 33. Which of the following would be least likely to be
considered a managerial accounting report
26. Costs per unit is constant A. Report to analyze potential efficiencies and
A. Variable costs savings for the purchase of new production
B. Mixed costs equipment
C. Semi variable costs B. Statement of cost of goods manufactured
D. Fixed costs C. Statement of stockholder’s equity
D. Schedule of total manufacturing costs
27. The setting of objectives and the identification of incurred
methods to achieve those objectives is called
A. Planning 34. Which of the following must be true in order for
B. Controlling materials to be classified as direct materials
C. Directing A. They must be an integral part of the finished
D. Organizing product and be a significant portion of the
total product cost
28. Which of the following are basic phases of the B. They must be an integral part of the finish
management process product but can be an insignificant portion of
A. Decision making and supervising the total product cost
B. Supervising and directing C. They must be classified as both prime and
C. Organizing and directing conversion costs
D. Planning and controlling D. They must be introduced into the process in
both work in process inventories and finished
29. Costs that is foregone in favor of another goods inventories
alternative
A. Opportunity costs 35. A plant manager’s salary is a (n)
B. Sunk costs A. Period costs
C. Direct costs B. Direct cost and an indirect cost
D. Avoidable costs C. Direct cost
D. Indirect cost
30. Costs which are subject to a significant influence
by a particular manager 36. WALEY
A. Variable costs
B. Committed costs 37. The major reporting standard for presenting
C. Discretionary costs managerial accounting information is
D. Direct costs A. Relevance
B. Cost principle
31. Costs that will not be incurred if a particular C. Current tax law
product or department is discontinued D. Generally accepted accounting principles
A. Opportunity costs
38. Which of the following is most associated with
financial accounting reports
A. Prepared in accordance with GAAP
B. Can be prepared periodically or as needed
C. Can be prepared for the entity or segment
D. Can have both objective and subjective
information

39. Which of the following is not true with regard to

direct materials for a bakery
A. Flour and sugar would probably be direct
materials
B. Paper cupcake liners, that become part of
the product must be accounted for as direct
materials
C. Eggs would probably be a direct material
D. Oil to lubricate factory machines would not
be a direct material

40. Costs incurred in the past that will not affect

future decisions
A. Avoidable cost
B. Irrelevant cost
C. Differential cost
D. Sunk cost