Question 1

A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called:
A)Continuous improvement.
B)Customer orientation.
C)Just-in-time.
D)Theory of constraints.
E)Total quality management.

Accepted Answer

Customer orientation emphasizes the importance of understanding and meeting customer needs and wants. This means flexible product designs and production processes which can quickly adapt to changing customer demands. The other options (continuous improvement, just-in-time, theory of constraints, and total quality management) all have different focuses and do not necessarily prioritize understanding and meeting customer needs.

Question 2

Prime costs consist of direct labor and factory overhead.

Accepted Answer

The answer of Prime costs consist of direct labor and...

Question 3

Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.

Accepted Answer

Newly completed units are combined with beginning finished goods inventory to make up total finished goods available for sale, not ending goods in process inventory. Goods in process inventory refers to items that are still in the production process.

Question 4

The manufacturing statement is also known as the schedule of manufacturing activities or the schedule of cost of goods manufactured.

Accepted Answer

The manufacturing statement is also known as the schedule of manufacturing activities or the schedule of cost of goods manufactured.

Question 5

Flexibility of practice when applied to managerial accounting means that:
A)The information must be presented in electronic format so that it is easily changed.
B)Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.
C)The managerial accountants need to be on call 24 hours a day.
D)The design of a company's managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company.
E)Managers must be flexible with information provided in varying forms and using inconsistent measures.

Accepted Answer

Flexibility of practice in managerial accounting refers to the ability of the accounting system to adapt to the unique needs and operations of a business. This means that the design of the accounting system must be flexible enough to accommodate the specific needs of the organization. Therefore, option D is the correct answer. Option A is incorrect because the presentation format is not the focus of flexibility. Option B is incorrect because managers should have input into the design of the accounting system. Option C is incorrect because 24-hour availability is not related to flexibility. Option E is incorrect because inconsistent measures should be avoided in managerial accounting.

Question 6

A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

Accepted Answer

This is correct. The cost of goods manufactured includes all the costs incurred in the production process, including direct materials, direct labor, and factory overhead costs.

Question 7

The Malcolm Baldrige Award was established by:
A)The United Nations.
B)The U.S.Chamber of Commerce.
C)The Malcolm Baldrige Foundation.
D)The U.S.Congress.
E)The SEC.

Accepted Answer

The Malcolm Baldrige National Quality Award was established by the U.S. Congress in 1987 to promote excellence in organizational performance, recognize the achievements and results of U.S. organizations, and publicize successful strategies.

Question 8

The manufacturing statement must be prepared monthly as it is a required general-purpose financial statement.

Accepted Answer

The manufacturing statement, also known as the cost of goods manufactured statement, is not a general-purpose financial statement and is not required to be prepared monthly. It is an internal document used to calculate the cost of goods manufactured during a period.

Question 9

Managerial accounting is different from financial accounting in that:
A)Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
B)Managerial accounting never includes nonmonetary information.
C)Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
D)Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.
E)Managerial accounting is mainly used to set stock prices.

Accepted Answer

Managerial accounting involves a lot of estimates and projections to help managers make decisions, while financial accounting is more focused on providing accurate and reliable financial information for external stakeholders like investors and creditors. The other choices are incorrect: A is partially true but incomplete, B is false, D is incorrect, and E is incorrect.

Question 10

The Goods in Process Inventory account is found only in the ledgers of merchandising companies.

Accepted Answer

The Goods in Process Inventory account is found in the ledgers of manufacturing companies, not merchandising companies. Merchandising companies typically have a Merchandise Inventory account instead.

Question 11

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

Accepted Answer

The answer of Raw materials purchased plus beginning raw materials...

Question 12

The main difference between the income statement of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.

Accepted Answer

The statement should say "the manufacturer includes cost of goods manufactured rather than cost of goods sold." The merchandiser includes cost of goods sold, which is the cost of the goods purchased from a manufacturer or supplier.

Question 13

Continuous improvement:
A)Is a measure of profits.
B)Is a measure of costs.
C)Rejects the notion of "good enough."
D)Is not applicable to most businesses.
E)Is possible only in service businesses.

Accepted Answer

Continuous improvement is the process of constantly seeking ways to improve processes, products, and services. It emphasizes that there is no such thing as "good enough" and that businesses must constantly strive for better quality, efficiency, and effectiveness. It is not a measure of profits or costs, but rather a philosophy and approach to business management that can be applied to any industry or sector.

Question 14

The series of activities that add value to a company's products or services is called a value chain.

Accepted Answer

This statement is true. A value chain is the sequence of activities involved in the production and delivery of a product or service, from the raw materials to the end customer. The goal of the value chain is to create value that exceeds the cost of producing the product or service, resulting in a profit for the company.

Question 15

Raw materials inventory turnover equals raw materials used divided by average raw materials inventory.

Accepted Answer

That is the correct formula for calculating raw materials inventory turnover.

Question 16

Managerial accounting information:
A)Is used mainly by external users.
B)Involves gathering information about costs for planning and control decisions.
C)Is generally the only accounting information available to managers.
D)Can be used for control purposes but not for planning purposes.
E)Has little to do with controlling costs.

Accepted Answer

Managerial accounting information is used by managers within an organization to make planning and control decisions. It involves gathering, analyzing, and interpreting information related to costs, budgets, performance, and strategic planning. While external users may also use some managerial accounting information, such as cost reports, the primary purpose is to help managers make informed decisions.

Question 17

Indirect labor refers to the cost of the workers whose efforts are directly traceable to specific units or batches of product.

Accepted Answer

Indirect labor refers to the cost of the workers whose efforts are not directly traceable to specific units or batches of product, such as maintenance workers or supervisors. Direct labor refers to the cost of the workers whose efforts can be directly traced to specific units or batches of product.

Question 18

Raw materials inventory includes only direct materials.

Accepted Answer

Raw materials inventory can include both direct materials (used directly in the production of goods) and indirect materials (used in the production process but not directly in the final product).

Question 19

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

Accepted Answer

Factory overhead includes costs that are directly related to the manufacturing process, such as rent, utilities, and machinery maintenance. Selling and administrative expenses are not directly related to the manufacturing process and are usually considered separate categories of expenses.

Question 20

An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called:
A)Continuous improvement.
B)Customer orientation.
C)Just-in-time.
D)Theory of constraints.
E)Total quality measurement.

Accepted Answer

The attitude of constantly seeking ways to improve company operations in all areas is referred to as continuous improvement. This involves constantly evaluating and refining all aspects of the business to improve efficiency, quality, and customer satisfaction.

Quiz 1: Managerial Accounting Concepts and Principles

A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called:

Prime costs consist of direct labor and factory overhead.

Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.

The manufacturing statement is also known as the schedule of manufacturing activities or the schedule of cost of goods manufactured.

Flexibility of practice when applied to managerial accounting means that:

A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

The Malcolm Baldrige Award was established by:

The manufacturing statement must be prepared monthly as it is a required general-purpose financial statement.

Managerial accounting is different from financial accounting in that:

The Goods in Process Inventory account is found only in the ledgers of merchandising companies.

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

The main difference between the income statement of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.

Continuous improvement:

The series of activities that add value to a company's products or services is called a value chain.

Raw materials inventory turnover equals raw materials used divided by average raw materials inventory.

Managerial accounting information:

Indirect labor refers to the cost of the workers whose efforts are directly traceable to specific units or batches of product.

Raw materials inventory includes only direct materials.

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called: