Question 1

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 and products to increase efficiency and effectiveness. It involves rejecting the notion of "good enough" and constantly striving for better outcomes. Continuous improvement is not a measure of profits or costs and is applicable to all businesses, not just service businesses.

Question 2

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 Award was established by the U.S. Congress in 1987 to promote quality and performance excellence among American businesses.

Question 3

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 primarily by internal users, particularly managers, to make planning and control decisions. This information includes data on costs, revenues, and other financial and non-financial measures, and is used to develop budgets, set performance targets, and monitor actual performance against those targets.

Question 4

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

Continuous improvement refers to the attitude of constantly seeking ways to improve company operations in different areas, including customer service, quality, features, production process, and employee interactions, among others. This approach involves a commitment to ongoing change and progress, using various tools and techniques to identify and address areas for improvement. The goal is to increase efficiency, effectiveness, and customer satisfaction, while reducing waste, errors, and costs. Customer orientation, just-in-time, theory of constraints, and total quality measurement are related concepts or approaches, but they do not fully capture the holistic and dynamic nature of continuous improvement.

Question 5

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 6

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 is incorrect. A manufacturer includes cost of goods manufactured on their income statement, while a merchandiser includes cost of goods sold, which is calculated as the cost of goods purchased minus the ending inventory of goods.

Question 7

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

Accepted Answer

A value chain includes all the activities involved in delivering a product or service to customers, from raw materials to final delivery. It is a concept developed by Michael Porter to help companies identify their core competencies and competitive advantage.

Question 8

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 forward-looking projections and estimates, while financial accounting is more focused on historical data and has a minimum of predictions. The other options are incorrect as managerial accounting is more focused on subdivisions of the organization, may include nonmonetary information, is not used extensively by investors, and is not mainly used to set stock prices.

Question 9

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 10

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 11

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 workers whose efforts cannot be directly traced to specific units or batches of product, such as supervisors, maintenance workers, and quality control personnel.

Question 12

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

Accepted Answer

The correct formula is "Raw materials purchased equals the ending balance of raw materials inventory minus the beginning raw materials inventory."

Question 13

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

Accepted Answer

Factory overhead includes indirect costs that are directly associated with producing a product, such as indirect labor and indirect materials. Selling and administrative expenses, on the other hand, are not related to the production process and are typically classified as period expenses.

Question 14

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.

Question 15

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 means designing the system according to the nature of the business and internal operations. This allows for tailoring the system to fit the specific needs and goals of the company, rather than adhering strictly to a standardized format.

Question 16

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, so the statement is true.

Question 17

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

Accepted Answer

Raw materials inventory turnover is calculated by dividing the raw materials used during a period by the average raw materials inventory. This ratio measures how efficiently a company is using its raw materials, and a higher turnover ratio indicates more efficient utilization of raw materials.

Question 18

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 statement is true. The cost of goods manufactured includes all direct and indirect costs incurred in the production process.

Question 19

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 is a management concept that involves putting the customer at the center of all operations and decision making. It encourages managers and employees to understand and be responsive to the wants and needs of customers, which leads to flexible product designs and production processes. This approach ultimately leads to higher customer satisfaction and loyalty, and can positively impact the bottom line of a business.

Question 20

Prime costs consist of direct labor and factory overhead.

Accepted Answer

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

Quiz 14: Managerial Accounting Concepts and Principles

Continuous improvement:

The Malcolm Baldrige Award was established by:

Managerial accounting information:

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: