Multiple Choice Answers

The person MOST likely to use management accounting information is a(n):
banker evaluating a credit application
shareholder evaluating a stock investment
governmental taxing authority
assembly department supervisor

Which of the following is NOT a function of a management accounting system?
strategic planning
financial reporting
operational control
product costing

Financial accounting provides the PRIMARY source of information for:
decision making in the finishing department
improving customer service
preparing the income statement for shareholders
planning next year’s operating budget
A key element of any organization’s strategy is identifying:
its potential shareholders
its target customers
competitor’s products
employee needs

Managers of service departments need all of the following information EXCEPT:
efficiency data on work performance
quality data on work performance
profitability data of the whole company
profitability data of the service department

A weekly report comparing machine time used to available machine time is information MOST useful to:
a front-line employee
the manager of operations
the chief executive officer
the accounting department
18. Decentralized responsibility refers to allowing lower-level managers to do all of the following EXCEPT:
make decisions without seeking higher approval
take advantage of local opportunities
make periodic financial reports to upper-management
pursue individual objectives even though they may not contribute to the entire company

Materials used in the operation of a factory, such as cleaning supplies, that are not an integral part of the final product should be classified as:
a. direct materials.
b. a period cost.
c. administrative expense.
D. manufacturing overhead.

Which of the following is NOT a period cost?
A. Monthly depreciation of the equipment in a fitness room used by factory workers.
b. Salary of a billing clerk.
c. Insurance on a company showroom, where current and potential customers can view new products.
d. Cost of a seminar concerning tax law updates that was attended by the company’s controller.

Colby Company has a process costing system in which the weighted-average method is used. The company adds all materials at the beginning of the process in the Molding Department, which is the first of two stages of its production process. Information concerning the materials used in the Molding Department during March is as follows:
What was the materials cost of the work in process inventory at March 31?
a. $11,220
b. $7,500
c. $5,100
D. $7,650

For an automobile manufacturer, the cost of a driver’s side air bag purchased from a supplier and installed in every automobile would best be described as a:
a. fixed cost.
b. mixed cost.
c. step-variable cost.
D. variable cost.