BA225 Managerial Accounting
University of Maryland, Baltimore County (UMBC)
Fundamental Managerial Accounting Concepts
Thomas Edmonds, Philip Olds, Bor-Yi Tsay
BA 225 TEST 1
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1. A cost that contains both fixed and variable elements is referred to as a:
2. Whirl Company sells cordless razors for $50. Variable costs are 40% of sales and total fixed costs are $40,000. What is the firm's magnitude of operating leverage if 2,000 units are sold?
3. Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost:
4. Select the incorrect statement regarding costs and expenses.
5. Choose the answer that is not a distinguishing characteristic of financial accounting information.
6. All of the following are features of managerial accounting except:
7. During her first year with the company, Ann mistakenly accumulated some of the company's period costs in ending inventory. Which of the following indicates how this error affects the company's financial statements assuming number of units produced exceeded number of units sold during the period?
8. As a Certified Management Accountant, Jill is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?
9. The excess of a product's selling price over its variable costs is referred to as:
10. Assuming a company's inventory increased during the period, which of the following misclassifications increases net income?
11. Based on the following cost data, items labeled (a) and (b) in the table below are which of the following amounts, respectively?
12. Identify the true statement regarding how product costs in a manufacturing company differ from product costs in a service company.
13. Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the salespersons' commissions are an example of:
14. Casters, Inc. normally produces between 150,000 and 175,000 units each year. Producing more than 175,000 units alters the company's cost structure. For example, fixed costs increase because more space must be rented, and additional supervisors must be hired. The production range between 150,000 and 175,000 is called the:
15. Gypsy Joe's operates a chain of coffee shops. The company pays rent of $10,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis. The costs of supplies relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost, respectively?
16. Select the correct statement from the following.
17. The following income statement is provided for Barron Company in 2006:
What amount was the company's contribution margin?
18. The following information relates to Minimart's 2007 accounting period:
Based on this information, what is the company's net income for 2007?
19. The following information is provided for Steinberg Company:
What is this company's contribution margin?
20. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold. If the company's volume increases to 2,500 units, the company's total costs will be:
21. What is the effect on the financial statements of recording a $100 purchase of raw materials?
22. Which of the following costs is not considered to be a product cost?
23. Which of the following should be recorded as an asset?
24. Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?
25. Why do accountants normally calculate cost per unit as an average?
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