1.Managerial accounting stresses accounting concepts and procedures that are relevant to preparing reports for
O investors and banks.
O internal users of accounting information.
O shareholders and creditors.
O the Securities and Exchange Commission (SEC).
2.The goal of managerial accounting is to provide information that managers need for
O planning, control, and financial reporting.
O control, evaluation, and financial reporting.
O planning, control, and decision making.
O preparing reports for external users.
3.The financial plans prepared by managerial accountants are referred to as
O budgets.
O financial statements.
O treasurer’s reports.
O controller’s opinions.
4.Performance reports often compare current performance with
O a competing company’s performance.
O shareholders’ expected level of performance.
O industry standards.
O performance in a prior period or budgeted performance.
Below is a performance report that compares budgeted and actual profit of Atlanta Enterprises for the month of June:
Budget
$182,000
Actual
$180,000
Sales
Less:
Cost of ingredients
Salaries
Controllable profit
145,000
24,000
$ 13,000
141,000
23,000
$ 16,000
In evaluating the department in terms of its changes in sales and expenses, what will be most important to investigate?
O Sales
O Cost of ingredients
O Salaries
O Debtors
#
6.The fundamental difference between managerial and financial accounting is that
• all financial accounting information is audited by Certified Public Accountants whereas managerial accounting information is audited by the IMA.
O managerial accounting is concerned principally with budgets, whereas financial accounting is concerned with a wider range of the organization’s activities.
O managerial accounting provides
information for decision-makers within the organization, whereas financial accounting provides information for individuals and institutions external to the organization.
O financial accounting information follows
U.S. Generally Accepted Accounting Principles, whereas managerial accounting information generally follows rules set forth by the Institute of Management Accountants.
7.Variable cost per unit
O increases when the number of units produced increases.
O does not change when the number of
units produced increases.
decreases when the number of units produced increases.
O decreases when the number of units
produced decreases.
8.Which of the following is most likely to be a fixed cost?
O Cost of wheels for a lawn mower manufacturer
O Rent on a factory building
Cost of labor for cashiers at a retail store
• Supplies used by the housekeeping staff that cleans hotel rooms
9.Cullumber’s Salsa is in the process of preparing a production cost budget for May. Actual costs in April were:
Cullumber’s Salsa
Production Costs
April 2020
Production
Ingredient cost (variable)
Labor cost (variable)
Rent (fixed)
Depreciation (fixed)
Other (fixed)
Total
20,000
Jars of Salsa
$12,000
8,400
5,000
6,000
1,000
$32,400
Using this information, prepare a budget for May. Assume that production will increase to 24,000 jars of salsa, reflecting an anticipated sales increase related to a new marketing campaign.
Cullumber’s Salsa
Budgeted Production Costs
May 2020
Production
24,000
Jars of Salsa
Ingredient cost
$
Labor cost
Rent
Depreciation
Other
SUPPORT
Total
@ education.wiley.com
10.The Riverview Hotel is a deluxe four-star establishment. Late on Friday, it had 20 of its 300 rooms available when the desk clerk received a call from the Pines Hotel. The Pines Hotel made a booking error and did not have room for 4 guests (each of whom had a “confirmed” room). The Pines wants to send its customers to the Riverview but pay the rate the guests would have been charged at the Pines ($140 per room) rather than paying the normal rate of $220 per room at the Riverview.
(a)
If the Riverview accepts the guests, what will be the incremental revenue?
nental Revenue
11.Sanchez Sweets is in the process of preparing a production cost budget for May. Actual costs in April for production of 7,000 batches of cookies were:
Ingredients cost
Rent
Labor cost
Depreciation
Other fixed costs
Total
$ 7,200
1,100
3,300
900
700
$13.200
The company is currently producing and selling 80,000 batches of cookies annually with each batch sold for $8.00. The company is considering lowering the price to $7.50 per batch for which management estimates this will increase sales to 90,000 batches. Ingredients and labor are the only variable costs.
What is the incremental cost associated with producing an extra 10,000 batches of cookies? (Do not round intermediate calculations, round final answer to O decimal places, e.g. 2,520.)
cremental cost
$
What is the incremental revenue associated with the price reduction?
Incremental revenue
§
Should Sanchez Sweets lower the price of its cookies?
___ lowering the price will rest of $ _____
12.Sterling Auto Detail is currently open Monday
through Friday. In the past year, income before taxes was as follows:
Numbers of cars detailed
Revenue
Less operating expenses:
Supplies (polish, wax, etc.)
Salaries of detailers
Water and other variable costs
Supervisor’s salary
Rent
Depreciation
Other fixed costs
Income before taxes
$5,824
104,000
12,480
65,000
36,000
5,000
1,050 229,354
Total cost= $238,646
13.Quincy Davis, the owner of Sterling, is considering extending the workweek through Saturday. If he takes this action, he’ll hire a part-time employee for $300 per day to act as the Saturday manager so the supervisor still can have Saturday off.
Quincy estimates that his company will detail an additional 10 cars per Saturday, 52 weeks per year.
(a)
Calculate the annual incremental revenue associated with being open on Saturday.
Annual incremental revenue
$
The production cost information for Crane’s Salsa is as follows:
Crane’s Salsa
Production Costs
April 2020
Production
Ingredient cost (variable)
Labor cost (variable)
Rent (fixed)
Depreciation (fixed)
Other (fixed)
Total
21,000
Jars of Salsa
$18,900
9,660
4,300
6,400
1,100
$40,360
The company is currently producing
E SUPPORT
210,000 jars of salsa annually. The j $6.00 each. The company is considering lowering
• price to $5.60. Suppose this action will Increase sales to 252,000 jars.
AA
§ education.wiley.com
What is the incremental cost associated with producing an extra 42,000 jars of salsa?
Incremental Cost
§
