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Multiple Choice Questions

The document contains 45 multiple choice questions about managerial accounting concepts like incremental analysis, cost behavior, relevant costs, and decision making. Incremental analysis involves analyzing the changes in revenues and costs between alternative courses of action. It is useful for decisions that involve choosing among alternatives. Variable costs always change between alternatives while fixed costs may or may not change. Only differences in revenues and costs are relevant for incremental analysis.

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Tk Kim
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84 views

Multiple Choice Questions

The document contains 45 multiple choice questions about managerial accounting concepts like incremental analysis, cost behavior, relevant costs, and decision making. Incremental analysis involves analyzing the changes in revenues and costs between alternative courses of action. It is useful for decisions that involve choosing among alternatives. Variable costs always change between alternatives while fixed costs may or may not change. Only differences in revenues and costs are relevant for incremental analysis.

Uploaded by

Tk Kim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MULTIPLE CHOICE QUESTIONS

26. A major accounting contribution to the managerial decision-making process in


evaluating possible courses of action is to
a. assign responsibility for the decision.
b. provide relevant revenue and cost data about each course of action.
c. determine the amount of money that should be spent on a project.
d. decide which actions that management should consider.

27. Which of the following stages of the management decision-making process is


improperly sequenced?
a. Evaluate possible courses of action  Make decision.
b. Assign responsibility for decision  Identify the problem.
c. Identify the problem  Determine possible courses of action.
d. Assign responsibility for decision  Determine possible courses of action.

28. Internal reports that review the actual impact of decisions are prepared by
a. department heads.
b. the controller.
c. management accountants.
d. factory workers.

29. Which of the following steps in the management decision-making process


does not generally involve the managerial accountant?
a. Determine possible courses of action.
b. Make the appropriate decision based on relevant data.
c. Prepare internal reports that review results of decisions.
d. None of these

30. The process of evaluating financial data that change under alternative
courses of action is called
a. double entry analysis.
b. contribution margin analysis.
c. incremental analysis.
d. cost-benefit analysis.

31. Nonfinancial information that management might evaluate in making a


decision would not include
a. employee turnover.
b. contribution margin.
c. the environment.
d. the corporate profile in the community.

32. Incremental analysis is synonymous with


a. difficult analysis.
b. differential analysis.
c. gross profit analysis.
d. derivative analysis.
33. In incremental analysis,
a. only costs are analyzed.
b. only revenues are analyzed.
c. both costs and revenues may be analyzed.
d. both costs and revenues that stay the same between alternate courses of
action will be analyzed.

34. Incremental analysis is most useful


a. in developing relevant information for management decisions.
b. in choosing between the net present value method and the internal rate of
return method.
c. in evaluating the master budget.
d. as a replacement technique for variance analysis.

35. The source of data to serve as inputs in incremental analysis is generated by


a. market analysts.
b. engineers.
c. accountants.
d. all of these.

36. Which of the following is not a true statement?


a. Incremental analysis might also be referred to as differential analysis.
b. Incremental analysis is the same as CVP analysis.
c. Incremental analysis is useful in making decisions.
d. Incremental analysis focuses on decisions that involve a choice among
alternative courses of action.

37. Incremental analysis would not be appropriate for


a. a make or buy decision.
b. an allocation of limited resource decision.
c. elimination of an unprofitable segment.
d. analysis of manufacturing variances.

38. Incremental analysis would be appropriate for


a. acceptance of an order at a special price.
b. retain or replace equipment.
c. sell or process further.
d. all of these.

39. Which of the following is a true statement about cost behaviors in incremental
analysis?
1. Fixed costs will not change between alternatives.
2. Fixed costs may change between alternatives.
3. Variable costs will always change between alternatives.
a. 1
b. 2
c. 3
d. 2 and 3
40. A company is considering the following alternatives:
Alternative 1 Alternative 2
Revenues $120,000 $120,000
Variable costs 60,000 70,000
Fixed costs 35,000 35,000
Which of the following are relevant in choosing between the alternatives?
a. Variable costs
b. Revenues
c. Fixed costs
d. Variable costs and fixed costs

41. Adler Company manufactures a product with a unit variable cost of $50 and a
unit sales price of $88. Fixed manufacturing costs were $240,000 when
10,000 units were produced and sold. The company has a one-time
opportunity to sell an additional 3,000 units at $70 each in a foreign market
which would not affect its present sales. If the company has sufficient
capacity to produce the additional units, acceptance of the special order
would affect net income as follows:
a. Income would decrease by $12,000.
b. Income would increase by $12,000.
c. Income would increase by $210,000.
d. Income would increase by $60,000.

42. In incremental analysis,


a. costs are not relevant if they change between alternatives.
b. all costs are relevant if they change between alternatives.
c. only fixed costs are relevant.
d. only variable costs are relevant.

43. If a plant is operating at full capacity and receives a one-time opportunity to


accept an order at a special price below its usual price, then
a. only variable costs are relevant.
b. fixed costs are not relevant.
c. the order will likely be accepted.
d. the order will likely be rejected.

44. If a company must expand capacity to accept a special order, it is likely that
there will be
a. an increase in unit variable costs.
b. no increase in fixed costs.
c. an increase in variable and fixed costs per unit.
d. an increase in fixed costs.

45. Which of the following is true if a company can accept a special order without
affecting its regular sales and is within plant capacity?
a. Net income will not be affected.
b. Net income will increase if the special sales price per unit exceeds the
unit variable costs.
c. Net income will decrease.
d. Additional fixed costs will probably be incurred.

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