Reference no: EM1310558

Similarity between financial and managerial accounting.

1. Turner Corporation operates two stores: Alpha and Beta. The following information relates to the Alpha Store:
Revenues .......................................................................... $200,000
Variable operating expenses................................................ 110,000
Direct fixed expenses controllable by the store manager..... 65,000
Direct fixed expenses controllable by others......................... 15,000
Indirect fixed expenses allocated to the Alpha Store ............ 18,000
What "income" amount should be used to evaluate the performance of the manager of the Alpha Store?
a.$90,000
b.$25,000
c.$10,000
d.$4,000
e.$(8,000)
2. What "income" amount should be used to evaluate the Alpha Store as an investment of the company?
a.$90,000
b.$25,000
c.$10,000
d.$4,000
e.$(8,000)
3. The salary that is sacrificed by a college student who pursues a degree full time is a(n):
a.Sunk cost.
b.Out-of-pocket cost.
c.Opportunity cost.
d.Differential cost.
e.Marginal cost.
4. The relevant range is that range of activity:
a.where a company achieves its maximum efficiency.
b.where units produced equal units sold.
c.where management expects the firm to operate.
d.where the firm will earn a profit.
e.where expected results are abnormally high.
5. The Shoe Department at the Baton Rouge Department Store is being considered for closure. The following information relates to shoe activity:
Sales revenue - $350,000
Variable costs:
Cost of goods sold - 280,000
Sales commissions - 30,000
Fixed operating costs - 90,000
If 70% of the fixed operating costs are avoidable, all else being the same, closing the Shoe department has what effect on before-tax operating income?
a.Operating income would increase by $23,000.
b.Operating income would increase by $50,000.
c.Operating income would decrease by $13,000.
d.Operating income would decrease by $40,000.
6. Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are termed:
a.Step-fixed costs.
b.Step-variable costs.
c.Semi variable costs.
d.Curvilinear costs.
e.Mixed costs.
7. Which of the following statements represents a similarity between financial and managerial accounting?
a.Both are useful in providing information for external users.
b.Both are governed by GAAP.
c.Both draw upon data from an organization's basic accounting system.
d.Both use similar methods of reporting financial statements.
e.Both are solely concerned with historical transactions.