74 practice sets · Page 2 of 4
What is the payback period?
The length of time it takes for an investment to generate enough cash flow to recover its initial cost
The present value of an investment's future cash flows
The rate of return that an investment is expected to generate
The profitability of an investment relative to its cost
What is the purpose of a capital budgeting decision?
To decide whether to invest in a long-term asset
To decide how to finance a long-term asset
To decide when to replace a long-term asset
All of the above
What is management by exception?
A management approach that focuses on significant deviations from budgeted amounts
A management approach that focuses on meeting all budget targets
A management approach that involves setting challenging budget targets
A management approach that involves delegating all budget responsibilities
What is the purpose of a performance report?
To compare actual results to budgeted amounts
To identify variances
To analyze the causes of variances
All of the above
What is a cost driver?
A factor that causes a change in the cost of an activity
A factor that determines the selling price of a product
A factor that influences customer demand
A factor that affects employee morale
What is the purpose of a cost allocation system?
To assign indirect costs to cost objects
To trace direct costs to cost objects
To calculate the cost of goods sold
To determine the selling price of a product
What is the difference between absorption costing and variable costing?
Absorption costing includes fixed manufacturing overhead in product costs, while variable costing does not
Absorption costing is used for external reporting, while variable costing is used for internal decision-making
Absorption costing is based on generally accepted accounting principles (GAAP), while variable costing is not
All of the above
Which of the following is NOT a method of cost behavior analysis?
Account analysis
Regression analysis
High-low method
Net present value analysis
What is the margin of safety?
The difference between actual sales and break-even sales
The difference between actual profit and budgeted profit
The difference between actual costs and budgeted costs
The difference between actual production and budgeted production
The break-even point is the level of sales at which:
Total revenue equals total costs
Total revenue equals fixed costs
Total costs equal variable costs
Fixed costs equal variable costs
What is the formula for calculating the break-even point in units?
Fixed costs / Contribution margin per unit
Fixed costs / Sales price per unit
Variable costs / Contribution margin per unit
Variable costs / Sales price per unit
What is the purpose of cost-volume-profit (CVP) analysis?
To understand the relationship between costs, volume, and profit
To determine the break-even point
To assess the profitability of different products
All of the above
What is a just-in-time (JIT) inventory system?
An inventory system that aims to minimize inventory levels by receiving materials only when they are needed for production
An inventory system that aims to maximize inventory levels to avoid stockouts
An inventory system that uses a fixed order quantity
An inventory system that uses a periodic review system
What is a standard cost?
A predetermined cost that is used as a benchmark for measuring actual costs
An actual cost that is incurred in the production of a product
A budgeted cost that is estimated for a future period
A historical cost that is used for inventory valuation
What is activity-based costing (ABC)?
A costing system that assigns costs to activities and then to products based on their consumption of those activities
A costing system that assigns costs to products based on their direct labor content
A costing system that assigns costs to products based on their machine hours
A costing system that assigns costs to products based on their direct material content
What is the purpose of a balanced scorecard?
To provide a comprehensive view of organizational performance
To focus on financial performance only
To focus on non-financial performance only
To measure customer satisfaction only
What is a key performance indicator (KPI)?
A metric that is used to measure progress towards a goal
A financial ratio that is used to evaluate profitability
A non-financial measure that is used to evaluate customer satisfaction
A measure of employee productivity
What is benchmarking?
The process of comparing a company's performance to that of other companies
The process of setting goals for future performance
The process of evaluating employee performance
The process of measuring customer satisfaction
What is the purpose of performance evaluation?
To assess the effectiveness and efficiency of operations
To identify areas for improvement
To motivate employees
All of the above
What is decentralization?
The delegation of decision-making authority to lower levels of management
The centralization of decision-making authority at the top level of management
The process of dividing a company into separate divisions
The process of merging two or more companies
