Question

SECTION A: MULTIPLE CHOICE QUESTIONS 1. Compared to financial accounting, management accounting places more emphasis on: A. the flexibility of information B. the precision of information C. the timeliness of information D. choices A and C above. 2. Managerial accountant regularly communicates with business associates to avoid conflicts of interest and advises relevant parties of potential conflicts. In doing so, the accountant will have applied the ethical standard of: A. objectivity. B. confidentiality. C. integrity. D. credibility. 3. What type of cost exhibits the behaviour that follows? Production (units) Cost per unit 50,000 RM1.50 70,000 RM1.50 A. Fixed cost. B. Variable cost. C. Step-fixed cost. D. None of the above. 4. All of the following would be classified as period costs EXCEPT: A. advertising cost. B. insurance on a factory building. C. administrative clerk's salary. D. office supplies expense. 5. Denver Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to RM50,000; variable costs were RM100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units? A. RM150,000. B. RM151,000. C. RM152,000. D. RM153,000. 6. The term differential cost refers to: A. a difference in cost which results from selecting one alternative instead of another. B. the benefit forgone by selecting one alternative instead of another. C. a cost which does not involve any dollar outlay but which is relevant to the decision-making process. D. a cost which continues to be incurred even though there is no activity.

Answer 1

1) Solution: choices A and C above
Explanation: The managerial accounting lays more emphasis on timeliness and flexibility of information.

2) Solution: integrity
Explanation: The integrity in ethics refers to the honesty and accuracy or truthfulness of one's actions

3) Solution: Variable Cost
Explanation: Variable cost changes with change in number of units produced

4) Solution: insurance on a factory building
Explanation: The period cost includes advertisement cost, office supplies expense and administrative clerk's salary

5) Solution: RM152,000
Explanation: FC = 50,000; VC per unit = RM100,000 / 100,000 units = 1
Thus anticipated cost for 102,000 units = 50,000 + 102,000*1 = 152,000

6) Solution: difference in cost which results from selecting one alternative instead of another
Explanation: Differential cost is difference in cost among any two alternatives