1) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. 
General corporate liability insurance
B. Cost of landscaping the corporate office
C. The western divisions vice presidents salary
D. Factory janitor
2) Managerial accounting __________.
A. is governed by generally accepted accounting principles
B. pertains to the entity as a whole and is highly aggregated
C. places emphasis on special-purpose information
D. is concerned with costing products
3) What is value chain management best defined as?
A. A large chain that keeps the machines from falling on the production floor
B. Management decisions that affect how quickly the production run occurs
C. The incremental value of costs associated with hiring a new production floor leader
D. All activities associated with providing a product or service
4) The income statement and balance sheet columns of Pine Companys worksheet reflects the following totals:
Income Statement Balance Sheet
Dr.
Cr.
Dr.
Cr.
Totals $58,000
$48,000
$34,000 $44,000
The net income (or loss) for the period is __________.
A. $10,000 income
B. not determinable
C. $10,000 loss
A. $10,000 income
D. $48,000 income
5) The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. generally accepted accounting principles
B. generally accepted accounting standards
C. standards of financial reporting
D. operating guidelines
6) If a company reports a net loss, it __________.
A. will not be able to pay cash dividends
B. will not be able to make capital expenditures
C. will not be able to get a loan
D. may still have a net increase in cash
7) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?
A. Selling either results in the same additional income for the company
B. It should sell an equal quantity of both
C. Wine
D. Beer
8) The cost principle requires that when assets are acquired, they be recorded at __________.
A. selling price
B. list price
C. exchange price paid
A. selling price
D. appraisal value
9) Which one of the following is a product cost?
A. Office salaries
B. Indirect labor
C. Advertising costs
D. Sales persons salaries
10) What exists when budgeted costs exceed actual results?
A. A favorable difference
B. A budgeting error
C. An unfavorable difference
D. An excess profit
11) The primary purpose of the statement of cash flows is to __________.
A. provide information about the investing and financing activities during a period
B. facilitate banking relationships
C. provide information about the cash receipts and cash payments during a period
D. prove that revenues exceed expenses if there is a net income
12) Multinational corporations __________.
A. are U.S. companies that sell goods and services in other countries
B. are U.S. companies that trade their securities on the exchanges in other countries
C. are required to use international accounting standards
D. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
13) What exists when budgeted costs exceed actual results?
A. A favorable difference
B. An excess profit
C. A budgeting error
D. An unfavorable difference
14) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.
A. $75
B. $65
C. $60
D. $50
15) Institutions in the economy that help to match one persons saving with another persons investment are collectively called the __________.
A. Federal Reserve system
B. financial system
C. monetary system
D. banking system
16) Which of the following statements about GDP is correct?
A. Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
B. GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
C. GDP is to a nations economy as household income is to a household.
D. GDP increases if the total population increases.
17) One characteristic of an oligopoly market structure is:
A. firms in the industry have some degree of market power.
B. the actions of one seller have no impact on the profitability of other sellers.
C. firms in the industry are typically characterized by very diverse product lines.
D. products typically sell at a price that reflects their marginal cost of production.
18) In computing GDP, market prices are used to value final goods and services because
__________.
A. market prices do not change much over time, so it is easy to make comparisons between years
B. market prices reflect the values of goods and services
C. if market prices are out of line with how people value goods, the government sets price ceilings and price floors
D. Market prices are not used in computing GDP
19) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.
A. form various degrees of cartels
B. cooperate rather than compete with each other
C. collude with each other
D. compete rather than cooperate with each other
20) The price of a good that prevails in a world market is called the
A. relative price.
B. world price.
C. absolute price.
D. comparative price.
21) A rational decision maker __________.
A. ignores the likely effects of government policies when he or she makes choices
B. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
C. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions
D. ignores marginal changes and focuses instead on the big picture
22) Many U.S. business leaders argue that the current state of U.S. net exports is the result of __________.
A. free trade policies of foreign governments.
B. unproductive U.S. workers.
C. unfair foreign competition.
D. U.S. export subsidies.
23) The political business cycle refers to __________.
A. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected
B. changes in output created by the monetary rule the Fed must follow
C. the fact that about every four years some politician advocates greater government control of the Fed
D. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle
24) The part of the balance of payments account that lists all long-term flows of payments is called the:
A. financial and capital account.
B. government financial account.
C. balance of trade.
D. current account.
25) In general, the longest lag for __________.
A. both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
B. monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
C. fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
D. both fiscal and monetary policy is the time it takes to change policy
26) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.
A. the monetary policy reaction lag
B. the sacrifice ratio dilemma
C. the time inconsistency of policy
D. inflation targeting
27) Most economists use the aggregate demand and aggregate supply model primarily to analyze __________.
A. productivity and economic growth
B. the long-run effects of international trade policies
C. the effects of macroeconomic policy on the prices of individual goods
D. short-run fluctuations in the economy
28) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:
A. Producing an imitation of the new technology that utilizes lower-quality and lower-cost materials
B. Technology followers are not successful at low-cost strategies C. Mass-producing products that have an established market niche
A. Producing an imitation of the new technology that utilizes lower-quality and lower-cost materials
D. Making subtle changes to the product, thereby avoiding patent restrictions
E. Learning from the leader thereby avoiding the costs and risks of technology leadership
29) Which of these describes a vision, as it pertains to leadership?
A. A mental image of a future state of an organization
B. The method through which leaders achieve goals
C. A short-term goal of an organization
D. A long-term goal of an organization
E. Likely to land you in a padded room
30) The pursuit of lucrative opportunities by enterprising individuals is called:
A. Independence
B. Social experimentation
C. Entrepreneurship
