Multiple Choice Questions

1-1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 01 Introduction Multiple Choice Questions

1.The firm's information system:

• is always a single integrated system
• includes only financial information
• may include other information such as customer satisfaction surveys, in addition to

financial information

• is less important as a firm grows in size
• none of the above

2.Identify all the correct statements:

• Managers naturally seek to maximize shareholders' wealth
• Managers act in their own interests, and so there is no way to align their interests with

those of the owners

• To motivate managers in non-profit firms, no employee incentives are needed
• To align the interests of managers and owners, owners must design systems to monitor

and reward management behavior that increases the firm's profits

• none of the above

Accounting for Decision Making and Control, 9e Jerold L.Zimmerman (Test Bank All Chapters, 100% Original Verified, A

• Grade) Answers At The End Of Each Chapter 1 / 4

1-2 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3.An internal accounting system should:

• provide information to enable costs to be minimized
• provide financial accounting data for external reporting purposes
• provide management accounting information for decision-making
• provide data for tax purposes
• all of the above

4.Economic Darwinism:

• explains why firms persist in inefficient behavior
• explains why some inefficient accounting practices persist
• explains why marmots eat bears
• explains why bears eat marmots
• none of the above

5.Management accountants:

• are internal consultants
• are mainly score-keepers
• focus on calculating product costs
• are ‘corporate cops'
• mostly a) and d)

6.Internal control systems:

• are the responsibility of the external auditor
• include anti-fraud measures
• are designed to allow financial misrepresentation
• require that one person perform all aspects of a task
• all of the above 2 / 4

1-3 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7. Performance measures:

• are critical in designing a reward system

• are unimportant in designing a reward system

• always influence people to achieve them

• are always worded vaguely

• are not needed to provide incentives because employees always want to do the right thing

• Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes

and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each.

What is the "cost" per unit in the context of evaluating the offer from Coyote Corp.?

A. $2

B. $3

C. $4

D. $5

E. $6

• Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes

and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each.

On this information alone, should Micro accept the offer?

• No, because it will lose $1 per unit

• No, because it will lose $2 per unit

• No, because it will exceed capacity

• Yes, because it makes $1 per unit in the short run

• Unable to determine

• / 4

1-4 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes

and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each.

What other factors should be taken into consideration?

• The impact on the normal selling price of $6

• Will an additional shift be needed to complete the order?

• Are future orders from Coyote likely?

• Does the special price comply with the Robinson-Patman Act?

• All of the above

• Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes

and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each.

Assuming the same story, but Coyote's offer is for 1,500 units (all or nothing), should the offer be accepted?

• No, because it will lose $1 per unit

• No, because the opportunity costs outweigh the gains

• No, (indifferent or worse) because the opportunity costs equal the gains

• Yes, because it makes $1 per unit in the short run

• Unable to determine

Essay Questions

• / 4