Temple University

Acct 2102. Practice questions

ch 1

1)In choosing the best decision option, do we:

1. 1. maximize revenue (benefits)
   2. minimize costs
   3. maximize profit = revenue – costs (or value = benefits – costs)
   4. A, B and C are equivalent (i.e., they always lead to the same choice).

2. The opportunity cost of a decision option is:
   1. The value of the worst option.
   2. The value of the best option.
   3. The cost of the best other option.
   4. The value of the best other option.

3. Managerial accounting serves the information needs of which of the following groups:
   1. Shareholders of the firm
   2. Creditors of the firm
   3. Managers of the firm
   4. All of the above

4. John has three options for summer work. He can do lawn work for $100 per week, babysit for $125 per week, or work at the local pool for $175 per week. All of the options require approximately 20 hours of work per week. In addition, if he chooses to work at the pool, he will incur $20 in gas costs per week. The opportunity cost if he chooses to babysit is:

A. $100

B. $175

C. $155

D. $105

5. The owner of a driving range is trying to determine the value of hiring additional part time help. If she is able to hire someone to work in the shop for 15 hours per week for $10 per

hour, she estimates that she can teach approximately 10 additional lessons, for which she charges $40 per lesson. The value of hiring a new employee is:

A. $400

B. $250

C. $150

D. $100

6. A firm’s employees use managerial accounting data to determine:
   1. Who to hire and how to pay them.
   2. Which products and services to offer.
   3. The prices of products and services.
   4. What equipment to purchase.
   5. All of the above.