Accounting and Finance for Decision Making Test Preparation
Course Introduction
This course provides an in-depth understanding of key accounting and finance principles essential for effective decision making in business organizations. Students will explore financial statement analysis, budgeting, cost management, and performance evaluation, learning how to interpret and use accounting information to make strategic decisions. Emphasis is placed on the role of financial data in planning, control, and resource allocation, equipping students with practical skills in investment appraisal, risk assessment, and financial planning necessary for managerial and entrepreneurial success.
Recommended Textbook
Introduction to Managerial Accounting 8th Edition by Peter Brewer
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21 Chapters
4046 Verified Questions
4046 Flashcards
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Page 2
Chapter 1: Managerial Accounting and Cost Concepts
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299 Verified Questions
299 Flashcards
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Sample Questions
Q1) In May direct labor was 60% of conversion cost.If the manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000, the direct labor cost was:
A)$36,000
B)$20,000
C)$81,000
D)$45,000
Answer: C
Q2) If 4,000 units are sold, the variable cost per unit sold is closest to:
A)$13.60
B)$12.20
C)$14.40
D)$16.90
Answer: A
Q3) Most companies use the contribution approach in preparing financial statements for external reporting purposes.
A)True
B)False
Answer: False
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Chapter 2: Job-Order Costing: Calculating Unit Product Costs
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292 Verified Questions
292 Flashcards
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Sample Questions
Q1) If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.
A)True
B)False
Answer: False
Q2) Henkes Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 66,000 labor-hours.The estimated variable manufacturing overhead was $8.41 per labor-hour and the estimated total fixed manufacturing overhead was $1,533,180.The actual labor-hours for the year turned out to be 68,400 labor-hours.
Required:
Compute the company's predetermined overhead rate for the recently completed year.
Answer: Estimated total manufacturing overhead = $1,533,180 + ($8.41 per labor-hour × 66,000 labor-hours)= $2,088,240
Predetermined overhead rate = $2,088,240 ÷ 66,000 labor-hours = $31.64 per labor-hour
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Page 4
Chapter 3: Job-Order Costing: Cost Flows and External Reporting
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256 Verified Questions
256 Flashcards
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Sample Questions
Q1) Braam Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year, the estimated direct labor-hours were 11,500 hours.At the end of the year, actual direct labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was $143,350, and manufacturing overhead for the year was underapplied by $18,220.The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:
A)$164,023
B)$125,130
C)$148,350
D)$138,350
Answer: C
Q2) The credits to the Work in Process account as a consequence of the raw materials transactions in November total:
A)$78,000
B)$92,000
C)$0
D)$95,000
Answer: C
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Chapter 4: Activity-Based Costing
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230 Verified Questions
230 Flashcards
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Sample Questions
Q1) If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:
A)$34.33 per DLH
B)$15.39 per DLH
C)$23.03 per DLH
D)$78.28 per DLH
Q2) The activity rate for the General Factory activity cost pool under activity-based costing is closest to:
A)$166.83 per MH
B)$88.96 per MH
C)$65.12 per MH
D)$192.54 per MH
Q3) The unit product cost of Product A4 under activity-based costing is closest to:
A)$1,168.26 per unit
B)$1,381.41 per unit
C)$1,307.76 per unit
D)$784.69 per unit
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Chapter 5: Process Costing6 Cost-Volume-Profit Relationships
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) Mundes Corporation uses the weighted-average method in its process costing system.The beginning work in process inventory in its Painting Department consisted of 2,000 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs.The cost of the beginning work in process inventory in the department was recorded as $8,800.During the period, 8,000 units were completed and transferred on to the next department.The costs per equivalent unit for the period were $4.00 for material and $5.00 for conversion costs.The cost of units transferred out during the month was:
A)$40,000
B)$63,200
C)$72,000
D)$80,800
Q2) In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs.
A)True B)False
Q3) In a process costing system, costs are traced directly to jobs. A)True B)False
Page 7
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Chapter 6: Cost-Volume-Profit Relationships
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260 Verified Questions
260 Flashcards
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Sample Questions
Q1) This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $7 and increase the advertising budget by $28,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $17,500
B)increase of $17,500
C)decrease of $24,500
D)increase of $38,500
Q2) Product Y sells for $15 per unit, and has variable expenses of $9 per unit.Fixed expenses total $300,000 per year.How many units of Product Y must be sold each year to yield an annual profit of $90,000?
A)50,000 units
B)65,000 units
C)15,000 units
D)43,333 units
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Chapter 7: Variable Costing and Segment Reporting: Tools for Management
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291 Verified Questions
291 Flashcards
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Sample Questions
Q1) The unit product cost under absorption costing in Year 1 is closest to:
A)$36.00
B)$21.00
C)$57.00
D)$62.00
Q2) Under absorption costing, the unit product cost would be:
A)$7 per unit
B)$16 per unit
C)$11 per unit
D)$10 per unit
Q3) A properly constructed segmented income statement in a contribution format would show that the segment margin of the Consumer business segment is:
A)$164,000
B)$62,000
C)$394,000
D)$184,000
Q4) Absorption costing treats all fixed costs as product costs.
A)True
B)False
9
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Chapter 8: Master Budgeting
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236 Verified Questions
236 Flashcards
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Sample Questions
Q1) Um Corporation has provided the following information concerning its raw materials purchases.The budgeted cost of raw materials purchases in November is $286,032.The company pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month.The budgeted accounts payable balance at the end of November is closest to:
A)$114,413
B)$140,333
C)$171,619
D)$286,032
Q2) The total needs (i.e., production requirements plus desired ending inventory)of Material K for November are:
A)37,800 yards
B)44,940 yards
C)37,380 yards
D)45,360 yards
Q3) The estimated selling and administrative expense for August is closest to:
A)$70,000
B)$57,970
C)$16,950
D)$86,950
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Chapter 10: Performance Measurement in Decentralized Organizations
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) Suppose a company evaluates divisional performance using both ROI and residual income.The company's minimum required rate of return for the purposes of residual income calculations is 12%.If a division has a residual income of $6,000, then its ROI is less than 12%.
A)True
B)False
Q2) The division's return on investment (ROI)is closest to:
A)7.3%
B)23.8%
C)31.3%
D)3.0%
Q3) Haney Fabrication is a division of a major corporation.Last year the division had total sales of $21,560,000, net operating income of $1,897,280, and average operating assets of $7,000,000.The company's minimum required rate of return is 16%.
Required:
What is the division's return on investment (ROI)?
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Page 11
Chapter 11: Differential Analysis: The Key to Decision Making
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203 Verified Questions
203 Flashcards
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Sample Questions
Q1) Schickel Inc.regularly uses material B39U and currently has in stock 460 liters of the material for which it paid $3,128 several weeks ago.If this were to be sold as is on the open market as surplus material, it would fetch $5.95 per liter.New stocks of the material can be purchased on the open market for $6.45 per liter, but it must be purchased in lots of 1,000 liters.You have been asked to determine the relevant cost of 760 liters of the material to be used in a job for a customer.The relevant cost of the 760 liters of material B39U is:
A)$4,902
B)$4,672
C)$4,522
D)$6,450
Q2) It may be a good decision to replace an asset before its original cost has been fully recovered through increased revenues or decreased costs.
A)True
B)False
Q3) Opportunity costs represent costs that can be reduced by effective management of operations.
A)True
B)False
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Page 12
Chapter 12: Capital Budgeting Decisions
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) If the new bus is purchased, the present value of the annual cash operating costs associated with this alternative is closest to:
A)$(54,800)
B)$(36,500)
C)$(16,200)
D)$(42,800)
Q2) (Ignore income taxes in this problem.)Golab Roofing is considering the purchase of a crane that would cost $69,846, would have a useful life of 6 years, and would have no salvage value.The use of the crane would result in labor savings of $21,000 per year.The internal rate of return on the investment in the crane is closest to:
A)18%
B)20%
C)19%
D)17%
Q3) The present value of the annual cost savings of $78,000 is closest to:
A)$763,064
B)$177,027
C)$546,000
D)$367,536
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Page 13
Chapter 9: Flexible Budgets Standard Costs and Variance Analysis
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461 Verified Questions
461 Flashcards
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Sample Questions
Q1) The variable overhead efficiency variance for supplies is closest to:
A)$10,947 F
B)$119 U
C)$10,947 U
D)$119 F
Q2) The variable overhead efficiency variance for September is:
A)$140 U
B)$140 F
C)$133 F
D)$133 U
Q3) The labor efficiency variance for September is:
A)$1,540 F
B)$1,687 U
C)$1,687 F
D)$1,540 U
Q4) The raw materials price variance for the month is closest to:
A)$33,670 U
B)$29,743 F
C)$29,743 U
D)$33,670 F
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Chapter 13: Statement of Cash Flows
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132 Flashcards
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Sample Questions
Q1) Which of the following would be considered a cash inflow in the financing activities section of the statement of cash flows?
A)Issuing bonds payable.
B)Receiving cash from customers.
C)Sale of equipment.
D)Collection of a loan made to another company.
Q2) The net cash provided by (used in)financing activities for the year was:
A)$10
B)$5
C)$(12)
D)$17
Q3) Suggett Corporation's net cash provided by operating activities was $34; its income taxes were $12; its capital expenditures were $24; and its cash dividends were $7.The company's free cash flow was:
A)$(19)
B)$77
C)$3
D)$15
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15
Chapter 14: Financial Statement Analysis
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289 Flashcards
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Sample Questions
Q1) The company's book value per share at the end of Year 2 is closest to:
A)$0.38 per share
B)$8.18 per share
C)$18.08 per share
D)$13.93 per share
Q2) The acid-test (quick)ratio at the end of Year 2 is closest to:
A)0.72
B)0.83
C)0.59
D)1.25
Q3) Gnas Corporation's total current assets are $210,000, its noncurrent assets are $590,000, its total current liabilities are $160,000, its long-term liabilities are $490,000, and its stockholders' equity is $150,000.The current ratio is closest to:
A)1.31
B)0.76
C)0.33
D)0.36
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Chapter 15: Job-Order Costing: Cost Flows and External Reporting
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) In the Excel, or spreadsheet, approach to recording financial transactions, the revenues and expenses on the income statement can be determined by summing each column.
A)True
B)False
Q2) In the Excel, or spreadsheet, approach to recording financial transactions, factory utility costs paid in cash are recorded as a decrease in the Cash column and as an increase in the Manufacturing Overhead column.
A)True
B)False
Q3) In the Excel, or spreadsheet, approach to recording financial transactions, the Manufacturing Overhead account is used to record two things-all actual overhead expenses and the amount of manufacturing overhead applied to production using the predetermined overhead rate.
A)True
B)False
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17
Chapter 16: Process Costing6 Cost-Volume-Profit Relationships
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A)$29.89
B)$34.07
C)$31.07
D)$31.38
Q2) From the standpoint of cost control, the FIFO method of process costing is superior to the weighted-average method.
A)True
B)False
Q3) In the department's cost reconciliation report for February, the total cost accounted for would be:
A)$534,000
B)$267,000
C)$42,000
D)$510,000
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Chapter 17: Cost-Volume-Profit Relationships
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Sample Questions
Q1) Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year?
A)$60,000
B)$174,000
C)$150,000
D)$162,000
Q2) The best estimate of the total contribution margin when 6,300 units are sold is:
A)$75,600
B)$97,650
C)$362,880
D)$229,950
Q3) The best estimate of the total monthly fixed manufacturing cost is:
A)$221,200
B)$391,800
C)$173,800
D)$126,400
Q4) The highest and lowest costs are always used to analyze a mixed cost under the high-low method.
A)True
B)False
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Chapter 18:Flexible Budgets, Standard Costs, and Variance Analysis
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177 Verified Questions
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Sample Questions
Q1) In a standard costing system, if the actual fixed manufacturing overhead cost exceeds the budgeted fixed manufacturing overhead cost for the period, then fixed manufacturing overhead cost would be underapplied for the period.
A)True
B)False
Q2) At the beginning of last year, Tarind Corporation budgeted $75,000 of fixed manufacturing overhead and chose a denominator level of activity of 150,000 machine-hours.At the end of the year, Tari's fixed manufacturing overhead budget variance was $2,250 favorable.Its fixed manufacturing overhead volume variance was $3,750 favorable.Actual direct labor-hours for the year were 156,250.What was Tari's total standard machine-hours allowed for last year's output?
A)157,500
B)162,000
C)164,000
D)142,500
Q3) There can be no volume variance for variable manufacturing overhead.
A)True B)False
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Chapter 19: Flexible Budgets, Standard Costs, and Variance Analysis
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) When the company closes its standard cost variances, the Cost of Goods Sold will increase (decrease)by:
A)$34,300
B)($34,300)
C)$66,810
D)($66,810)
Q2) When recording the direct labor costs, the Work in Process inventory account will increase (decrease)by:
A)($249,405)
B)$249,405
C)($281,435)
D)$281,435
Q3) The net operating income for the year is closest to:
A)$107,269
B)$6,150
C)$89,348
D)$72,960
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Chapter 20: A Capital Budgeting Decisions
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Sample Questions
Q1) (Ignore income taxes in this problem.)At an interest rate of 14%, approximately how much would you need to invest today if you wanted to have $2,000,000 in 10 years?
A)$383,436
B)$540,000
C)$740,741
D)$1,043,200
Q2) The higher the discount rate, the higher the present value of a given future cash flow.
A)True
B)False
Q3) An increase in the discount rate:
A)will increase the present value of future cash flows.
B)will have no effect on net present value.
C)will reduce the present value of future cash flows.
D)is one method of compensating for reduced risk.
Q4) The present value of a given future cash flow will decrease as the discount rate decreases.
A)True
B)False
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22
Chapter 21: A Statement of Cash Flows
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Sample Questions
Q1) Using the direct method, sales adjusted to a cash basis would be:
A)$300,000
B)$302,000
C)$298,000
D)$305,000
Q2) If accounts receivable increase during a period, then the amount of cash collected from customers will be less than the amount of sales reported on the income statement for the period.
A)True
B)False
Q3) Under the direct method of determining the net cash provided by (used in)operating activities on the statement of cash flows, an increase in accounts receivable would be added to sales revenue to convert revenue to a cash basis.
A)True
B)False
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