Accounting for Decision Making Exam Materials
Course Introduction
Accounting for Decision Making focuses on the use of accounting information to support managerial decision processes within organizations. The course explores key principles and techniques of managerial accounting, including budgeting, cost analysis, performance measurement, and decision-making models. Emphasis is placed on interpreting and applying financial data to organizational planning, control, and strategic development. Students learn to analyze financial statements, allocate resources, and evaluate alternative business choices, equipping them with essential tools to make informed, effective decisions in real-world business scenarios.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
1673 Flashcards
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Page 2
Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) In a manufacturing company,wages and benefits of assembly line workers are period costs.
A)True
B)False
Answer: False
Q2) Which of the following is true of Finished Goods Inventory?
A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.
B) Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold.
C) Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory.
D) Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory.
Answer: A
Q3) Product costs,such as direct materials,are expensed in the period they are paid. A)True
B)False
Answer: False
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Page 3
Chapter 19: Job Order Costing
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) The predetermined overhead allocation rate is the rate used to ________.
A) assign direct material costs to jobs
B) allocate actual manufacturing overhead costs incurred during a period
C) allocate estimated manufacturing overhead costs to jobs
D) trace manufacturing and non manufacturing costs to jobs
Answer: C
Q2) The actual direct labor costs are assigned to individual jobs,and the actual direct labor cost is recorded with a debit to Work-in-Process Inventory.
A)True
B)False
Answer: True
Q3) The predetermined overhead allocation rate is calculated by dividing ________.
A) the total estimated overhead costs by total number of days in a year
B) the estimated amount of cost driver by actual total overhead costs
C) the actual overhead costs by actual amount of the cost driver or allocation base
D) the estimated overhead costs by total estimated quantity of the overhead allocation base
Answer: D
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4
Chapter 20: Process Costing
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) In a process costing system,production costs are ________.
A) adjusted and allocated by jobs
B) not inventoried
C) directly shown on the income statement
D) accumulated by process
Answer: D
Q2) Both job order costing and process costing ________.
A) maintain a single Work-in-Process Inventory account
B) treat all period costs as product costs
C) follow last-in, first-out method for inventory valuation
D) have the same type of product costs
Answer: D
Q3) The Raw Materials Inventory account is debited when direct materials are issued for production.
A)True
B)False
Answer: False
Q4) Provide the formula for (1)To account for and (2)Accounted for.
Answer: (1)To account for = Beginning balance + Amount started or added
(2)Accounted for = Completed and transferred out + In process
Page 5
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Chapter 21: Cost-Volume-Profit Analysis
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238 Verified Questions
238 Flashcards
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Sample Questions
Q1) Roy's Raingear produces a single product and reports the following data:
\(\begin{array}{|l|r|l|}
\hline \text { Price } & \$ 8.84 &\text { per unit } \\
\hline \text { Variable cost } & \$ 6 & \text { per unit } \\
\hline \text { Fixed cost } & \$ 21,000 &\text { per month } \\
\hline \text { Volume } & 13,000 &\text { per month } \\
\hline
\end{array}\) If the company reduces its price to $7.75,it believes that the volume will go up to 15,000 units.
How would this change affect operating income?
A) It will go up by $10,670.
B) It will go up by $15,920.
C) It will go down by $10,670.
D) It will go down by $15,920.
Q2) Aspen Manufacturers produces flooring material.The monthly fixed costs are $12,000 per month.The unit selling price is $85 and variable cost per unit is $45.Aspen wishes to earn an operating income of $25,000.Using the contribution martin ratio,calculate the total revenue.(Round your intermediate calculations to five decimal places.)
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Chapter 22: Master Budgets
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) The direct materials budget is prepared using information from the ________ budget.
A) cash
B) master
C) capital expenditure
D) production
Q2) What is the final step in the master budget process?
Q3) A company with different segments using different software configurations can easily combine budget data of different segments to create the master budget.
A)True
B)False
Q4) Farmerlands,Inc.has budgeted sales for the months of September and October at $304,000 and $272,000,respectively.Monthly sales are 80% credit and 20% cash.Of the credit sales,50% are collected in the month of sale,and 50% are collected in the following month.Calculate cash collections for the month of October.
A) $163,200
B) $291,200
C) $284,800
D) $182,400
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Chapter 23: Flexible Budgets and Standard Cost Systems
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) The sales volume variance is the difference between the ________.
A) actual results and the expected results in the flexible budget for the actual units sold
B) expected results in the flexible budget for the actual units sold and the static budget
C) static budget and actual amounts due to differences in sales price
D) flexible budget and static budget due to differences in fixed costs
Q2) Complete the following table:
\[\begin{array} { | l | l | l | }
\hline \text { Variance } & \text { How is the variance calculated? } & \text { How does the variance arise? } \\
\hline \text { Flexible budget } & & \\
\hline \text { Sales volume } & & \\
\hline
\end{array}\]
Q3) An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.
A)True
B)False
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Chapter 24: Cost Allocation and Responsibility Accounting
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189 Flashcards
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Sample Questions
Q1) Kurtz Logistics provides the following information: \[\begin{array} { | l | r | }
\hline \text { Operating income } & \$ 1,550,000 \\
\hline \text { Net sales } & \$ 15,000,000 \\
\hline \text { Average total assets } & \$ 1,950,000 \\
\hline \text { Management's target rate of return } & 30 \% \\
\hline \end{array}\] What is the company's profit margin ratio?
A) 13.0%
B) 10.3%
C) 79.5%
D) 27.9%
Q2) The limitations of financial performance measures ________.
A) lead management to use a time horizon of more than five years
B) make it difficult for companies to create goal congruence
C) lead management to use the gross book value of assets
D) can be overcome by taking a broader view of performance
Q3) A profit center performance report includes both revenues and expenses.
A)True
B)False
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Page 9
Chapter 25: Short-Term Business Decisions
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) Peacock,Inc.sells 2,100 kayaks per year at a sales price of $500 per unit.It sells in a highly competitive market and uses target pricing.The company has calculated its target full product cost at $820,000 per year.Fixed costs are $340,000 per year and cannot be reduced.What is the target variable cost per unit assuming units sold are equal to units produced?
A) $229
B) $390
C) $552
D) $162
Q2) Differential analysis is a common approach to making short-term business decisions.
A)True
B)False
Q3) If a company wants to be a price-taker,which of the following strategies should be taken?
A) Enter a competitive market and focus on cost cutting.
B) Produce a unique product.
C) Exploit the value of a fashionable brand name.
D) Differentiate the product clearly from the competitors.
Q4) Define the terms Relevant Cost and Sunk Cost.
Page 10
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Chapter 26: Capital Investment Decisions
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) Most capital budgeting methods focus on accrual-based income.
A)True
B)False
Q2) An investment today of $8,424 at 6% will yield total payments of $10,000 over five years.The reason for this increase is that the interest is being earned on principal that is left invested each year.
A)True
B)False
Q3) When the internal rate of return is the same as the required rate of return,the net present value of an investment will be positive.
A)True
B)False
Q4) Which of the following most accurately describes an annuity?
A) an investment which produces increasing cash flows over time
B) a series of unequal cash payments made at equal time intervals
C) a stream of equal cash payments made at equal time intervals
D) a term that does not apply to mortgage payable or bond payable
Q5) When using the accounting rate of return,what is the basis for making the decision to make the investment?
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