Accounting for Decision Making Exam
Questions
Course Introduction
Accounting for Decision Making introduces students to the fundamental concepts and tools of accounting as they relate to managerial decision-making. The course emphasizes how accounting information is used by managers to plan, control, and evaluate business operations for effective resource allocation and strategic planning. Topics include cost behavior, budgeting, performance measurement, relevant cost analysis, and financial statement interpretation. Through real-world case studies and exercises, students develop the skills to analyze financial data, assess business alternatives, and make informed management decisions that enhance organizational effectiveness.
Recommended Textbook
ACCT Managerial Asia Pacific Edition 1st Edition by Prabhu Sivabalan
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) How has the automation of accounting information altered the role of the managerial accountant?
Answer: Automation in present-day organisations allows clerical staff to gather and input accounting information.Most computer systems have the ability to generate data reports.Therefore,the managerial accountant is able to spend time monitoring and interpreting the reports generated by the automated system.They also aid managers in the decision-making process and perform more financial planning and modelling.
Q2) All of the following are examples of operating activities except:
A) Decisions on whether or not to schedule overtime for employees.
B) Decisions on what price to charge for a product.
C) Decisions on whether or not to accept a special order.
D) Decisions on whether actual outcomes were similar to desired outcomes.
Answer: D
Q3) An example of quantitative data is:
A) company reputation.
B) number of customer complaints.
C) customer satisfaction.
D) product quality.
Answer: B
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Chapter 2: Product Costing: Manufacturing Processes, cost
Terminology and Cost Flows
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Sample Questions
Q1) Which of the following is a risk that would more likely be seen in a lean production and just-in-time manufacturing environment than in a traditional production environment?
A) Reduced customer satisfaction due to higher product defects
B) Reduced raw material supply bringing the production process to a halt
C) Increased inventory storage costs
D) Increased production time resulting in lost sales
Answer: B
Q2) Which of the following is not a type of manufacturing cost?
A) Direct material costs
B) Administrative costs
C) Factory overhead costs
D) Direct labour costs
Answer: B
Q3) Provide specific examples of why accurate product or service costing information is important for internal purposes.
Answer: It may be useful for the following reasons: to determine accurate pricing information to determine a products profitability for cash budgeting purposes
4
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) Label whether each of the following costs is most likely fixed (F)or variable (V). \(\begin{array}{lc}
\text { Direct materials} &\underline{\quad\quad}\\
\text { Factory rent} &\underline{\quad\quad}\\
\text {Sales commissions expense } &\underline{\quad\quad}\\
\text { Direct labour } &\underline{\quad\quad}\\
\text { Depreciation on factory building } &\underline{\quad\quad}\\ \end{array}\)
Answer: \(\begin{array}{lc}
\text { Direct materials} &\underline{\quad V\quad}\\
\text { Factory rent} &\underline{\quad F\quad}\\
\text {Sales commissions expense } &\underline{\quad V\quad}\\
\text { Direct labour } &\underline{\quad V\quad}\\
\text { Depreciation on factory building } &\underline{\quad F\quad}\\ \end{array}\)
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Chapter 4: Job Costing and Overhead Costing Systems
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Sample Questions
Q1) Samantha's Sundries Inc.assigns overhead to specific jobs based on machine hours.At the beginning of the current year,estimated overhead costs were $400 000 and estimated machine hours were 25 000.By the end of the year,actual overhead costs were calculated to be $375 000 and actual machine hours were 30 000. By how much was overhead under- or overapplied for the year?
Q2) An allocation base that causes overhead costs to be incurred is called a(n):
A) revenue driver.
B) predetermined driver.
C) cost driver.
D) applied driver.
Q3) Which of the following companies would be the most likely to adopt a job order costing system?
A) Beverage manufacturer
B) Oil Refinery
C) Custom Home Contractor
D) Clothing manufacturer
Q4) Why do companies develop estimates for overhead costs in job costing? How are estimates developed?
Q5) Explain the term 'cost driver' and give several examples.
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Chapter 5: Process Costing Systems
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Q1) Robinson Products uses the weighted-average method of process costing.The following information was available for the current year: \(\begin{array}{lcc} & \text {Number } & \text {Production } \\ &\underline{ \text {of units } } &\underline{\text { costs }}\\ \text { Beginning work-in-process ( \( 10 \% \) complete) } &5000&\$1500\\ \text { Units started this period (current period production work) } &90000&2790000\\ \text { Ending work-in-process ( \(40 \% \) complete) } &2000\\ \end{array}\)
Required: A. How many total equivalent units were completed during the year?
B. What was the cost per equivalent urit?
C. What is the cost allocated to the ending work-in-pracess units?
D. What is cost of goods manufactured for the year?
Q2) With respect to process costing,what is the difference in how the weighted-average and first-in,first-out (FIFO)methods treat beginning work-in-process units?
Q3) What is the weighted average process costing method?
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Chapter 6: Service and Operations Costing
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Sample Questions
Q1) Which of the following characteristics does not explain a service shop organisation?
A) Medium customisation
B) Medium contact time
C) Medium discretion
D) Dominantly people focused
Q2) Evaluate the following statement - direct labour is the main cost in service organisations.
Q3) By how much was overhead over- or underapplied for the month of June?
A) $1700 overapplied
B) $500 overapplied
C) $500 underapplied
D) $1700 underapplied
Q4) A service shop is characterised by:
A) low contact time.
B) medium contact time.
C) high contact time.
D) low customisation.
Q5) Explain how professional services,mass services and service shops relate to other costing systems existing in product organisations.
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Chapter 7: Departmental Overhead Costing
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Sample Questions
Q1) Shell Harbour Productions has two production departments,Assembly and Finishing.The total overhead cost in Assembly is $450?000 and Finishing is $25?000.Assembly is driven by machine hours,and Finishing by labour hours.There are 4000 labour hours and 15?000 machine hours in Assembly,while there are 5000 labour hours and 8000 machine hours in Finishing.
Required:
A.What is the overhead rate per unit for Assembly,and for Finishing?
B.How much overhead is applied to a product that uses 3 labour hours in Assembly and 7 labour hours in Finishing,as well as 9 machine hours in Assembly and 4 machine hours in Finishing?
Q2) Assuming that Motlop Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to Producing 2 under the direct method would be:
A) $6667
B) $3333
C) $6500
D) $3500
Q3) When might the plantwide overhead rate be equally effective as departmental overhead rates?
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Chapter 8: Activity-Based Costing
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Sample Questions
Q1) What is the overhead rate for the purchasing activity?
A) $ .05
B) $20.00
C) $72.00
D) $ 3.13
Q2) If Job #229 required 5 purchase orders,10 shipments,8 machine setups,and 4 inspections to fill,how much overhead should be assigned to Job #229?
A) $ 4.06
B) $303.75
C) $580.00
D) $ 85.50
Q3) Which of the following statements comparing traditional and activity-based costing (ABC)is false?
A) Traditional systems are generally less accurate than ABC systems.
B) ABC and traditional systems often produce different product cost information.
C) ABC systems focus on activity costing while traditional systems focus on volume costing.
D) ABC systems are generally less expensive to implement than traditional systems.
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Chapter 9: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Which of the following is an assumption of CVP analysis?
A) Inventory levels increase at a constant rate.
B) Costs are linear throughout the relevant range.
C) The number of units sold is constant.
D) Fixed costs increase as production increases.
Q2) Greenwood Manufacturing has the following product information: \(\begin{array}{llcc}
\text {Sales price } & \text { \( \$40.00 \) per unit } \\ \text {Variable costs } & \text { \( \$ 18.00 \) per unit } \\ \text { Fixed Costs (total) } &\$99000\\
\end{array}\)
Required: Calculate the following based on the above information:
A What is the break-even paint in units?
B. What is the break-even point in sales dollars?
C. How many units need to be sold in order for the company to eann a target-profit of 4429 000? (ignore taxes)
Q3) What is meant by the term 'break-even point' and how is it computed in a single versus a multiproduct environment?
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Chapter 10: Relevant Costs and Product Planning Decisions
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Sample Questions
Q1) If Averette & Averette outsources the making of dentures,net income will:
A) decrease by $15 000.
B) increase by $5000.
C) increase by $15 000.
D) decrease by $5000.
Q2) Which of the following would not be a factor in the consideration of whether or not a special order is accepted or not?
A) Variable costs
B) Avoidable fixed costs
C) Sales price of the special order
D) Unavoidable fixed costs
Q3) If demand were strong for both sets and the company could sell an unlimited number of either style,what is the maximum total contribution margin the company could have?
A) $ 875 000
B) $ 281 250
C) $1 125 000
D) $1 750 000
Q4) List at least two factors that should be considered in a make or buy decision.
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Chapter 11: Long-Term Capital Investmentdecisions
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Sample Questions
Q1) Capital investment decisions often involve all of the following except:
A) qualitative factors.
B) short periods of time.
C) risk.
D) large sums of money.
Q2) Siddon Inc.is considering investing in equipment that costs $20 000.The equipment would be depreciated using the straight-line method with no half-year convention over five years and have no salvage value.If the company has a 40 per cent income tax rate and desires an after-tax rate of return of 12 per cent on investments,the total present value of the depreciation tax shield is:
A) $ 8652
B) $14 419
C) $ 5768
D) $ 908
Q3) Which of the following statements is true regarding the concept of the time value of money?
A) A dollar paid today is worth the same as a dollar paid in the future.
B) A dollar received today is worth the same as a dollar received in the future.
C) A dollar received today is worth more than a dollar received in the future.
D) A dollar received today is worth less than a dollar received in the future.
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Chapter 12: Fixed and Rolling Budgets for Planning and Decision Making
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Sample Questions
Q1) The budget that forecasts how many units a manufacturing company should produce in order to meet sales projections is called a:
A) sales budget.
B) materials budget.
C) production budget.
D) flexible budget.
Q2) Budgets are:
A) future oriented.
B) for managers only.
C) required by GAAP.
D) typically not used by small business.
Q3) On a production budget,what is the basic formula for computing the required production for a certain period of time?
Q4) Which type(s)of activities are static budgets less useful for?
A) Operating activities
B) Control activities
C) Planning activities
D) Both control and planning activities
Page 14
Q5) What is the difference between a static budget and a flexible budget?
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Chapter 13: Management Accounting for Cost Control and Performance Evaluation Flexible
Budgets and Variance Analysis
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Sample Questions
Q1) The type of budget that budgets standard costs for the actual volume of production is a:
A) standard budget.
B) static budget.
C) flexible budget.
D) fixed budget.
Q2) Smith Corp.has a $6 000 favourable flexible budget variance for January.If January's flexible budget net income was $100 000,which of the following statements is true?
A) Smith's static budget must have showed net income of $106 000.
B) Smith's static budget must have showed net income of $94 000.
C) Smith's actual net income must have been $106 000.
D) Smith's actual net income must have been $94 000.
Q3) What was Sampson's variable overhead efficiency variance?
A) $4000 U
B) $4000 F
C) $2000 U
D) $2000 F
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Q4) What is 'management by exception'? Do you think it represents an efficient use of management time? Why or why not?
Chapter 14: Decentralisation and Modern Performance
Management Systems the Balanced Scorecard
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Sample Questions
Q1) Grayson & Sons,a local car dealership,has three separate divisions: car repair,new car sales,and used car sales.The company has decided to implement a new system for evaluating the performance of its three division managers and the bonuses they receive.The following information is available with respect to each division for the current year:
\(\begin{array}{lrrr}
& \underline{\text { Car Repair} } & \underline{ \text { New Car Sales} }& \underline{\text { Used Car Sales }}\\
\text { Operating income } & \$ 2000000 & \$ 8000000 & \$ 3000000 \\ \text { Operating assets } & 3000000 & 18000000 & 8000000 \end{array}\)
In order to receive a bonus,a division manager must have an ROI greater than 50 per cent and residual income in excess of $1 400 000.If management uses a minimum required rate of return of 18 per cent,which division manager(s)would be eligible to receive a bonus?
A) Car repair only
B) New car only
C) Used car only
D) Car repair,new car,and used car
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Chapter 15: Accounting for Sustainability Social
Reporting,environmental Reporting and Management Accounting
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Sample Questions
Q1) Management accounting most clearly contributes to sustainability by:
A) identifying budgets for environmental companies.
B) helping to understand costs for running environmental programs.
C) providing a cost benefit analysis of social and environmental practices.
D) determining revenues from environmental projects.
Q2) Describe three external costs that might be related to Qantas.Please explain your rationale:
Q3) 'High levels of environmental costs are acceptable if they are prevention costs.' Do you agree? Please explain.
Q4) Sustainability is referred to as being:
A) organisations that can last longer than others.
B) the pursuit of endeavours which prolongs the use of resources.
C) any activity that is of a higher than average standard.
D) the pursuit of green policies at all cost.
Q5) Which of the following expenses is most likely to be an external failure cost?
A) Regulatory fine
B) Salary expense
C) Quality control expenses
D) GHG monitoring expense
Page 17
Q6) What are prevention environmental costs? Please explain with an example.
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