Accounting for Decision Making
Mock Exam
Course Introduction
Accounting for Decision Making introduces students to the fundamental concepts and techniques of financial and managerial accounting essential for effective decision-making within organizations. The course emphasizes the use of accounting information in planning, controlling, and evaluating business operations. Students will explore how financial statements, budgeting processes, cost analysis, and performance measurements inform strategic and operational decisions. Through real-world case studies and practical exercises, learners develop the analytical skills needed to interpret financial data and support informed management decisions across a range of industries.
Recommended Textbook
Cornerstones of Managerial Accounting 2nd Canadian Edition by Maryanne Mowen
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14 Chapters
2059 Verified Questions
2059 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) Customer value is the difference between what a customer receives and what they give up when buying a product or service.
A)True
B)False
Answer: True
Q2) Which of the following involves choosing actions that are right,proper,and just?
A) balanced costing
B) activity-based costing
C) ethical behaviour
D) cross-functional perspective
Answer: C
Q3) What is the name of the newly formed professional accounting body?
A) CA Canada
B) CFA Canada
C) CPA Canada
D) CMA Canada
Answer: C
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Page 3
Chapter 2: Basic Managerial Accounting Concepts
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) It is NOT necessary to assign indirect costs to cost objects. A)True
B)False Answer: False
Q2) Costs are directly,NOT indirectly,associated with cost objects. A)True
B)False Answer: False
Q3) Costs can be assigned to cost objects in a number of ways.
A)True
B)False Answer: True
Q4) Screws used in the manufacture of cabinets are an example of a variable cost. A)True
B)False Answer: True
Q5) Product costs are carried in inventory until the goods are finished. A)True
B)False
Answer: False
Page 4
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Chapter 3: Cost Behaviour
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186 Flashcards
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Sample Questions
Q1) Inuvik Company manufactures drill presses.Based on past experience,Inuvik has found that its total overhead cost can be represented by the following formula: total overhead cost = $40,000 + $1.25x,where x = number of machine hours.Last year,Inuvik incurred 150,000 machine hours.
Required: A. What was the total overhead cost incurred by Inuvik last year?
B. What was the total variable overhead cost incurred by Inuvik last year?
C. What was the total overhead cost per machine hour last year?
D. What was the fixed overhead cost per machine hour last year?
E. If Inuvik incurs 180,000 machine hours next year, what will be the total overhead cost per machine hour?
Answer: A. \(\quad \$ 227,500 = \$ 40,000 + ( \$ 1.25 \times 150,000 )\)
B. \(\quad \$ 1.25 \times 150,000 = \$ 187,500\)
C. \(\quad \$ 227,500 / 150,000 = \$ 1.52\)
D. \(\quad \$ 40,000 / 150,000 = \$ 0.27\)
E. \(\quad \$ 265,000 = \$ 40,000 + ( \$ 1.25 \times 180,000 )\)
\(\$ 265,000 / 180,000 = \$ 1.47\)
Q2) Depreciation
A)Variable
B)Fixed Answer: B
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Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Break-even quantity (in units)
A)$12
B)30%
C)$28
D)70%
E)$580,000
F)14,500
Q2) Which of the following should be used to compute the sales mix so that the break-even computation is meaningful to management?
A) the expected mix
B) the most desirable mix
C) the least desirable mix
D) the traditional mix
Q3) Refer to the Figure.What is the contribution ratio?
A) 35%
B) 50%
C) 58%
D) 65%
Q4) Explain why cost-volume-profit analysis can be useful to managers.
Q5) What are two concepts useful to management when assessing risk?
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Chapter 5: Job-Order Costing
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Refer to the Figure.What is the ending balance in work in process as of September 30?
A) $1,392
B) $1,700
C) $1,961
D) $2,222
Q2) On March 1,Job 492 had a beginning balance of $500.During March,direct materials of $700 and direct labour of $400 were added to the job.Overhead is applied to production at a rate of 60% of direct labour.There are ten units in Job 492. What is the unit cost?
A) $134
B) $184
C) $1,100
D) $1,840
Q3) What is characteristic of job-order costing?
A) It is used in firms that produce homogeneous products.
B) The total cost of each job is accumulated on the time card.
C) The document for accumulating manufacturing costs is the cost sheet.
D) Costs are collected by department.
Q4) Discuss overapplied and underapplied overhead.
Page 7
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Chapter 6: Process Costing
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157 Flashcards
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Sample Questions
Q1) Complete units that could have been produced given the total amount of manufacturing effort expended for the period under consideration
A)Equivalent units of production
B)Transferred-in costs
C)FIFO costing methods
D)Production report
Q2) Green Company adds materials at the beginning of the process in the forming department,which is the first of two stages of its production cycle.Information concerning the materials used in the forming department in May follows: \(\begin{array}{lll}&&\text { Materials }\\&\text { Units }&\text { Costs }\\ \text { Work in process at May } 1 & 15,000 & \$ 8,000 \\ \text { Units started during May } & 60,000 & \$ 38,500\\\text { Units completed and transferred to next department }\\\text { during May }&65,000 \end{array}\) Using the FIFO method,what is the materials cost of the work in process at May 31? (Round unit calculations to the nearest cent.)
Q3) Describe the differences between process costing and job-order costing.
Q4) Explain how nonuniform inputs and multiple departments affect process costing.
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8
Chapter 7: Activity-Based Costing and Management
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Activity input measure is the result or product of an activity.
A)True
B)False
Q2) What is the term for the process of choosing among different sets of activities caused by competing strategies?
A) activity elimination
B) activity reduction
C) activity costing
D) activity selection
Q3) What is the term for increasing the efficiency of necessary activities by using economies of scale?
A) activity elimination
B) activity sharing
C) activity management
D) activity selection
Q4) What is the term for the time required to produce one unit of a product?
A) efficiency
B) velocity
C) speed
D) cycle time
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Chapter 8: Absorption and Variable Costing,and Inventory Management
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88 Flashcards
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Sample Questions
Q1) What is the economic order quantity (EOQ)?
A) the quantity that minimizes total ordering cost
B) the quantity that maximizes total profit
C) the quantity that minimizes total inventory-related costs
D) the quantity that maximizes carrying costs
Q2) Refer to the Figure.What is the relationship between absorption costing net income and variable costing net income?
A) Absorption costing net income is $150,000 less.
B) Absorption costing net income is $150,000 greater.
C) Absorption costing net income is $240,000 less.
D) Absorption costing net income is $240,000 greater.
Q3) Which of the following occurs under a JIT system?
A) Customer demand pulls units through the production line.
B) Safety stock is set at relatively high levels.
C) Stockouts are never a problem.
D) Inventory levels are set at 10% of total production levels.
Q4) What is the difference between absorption-costing income and variable-costing income?
Page 10
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Chapter 9: Budgeting, production, cash, and Master Budget
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166 Flashcards
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Sample Questions
Q1) Refer to the Figure.What cash is budgeted to be collected on account in August?
A) $45,000
B) $54,600
C) $132,000
D) $132,600
Q2) Refer to the Figure.How many units does BoomBoom expect to produce in February?
A) 20,000
B) 23,750
C) 24,250
D) 25,000
Q3) Sleep Country Company produces and sells pillows.It expects to sell 10,000 pillows the coming year,and it had 1,000 pillows in the finished goods inventory at the end last year.Sleep Country would like to complete operations in the coming year with at least 1,250 completed pillows in inventory.There is no ending work-in-process inventory.The pillows sell for $5 each.How many pillows should be produced in the coming year?
A) 10,000 pillows
B) 10,250 pillows
C) 11,000 pillows
D) 11,250 pillows
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Page 11
Chapter 10: Standard Costing: a Managerial Control Tool
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Which of the following statements is characteristic of variances?
A) Unfavourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
B) Favourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
C) Unfavourable variances are always credits.
D) Favourable variances are always debits.
Q2) Refer to the Figure.At the end of December,Cakers Express found that it had a favourable materials price variance of $1,000.What is the flour's standard cost per kilogram?
A) $0.95
B) $1.00
C) $1.05
D) $1.95
Q3) Ideal standards demand maximum efficiency and can be achieved only if everything operates perfectly.
A)True
B)False
Q4) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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149 Flashcards
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Sample Questions
Q1) Activity flexible budgeting predicts what activity costs will be as direct labour hours change.
A)True
B)False
Q2) Which of the following is NOT one of the three steps in building an activity-based budget?
A) identifying activities
B) classifying activities as value-added or non-value-added
C) estimating the demand for each activity's output
D) estimating the cost of producing the output demanded by each activity
Q3) Refer to the Figure.Which of the following is a flexible budget formula for the moving materials activity?
A) $180,000 + $0.50 × moves
B) $405,000 + $0.50 × moves
C) $450,000 + $0.50 × moves
D) $450,000 + $2.00 × moves
Q4) In an activity framework,recording costs is equivalent to managing activities.
A)True
B)False
Q5) What is a performance report?
Page 13
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Chapter 12: Performance Evaluation and Decentralization
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145 Flashcards
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Sample Questions
Q1) The market price is always the best transfer pricing policy.
A)True
B)False
Q2) Economic value added is residual income with the cost of capital equal to which of the following?
A) the firm's budgeted cost of capital
B) the firm's average cost of capital
C) the firm's standard cost of capital
D) the firm's actual cost of capital
Q3) What are the advantages and disadvantages of return on investment (ROI)?
Q4) Which responsibility centre designation would be used for a production manager?
A) an investment centre
B) a revenue centre
C) a profit centre
D) a cost centre
Q5) The direct comparison of the performance of two different investment centres is difficult using residual income because residual income is an absolute measure.
A)True
B)False
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Chapter 13: Short-Run Decision Making: Relevant Costing
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149 Flashcards
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Sample Questions
Q1) Many companies start with cost to determine price since revenue must cover cost for the firm to make a profit.
A)True
B)False
Q2) Meco Company produces a product that has a regular selling price of $360 per unit.At a typical monthly production volume of 2,000 units,the product's average unit cost of goods sold amounts to $270.Included in this average is $120,000 of fixed manufacturing costs.All selling and administrative costs are fixed and amount to $30,000 per month. Meco Company has just received a special order for 1,000 units at $240 per unit.The buyer will pay transportation,and the regular selling price will not be affected if Meco accepts the order.
Assume that Meco Company has excess capacity.Suppose Meco accepts the order.What would be the effect on profits?
A) a $30,000 increase
B) a $30,000 decrease
C) a $60,000 increase
D) a $60,000 decrease
Q3) Why does a special-order decision frequently ignore fixed factory overhead?
Q4) What are the six steps of the decision-making model?
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Chapter 14: Capital Investment Decisions
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153 Flashcards
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Sample Questions
Q1) Refer to the Figure.What is the payback period for Project A?
A) 2 years
B) 2.5 years
C) 3 years
D) 3.5 years
Q2) Which of the following measure results in the time required for a firm to recover its original investment?
A) the internal rate of return
B) the net present value
C) the life of the project
D) the payback period
Q3) Refer to the Figure.What is the average annual income for this project?
A) $62,500
B) $300,000
C) $500,000
D) $1,900,000
Q4) A postaudit is an analysis of a capital project before it is implemented.
A)True
B)False
Q5) What are the limitations of Accounting Rate of Return?
Page 16
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