Accounting for Decision Making Review Questions
Course Introduction
Accounting for Decision Making introduces students to the principles and practices of accounting as a vital tool for informed business decision-making. The course covers fundamental financial and managerial accounting concepts, including interpreting financial statements, analyzing costs, budgeting, and performance evaluation. Through case studies and practical exercises, students learn how accounting information supports strategic planning, operational control, and resource allocation in a variety of organizational settings. Emphasis is placed on ethical considerations, critical thinking, and problem-solving skills essential for effective managerial decisions.
Recommended Textbook
ACCT Managerial Asia Pacific Edition 1st Edition by Prabhu Sivabalan
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15 Chapters
1304 Verified Questions
1304 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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51 Verified Questions
51 Flashcards
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Sample Questions
Q1) Costs that differ between alternatives are called:
A) sunk costs.
B) irrelevant costs.
C) relevant costs.
D) unavoidable costs.
Answer: C
Q2) Which of the following is true regarding managerial accounting?
A) It often emphasises segments rather than the organisation as a whole.
B) It often must follow established rules called generally accepted accounting principles.
C) Its primary focus is on providing information to external users.
D) It is less flexible than financial accounting.
Answer: A
Q3) ERP systems capture:
A) only qualitative data.
B) only quantitative data.
C) both qualitative and quantitative data.
D) the same information as traditional accounting information systems.
Answer: C
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3
Chapter 2: Product Costing: Manufacturing Processes, cost
Terminology and Cost Flows
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) In general,costs incurred in the factory that do not qualify as either direct material or direct labour are called:
A) manufacturing costs.
B) manufacturing overhead.
C) non-manufacturing costs.
D) selling and administrative costs.
Answer: B
Q2) Cost of goods manufactured for July is:
A) $153 000
B) $103 000
C) $130 000
D) $133 000
Answer: D
Q3) What is cost of goods sold for 2009?
A) $55 000
B) $52 250
C) $61 750
D) $65 000
Answer: B
Page 4
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Chapter 3: Cost Behaviour
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Regression analysis is a technique used to:
A) estimate the step and mixed components of total cost.
B) estimate the fixed and variable components of a mixed cost.
C) estimate the fixed and variable components of a step cost.
D) estimate the fixed and mixed components of step cost.
Answer: B
Q2) For each of the following statements,fill in the blank with either the word increase,decrease,or stay the same.
a.As production decreases,total fixed costs ______________.
b.As production decreases,fixed costs per unit _____________.
c.As production increases,variable costs per unit _____________.
d.As production increases,total variable costs _______________.
Answer: a.As production decreases,total fixed costs stay the same .
b.As production decreases,fixed costs per unit increase .
c.As production increases,variable costs per unit stay the same .
d.As production increases,total variable costs increase .
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Chapter 4: Job Costing and Overhead Costing Systems
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) Sherrell Inc.applies overhead to jobs using direct labour hours.The following data are available for the year:
\(\begin{array}{lr}
\text { Estimated direct labour hours } & 190000 \\
\text { Actual direct labour hours } & 130000 \\
\text { Actual overhead } & \$ 600000 \end{array}\)
At the end of the year,it was determined that overhead was over-applied by $50 000. Required: A. What was the total applied overhead for the year?
B. What was the predetermined overhead rate?
Q2) For each of the following organisations,indicate which types might be best suited to job costing.
\(\begin{array}{ll}
\text { Hospital } & \text { Beverage producer } \\
\text { Construction company } & \text { Law firm } \\
\text { Clothing manufacturer } & \text { Drug manufacturer } \\
\text { Oil refinery } & \text { Paint manufacturer } \end{array}\)
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Chapter 5: Process Costing Systems
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) What are the two types of spoilage costs for process costing?
A) Normal spoilage and unreasonable spoilage costs
B) Abnormal and reasonable spoilage costs
C) Operations and period costs
D) Normal and abnormal costs
Q2) Jet Products had no units in process at the beginning of the year.Jet uses process costing and has calculated 45 000 total equivalent units completed during the year.If there were 53 000 units started in the current period and 10 000 units in ending work-in-process,what percentage complete were the ending inventory units?
A) 50 per cent
B) 85 per cent
C) 20 per cent
D) 22 per cent
Q3) How many total equivalent units of telephones were completed during the year?
A) 4600
B) 4500
C) 3000
D) 2300
Q4) What is the weighted average process costing method?
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Chapter 6: Service and Operations Costing
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60 Flashcards
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Sample Questions
Q1) Which of the following costs is the most likely to be traced to a customer in a service costing environment?
A) Rent costs
B) Labour costs
C) Administrative costs
D) Equipment depreciation costs
Q2) Lewis and Partners is a legal firm that measures and tracks costs for individual clients separately.While most client work requires some automation time,management has determined that direct labour cost drives its service overhead costs.During the month of September,the following data were available for Client #234: Direct labour \(\quad \) \(\quad \) \(\quad \)200 hours at \( \$ 15 \) per hour
If total overhead costs during the month totalled $5000 when a total of $20 000 in direct labour costs were incurred,what will be the overhead allocated to Client #234?
A) $1000
B) $3000
C) $750
D) $250
Q3) How is service costing different to traditional product costing?
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Chapter 7: Departmental Overhead Costing
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61 Verified Questions
61 Flashcards
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Sample Questions
Q1) What is the overhead allocated to a product that uses 3 direct labour hours in Assembly and 5 machine hours in Machinery?
A) $960
B) $0
C) $1020
D) $900
Q2) What is the direct method? What assumptions are necessary to make it relevant?
Q3) Assuming that Motlop Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to producing 2 under the step method would be:
A) $ 0
B) $1600
C) $5714
D) $2400
Q4) Which of the following would be classified as a service department?
A) The bottling department of a soft drink manufacturer
B) The painting department of an automobile manufacturer
C) The accounting department of a manufacturing company
D) The claims processing department of an insurance company
Q5) How are departmental overhead rates superior to plantwide overhead rates?
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Chapter 8: Activity-Based Costing
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78 Verified Questions
78 Flashcards
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Sample Questions
Q1) Which of the following statements regarding cost drivers is false?
A) Cost drivers can have a motivational effect upon employees.
B) Cost drivers should generally be chosen based on a cause-and-effect relationship between the driver and the specific cost being considered.
C) Cost drivers are groups of overhead costs that are similar.
D) An activity could have more than one potential cost driver.
Q2) What is meant by the term 'activity' in activity-based costing (ABC)? How are costs allocated in ABC?
Q3) What will be the overhead rate for the production activity?
A) $32.50
B) $50.00
C) $ .03
D) $31.25
Q4) Which of the following would most likely be a facility-level cost?
A) Depreciation on factory equipment
B) Depreciation on factory building
C) Depreciation of engineering equipment
D) Depreciation of setup equipment
Q5) What are the benefits and limitations of activity-based costing (ABC)systems?
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Chapter 9: Cost-Volume-Profit Analysis
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117 Flashcards
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Sample Questions
Q1) If a company has a positive contribution margin but net income is low or negative,what are some ways of increasing net income?
A) Increase sales price
B) Increase sales volume
C) Decrease variable costs
D) All of these are ways to increase net income
Q2) Which of the following statements is true when making decisions using cost-volume-profit (CVP)analysis?
A) As long as the contribution margin is a positive number,net income will be positive.
B) As long as variable costs are more than fixed costs,net income will be negative.
C) As long as the contribution margin is greater than fixed costs,net income will be positive.
D) As long as the sales price per unit is greater than fixed costs per unit,net income will be positive.
Q3) What is meant by the term 'break-even point' and how is it computed in a single versus a multiproduct environment?
Q4) How is contribution margin ratio computed?
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11
Chapter 10: Relevant Costs and Product Planning Decisions
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) In deciding whether to sell a product 'as is' or process it further,which of the following costs are relevant to the decision?
A) Costs incurred up to the decision point
B) Costs incurred to process further
C) Only overhead costs
D) Direct materials and direct labour costs only
Q2) JNR Products produces and sells plastic soft drink cups with specialised logos on the front.They sell the cups in batches of 500 for $125 per batch.The company has the capacity to produce 100 batches per month but averages much less.When 75 batches are sold a month,each batch has $40 worth of variable costs and $5 worth of fixed overhead costs allocated to it.The company has been approached by a local fireman's association who wishes to purchase three batches of cups for $50 per batch.If the special order were accepted,net income would:
A) increase by $10.
B) decrease by $225.
C) increase by $15.
D) increase by $30.
Q3) When are fixed costs relevant in a make or buy decision? Give one example of a relevant fixed cost.
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Page 12
Chapter 11: Long-Term Capital Investmentdecisions
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97 Flashcards
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Sample Questions
Q1) Mid-Town Products Inc.purchased equipment costing $100 000.Annual operating cash inflows are expected to be $30 000 each year for five years.At the end of the equipment's life,the salvage value is expected to be $6000.If Mid-Town's cost of capital is 14 per cent,what is the asset's net present value? (ignore income taxes)
A) $ 6109
B) $ 2993
C) $ 7840
D) $23 592
Q2) A local company requires all capital investments to generate a minimum internal rate of return of 14 per cent.The company is currently considering an investment that is expected to generate annual cash inflows of $40 000 for 5 years.The cost of this investment is $150 000.
Required: Would you recommend the company make this investment? Why or why not? Show computations and ignore income taxes.
Q3) The time value of money concept focuses on:
A) revenues.
B) expenses.
C) cash flows.
D) net income.
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Page 13
Chapter 12: Fixed and Rolling Budgets for Planning and Decision Making
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115 Flashcards
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Sample Questions
Q1) Milton Inc.has prepared the following first quarter sales forecast: \(\begin{array}{ll}
\text { January } & 250000 \text { units } \\
\text { February } & 375000 \text { units } \\
\text { March } & 315000 \text { units } \end{array}\)
Each unit sells for $1.50.
The sales budget for the first quarter is:
A) $1 410 000
B) $ 940 000
C) $ 626 667
D) $ 472 500
Q2) 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.
Q3) There are many advantages of budgeting.List four of these advantages.
Page 14
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Chapter 13: Management Accounting for Cost Control and Performance Evaluation Flexible
Budgets and Variance Analysis
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Answer the following questions:
A. How do ideal and practical standards differ?
B. As an employee who is evaluated based upon standards, which would you prefer and why?
Q2) Task analysis:
A) is used to determine the tasks that production employees should complete on a daily basis.
B) is used to evaluate employee performance.
C) is used to set standard costs.
D) emphasises the historical costs of a product.
Q3) Which of the following types of companies would not have a need to calculate a fixed overhead volume variance?
A) A company that uses variable costing
B) A company that uses absorption costing
C) A company that applies fixed overhead based on direct labour hours
D) A company that uses activity-based costing (ABC)
Q4) As a manager,how might you determine the standard price and quantity of materials,labour,and overhead for a particular product?
Q5) What is 'task analysis' and how is it used in the context of variance analysis? Page 15
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Page 16
Chapter 14: Decentralisation and Modern Performance
Management Systems the Balanced Scorecard
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) For the current year,Winston Inc.reported sales of $800 000 and an asset turnover of 2.The rate of return on average invested assets was 20 per cent.The company's margin for the year was:
A) 10 per cent
B) 40 per cent
C) 25 per cent
D) 50 per cent
Q2) Residual income:
A) is an alternative to ROI for manager performance evaluation..
B) is the amount of income earned in excess of a predetermined minimum level of return on assets.
C) is equal to ROI - (Average operating assets * Minimum required rate of return).
D) both A and B.
Q3) Which of the following items is not part of the calculation for segment margin?
A) Contribution margin
B) Traceable fixed expenses
C) Common costs
D) Variable costs
Q4) What is a 'share option' and does it always have value?
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Chapter 15: Accounting for Sustainability Social
Reporting,environmental Reporting and Management
Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) If BHP Billiton is concerned about the medical costs for looking after employees with health concerns,they are concerned with:
A) prevention costs.
B) appraisal costs.
C) internal failure costs.
D) external failure costs.
Q2) The James Hardie Corporation has been supplying building materials since the early to mid 20th century.Its earlier products used asbestos,a material we now know to be toxic and dangerous to those that come into contact with it.As a consequence of the ill health suffered by its employees,James Hardie incurred significant environmental costs,which it continues to be held accountable for even today.It is doing its best to minimise these adverse costs,but they often nevertheless must be incurred. Please identify any possible prevention,appraisal,internal failure and external failure costs that might have to be considered by James Hardie.
Q3) How might the sustainability value chain perspective affect how the National Australia Bank (NAB)conducts its operations?
Q4) Why can't accounting systems capture external costs at present?
Page 18
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