Accounting for Managers
Exam Answer Key
Course Introduction
Accounting for Managers provides a comprehensive introduction to the principles and practices of accounting as they apply to managerial decision making. The course covers essential topics such as financial statement analysis, budgeting, cost behavior, performance evaluation, and internal controls. Through the lens of managerial roles, students learn how to interpret accounting information, utilize data for strategic planning, and apply key accounting tools to real-world business scenarios. Emphasis is placed on the practical use of accounting information for planning, controlling, and evaluating organizational activities, helping future managers make informed financial decisions to achieve business objectives.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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14 Chapters
2120 Verified Questions
2120 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) Which employee would normally occupy a line position?
A) the treasurer
B) the controller
C) the purchasing manager
D) the vice-president of marketing
Answer: D
Q2) Which statement best describes financial accounting?
A) It is internally focused.
B) It has an emphasis on the future.
C) It has no regulatory or mandatory rules.
D) It is concerned with information about the organization as a whole.
Answer: D
Q3) What is an example of the management activity referred to as planning?
A) upgrading outdated equipment
B) outsourcing the organization's payroll processing
C) developing a strategy to dispose of hazardous waste
D) deciding to eliminate an unprofitable segment of an organization
Answer: C
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Chapter 2: Basic Managerial Accounting Concepts
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) Gross margin - selling and administrative expenses
A)Income Statement
B)Cost of Goods Manufactured
C)Work-in-Process Inventory
D)Gross Margin
E)Operating Income
Answer: E
Q2) Which statement best describes indirect costs?
A) Indirect costs include all labour.
B) Indirect costs should always be assigned to a cost object.
C) Indirect costs can be easily and accurately traced to a cost object.
D) Indirect costs are shared between or among more than one cost object.
Answer: D
Q3) Refer to Katz Group. What was the selling expense percentage?
A) 15%
B) 16%
C) 17%
D) 19%
Answer: C
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Page 4
Chapter 3: Cost Behaviour
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Describe the three methods used to determine cost behaviour. Answer: The three methods used to determine cost behaviour are scattergraph, high-low, and least squares (regression) method. The scattergraph method is a way to see the cost relationship by plotting the data points on a graph. The high-low method is a method of separating mixed costs into fixed and variable components by using just the high and low activity data points. The least squares (regression) method is a statistical way to find the best-fitting line through a set of data points.
Q2) Real estate taxes
A)Variable cost
B)Fixed cost
Answer: B
Q3) Refer to Drumheller Company. Which element is the intercept?
A) output
B) total cost
C) fixed cost
D) variable rate
Answer: C
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Flashcards
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Sample Questions
Q1) Operating leverage is the use of variable cost to extract higher percentage changes in profits as sales activity changes.
A)True
B)False
Q2) Refer to Date Company. What is the contribution margin per unit?
A) $5.00
B) $5.40
C) $6.00
D) $6.30
Q3) In a multi-product firm, if the sales mix changes, the break-even points for each product will change.
A)True
B)False
Q4) Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units per year. How many jungle gyms are sold at break-even using this new sales mix?
A) 668
B) 875
C) 1,002
D) 2,625
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Chapter 5: Job-Order Costing
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Which of the following is NOT on a time ticket?
A) cost of materials
B) employee's name
C) employee's wage rate
D) hours worked on each job
Q2) Refer to Quillen Company. Using the direct method, how much of the support department costs will be allocated from Department S1 to Department S2?
A) $0
B) $81,818
C) $150,000
D) $180,000
Q3) Which event would require two separate journal entries?
A) selling a good
B) purchasing raw materials
C) hiring an hourly employee
D) transferring a good to Finished Goods Inventory
Q4) Discuss overapplied and underapplied overhead.
Q5) The raw materials account is an inventory account located on the balance sheet.
A)True
B)False
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Chapter 6: Process Costing
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156 Flashcards
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Sample Questions
Q1) Which statement best describes sequential processing?
A) Only one process can be applied to a product in each department.
B) Several sequences of production are applied to a product in the department.
C) Units must pass through one process before they can be worked on in later processes.
D) Subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.
Q2) Which two methods are used to determine equivalent units of production in process costing?
A) exact costing and LIFO costing method
B) FIFO costing method and LIFO costing method
C) weighted average costing method and exact costing
D) weighted average costing method and FIFO costing method
Q3) In parallel processing, two subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.
A)True
B)False
Q4) Describe the differences between sequential and parallel processing.
Q5) Describe the differences between process costing and job-order costing.
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Chapter 7: Activity-Based Costing and Management
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) To calculate an activity rate, the practical capacity of each activity must be determined.
A)True
B)False
Q2) The value-added standard is the waste-free component of the value-added activity.
A)True
B)False
Q3) Which of the following must be determined to calculate an activity rate?
A) value of each activity
B) processing ratio of each activity
C) expenditure level of each activity
D) practical capacity of each activity
Q4) What is a value-added activity?
A) waiting
B) moving
C) inspection
D) processing
Q5) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Inventory using the absorption costing method includes direct materials, direct labour, variable manufacturing overhead, and fixed manufacturing overhead.
A)True
B)False
Q2) Refer to Nute Corporation. What is the value of the ending Finished Goods Inventory using the variable costing method?
A) $240,000
B) $350,000
C) $360,000
D) $420,000
Q3) What is characteristic of the economic order quantity (EOQ)?
A) the quantity that maximizes total profit
B) the quantity that maximizes carrying costs
C) the quantity that minimizes total ordering cost
D) the quantity that minimizes total inventory-related costs
Q4) If the demand for a product is known, total inventory-related costs consist of ordering costs and carrying costs.
A)True
B)False
10
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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165 Flashcards
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Sample Questions
Q1) Refer to Wallen Company. What is the budgeted selling and marketing expense?
A) $39,000
B) $65,000
C) $84,000
D) $133,360
Q2) Refer to Stumble Inc. What is the direct labour cost budgeted for March?
A) $26,900
B) $107,600
C) $322,800
D) $538,000
Q3) Ending finished goods inventory
A)Production budget
B)Direct materials purchases budget
C)Sales budget
D)Production budget and Direct materials purchases budget
E)Production budget and Sales budget
F)Direct materials purchases budget and Sales budget
G)Product budget, Direct materials purchases budget, and Sales budget
Q4) Describe some problems with participative budgeting.
Q5) What are the advantages of budgeting?
11
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Chapter 10: Standard Costing: a Managerial Control Tool
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Kaizen costing focuses on the continuous reduction of manufacturing costs of existing products and processes.
A)True
B)False
Q2) Refer to Allan Company. What is the entry to record the purchase of materials?
A) Materials 1,170,000
Materials Price Variance 30,000
Accounts Payable 1,200,000
B) Materials 1,200,000
Materials Price Variance 30,000
Accounts Payable 1,170,000
C) Materials 1,218,750
Materials Price Variance 31,250
Accounts Payable 1,250,000
D) Materials 1,250,000
Materials Price Variance 31,250
Accounts Payable 1,218,750
Q3) Explain the kaizen approach to costing.
Q4) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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147 Flashcards
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Sample Questions
Q1) Price changes of variable overhead items are easily controlled by production supervisors.
A)True
B)False
Q2) Activity-based budgeting classifies costs as direct or indirect with respect to the activity output measure.
A)True
B)False
Q3) When budgeting at the activity level, with respect to which of the following is the cost behaviour of each activity defined?
A) machine hours
B) direct labour hours
C) the activity output measure
D) the activity's resource driver
Q4) Which formula reflects the fixed overhead spending variance?
A) AFOH - BFOH
B) AFOH - (SFOR × SH)
C) BFOH - (SFOR × SH)
D) AFOH - (SFOR × AH)
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Chapter 12: Performance Evaluation and Decentralization
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145 Flashcards
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Sample Questions
Q1) Residual income is sometimes used to overcome the tendency of ROI to discourage investments that are profitable for the company but that lower the division's ROI.
A)True
B)False
Q2) Transfer pricing does NOT affect divisional profits.
A)True
B)False
Q3) Division A produces a component and wants to sell it to Division B. Which of the following best describes the relationship of the transfer price to Division A and Division B?
A) revenue to Division A and a cost to Division B
B) revenue to Division B and a cost to Division A
C) a cost to Division B and no effect on Division A
D) revenue to Division A and no effect on Division B
Q4) Using return on investment to calculate residual income, the dollar cost of capital employed is the actual percentage cost of capital multiplied by the total capital.
A)True
B)False
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14
Chapter 13: Short-Run Decision Making: Relevant Costing
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84 Flashcards
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Sample Questions
Q1) Winston Custom Cabinetry makes cabinets to order and prices the completed jobs at product cost plus 40%. Recently, the company finished a job and billed the customer $560. Suppose direct materials for the job cost $130 and direct labour cost $180. What was the applied overhead for the job?
A) $90
B) $179
C) $250
D) $350
Q2) The benefit sacrificed when one alternative is chosen over another is called opportunity cost.
A)True
B)False
Q3) Short-run decision making only involves short-run decisions that have nothing to do with the firm's overall strategy.
A)True
B)False
Q4) All fixed costs are always relevant.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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151 Flashcards
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Sample Questions
Q1) Refer to Martin Brother. What is the accounting rate of return for the project?
A) 30%
B) 45%
C) 75%
D) 150%
Q2) The internal rate of return model consistently results in choices that maximize firm wealth.
A)True
B)False
Q3) An internal auditor is usually the best choice for performing a postaudit of a capital investment.
A)True
B)False
Q4) What is NOT a benefit of postaudits of capital investments?
A) They consider changes in the actual operating environment.
B) They ensure that resources are used wisely by evaluating profitability.
C) They supply feedback to managers that should help improve decision making.
D) They guide managers to make capital investment in the best interests of the company.
Q5) Explain the concept of capital investment decision. Give an example of each.
Page 16
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